The construction industry is complicated and can require the coordination of multiple independent contributors. Avoiding disputes helps construction companies and contractors complete their jobs efficiently and profitably. Disagreements may arise for an array of reasons. Whatever their cause, these disruptions can impact you and your company’s operation. When controversy arises, proactive measures may be necessary to safeguard your business and investment. Anticipating and avoiding conflicts is a superior strategy, but unanticipated problems will occur. In this article, our construction law attorney provides an overview of the most common construction disputes and discusses steps to help anticipate and avoid them.
The Most Common Causes of Construction Disputes
Many types of legal disputes arise from construction projects. Complex projects often involve multiple contractors, whose efforts must be coordinated from beginning to end. The interrelation of these moving parts means disruption of one often has a cascading impact on other project contributors. Most frequently, the following legal disputes are the most disruptive:
- Contract Deficiencies (Poor Drafting, Omissions, etc.): One of the most common causes of construction disputes is contract deficiencies. These include erroneous or poor drafting, omissions of essential details, or miscommunication about the scope of work. When contract terms lack clarity, the resulting ambiguity promotes disagreement and disputes between the parties, which lead to delays and cost overruns.
- Breach of Contract Claims: A well-drafted contract protects your interest when another common dispute occurs, breach of contract. This typically involves one party’s failure to fulfill its obligations under a contract. Examples of a breach include failing to complete the work, failing to complete it on time, or failing to provide agreed-upon materials.
- Changing Conditions (Change Orders): Construction projects are often subject to change. Disputes can arise when such changes impact the scope of work. This results in additional costs and delays and can cause disagreement over which party bears the extra burden of costs and delays.
- Timing: Frequently, the coordination on a construction project imposes tight deadlines. A simple delay can snowball and lead to multiple, larger disagreements, even project failure. Delays may occur due to poor project management, lack of resources, or any of a multitude of complications. For highly coordinated projects, delays can cause frustration to boil over. This may lead parties to declare a breach of contract and initiate litigation.
- Billing/Payment Issues: Finally, many construction disputes arise over billing issues and other payment issues. Notably, unpaid bills for labor or materials could lead to a construction lien under Article 2 of Chapter 44A of the North Carolina General Statutes.
Four Actionable Tips to Avoid Construction Disputes
While you cannot completely eliminate the risk of a construction dispute, there are proactive steps that you can take to reduce the chances your company will be locked in a protracted or damaging dispute. Here are four tips to avoid construction disputes:
- Contract Review: One of the most critical steps when starting a construction project is to get a well-drafted, signed contract. Among other things, a contract should clarify the scope of work, deadlines, payment terms, and any other important details. A clearly written agreement avoids incomplete or vague communications and helps assure predictable outcomes for both parties.
- Know Your Contract: The best practice is to thoroughly review a contract before signing it so that you understand the commitment you are making. It is essential that you identify and plan for contingencies, deadlines, and payment. Knowing the contract’s details will help you identify any potential issues before they become a problem, and knowledge of potential damages will assist you in making difficult business decisions.
- Communicate Every Step of the Way: Good communication between parties to a contract is key to avoiding construction disputes. Keep all parties informed of progress, changes, and any issues that arise. Regular meetings and progress reports can help keep the project on track and prevent disagreements from escalating. If parties have different interpretations, you will want to know about that as early as possible—before incurring costs on a project in which a dispute is more likely.
- Be Proactive When Disagreements Emerge: If a disagreement arises, be proactive in finding a resolution. Do not wait until the issue becomes a full-blown dispute with significant damages. Establish protocols to identify and address problems as soon as possible. Be open to compromise so that projects move forward and more costly damages are avoided.
Schedule a Confidential Consultation With a Construction Attorney
At Anderson Jones, PLLC, we cater to the needs of our construction clients. Our attorneys can help you plan and avoid disputes through contract review, and we can represent your interests when disputes arise. We offer diligent and solutions-driven service to our clients, and are a resource for any questions or concerns you may have regarding potential disputes. Call us now or connect with us directly online to set up your fully confidential consultation.