Between 2018 and 2020, construction disputes put out legal and related fees to the tune of $48.6 billion. In Massachusetts, disputes are time-consuming, a threat to reputation and damaging to relationships. These disputes also add up costs as legal matters can bring projects to a halt and result in unwanted fees.
What drives construction disputes?
Construction litigation involves disagreements between contract parties. One side sees a real or perceived violation and the obligations set therein. Lawsuits can arise due to:
- Incomplete or unsubstantiated claims
- Lack of understanding of contract terms
- Failure to administer the contract
Top driver construction disputes
Researchers collected data in 2020 across 410 projects in the country. These were the top causes of all construction disputes:
- Incorrect or incomplete design
- Deficiencies in workmanship
- Unforeseen physical conditions or adverse weather
- Change in scope
- Poor management of sub-contractor or supplier
- Management or administrative failing
- Installation failure
- Restricted or late access to the site
How to avoid disputes
One dispute can flip a job from profitable to a loss. Multiple disputes can even shutter a business. Here are some strategies for avoiding conflict.
Word contracts carefully
Ambiguous language is the foundation for most legal contract disputes. Draft your contracts with care, paying attention to provisions that impact compensation and extensions.
Monitor sites closely
Make sure teams are following mandated safety procedures. Comply with all approval and notice requirements, and document everything.
Stay on top of applicable regulations and laws
Manage local, state and federal requirements that affect projects as each can have its rules for mandatory clauses. Failure to comply increases the risk of construction litigation.
There has been a year-to-year uptick of 10% in disputes for several years. If the industry hopes to manage successful projects, there must be a concerted effort to have managers, suppliers, contractors and a supply chain that prevents disputes.