If you own a construction company, you know that contract disputes are the norm. They will surface at some point, especially if you have multiple projects underway.
A 2018 report indicates that contract disputes are not going away but rather, are becoming more complex.
About the report
Arcadia, a design and consultancy firm, released its “Global Construction Disputes Report 2018” showing that construction contract disputes worldwide were getting longer. For example, the average of a contract dispute in North America was more than 17 months in 2017, while the global average was less than 15 months. The report also indicated that disputes were becoming increasingly complicated and expensive.
Causes of contract disputes
The researchers found that problems with errors and omissions represented the main cause of construction contract disputes. Next was poor contract administration followed by the failure of a contractor, subcontractor or owner either to understand or comply with contractual obligations. The report cited the importance of resolving disputes in the early going as well as the parties’ willingness to compromise.
Settling without litigation
The larger and more complex a project, the more opportunity there is for misunderstandings and disagreement between the parties joined by a contract. However, this does not mean that litigation is inevitable. With the appropriate guidance, the majority of claims, even those worth $1 million or more, can settle out of court. The Arcadia report stressed that the use of early resolution techniques for parties in a construction contract dispute resulted in a success rate of 82% for reaching a settlement.