CONSTRUCTIO

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• Arises when there is disagreement or conflict between the
contradicting parties.
• A dispute implies an assertion of a right (claim) by one
party and repudiation therof by another.
• Construction disputes vary in nature, size and complexity,
but they all have a common thread; they are costly both in
terms of time and money and are often accompanied with
the destruction of individual and good working
relationships
 TYPES OF
CONSTRUCTION
DISPUTES
1. Technical Construction
2. Design and Defect
3. Penalty, time and Delay
4. Professional Negligence
5. Sub-contract
6. Breach of Contract
7. Liquidated and Ascertained damages
TECHNICAL CONSTRUCTION DISPUTES
• Avoiding construction disputes requires
understanding of the contractual terms,
early nonadversarial communication, and
understanding of the causes of claims.
 DESIGN and DEFECT DISPUTE
• Often no planning or sequencing is given to the
release of design information, which then impacts
on construction. Equally, the design team
sometimes abrogate their responsibilities for the
design, leaving the contractor to be drawn into
solving any design deficiencies by carrying out that
part of the work itself to try to avoid delays, and,
in doing so, innocently assuming the risk for any
subsequent design failures.
• Building defects disputes are expensive in terms of
money, time and effort.
 Penalty, time and Delay Dispute
1. If the contractor fails to complete the
works by this date, it is usually
required to pay a predetermined
amount to compensate the employer
for the losses suffered by the employer
as a result of such delay.
Professional Negligence Dispute
 Sub-contract Dispute

• A dispute with a subcontractor is usually

around contracts, payments disallowed
costs and the timing and/or quality of the
work done.
• A dispute with a subcontractor can delay
your project and cause major problems
for both the contractor and the employer.
 Non payment, Breach of Contract

• A contract creates certain obligations

that are to be fulfilled by the parties
who entered into the agreement.
Legally, one party's failure to fulfill any
of its contractual obligations is known as
a "breach" of the contract
 Liquidated and Ascertained damages

1. Liquidated and ascertained damages

(LADs or LDs) are a predetermined
measure of damage agreed between
parties to a construction contract
before the contract is finalised.
COMMON CAUSES
OF
CONSTRUCTION
DISPUTES
1.
 ACCELERATION
• It is not uncommon for commercial property
owners to insist upon acceleration of a
construction project. Such examples might
include the completion of a major retail scheme,
and the need to meet key opening dates or
tenant occupation in an office development. The
construction costs associated with acceleration
are likely to be less than the commercial risk the
developer may face if key dates are missed.
• The circumstances surrounding acceleration
are often not properly analysed at the time
the decision is made, and that inevitably
leads to disputes once the contractor has
carried out accelerative measures and
incurred additional costs only to find that the
developer refuses to pay
 CO-ORDINATION
• In complex projects involving many
specialist trades, particularly mechanical
and electrical installations, co-ordination is
key, yet conflict often arises because work is
not properly co-ordinated. This inevitably
leads to conflict during installation which is
often costly and time-consuming to resolve,
with each party blaming the other for the
problems that have arisen.
 CULTURE
• The personnel required to visualise,
initiate, plan, design, supply materials
and plant, construct, administer,
manage, supervise, commission and
correct defects throughout the span of a
large construction contract is
substantial. Such personnel may come
from different social classes or ethnic
backgrounds
• Major international construction
projects may employ or engage people
from different nationalities and
cultures. Forming a teamwork
approach across cultures can be very
difficult where each culture has its own
values.
 DIFFERING GOALS
• Personnel engaged on a large construction
contract are likely to be employed by one of
many subcontracted firms, including those
engaged as suppliers and manufacturers.
Each of these firms may have its own
commitments and goals, which may not be
compatible with the others and could result
in disputes.
 DELAYS
• Disputes frequently arise in respect of
delays and who should bear the
responsibility for them. Most
construction contracts make provision
for extending the time for completion.
The sole reason for this is that the
owner can keep alive any rights to delay
damages recoverable from the
contractor.
 DESIGN

