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What Is A Dispute In The Construction Industry

The construction industry is often a complicated and extremely competitive environment where different partners, with different knowledge and skills, are required to work together with a focus on both personal and collective goals.

With large sums of money, and risk involved, it’s understandable that the participants may have differing perceptions of the tasks and data relating to the project that causes conflicts, and if not managed well those conflicts are likely to become disputes. There is still some confusion between what constitutes a dispute and what defines a conflict, but in layman’s terms, the easier definition is to think of a conflict as being: an incompatibility of interests, which can be managed, whereas a dispute is where that compatibility of interest can’t be managed and needs a third party, be it litigation or mediation, for resolution.

As experts in dispute resolution, we have our own experiences and understanding of disputes and we feel they often fall into 7 categories. Here is a brief breakdown of each category.

Owner related. In some cases, the behaviour or actions by the owner could be the reason behind the dispute. Whether intentionally or indirectly, the owner might :

  • Make changes to the requirements of the project. Either formally or informally.
  • Late handing over the site, or start of the project.
  • Unreasonable expectations of the client
  • Payment delays

Contractor related. Equally, the reason for the dispute could stem from a behaviour and action of the contractor or one of the contractors involved in the project, which could include:

  • Delays in work progress
  • Time extensions
  • Financial failure of the contractor
  • Technical inadequacy of the contractor
  • Tendering  
  • Quality of works

Design related. The issue can be related to the design process, especially as the design is often an evolutionary process with issues and changes arising as the project moves different phases of construction. Issues of dispute might include:

  • Design errors
  • Inadequate / incomplete specifications
  • Quality of design
  • Availability of information

Contract related. Creating a contract is a complex process and even when created by professionals, there is always an element of interpretation that can lead to conflict and possible dispute, which may be:

  • Ambiguities in contract documents
  • Different interpretations of the contract provisions
  • Risk allocation
  • Other contractual problems

There can be disputes or conflicts that occur for other reasons that include disputes concerned with human behaviour. For example, they could be related to the work culture, as a result of a lack of communication or a lack of team spirit.

Additionally, disputes can arise from site conditions, unforeseen changes and external factors like weather as well as legal and economic factors.

 

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Kenzie Claims Assistant