Avoiding Conflict in Construction

Dear Colleague,

Welcome back to another Nexus Consult newsletter, where all of your construction law confusions dissipate. ? ?

In this newsletter, you’ll learn about the most common causes of construction disputes and what you can do to avoid them, how the conflict avoidance process works, and how to submit a successful loss and expense claim. ? ?

Our director,?Scott Coulton , uses his years of dispute experience and construction knowledge to share his expertise with you in our newsletter. Throughout his career, Scott has worked on diverse projects across multiple sectors in the UK, Middle East, and South Africa, so he’s the best man for the job if you have any dispute questions or queries.

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What Are the Causes of Construction Disputes??

What Should We Do to Avoid Them

According to the?2023 Global Construction Disputes Report ?by Arcadis, the most common cause of construction disputes in 2022 was errors and/or omissions in the contract document, Owner/Contractor/Subcontractor failure to understand and/or comply with its contractual obligations, and poorly drafted or incomplete and unsubstantiated claims.

As well as this report, the?HKA CRUX Insight Sixth Annual Report? confirmed the global top causes of claim or dispute were change in scope, incorrect design and contract interpretation issues.? ?

Disputes are common in the construction industry and are often caused by three overarching dispute categories: uncertainty, contractual problems and behaviour. In our experience, the below are the most common types of construction disputes:?

• Poorly drafted agreements?

• Misunderstandings of the contract’s terms?

• Delays (such as supply chain disruptions or adverse weather conditions)?

• Unforeseen site conditions??

• Changes in project scope?

• Acceleration?

• Poor communication or a lack of collaboration?

• Design-related disputes?

• Disputes over payment claims?

• Disputes over quality.?

The above is by no means an exhaustive list; there are many reasons why disputes can occur. Luckily, there are several techniques you can employ to avoid a construction dispute altogether, such as:??

1. Clear contract documentation?– Good documentation prevents contract ambiguities, so if you want to avoid a dispute, make sure you include the project's specifics, address the circumstances, and outline the risks in the contract.???
2. Good management?– Correct management of the project and your responsibilities and duties during the project is one of the best ways to avoid disputes. Be proactive when planning; if there are any issues, ensure you communicate them as soon as possible.?
3. Record keeping?– Good records can quickly resolve any potential disputes. You should keep records of the labour, plant, and materials used during the project, as well as daily records of site activities.????
4. Good payment practice?– Paying for works correctly and promptly can prevent many disputes. Clients and employers need to pay their contractors and subcontractors according to the agreed-upon payment terms.?
5. Regular reporting and proactivity?– Regular reporting, such as minutes of meetings, progress reports, or photos of the site, can also help you avoid disputes and illustrate how you are following the contract.

You can follow and implement the above techniques to avoid construction disputes. However, if a dispute is unavoidable, Nexus Consult can help. Click the button below to learn more about our dispute management services.?

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How Does the Conflict Avoidance Process (CAP) Work??

CAP Perspectives: Client vs Contractor

Six years ago, the Conflict Avoidance Process (CAP) was established, and it continues to significantly help parties avoid expensive legal proceedings to resolve disputes at the time of the event.??

This government-endorsed procedure can be written into contracts or utilised on an ad hoc basis by agreement between the parties. Here’s how CAP helps both client and contractor, as shared by real people:? ??

Sue Barrett is currently the head of contracts and procurement at the Houses of Parliament Restoration and Renewal. Previously, she was the head of commercial for construction at TfL, so she’s had many instances where the organisation she’s working at has been the client in a CAP.??

When speaking about CAP, Sue said, “We used the CAP to bring projects in within their budget... One driver for CAP is that you deal with things in real time as you go along. A good example was when we had a complex issue on ground conditions. If we had gone to adjudication, we would have had programme experts, ground condition experts and it just would have kept going.” ??

Another issue emerged after the CAP panel helped Sue overcome the first hurdle. That’s when the CAP panel lead told the planner and the contractor’s planner to go away and agree on what they could and couldn’t resolve. The unresolved issues were then able to be discussed, and Sue and the commercial director reached a resolution (without the need for additional legal help).?? ??

CAP doesn’t only benefit clients, as the Strabag managing director, Andrew Dixon, can attest to for many of the contracts he has worked on. ??

Andrew explains, “A lot of the work we do is highly complex and unexpected things happen. It isn’t unusual to have a difference of opinion with clients over whether we’re entitled to additional time or payment because we’re working in really complex ground conditions, for example.” ??

He believes that CAP gives you the same quality of analysis, decision-making and application of the law to the facts as you get under the legal process. It’s a reliable decision.

Discover more about how CAP works for both client and contractor

How to Submit a Successful Loss and Expense Claim?

New Blog, Now Live!?

If you’ve not had a chance to read our latest blog yet, now is your chance. This month, we’re talking about loss and expense claims, including what a loss and expense claim is, what types of loss and expense claims there are, when you should submit a claim, and how to ensure your loss and expense claim is successful.? ?

Loss and expense claims are submitted by contractors and subcontractors to recover the financial losses or unexpected expenses resulting from events within the employer’s control. These events can range from project delays and variations to acts of prevention and defaults by the employer or their consultants.? ?

The four pillars underpinning any successful loss and expense claim are:?

• Cause?

• Effect?

• Entitlement?

• Substantiation.?

To ensure your loss and expense claim is successful, you need to familiarise yourself with each of the four pillars, which you can do in our latest blog (where you will also find practical tips to ensure success).?

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