TOPIC 11- CONSTRUCTION DISPUTES

Created by

MIKAELA MARQUEZ

Cards (73)

CONSTRUCTION DISPUTE
CONSTRUCTION DISPUTE
FACTORS AFFECTING DISPUTES
TYPES OF CONSTRUCTION DISPUTES
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IMPACTS OF CONSTRUCTION DISPUTES
CONSTRUCTION DISPUTE AVOIDANCE AND MANAGEMENT
DISPUTE RESOLUTION
MECHANISM OF DISPUTE RESOLUTION
ALTERNATIVE DISPUTE RESOLUTION (ADR)
DOCUMENTS
ARBITRATION: A MACHINERY FOR CONSTRUCTION DISPUTES
JURISDICTIONAL BODIES
AVAILING CONSTRUCTION ARBITRATION
REQUIRED AND PROCEDURES TO INITIATE CONSTRUCTION ARBITRATION
ARBITRATION AWARD
CONSTRUCTION DISPUTE
It refers to disagreements, conflicts, or legal issues that arise during the planning, execution, or completion of construction projects.
CONSTRUCTION DISPUTE
It refers to disagreements, conflicts, or legal issues that arise during the planning, execution, or completion of construction projects. - It arises between the involved parties in a construction project such as:
Owner
Contractors
Subcontractors
Suppliers
Engineers
Architects
FACTORS AFFECTING DISPUTES
TERMS OF CONTRACTS
TECHNOLOICAL ISSUES
PROJECT CONDITIONS
PARTIES INVOLVED
MAGNITUDE
SITE CONDITIONS
DEGREE OF BIAS
THIRD PARTY
ORGANIZATIONAL
BEHAVIOR
CULTURE
TERMS OF CONTRACTS
Clear and precise contract terms are essential for effective construction management and dispute resolution. Ambiguity, omissions, or conflicts in contract terms often lead to disputes, causing delays, cost overruns, and legal battles.
TECHNOLOGICAL ISSUES
Inadequate technology infrastructure, compatibility challenges, data management and security concerns, lack of training and expertise, design and model coordination issues, and problems with automated systems can all contribute to disputes.
PROJECT CONDITIONS
Project conditions encompass various factors affecting construction projects, from site conditions to weather and regulatory requirements. Understanding these conditions is crucial in managing construction projects effectively and mitigating potential disputes.
PARTIES INVOLVED
Owners/clients, contractors, subcontractors /suppliers, design professionals, and regulatory authorities all play crucial roles in the success of construction projects.
MAGNITUDE
Larger and more complex projects often present unique challenges that can significantly impact the occurrence and resolution of construction disputes.
SITE CONDITIONS
Differing site conditions, inadequate site investigation, contractual risk allocation, change orders, and variations, as well as their impact on project schedules and costs, can all contribute to conflicts among project stakeholders.
DEGREE OF BIAS
Bias from differing occupational standpoints and cognitive influences can significantly impact construction disputes.
THIRD PARTY
The diverse interests and perspectives of third parties can complicate disputes over scope of work, quality, contracts, delays, liability, and resolution processes.
ORGANIZATIONAL
organizational factors such as training, communication, contract administration, payment practices, design, and specification management, change management, and project management solutions can all affect the occurrence and resolution of construction disputes.
BEHAVIOR
Behavior within construction projects significantly influences the occurrence, escalation, and resolution of disputes. The attitudes, actions, and interactions of project stakeholders can either mitigate or exacerbate conflicts.
CULTURE
Culture can have a significant impact on construction disputes, as it influences the behavior, communication, and expectations of the parties involved.
TYPES OF CONSTRUCTION DISPUTES
PAYMENT DISPUTES
SCOPE DISPUTES
SCHEDULE DISPUTES
DESIGN DISPUTES
QUALITY DISPUTES
SAFETY DISPUTES
PAYMENT DISPUTES
one of the most common disputes in the construction industry.
may arise due to the value of work completed
SCOPE DISPUTES
arises when the owner and general contractor disagree over the scope of work to be done.
lead to a change where it might not be mentioned in the contract.
SCHEDULE DISPUTE
arises when the construction schedule suffers delays or disruptions.
Weather, Unforeseen site conditions, and Labor shortages are some reason why it happen.
DESIGN DISPUTES
happens when the project owner and contractor disagree over the project’s design or specifications.
Ex. Unclear design, erroneous design, and something is missing from the design.
QUALITY DISPUTES
arises when the project owners and contractors disagree on the overall quality of the work completed.
Ex. Defective work, Incomplete work, and Inability to meet the required standards and regulations.
SAFETY DISPUTES
disagreements over safety issues on the construction site.
contractor does not follow the required safety standards.
IMPACTS OF CONSTRUCTION DISPUTES
PROJECT DELAY
COST OVERRUN
RELATIONSHIP DAMAGE
REPUTATIONAL DAMAGE
QUALITY AND SAFETY CONCERNS
