Types Of Construction Disputes & How To Avoid Them

When it comes to the construction industry, it’s not all sunshine and roses out there. Like in any field, conflicts and disputes can sometimes arise among the various parties involved. In fact, according to a recent report by Arcadis, construction disputes in North America took an average of 15.4 months to resolve in 2022, costing companies plenty of valuable time and money along the way.

But don’t worry; we’re not trying to be bearers of bad news here—instead, we’re trying to arm you with crucial knowledge and practical, proven strategies you need that could help you work through any potential construction disputes you may face.

In this comprehensive overview and guide, we’ll review the various kinds of construction disputes that can occur during a project, explore the root causes behind these issues, and, most importantly, share key tactics to help avoid and resolve them efficiently.  

Our core goal is to help you minimize these conflicts, streamline project timelines, and, ultimately, ensure successful construction projects. Knowledge is power, after all, and we’re here to ensure you’re powered up and prepared for whatever comes your way.

What Are Construction Disputes? 🤔

A construction dispute is a fairly common term you’re likely familiar with if you’ve been in the construction industry for any meaningful length of time. Simply put, construction disputes refer to disagreements or conflicts that can arise during or after a construction project.

Construction projects are inherently complex, involving many different elements. They require the coordinated efforts of diverse stakeholders such as architects, engineers, contractors, subcontractors, suppliers, and clients. Each of these stakeholders has distinct responsibilities, expectations, and interests.

Disputes can happen when these interests collide or when there are miscommunications, different interpretations of contracts, unforeseen project complications, and delays. These disputes can have serious implications, resulting in project delays, cost overruns, and strained relationships.

However, it’s not all doom and gloom. Understanding the nature and causes of construction disputes is the first step towards preventing and managing them effectively. With this knowledge, you’ll be better equipped to work through the complexities of construction projects and foster a more effective and efficient working environment.

Leading Causes of Construction Disputes

To help you mitigate or avoid construction disputes altogether, you first need to understand the usual culprits that can lead to these different kinds of disagreements. 

Thankfully for you, we’re here to help. Some of the most common reasons why disputes arise include the following:

Delays ⌛

Time is a precious commodity in construction; when projects get delayed, it can have a cascading effect on everything else, from budgets to stakeholder relationships. For instance, take a project scheduled for completion in six months, but the timeline gets extended to nine months due to an equipment malfunction or the unavailability of specific materials. This disrupts the plan and increases the overall project cost, leading to potential disputes down the line.

Design Errors 📐

Construction projects begin with blueprints. If there are errors or omissions in the design phase, these can lead to significant problems as the project progresses. Consider the case where the plans call for a particular type of window that later turns out to be too large for the allotted space. Correcting such errors can result in extra cost and time, thereby sparking potential disputes.

Scope Changes 📝

Changes in the project’s scope midway through construction can also lead to potential stakeholder disputes. For example, a client might suddenly want an additional bathroom on their property. These kinds of abrupt changes can lead to disagreements over project timelines, costs, and contract terms.

Contract Issues  📄

Contracts form the legal backbone of construction projects. If they are unclear or if parties interpret clauses differently, it can cause disputes. For example, let’s say a contract vaguely defines the quality of materials to be used, and then the contractor uses a lower quality than the client expected—this kind of poor planning and communication can easily trigger a dispute.

Payment Disputes 💰

Money-related issues are always sensitive, and disputes can occur over payment terms, outstanding invoices, or unexpected costs. A contractor might, for example, invoice for extra work that wasn’t initially agreed upon, leading to potential disagreements among the parties involved.

Differing Site Conditions  🏗️

Sometimes, the actual site conditions can be different from what was initially understood or presented. For example, the ground may be rockier than expected, making excavation more difficult and costly, and the difference between anticipated and actual conditions can stir up a prospective dispute.

Recognizing these common causes of various construction disputes is the first step in actually avoiding them, helping ensure greater satisfaction among all parties involved and keeping the project on track.

