Embarking on a building project be it a modest loft conversion or building your dream home can be stressful. Before embarking on such a project you will no doubt have planned every detail meticulously. You will have a contingency plan in place and will have a vision of exactly how your project will progress to the end. A possible construction dispute will not be a part of that master plan.
The reality however is that, construction disputes are unfortunately very common. It is simply not feasible to resolve every detail and foresee every situation that may arise, therefore difficult situations are likely to arise that are often not addressed by the contract.
A multitude of factors are capable of driving construction disputes. We will look at a number of those possible factors that may prove contentious when embarking on your building project. Please note that the examples discussed below are no means exhaustive.
It is not possible to plan to every minute detail of a project. Therefore it follows that there is a strong likelihood that there will be an element of uncertainty involved. The definition of uncertainty in this context is the difference between the level of information that is required to complete the project in comparison to the level of information that is actually available. The level of information required will obviously differ in accordance to the size of the project; it will also depend very much on the complexity of the project and the performance requirements. This is usually measured either in terms of time or budget. The level of information that is available will be contingent upon the effectiveness of the planning stage of the project. As it is at this initial stage that the required information will be collected and collated.
It is of course very possible that initial specifications can change as the project progresses. This will ultimately add to uncertainty.
Many people may choose to use standard forms of contract. These can work well depending on your requirements. However there is a risk that such contracts can be too rigid and so such rigid agreements may not be suitable for long term projects that are complex in nature and often full of uncertainty.
If your project is particularly complex then you should consider amending the terms of a standard contract or contemplate a bespoke contract that is tailored specifically for your project. If you are considering a bespoke contract then you should seek legal advice as it is important to ensure that the terms agreed are clear and unambiguous. As often bespoke contracts may contain unclear and unambiguous terms. Unclear and unambiguous terms can cause issues for contracting parties as differences may arise in the parties’ perception of the risk allocation under the contract.
Quite often for a commercial project there will almost certainly be a clear time line for the progression of the project. This will include key dates and of course deadlines. Examples where this may be the case are the completion of a project ahead of a major sporting event, and requirements to meet important dates for tenant occupation in an office development. If such key dates/deadlines are missed then the implications and costs associated for a developer can be considerable. When this happens, it can give rise to disputes.
Following on from deadlines, it is also important to discuss the impact of delays. Often times delays may occur, this may lead on to disputes surrounding who should bear the responsibility of the delays. The contracts for most complex projects will contain provisions to account for extending the time for completion. Nevertheless such delays can prove problematic.
Co-ordination and management of teams involved in the project.
Almost all building projects will require a number of specialists to come together and play their part in the project. For the smooth-running of a project co-ordination of specialists is key. It is inevitable that at times co-ordination may not be implemented correctly, thus leading to disputes and conflicts. Further the different teams involved in the project may represent different companies, no doubt each of these companies will have differing goals and commitments they may not reflect the goals and commitments of the other companies they are working alongside and this incompatibility may give rise to disputes.
The Importance of risk assessments
The importance of carrying out a risk assessments prior to embarking upon the project cannot be stressed upon enough, especially in situations where the project in question is of a complex nature. Surprisingly however, the reality is that such risk assessments are often not carried out.
The knock on effect of failing to carry out an appropriate risk assessment is that this will result in an insufficient appreciation of the risks involved in the project. This will result in delays as projects will take longer than anticipated; it follows that the delays will cost money and thus an increase in costs. Disputes may ensue in such situations.
The Quality and Workmanship of the Works
A developer will have clear specifications that they will have set out for the project. When works are not completed in accordance with the specification, it is foreseeable that disputes may occur. It may be the case that specifications are vague to begin with, or quite often it will be the case that each contracting party will have a different viewpoint with regards to the level of quality and workmanship that is acceptable.
Changes to the project
During the course of the project it may be necessary to implement changes to the initial strategy. Such changes are a major reason for construction disputes. If the proposed changes are substantial in number or nature, or such changes will inevitably impact upon partially completed works then a bitter dispute may follow.
Part 2 of this article will discuss ways in which such disputes can be resolved in a timely and cost effective manner.