• Errors in design can lead to delays and

additional costs that become the
subject of disputes. Often no planning
or sequencing is given to the release of
design information, which then
impacts on construction.
 ENGINEER AND EMPLOYER'S
REPRESENTATIVE
• The personality of the engineer or the
employer's representative and their
approach to the proper and fair
administration of the contract on behalf of
the employer is crucial to avoiding disputes,
yet a substantial proportion of disputes have
been driven by the engineer or the
employer's representative exercising an
uneven hand in deciding differences in favour
of the employer.
 PROJECT COMPLEXITY
• In complex construction projects the
need to carry out a proper risk
assessment before a contract is
entered into is paramount: yet this is
often not done.
 QUALITY AND WORKMANSHIP
• In traditional construction contracts,
disputes often arise as to whether or not
the completed work is in accordance with
the specifications. The specification may be
vague on the subject of the dispute in
question, and each party to the contract
may have a different view on whether the
quality and workmanship is acceptable.
 SITE CONDITIONS
• If the contract inadequately describes
which party is to take the risk for the
site conditions, disputes are inevitable
when adverse site or ground
conditions impede the progress of
work or require more expensive
engineering solutions
 VARIATIONS
• Variations are a prime cause of construction
disputes, particularly where there are a
substantial number, or the variations impact
on partially completed work or are issued as
work is nearing completion. The nature and
number of variations can transform a
relatively straightforward project into one of
unmanageable complexity.
DISPUTE RESOLUTION
METHODS
• NEGOTIATIONS
• MEDIATION and CONCILIATION
• ADJUDICATION
• EXPERT DETERMINATION
• LITIGATION
• ARBITRATION
 NEGOTIATIONS
• is a process of solving disputes with
discussion and arguments.
• A negotiation clause basically includes the
agreement that if a cause for a dispute
should arise between a contractor and a
project owner, these parties will attempt
to reach a just and satisfactory resolution
between themselves before moving on to
other means.
 MEDIATION
and CONCILIATION
• is a process in which a third
party/mediator is involved in resolving
disputes without any legal binding.
• should be voluntary
• There must be a Neutral third party to
assists the parties towards settlement
• Non binding unless aggrement is reach
 Mediation Process
• Pre-Mediation
• Direct and Indirect Mediation
• Post Mediation
Benefits:
• Faster and cheaper disposal of disputes
• More satisfactory outcome to the
disputes
• Minimizes further disputes
• Open channels of communication
• Preserves and enhance relationship
• Empowers parties
 ADJUDICATION
• The aim is for adjudication to provide a
fast answer to a dispute, which is
binding on the parties, and which can
be enforced through the High Court.
• The Adjudicator will set the procedure,
and commonly will determine the
outcome on the basis of written
submissions.
• The adjudication method also includes a
neutral third party but unlike with the
mediation method, the adjudicator will give
a decision, whereas the mediator will assist
parties in finding the resolution. Adjudication
clauses typically also include the possibility
of applying to a court to enforce the
adjudicator's decision, if the dispute is not
resolved by the decision itself. It is a cost-
efficient method which helps operations
proceed while the dispute is resolved.
• Adjudications, although now the
common method of dealing with
construction disputes, can be highly
technical, and involve complex
questions of law. The consequences of
an adverse ruling in an adjudication
can be, and often is, very serious.
 EXPERT DETERMINATION
• Expert services are hired for the dispute resolution.
• An alternative to mediation is expert determination
which is used to resolve disputes of a specialist
nature or in cases where there is a valuation dispute
requiring a specialist's opinion. Though the
determination cannot be legally enforced either, if
the parties agree to this type of resolution it may
save them from more time-consuming procedures.
 LITIGATION
• Is the process of acquiring legal
assistance from the court for dispute
resolution
• litigation is usually also included in the
dispute clause, in case the parties do not find
any other way to resolve the issues that have
come up. Litigation involves a trial and is
legally binding and enforceable, though it
can also be appealed. Litigation can be by far
the most thorough, complex as well as slow
and costly way of resolving a dispute. This is
why parties will typically attempt a number
of other resolution methods before opting
for litigation.
 ARBITRATION
• in which parties seeking resolve are legally bound to
comply with the third party's decision
• In arbitration parties agree to the arbitrator who has
the relevant experience to engage in the matter. The
arbitrator considers documents and facts that concern
the situation, and can make a decision that favors one
side if the parties fail to achieve consensus. Arbitrations
can be legally binding, depending on the jurisdiction.
The costs of arbitration can be significantly higher than
that of other methods, sometimes even as high as legal
proceedings.
• Arbitration is also a common method of
dispute resolution which is often found in
building contracts.
• The essence of arbitration is that it is a
private method of dispute resolution, and
the Arbitrator will be a construction
professional who would be expected to
understand the technical issues.
 ADVANTAGE:
• A formal judicial process
• Decision can be imposed
• Best suited for technical dispute
• Expert legal and technical advice
• Interim rerelief can be granted
• No publicity involved