Constructive Solutions: Expert Tips for Construction Dispute Preparation
Legal disputes are immensely costly and time-consuming. By implementing effective project organization and risk management strategies throughout the project delivery lifecycle, owners and contractors can minimize the likelihood of disputes and protect their interests. Here are some essential practices to protect contractors and owners from construction disputes, as informed by the collective experience of our Dispute Resolution service line, a team with a proven track record of over 200 projects worldwide and boasting 150+ years of combined experience. As you will see, the most significant risk facing construction contractors is failing to invest in your project’s success.
At the outset of any project, the initiation phase sets the stage for the entire enterprise. Ensuring the delivery team’s objectives are well-defined and aligned with expectations is essential. This begins with a clear and understandable definition of the project’s scope in the form of a contract. A contract is a formal document that embodies the goals and documents an agreement on expectations between the owners and the various contractors that will deliver the project. If the contract clearly defines terms and responsibilities, it will establish a reliable framework for any unexpected developments during project delivery. Procedures for these eventualities, including processes for payment, change orders, and disputes, are crucial elements of that framework.
Once your contract is in place, you can assess risks, allocate contingency resources, and educate all stakeholders on their contractual obligations. These steps are crucial to setting up all project stakeholders for success. During preconstruction, delivery teams must thoroughly review plans and specifications to effectively identify risks, plan mitigation strategies, and obtain permits and permissions to undertake the activities specified in the project plan.
One of the most commonly identified risks facing projects is complications with the procurement of critical materials and unavoidable delays in the supply chains that bring those materials to the site. A thorough approach to risk assessment allows project teams to create a realistic schedule that accounts for market conditions and facilitates effective procurement.
Once construction begins, the primary objective of a high-functioning project delivery team is consistent communication. Establishing a scalable process for communicating and documenting the construction phase is how stakeholders ensure an accurate record of progress and clearly define the remaining time needed to finish the project. Good documentation processes like daily reports, digitized meeting minutes, and regular discussions of known and potential construction risks all contribute to a detailed record of the project’s progress.
It is also critical to remember that, in litigation, if it’s not written down, it didn’t happen. Third parties involved in disputes cannot rely on informal conversations to prepare their opinions.
Perhaps most importantly, having a project schedule that is updated monthly or bi-monthly is crucial because accurately identifying the critical path and near-critical paths is essential to prevent delays. It ensures effective resource management, risk mitigation, and contractual compliance. At best, these measures significantly reduce the likelihood of disputes later in the project lifecycle. At worst, having these processes in place ensures a comprehensive record of what work has been done, when it was completed, and by whom, providing a secure history of the project’s progress. This is required information for the expedient resolution of any dispute that arises and often helps defuse potential disputes before they are elevated to the executive level.
During project closeout, the focus shifts to ensuring the completion of the construction plan. This phase is also one of the highest-risk stages for disputes to arise as timelines tighten and pressure mounts to get the project across the finish line. Project teams can protect against future disputes during this time by developing and maintaining punch lists (sometimes called snag lists) and completion lists. These documents verify that the project meets all contractual requirements as laid out during the initiation phase. Establishing a detailed approach to closeout and promptly addressing any issues prepares contractors and owners for a smooth transition to operation. It also establishes a clear record of deliverables in the event of a dispute.
At the end of the day, owners and contractors can prepare themselves for disputes by preparing themselves for a successful project. Investing resources and committing talent to the process of information control and documentation, transparent communication between stakeholders, and comprehensive schedule updates are mutually beneficial to dispute mitigation and project delivery.
Upfront costs to implement these processes may seem steep, but they pale in comparison to the costs associated with dispute resolution and litigation. If this seems daunting, Aegis is experienced in providing project controls and dispute resolution consulting services for every phase of construction project delivery, from best practices training to dispute resolution services. If you cannot implement these best practices yourself or face a dispute, Aegis is here to consult on your dispute resolution and project preparation needs. Contact us at info@consultaegis.com.