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Construction Disputes – Causes of Disputes in the Construction Industry

construction disputes

Construction disputes arise from environmental and behavioural factors. There are many different causes of disputes in the construction industry. Disputes waste money, therefore drain profits and destroy the relationship and it takes energy away from projects.

Construction delays, variations, efficiency issues and exceeding cost can be some causes for the dispute to arise in the project. Typically construction disputes occur between the owner and the main contractor, subcontractors, sub-subcontractors and design professionals. The main source of this problem is the lack of precision in the contract description between involving parties. The construction industry has tried a different way to avoid the disputes. Currently, construction industry uses Building Information Modeling (BIM) or 3D modeling and it has significantly minimized these kinds of disputes.

“Construction Industry is a fertile source of disputes”. (Speaight QC, 2010) The reasons for construction disputes are being a part of construction life fall into four categories.

  • Contract
  • Finance
  • Culture
  • External Factors

Definition of Dispute

  1. Dispute is a misunderstanding between two parties, either contractual or non- contractual (Oxford Dictionary)
  2. Dispute is unable to eliminate because the nature of the construction is full risk.(Thomas 1995)
  • Definition of the dispute may be circumscribed it may inevitably involve resolution of other matters which may not specifically have been raised into separate or discrete disputes.
  1. The judicial development of the definition of dispute required to give an adjudicator threshold jurisdiction has been instrumental in encouraging the Parties to exchange views andfacts which support their case, but it can be a rather blunt instrument for reducing dispute and far short of a pre-adjudication protocol (Construction Law Handbook, 2007).
  2. A dispute will not exist until a claim is asserted by one party which is disputed by the other party (Bachner1988)

Top 10 Factors Affecting Construction Disputes

A construction dispute can be the outcome of different factors.

  1. Terms of the Contract
  2. Technological Issues
  3. Project Conditions
  4. Parties Involved
  5. Magnitude
  6. Site Conditions
  7. Degree of Bias
  8. Third Party
  9. Organizational Behaviour
  10. Culture

Construction Disputes - causes of disputes in construction industry

The most common causes of disputes 2017

  • Failure to properly administer the contract
  • Poorly drafted or incomplete/unsubstantiated claims
  • Employer/Contractor/Subcontractor failing to understand and/or comply with its contractual obligation
  • Errors and/or omissions in the contract document
  • Incomplete design information or employer requirements (for Design and Build and D&C)

Causes of Construction Dispute by Clients

  • Deficient management supervision
  • Lowest price mentality in engagement of contractor
  • Poor communication
  • Discrepancies in contract documents
  • Failure to appoint project manager
  • Failure to respond in time

Causes of Construction Disputes by Contractors

  • Delay suspension of work
  • Lack of understanding and agreement in contract procurement
  • Inadequate CPM scheduling and update requirement
  • Failure to plan and execute the changes of works
  • Reluctance to seek clarification
  • Failure to understand and correctly bid or price the works

Causes of Construction Dispute by the Consultants

  • Failure to understand its responsibilities under the design team contract
  • Over design and understanding, the costs involved
  • Incompleteness of drawing and specification
  • Design and specification oversight and errors or omission from specialists
  • Variations due to design errors
  • To request for information late information delivery and cumbersome approach

 

Here are some of the ways to resolve construction dispute when is occurring. methods of dispute resolution such as.

  • Mediation
  • Arbitration
  • Judicial Appraisal
  • Adjudication
  • Dispute Reasolution Board

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