A construction dispute can lead to delays and litigation. Many disputes can be avoided with a strong contract.
It can help to understand how construction contract disputes happen and how they can be avoided. If you own a business or otherwise manage work within the construction industry, here is what you should know.
Payment disputes
A disagreement may arise about payment for a project. Parties may disagree with the price for the work done, the timing of the payment and additional costs. A contract can clearly state the financial obligations one party owes to the other for the completion of a project. A payment provision in a contract can include a timeline that payment must be made, how much is paid upfront and whether a party is required to pay in full upfront, in increments, or once a project is done.
Scheduling disputes
One party may want a project done at an early date, and the other may believe that a later date is necessary to complete a project in full. There may also be conflict about whether a party exceeded the timeline set out in a contract. Parties can agree to set a date for when a project should ideally be done. A contract can also outline what would happen if the project is not done by an agreed-upon deadline, such as extensions or damages.
Change of plans
The party requesting a construction project may request a change of plans once the project starts. These changes may alter the design that is already in construction, delay work and add to the cost of labor. A contract may stipulate what type of changes can be made to a project and under what circumstances. Parties may agree that any additions to the plans would lead to further costs and extended deadlines. However, a contract may also state that changes cannot be made after a set date to avoid confusion and additional issues.
Different interpretations
A confusing contract that includes nuanced language can make it hard for parties to understand what is expected from them. Parties may benefit from drafting simple, straightforward language for a contract to prevent different interpretations of either party’s obligations.
Cost increases
A project may become more expensive than initially discussed. This can happen when the cost of materials increases. A contract may clarify what would happen if the cost of a project goes beyond expectations and who is responsible for handling those expenses.
Creating a strong construction contract takes time. Seeking legal guidance proactively may help parties avoid conflicts down the road.