While the majority of construction projects end up largely fine, they are also areas ripe with opportunity for… friction.

Some of that friction escalates into full scale disputes, but most of it gets resolved one way or another.

But what if there were steps you could take that not only put you on the front foot in the event of a dispute, but also largely avoided disputes altogether because your position was so overwhelmingly correct?

While that might sound like idealistic claptrap, the fact is that most construction disputes that hit our desks contain many avoidable elements of uncertainty. And the answer to most of them lies in one word… clarity.

Clarity of Parties

Parties to a contract must be correctly identified and be actual legal entities.

Contracting with a trust but don’t know the trustee? Then we don’t know who your contract is with. Which means we don’t know who to sue…

Contracting with a business name but it’s not registered and there’s no ABN to search? Then we don’t know who your contract is with.

Thankfully this one is fairly straightforward:

1. Understand how different legal entities work; and
2. Do a few free searches before permitting a non-entity to supposedly sign a contract with you.

Clarity of Terms

In larger scale construction projects this tends to be less of an issue, but it does come up.

If you’re going to have a contract dispute, after “Do you have a contract?” the next question we ask is “What are its terms?”

Because, as you might predict, it’s hard to say that someone breached a contract if you can’t first say what the contract was.

When does this come up?

• starting work before the contract is signed;
• conducting negotiations but failing to incorporate them into the documentation;
• exchanging scopes, designs, or expectations without including them in the contract documents;
• referencing old versions of designs in your formal contract;
• doing pre-contractual investigations but failing to adjust the contract to allow for the findings.

It’s a huge problem, and it creates risk and uncertainty for you.

If something is discussed before the contract is signed, and its important – get it in the contract.

If it’s discussed after the contract is signed… insist on a variation, properly documented and agreed upon.

Clarity of Compliance

Within your organisation, who is responsible for ensuring that your company complies with the contract terms?

By which we mean specifically:

1. Getting the notices right;
2. Submitting the notices in time;
3. Deciding when and knowing how to escalate a dispute;
4. Escalating that dispute;
5. Documenting a resolution;
6. Claiming a variation;
7. Claiming an EoT;
8. Ensuring claims are compliant, comprehensive, and served properly.

There’s a long list beyond this one, but these tend to be the main “if only we had done this” categories that come up time and again.

Thankfully, it’s readily solved: get a proper contract review, get training on the contract, implement a chain of command to ensure it’s done.

Clarity of Variations

We understand that, in the real world, things move pretty quickly and contract administration isn’t always top of mind in the ebb and flow of daily project management.

But it should be fairly high on the list, because it would both save you money in disputes and improve your overall profitability on projects.

In particular, the complexity and sheer volume of documents within a larger contract that relate to scope, design and specification requirements can be overwhelmingly large.

However, these also form the foundation of what it is that you have been contracted to do. These, and time, are the most common areas of dispute and managing them under the contract avoids giving your counterpart a free kick to reject a claim or entitlement.

As a result, if something in those requirements changes then somebody on your team, ideally, should be ready and able to make sure that a variation is claimed under the contract within the time required.

Clarity on Delay

After scope and specifications, time and delay are similarly complex topics that often require specialist input.

In essence though, our comments about variations apply here too. Someone needs to be watching, understand the contract and its program, and making the call on when to submit a delay claim. Whether it will be rejected or not isn’t that relevant in the early stages – the point is to preserve your rights under the contract.

Clarity about “The Line”

This one is a little more ethereal.

But in any project, at some point you will have determined what it is worth to your company.

And as often as not, the profits on your project aren’t gobbled up in one massive issue – instead they are eroded, piece by piece, over a series of events that unfold during the course of the project. And many of those pieces relate to issues we’ve described above.

There’s a point at which a project might be turning into such a dog’s breakfast that you actually cannot continue it and hope that your company survives the experience.

So having someone who understands where that line is, spot how far away it is, and take a constant measure of how the project is tracking is an important piece of the contract administration puzzle.

Naturally there are complex decisions that might need to occur if the project margins are tightening right up, but having visibility on the risk allows you to at least make informed choices, have honest discussions with your project counterparts, and potentially address major problems rather than having them land on your desk after it’s too late.

Clarity on Disputes

Inevitably, the minor issues that have arisen during the course of a contract become a major issue at a single point: the final payment claim.

This is when all of the matters where someone decided to “not worry about sending a notice” come back to haunt you, typically in the form of a payment schedule with massive reductions.

And hopefully, none of this will come as a surprise because you’ve had your eye on these issues the whole way through and preserved your rights under the contract.

Now, however, you need to decide: is it worth the fight, how much will this cost, and what do I realistically hope to achieve?

Having eyes-wide-open clarity on the risk/benefit of a construction dispute is an important part of the process. That includes not just the raw legal costs, but naturally the commercial and opportunity costs that might arise as well.

Need Clarity? Give us a Call

An objective set of eyes on your situation can often help clear up anything that’s seeming a bit murky or unclear.

If you need help setting up your next construction project for success, or setting about clearing up some historical issues, then give us a call.