Most construction disputes don’t start on site; they start with a badly drafted contract.
Often construction contracts are the most complex documents, created by using JCT or NEC templates, with several appendices and amendments that simply confuse and complicate matters. I get it, construction is complicated and it is often juggling several different matters and timelines at once. Sometimes it is best to simplify these and make them short and succinct, rather than baffling everyone involved with too many words.
At its core, the contract needs to state what is being done, who is responsible for what, how it is done, and what can happen if anything doesn’t go to plan. This is the basis of all contracts, whether you choose to go down the standard route of using JCT or NEC templates, or creating them bespoke.
The first essential is ensuring that it is clear on the works being done – ie the scope of works. This needs to be clear, detailed and specific. It should be clear which document refers to this, and which is to be relied upon. Too often contracts may include the contractor’s quotation, the employers’ requirements, a separate schedule of works and other documents, which may not be cohesive and match what is in the other documents. Generally, it is best to only include one of these documents, however if there are several you may choose to include an order of precedence within these to decide what happens in the case of conflict.
Who is responsible for what is the next important part of the puzzle, this can be linked to having a clear scope of works, however, can also relate to attendances, approvals and prep work. If a party gets onto site and finds that they cannot start anything, this will affect the programme and lead to disputes. Without these clearly set out, the works may not be able to be started or completed, and it may result in additional charges being incurred for providing this – something that nobody wants when you are already on site.
Then there’s the project timeline: start dates, completion dates, and milestone deadlines should be clearly set out. Disputes can occur where a client is delayed in completing the works, or sometimes it is just the illusion of such. Certain stages of construction may be more labour intensive or visible than others. Some construction disputes have occurred where one party believes that the other is not proceeding regularly and diligently with the works, whilst they may be entirely on track to compete
on time. Charges can be incurred where a party enforces acceleration or deceleration of the works, which may not be justified.
Next is payment terms. Your contract should clearly state the contract price, payment milestones, timelines for payment, and consequences for late payment. Further, the basis on which payments are calculated is vital – if this isn’t clear, issues are almost guaranteed. Each payment application may be argued as to whether that payment is due, as well as calculating any variation costs can cause issues. Whether each part of the works is broken down into costs and stages, bills and quantities are provided or if dayworks etc will apply.
Finally, when disputes occur, it should be clear how these are dealt with. Some contracts list an alternative dispute resolution method such as arbitration or adjudication. Some contracts include certain people to issue notices and disputes to in the first instance, and it should be clear who has the final say on any discrepancies or disputes.
A solid construction contract isn’t about mistrust – it’s about clarity. When everyone knows where they stand, projects run smoother and disputes are far less likely. Why would you wait until you run into issues when you can deal with them before they arise. Getting ahead of disputes and foreseeing them where you can will stop a shouting match on site, or the dispute affecting the actual works and their completion.