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Types of Construction Disputes 📚

To help you stay ahead in the construction industry, identifying the core reason and nature behind the various types of construction disputes early on can help you develop effective strategies for resolving them.

Legal Disputes ⚖️

Construction projects are tangled in a web of laws and regulations, and any non-compliance can give rise to disputes. This could be due to violating certain building codes, non-adherence to safety regulations, or needing to obtain the necessary permits or licenses. A common example would be when a contractor fails to comply with the stipulated safety guidelines, potentially endangering the workers and leading to a legal dispute.

Financial Disputes 💸

Finances are a common bone of contention in the construction industry, which can involve various issues, from disagreements over the cost of completed work, disputes over contract sums, or non-payment of invoices. The impact of such disputes can be quite substantial, leading to project delays, work stoppages, or even termination of contracts.

Scheduling Disputes 📅

Time, a vital resource in construction projects, often leads to disagreements when managed poorly. These disputes typically arise when there are delays in the project timeline due to factors like late deliveries, slow approvals, or poor task management. For instance, if a key subcontractor fails to complete their work on time, it could potentially derail the entire project schedule, leading to a scheduling dispute.

Performance-related Disputes 🔨

These types of disputes are tied to the quality or standard of the completed work, which occurs when the client or another party feels that the finished work or materials used do not meet the standards outlined in the contract. An example could be when a contractor uses a lower-quality material than what was agreed upon in the contract, resulting in a dispute related to the quality of work.

Properly understanding these different types of construction disputes can help better equip you to manage and even mitigate them. With this knowledge, you can best identify potential dispute scenarios early and quickly strategize effective ways to address and resolve them. 

How To Resolve Construction Disputes

Disputes in construction projects are never fun, and in some cases, can almost feel impossible to overcome. However, with the right knowledge and strategies behind you, you can get through these potential disputes successfully and resolve them. 

Let’s look at the different methods of dispute resolution out there, which can all help get your project back on track:

Negotiation 🤝

Often the first step towards resolving disputes, negotiation is a simple, direct approach where the parties involved communicate to arrive at a mutually agreeable solution. Negotiation can potentially preserve relationships and is often the quickest and most cost-effective method of dispute resolution.

Mediation 🕊️

When negotiation fails to bridge the gap, mediation can be a powerful tool to help resolves disputes. Mediation involves a neutral third party, known as a mediator, who facilitates communication between the conflicting parties and helps guide them to a mutually acceptable solution. It’s important to note that the mediator doesn’t impose a decision but works to help the parties find common ground.

Arbitration 🔍

If mediation doesn’t resolve the dispute, arbitration could be the next step. In arbitration, a neutral third party, the arbitrator, examines the facts and makes a binding decision. This process is generally quicker and less formal than court proceedings, and its binding nature is often preferred in construction disputes to ensure finality.

Litigation 🏛️

The most formal method of dispute resolution is litigation, involving a court process where a judge or jury makes a binding decision. While it can be time-consuming and expensive, litigation is sometimes the only suitable method for complex or high-value disputes that cannot be resolved through other means.

As far as trying to find an attorney specializing in construction disputes goes, there are several different routes you can take:

• Personal referrals from industry colleagues or friends can be invaluable.
• Directories of local or national bar associations often list lawyers by their specializations.
• Online platforms that provide lawyer listings, such as Avvo or Martindale-Hubbell, or your local state’s bar association website, can also be great resources.

🚨 REMEMBER: Always remember, when disputes start getting super complicated or contentious, you should immediately seek out proper legal advice and counsel. Attorneys specializing in construction disputes possess the right experience and expertise to navigate the industry’s complex landscape of laws and regulations and can provide invaluable guidance.

How To Avoid Construction Disputes 🛑

Prevention, as they say, is much better than cure—and it’s definitely no different when it comes to construction disputes. Avoiding disputes saves time and money, preserves relationships, and ultimately promotes a healthy work environment. 