PROJECT ABANDONMENT OR TERMINATION
PROJECT DELAY
Disputes can significantly stall project progress as parties focus on resolving disagreements instead of construction. - Disputes can cause delays in project completion, leading to missed deadlines and contractual milestones
COST OVERRUN
Disputes often lead to additional costs, including legal fees, expert witness fees, and the costs associated with resolving the dispute itself.
When a project gets delayed, it can lead to increased labor costs, material costs, and overhead expenses. These cost overruns can strain project budgets and profitability.
RELATIONSHIP DAMAGE
Construction disputes can strain relationships between project participants.
Tensions, mistrust, and adversarial attitudes may develop, making collaboration and communication more challenging.
Damage to relationships can have long-term implications, affecting future business opportunities and referrals.
REPUTATIONAL DAMAGE
News of construction disputes can tarnish the reputation of companies involved
Owners may be seen as difficult to work with, and contractors might gain a reputation for unreliability. This can make it harder to secure future projects.
QUALITY AND SAFETY CONCERNS
Disputes can divert attention away from quality control and safety management, increasing the risk of construction defects, accidents, and injuries.
Rushed decision-making, and strained relationships may compromise adherence to quality standards, safety protocols, and regulatory requirements, posing risks to project integrity and stakeholder well-being.
PROJECT ABANDONMENT OR TERMINATION
In extreme cases, unresolved disputes may lead to project abandonment or termination, resulting in financial losses, contractual breaches, and damaged relationships.
Abandoned projects may leave stakeholders with incomplete structures, financial liabilities, and legal liabilities, requiring costly remediation efforts and recovery measures.
CONSTRUCTION DISPUTE AVOIDANCE AND MANAGEMENT
EFFECTIVE CONTRACT MANAGEMENT
DOCUMENT CONTROL AND RECORD-KEEPING
REGULAR COMMUNICATION AND COLLABORATION
PROJECT MONITORING AND CONTROL
DISPUTES RESOLUTION CLAUSES
EFFECTIVE CONTRACT MANAGEMENT
Implementing clear and comprehensive contracts with well-defined terms, obligations, and dispute resolution mechanisms.
DOCUMENT CONTROL AND RECORD-KEEPING
Maintaining accurate and organized project documentation, including contracts, change orders, meeting minutes, and correspondence, to provide evidence and support dispute resolution efforts.
REGULAR COMMUNICATION AND COLLABORATION
Encouraging open and transparent communication between project stakeholders to address issues proactively, prevent disputes, and promote resolution
PROJECT MONITORING AND CONTROL
Implementing effective project management practices, such as regular progress tracking, schedule monitoring, and quality control measures, to identify and address potential issues early.
DISPUTES RESOLUTION CLAUSES
Including well-crafted dispute resolution clauses in contracts that outline the preferred methods of dispute resolution and provide a clear process for resolving conflict
DISPUTE RESOLUTION
is the process of resolving conflicts or disagreements between parties in a peaceful and constructive manner.
MECHANISMS OF DISPUTE RESOLUTION
PREVENTION
NEGOTIATION
BINDING RESOLUTION (ARBITRATION)
NON-BINDING
PREVENTION
Involves proactive steps to avoid disputes before they escalate.
It focuses on identifying potential issues and addressing them early.
PROCESSES:
• Risk Assessment
• Clear Communication
• Regular Review
• Training and Education
PROS:
• Early Intervention: Addresses issues before they become contentious.
• Cost Savings: Prevents costly legal battles.
• Preserves Reputation: Avoids public disputes.
CONS:
• Not Always Feasible: Some disputes are unforeseeable.
• Resource-Intensive: Requires ongoing effort.
NEGOTIATION
involves direct communication between parties to find a mutually acceptable solution.
PROCESSES:
• Positional Bargaining
• Interest-Based Negotiation
• Mediation
PROS:
• Flexibility: Parties control the process and outcome.
• Preserves Relationships: Allows for open dialogue.
• Cost-Effective: Generally, less expensive than formal proceedings.
CONS:
• No Guarantee: No binding decision; parties may fail to reach an agreement.
• Power Imbalance: One party may have more leverage.
• Emotional: Can be emotionally charged.
BINDING RESOLUTION (ARBITRATION) - Binding resolution methods provide a final decision that parties must adhere to.
PROCESSES:
• Arbitration
• Litigation
PROS:
• Certainty: Provides a conclusive outcome.
• Enforceable: Parties must comply with the decision.
• Expertise: Arbitrators/judges are knowledgeable.
CONS: • Costly and Time-Consuming: Legal proceedings can be lengthy and expensive. • Adversarial: May strain relationships. • Limited Control: Parties surrender control over the outcome.