Construction disputes result from disagreements between the investor and the contractor (or design-build entity) over various aspects of a construction contract. Conflicts can arise because of ambiguous contract provisions leading to different interpretations. Violation of contract terms can take many forms (failure to complete the project on time, construction defects, delayed payments). Furthermore, unexpected site conditions (different from the situation during tender) can give rise to construction conflict. Parties can also disagree overcompensation claims. Finally, disputes can result from poor record-keeping practices or changes occurring due to unforeseen circumstances (force majeure).
Construction projects focus on building industrial (warehouses, factories, etc.) and commercial (offices, retail stores, hotels) real estate facilities, civil infrastructure (dams, railways, highways, tunnels, bridges), institutional facilities (hospitals, stadiums, schools), residential buildings (condos, dormitories, townhomes), etc. Every construction project (traditional or design-build) involves long-term relationships and significant investments. Resolving disputes can sometimes be a matter of routine. In other cases, conflicts can quickly escalate, causing delays and incomprehensible costs.
Therefore, all participants in a construction project seek ways to prevent disputes in the first place. When a dispute arises, the number one priority is how to speed up its resolution.
Most disagreements stem from unclear, vague, and confusing contractual provisions. To avoid interpretation issues, use clear and concise clauses.
Creating a comprehensive, all-encompassing project plan contributes to dispute prevention. A proper project plan should define schedules, project dynamics, and timelines. It should identify constructors, subcontractors, designers, and sub-consultants, determining their roles and how to coordinate their activities to avoid disputes. Setting a project plan is necessary before work in the field begins.
Identifying risk in advance helps avoid disputes later. A comprehensive project plan should include the identification of typical risks for each stage of the project. That way, parties can anticipate problems before they arise.
When the dispute eventually arises, the vital question is how to resolve it quickly and effectively. Whatever you do, avoid litigation at all costs. Litigating construction disputes should be your last resort. Use it only if all other efforts fail. Going to court means engaging in a vindictive, adversarial process that can drag on for months or even years. Besides, it is a costly and ineffective way of resolving construction disputes, incapable of bringing reconciliation between disputed business associates who engage in open confrontation, trying to defeat each other. While one party may succeed in getting financial compensation, their business relationship irretrievably breaks.
If you are involved in a construction dispute in Florida, there are several methods you can apply to speed up its resolution. Below are the most common.
The internal conflict management system has two purposes. It helps avoid disputes by creating a plan and the procedures everyone must follow to minimize conflicting situations. On the other hand, when a dispute arises, it deploys mechanisms to resolve it quickly and without escalation. Internal conflict management comprises tools for tracking eventual claims, disagreements, and conflicts, enabling proper responses before disputes run out of control. That involves screening each protest, assessing its effects, and resolving disputes internally to avoid costs and delays in the construction project. Internal mechanisms are irreplaceable tools for speeding up dispute resolution, so project participants should allocate sufficient time and resources to enable their functionality.
The contract administrator is an independent third party that resolves the disputes resulting from a construction project. The contract administrator controls the construction contract, ensuring the progress of the work, verifying milestones, keeping records, etc. However, their role is dual. When a dispute arises, contract administrators can act as decision-makers, resolving the conflict internally between the investor and the contractor or between the contractor and its employees. Contract administrators are usually engineers, architects, or building surveyors.
Establishing a Dispute Review Board is another method of speedy construction dispute resolution. Complex construction projects (design-build, design-bid-build, etc.) involve frequent disagreements and claims, delaying the work and increasing the costs. A Dispute Review Board (DRB), consisting of independent experts, acts as a neutral player in avoiding or resolving the dispute. Unlike mediation and arbitration, contractual parties appoint DRB members at the beginning of the project, meaning it supervises the works throughout its entire performance. By monitoring construction progress, DBR members learn about the details of the project and the circumstances in which it develops. That enables them to advise investors, contractors, and designers during the projects, fostering negotiations between them whenever there is a disagreement. In addition, parties can submit their claims to the DRB if negotiations produce no results. In that case, the DRB can issue a formal nonbinding recommendation. Therefore, DRB enhances cooperation and communication between all construction project stakeholders during the project. When a dispute emerges, DRB recommendations increase the chances of speedy and peaceful dispute resolution.
When a construction dispute arises in Florida, the best way to resolve it is by using alternative dispute resolution (ADR) methods. To ensure your project is quickly back on track in case of a dispute, put ADR clauses in your construction contract. The most common clauses are a mediation clause and an arbitration clause. The mediation clause provides that the neutral third person (mediator) will facilitate negotiations between the contracting parties. An arbitration clause stipulates that the parties will entrust the resolution of their dispute to an arbitrator or panel of arbitrators who can issue a binding or non-binding decision. Often, a mediation will precede an arbitration.
No method can compare to mediation when it comes to speeding up the resolution of your construction dispute. Because of its neutral, confidential, and reconciliatory aspects, mediation will seem like another stage in the construction project. There are no disruptions, endless delays, and astronomical costs typical for litigation. The mediation is flexible and free from rigid litigation stages. That allows the disputed parties to avoid extra costs and months of delays. As a confidential dispute resolution method, it keeps secret business information out of public sight, saving your project from undue publicity and its side effects. The central feature of mediation is its reconciliatory effect. The mediator (a retired judge, attorney, or other experienced professional) holds sessions in a neutral and professional atmosphere, allowing the parties to express their concerns. Negotiations facilitated by a mediator help disputed parties settle their differences, finding common ground for future cooperation. That makes mediation the unique tool for overcoming any construction project disagreement quickly and effectively, resuming the work with little or no postponement.
Joseph P. Farina is a retired Chief Judge from the 11th Judicial Circuit and a certified Florida mediator.
Through decades of experience, Joseph distinguished himself from the competition as a top-notch mediator with construction dispute knowledge.
Using sophisticated negotiation skills and expertise in the subject matter, Joseph can help you get back on track as quickly as possible, resuming your construction project without delays.
To speed up the dispute resolution process, schedule your appointment today.