Disputes in the construction industry are inevitable due to the length of most contracts as well as unforeseen problems that may only materialise during the course of a project. Additional works, for example, may be requested by an employer or otherwise become necessary because of a previously unknown issue discovered on the site. These scenarios lead to the length of the project being extended as well as costs being increased. Often, this would lead to a dispute between the parties.
In other cases, the employer may want to claim against the contractor for defective works or find themselves in dispute with a professional consultant (an architect or engineer) for shortcomings in the design or a failure to supervise the work. Contractors and professional consultants themselves may claim for non-payment of fees.
Once a dispute occurs, the appropriate method of dispute resolution must be adopted in order to ensure swift and cost-effective conclusions. Often, litigation would be the least ideal course of action, as the time expended would increase the delay in the project. As construction contracts often have a number of sub-contractors coming on and off the site, delay in payments due to lengthy litigation would further jeopardise project delivery. The costs of litigation also happen to be disproportionate, which necessitate disputes to be resolved using less expensive means.
Parties to a construction dispute have the following ADR options available to them:
- Adjudication - adjudication is a statutory right introduced into UK construction contracts by the Housing Grants, Construction and Regeneration Act 1996. It provides a temporarily binding decision which must be complied with until overturned or varied by a court or arbitration. The intention of adjudication is to resolve disputes quickly (an adjudicator is required to reach a decision within 28 days of its referral) during the course of a contract so that money keeps flowing and work can continue without (or with only minimal) delay.
- Arbitration - like a court, except it offers you confidentiality as well as swift and binding judgment. You may find that obligatory arbitration in the event of a dispute is a term in your contract. The outcome of arbitration (the award) is final and binding on the parties (link to arbitration page).
- Mediation – involves an impartial third party facilitating negotiations between parties with the aim of reaching a settlement that is mutually beneficial. Read more here (link to mediation page).
