Construction Contract Disputes - Reasons, Avoidance and Resolution

By Hilal Itani

Posted: 11th January 2018 08:33

Innovation and technological advancements have reshaped the construction industry in many ways compared to what it was a few decades ago. However, this has not reduced the number of disputes that arise within the industry. Construction is currently regarded as one of the most conflict and dispute-ridden industries, which has resulted in it being one of the most claim orientated sectors.
 
Everyone involved in the construction process of any construction project – from the owners looking to have a construction project completed to contractors, subcontractors, suppliers, and even those on the financing end of things – all have a vested interest in a project that moves forward on time, on schedule, and without any bumps in the road as far as payment is concerned.
 
Unfortunately, like everything else in life, curveballs are inevitable to come down the line during any construction project that may cause the schedule, milestones, or payments to be pushed back, accelerated, or wiped out completely.
 
A conflict is bound to arise if parties start considering two or more competing courses of responses, options, or courses of action which are intended to satisfy predefined situations or events. Equally, a dispute will arise when the involved parties detect any threat posed to their concerns, interests, or needs.
 
Construction disputes are disruptive and can be costly for the parties involved. Starting out as disagreements, a small “difference” can quickly become a “dispute” if not quickly, efficiently and amicably resolved.
 
Causes of disputes
 
The complexity of a contemporary construction project, requiring the orchestration of numerous interdependent components including tools, information, materials, equipment and a large number of personnel working for independent engineers, contractors, and suppliers, add to the complexity of the disputes arising out of or in relation to them. Some key reasons are highlighted below: -
 
Avoidance of Construction Contract Disputes
 
Dispute avoidance strategies should be executed during the project planning and pre-construction phases. These strategies are geared to minimising disputes through appropriate contract administration. Over time, disputes and claims have taken a relatively informal resolution turn through early cooperation and avoidance interventions. These include;
Construction Contract Dispute Resolution Mechanisms
 
There are several ways to resolve construction contract disputes, but the first step is a meeting between both parties. Before escalation, the contract parties should meet and discuss. If there are others who have the authority to settle the dispute, then they should also be in attendance. This meeting can sometimes help in forming a solution which will save both parties time and costs. It is essential that this meeting be held on a 'without prejudice’ principle so that all parties will be free to make comments that cannot be referred to in a court of law. If a meeting does not yield any results, there are other processes that are available in settling the dispute.
  Conclusion
 
In recent years, the construction industry has made significant progress in developing alternate dispute resolution mechanisms. It is dispute prevention that has been a neglected aspect of the construction industry despite dispute prevention mechanisms available, as construction industry dispute prevention mechanisms are frequently disregarded when drafting construction contracts and dispute resolution clauses.
 
Avoidance of disputes should be the fundamental goal of contractors and owners. This is achieved through effective and reliable records, communication, and awareness. Potential disputes can be avoided if the conflicts are identified and resolved during their earliest stages; otherwise, a dispute with far-reaching consequences will develop. Amicable resolution of such disputes requires a deep understanding of each party’s needs, past experiences, and the basis for their position.

An accomplished claims/contracts management professional with more than 15 years of experience in contract management and claims consulting services within high-profile corporations. Hands-on leader administers construction contracts and claims along with arbitration cases; sustain project controllership, and strong working relationships among employees. Demonstrate a broad range of technical, personal effectiveness and leadership skills, as well as apply rigorous logic and methods to come up with actual solutions to difficult issues. Exhibits aptitude to deliver support for multiple priorities and cope with change. Possess written and spoken fluency in English and Arabic. Hilal Itani is the Managing Shareholder of H.I.F.C.C. FZE in UAE with its offices in Lebanon and United Arab Emirates. Hilal Itani is a Civil Engineer and possess two masters degrees Engineering Management and Construction Law and Arbitration. Hilal Itani is a member of the Chartered Institute of Arbitrators and a certified Planning and Scheduling Professional in AACE.

H.I.F.C.C. FZE is a newly established company in UAE specializing in claims and delay analysis, contract administration, planning and critical path method (CPM) scheduling, and arbitration. H.I.F.C.C. FZE benefits from the vast experience of its consultants in the fields water supply, office buildings, hotels and resorts, power stations, residential and commercial buildings, wastewater treatment plants, recreation facilities, ports and harbors, roads and highways, and healthcare facilities in Iraq, Turkey, Qatar, Lebanon, the United Arab Emirates, the Kingdom of Saudi Arabia, Kuwait, Jordan and Africa.  H.I.F.C.C. FZE provide specialized services in forensic claims consulting and claims management on behalf of contractors, subcontractors, and project owners. Such services include overseeing pre- and post-contract tasks and operations for tenders/projects; handling extension of time, escalation, and termination claims; conducting forensic time impact analysis; productivity matters as well as illegitimate termination cases. H.I.F.C.C. FZE  expertise covers various forms of construction contracts such as International Federation of Consulting Engineers (FIDIC) forms of contract and bespoke contracts in Qatar, the United Arab Emirates, and the Kingdom of Saudi Arabia.

Hilal can be contacted on +9613871240 or by email at hilal.itani@hifcc.net
 

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