Contract disputes often challenge construction businesses in our area. These disputes affect schedules, budgets and professional relationships. However, understanding common causes, available legal remedies and practical preventive steps can help companies resolve conflicts efficiently (or, maybe, avoid them entirely).
Frequent sources of disputes
Several issues frequently trigger disagreements in construction projects. The first is the work itself, or specifically, the scope of work. The lack of clarity about each party’s responsibilities often leads to conflict. Vague or incomplete contract terms can create confusion over who is expected to manage certain tasks.
Like the scope of work are change orders, in that there are disputes over the work to be performed. Adjustments made to the original contract, known as change orders, must be documented and agreed upon by all parties. Without proper communication and records, these changes can spark disputes related to cost and timeline adjustments.
Delays, delays and more delays
Finally, the next most common construction contract dispute arises from delays. Payment delays or disputed payments can strain relationships among contractors, subcontractors and clients. Ensuring that payment terms are well-defined and followed is vital for a smooth project flow.
Project delays too are the bane of construction projects. When a project runs late, disagreements can arise over who is at fault and who should cover added expenses. Contracts that clearly address timelines, penalties and who cover delays caused by numerous factors can help reduce confusion and reduce disputes.
Legal avenues for resolution
In Denver, construction disputes can be resolved through various methods, but the first order of resolution is to negotiate a resolution. The least formal option, negotiation involves open communication to find a mutually acceptable outcome before escalating the conflict. Ideally, if you have a well drafted contract, most, if not all, disputes should be solvable during good faith negotiations.
If mediation does not solve the problem though, mediation is a good next step that should also be included in your contracts. A neutral mediator guides both sides toward a voluntary agreement. Although not binding, mediation often preserves working relationships and resolves conflicts without the need for expensive litigation.
Arbitration can also avoid litigation. More structured than mediation, arbitration involves an impartial arbitrator who reviews evidence and issues a binding decision. It is generally faster and less costly than a full court proceeding, but the process looks and works much the same as a court proceeding.
Finally, if all else fails, litigation may be required. If other avenues fail, going to court may be necessary. In litigation, a judge or jury makes the final call. But, this route can be more time-consuming and expensive than the other options.