The construction industry is known for being one of the most litigious, with disputes arising from poor communication, incomplete information, and other issues. These disputes can result in costly legal fees, delays, and lost productivity. In this blog, we'll explore the causes of construction disputes and discuss strategies for avoiding them by using a Site Diary.
Why are construction disputes so costly?
Construction disputes are costly for two reasons.
Firstly, construction disputes can lead to expensive litigation if parties don’t agree on a resolution.
Secondly, construction disputes often involve multiple parties, which means the dispute can drag on for months or even years. In order to understand why this is so costly, it’s important to understand how construction disputes arise and what kinds of things cause them to escalate into lawsuits.
The best way to avoid construction disputes is to start with a solid contract.
A good contract will help you plan, manage, and execute your project successfully—and avoid the potential for costly disputes down the road. The best contracts are based on a thorough understanding of all parties’ interests, so that all parties know what they need to do when they need to do it, and how much money is involved.
There are many issues that can lead to a dispute, but some occur more frequently than others.
What are the common causes of construction disputes?
Most construction disputes most commonly arise from some combination of the following issues;
1. Scope Clarity
The Contractor perhaps did not fully understand the extent of the work at time of tender, or the client might have interpreted their bid as something entirely different to what the Contractor was actually planning to do. A lack of clarity at an early stage can spiral out of control by the time works start to be undertaken on site. Yes, numerous RFI’s (Request for Information) can be submitted but this often does not fully clarify matters until physical works begin.
2. Scope Change
This can range from changes to design, to an extended completion time due to access changes. This type of change is common and almost expected in rail construction projects but the trouble arises when it is not properly documented in the daily report.
Key access times, associated resources and the impact on the works, compared against the plan, are all key bits of information that are fundamental to understanding and substantiating the impacts of scope change.
3. Ground Conditions
The responsibility for ground conditions varies wildly between Contract type but the impact of unforeseen conditions usually severely impacts all parties.
Advanced investigation allows project teams to mitigate against this risk, but is not always possible or as effective when working on vast linear infrastructure. Most issues are unfortunately only discovered when commencing the main works on site and can therefore result in delays or significant extra effort to complete the works.
When this happens, it's important for both parties to be open about the situation and work together to find a resolution that works best for everyone involved.
Construction disputes cost time, money and effort.
Construction disputes can be costly for all involved. Disputes can result in legal fees, delays and lost productivity, as well as unexpected costs when parties need to pay for expert witnesses or arbitration services.
In order to avoid these costs, it’s important that you keep accurate records of your worksite’s activities at the time of project completion. This will help you prove your case if you need to take legal action against an uncooperative party in the future.
In addition, it’s important to document your work as it progresses. This can include photos or videos of the construction process and any changes you make along the way. You should also keep track of receipts for materials and services that are purchased for use on the project.
A Site Diary can help you manage and avoid disputes.
With the right tools, you can prevent and manage disputes on your projects.
A Site Diary is one of these tools. It's a logbook that records all relevant information about a project—from planning through completion—to help you manage it and avoid disputes later on.
If you’re not already keeping a Site Diary, here's why it should be high on your to-do list:
- Document Project Information: Clearly document all project information in your Site Diary, including schedules, progress updates, and any issues or changes that arise. This will provide a clear and accurate record of the project's progress, which can be useful in resolving disputes.
- Regular Review and Update: Regularly review and update your Site Diary, and make sure that all relevant parties have access to it. This will ensure that everyone is on the same page and that any issues can be addressed quickly and effectively.
- Record Communications and Meetings: Use your Site Diary to document all communications and meetings related to the project, including any decisions that are made. This will provide a clear record of who said what and when, which can be crucial in resolving disputes.
- Visual Documentation: Include photographs and other visual documentation in your Site Diary, as these can provide valuable evidence in the event of a dispute.
- Sign and Confirm: Make sure that all parties involved in the project sign and confirm the contents of your Site Diary on regular basis, this will ensure that the contents of the diary are accurate and can be relied on in case of any disputes.
- Timely Resolution of Issues: Use your Site Diary to document any issues that arise and the steps taken to resolve them. This will demonstrate that the issues were addressed in a timely manner and can help prevent disputes from escalating.
- Compliance with Regulations: Document any inspections or approvals from relevant authorities in the Site Diary to demonstrate compliance with regulations and codes. This can help protect against disputes related to non-compliance.
- Cost Tracking: Use your Site Diary to track costs associated with the project, including materials, labor, and equipment. This will allow you to identify and address any cost overruns and can help prevent disputes related to cost.
- Weather and Site Condition: Keep record of weather conditions and site conditions on a daily basis. This will help to avoid disputes related to weather and site condition which is affecting the construction schedule.
- Third-Party Involvement: Document any involvement of third-party consultants, subcontractors, or suppliers in the Site Diary. This will provide a clear record of who was responsible for what and can help resolve disputes related to third-party involvement.
In conclusion, a Site Diary is an essential tool for avoiding costly construction disputes. By documenting project information, regularly reviewing and updating the diary, recording communications and meetings, including visual documentation, making sure that all parties sign and confirm the contents, and timely resolution of issues, you can ensure that you have a clear and accurate record of the project's progress.
However, it's worth noting that relying solely on paper or Excel for site diary recording can present several problems. For example, paper diaries can easily be lost or damaged, and Excel spreadsheets can be prone to errors and inconsistencies.
Furthermore, paper diaries and Excel spreadsheets can be time-consuming to update and difficult to share with all relevant parties. This can lead to delays in resolving disputes and added costs for legal proceedings.
A specialist digital tool for site diary recording offers a solution to these problems. Digital tools can provide real-time updates, automatic backups, and easy sharing of information with all relevant parties. Additionally, digital tools often include features such as automated reminders and alerts, photo and video documentation, and the ability to easily generate reports. These features can help to ensure that all information is accurate, up-to-date, and easily accessible. This can greatly aid in resolving disputes quickly and efficiently, ultimately saving time and money.