3 ways to proactively avoid construction disputes

As construction dispute values and the time taken to resolve disputes increased noticeably last year, we share the top three effective ways to proactively avoid conflict.

Construction programs today are fast-paced, complex and involve a multitude of parties, creating numerous points at which a dispute can occur. For the eighth consecutive year, Arcadis’ Contract Solutions team has facilitated a survey and compiled research to gather key themes and insights into the global construction disputes market. Finding that the industry continues to struggle with implementing proactive measures to protect their projects, we titled this year’s report “Does the Construction Industry Learn from its Mistakes?”

This year’s Global Construction Disputes Report reveals that both dispute values and the time taken to resolve disputes increased noticeably in 2017. Our research reiterates last year’s results and the need for better contract administration and more robust documentation, and highlights the need for employers, contractors and subcontractors to better understand their contractual obligations.

For the North America region, our research found that the value of disputes dropped slightly in 2017, while the average time taken to resolve the disputes increased slightly. With larger programs on the horizon for the United States, our research shows that this will yield larger disputes in the future unless project teams focus on shifting their approach.

How can the industry handle their projects in order to avoid future construction claims? From our years of experience in avoiding, mitigating or resolving disputes with clients, we’ve compiled the top three effective ways to proactively avoid conflict.

1. Employ risk management techniques early in the project lifecycle.

Construction projects typically have a well-defined goal. Whether it be the opening of a highway or the completion of a high-rise building, in a perfect world everything proceeds according to plan. However, it never does. Every construction project has some type of impact, which could be differing site conditions, contaminated material, third party impacts or the weather itself. How we plan for these potential impacts will make or break a project. As we are certain that every construction project will face impacts, we recommend developing a comprehensive risk management plan at the beginning of the project. A comprehensive risk management plan requires a high level of expertise and a very thorough analysis of the project as the most successful risk management plans cover the complete lifecycle of the project. Focus on these three elements.

            • Recognizing the Risk: You may not to be able to recognize every risk on your upcoming projects but do your best to recognize the most threatening ones.

            • Assessing the Risk: It is important to take the time on your project to assess the potential impact of the risk the project may face such as third-party issues, staging changes, potential differing site conditions, etc.

            • Planning for the Risk: The lesson here is the more planning done ahead of time, the easier it will be to manage the risk.

2. Know the contract.

The contract should not be either a hammer or a shield but a guide for all the project participants. Many project participants are only concerned with the provisions they believe affect them, if they are interested at all. This lack of understanding the big picture can lead to conflict. Fully understanding the responsibilities of everyone involved with the project clears up confusion among all parties involved and brings clarity to issues that would otherwise be ambiguous.

3. Learn how to communicate with project participants.

Projects, like life, involve lots of different personalities who communicate in different ways. Some people prefer talking face-to-face or on the phone while other people prefer the written word. There is one thing for certain, every project that experienced a major dispute also experienced poor communication. You can find a plethora of resources specifically on this topic, but one effective tip is to communicate regularly and intentionally. Take the time to have discussions with project participants where you look each other in the eye and discuss your position. It may be more uncomfortable than sending an email, but in the end, it is far more effective.

As the Global Construction Disputes survey results indicate, human factors continue to play a large role in the success of a project. Project participants need to work together with claims professionals and proactively be a part of the overall avoidance and resolution process. It’s completely possible to successfully employ dispute avoidance on projects globally, but it can only happen when the team understands and accepts that there may be an issue in the first place.

Roy Cooper

Senior Vice President, Head of Contract Solutions, North America +1 860 503 1465 Ask me a question