To help keep your project on track, let’s review some of the best practices and strategies that can help prevent disputes or at least mitigate their impact.

• Keep Clear Communication: Good communication is the backbone of any successful construction project. Ensure all project goals, plans, and expectations are clearly communicated to all stakeholders right from the start. Regularly check in with your team, subcontractors, and the client to keep everyone on the same page.
• Have Detailed Contracts: A well-drafted contract can be a lifesaver. Ensure your contracts are comprehensive, specifying everything from scope of work and payment terms, to timelines and quality expectations. If any changes occur, update the contract and get it signed by the relevant parties.
• Regular Project Meetings: Regular meetings provide a platform for open dialogue, allow for status updates, and create an opportunity to address any concerns or potential issues. It’s an effective way to keep everyone informed and nip any brewing disputes in the bud.
• Maintain Thorough Documentation: Good record-keeping practices help prevent and resolve disputes. Document everything from contract changes and email conversations, to work progress and site conditions. If a dispute arises, this evidence can prove invaluable.
• Hire a Good Team: A competent, experienced team can help ensure a project runs smoothly. Take the time to vet your subcontractors and suppliers. Look for those with a good track record, who understand their roles and responsibilities, and are committed to delivering quality work.
• Seek Legal Advice: Have a lawyer review your contracts and agreements to ensure they are legally sound. An experienced construction lawyer can help provide guidance to ensure you’re well-protected.

Preventing disputes may not always be possible, but following these strategies can help significantly reduce the likelihood of disputes occurring, or at least reduce their potential severity if they arise. Remember, the key to successful construction project management lies not just in executing the work but also in preventing and managing disputes effectively.

Improve Documentation To Avoid Construction Disputes

Remember how we stressed the importance of comprehensive documentation to help you avoid potential construction disputes?

Well, here’s where Workyard comes into play to save the day. This robust construction and field services-focused platform is designed to provide real-time tracking and enhanced documentation over all of the activities on your job site, helping you mitigate and even prevent potential conflicts along the way.

There’s a variety of key information that companies should be capturing to help safeguard themselves against potential construction disputes, which include the following:

• Detailed logs of arrivals and departures for every person on a project site.
• Detailed daily progression photos.
• Daily written progress reports.
• Detailed incident logs.

Capturing this kind of comprehensive data information manually can be overwhelming for firms of all sizes, not to mention that it can be highly prone to human errors and inefficiencies. This is where modern mobile field software, like Workyard, can become your best ally—it helps you automate data capture, ensuring accuracy and saving you valuable time.

Now let’s take a closer look at how Workyard specifically assists in capturing each of these critical pieces of information:

• Site arrivals and departures: Workyard’s GPS audit trail feature keeps a clear record of who was where and when, which can be absolutely vital in protecting your company against any potential liabilities and disputes.
• Progress photos: Workyard allows you to share photos, notes, and files directly from the field in real-time. This kind of detailed visual documentation can help offer invaluable insights and avoid potential miscommunication.
• Daily written progress reports: One key feature of Workyard is its ability to generate robust and comprehensive field reports on demand. This feature offers stakeholders remote access, anytime, anywhere, to detailed records of the work done, which helps significantly reduce the potential for any disputes or misunderstandings.
• Incident logs: With Workyard, you can efficiently track and record any incident that occurs on the job site. These records can be essential in investigating incidents, taking preventive measures, and resolving disputes.

Moreover, Workyard serves as an archive for all your project documents. With unlimited storage capacity, it takes the worry out of figuring out how to store all of your critical project documentation and date.

So no matter when you need to revisit a project detail or pull out evidence to resolve a dispute, all your data will be just a few clicks away. In essence, Workyard can be your best defense in the event of a potential dispute by fostering a more transparent, efficient, and accountable project environment.

Are you ready to experience the power of Workyard for yourself firsthand? Sign up for a free trial today and start working toward more effective dispute prevention and resolution in construction!