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Reducing the Risk of Costly Construction Disputes, by Andrew Richards, Esq., 6-26-2024

Posted Jun 26, 2024

With so many moving parts, disputes are often unavoidable on a construction project, particularly larger ones.

Depending upon the matter, they can take years to resolve and be very costly. In fact, the average cost of disputes in North America remains at historically high levels in part due to the rising costs of legal fees, but also greater demanding expectations on projects, according to a survey released last year.

To be sure, not all disputes are avoidable, but there are best practices to help reduce or prevent the likelihood of a conflict arising.

First, it pays to understand some of the top causes of construction disputes. According to the latest Arcadis Global Construction disputes report, among the leading drivers were errors and/or omissions in the contract document and the owner/contractor/subcontractor failing to understand and/or comply with its contractual obligations.

Considering many of the issues that cause construction disputes are contract-related, it is imperative from the start to pay careful attention to how contracts are drafted. Avoid ambiguity and be concise and clear on the contract terms/provisions. Lack of clarity can lead to disputes as construction progresses.

It also pays to set realistic expectations early on. Even the best laid plans can be derailed by unforeseen circumstances. Avoid overpromising when it comes to phases of completion and costs.

Keep the lines of communication open. Sometimes a minor misunderstanding can turn into a major dispute. That’s why it pays to communicate clearly and often and be transparent.

Maintain careful, clear and concise documentation. Document all phases of the projects including changes to contract terms and protest work. Include notices of delay and requests for time extensions; comply with them if you are the one making the request.  Concise documentation can be valuable if a dispute arises.

Ensure you are complying with all pertinent building codes, local and federal laws and regulations. There can be severe legal consequences for non-compliance, which can result in project delays that can also lead to disputes. If you are unsure of your obligations, it pays to seek legal advice.

Ultimately, sometimes conflicts are inevitable, but careful planning and taking a calculated and proactive approach can help reduce risk, avoid costly disputes and keep the project running smoothly.

If you need assistance on any phase of a construction project from contract negotiations to dispute resolution, please contact the attorneys in Kaufman Dolowich’s construction law team.

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