Whether you are a general contractor, a subcontractor or a commercial property owner, problems can arise at any stage of a building project. A well-crafted construction contract helps you avoid disputes that may lead to litigation down the road.
Understanding contract complexities
According to the “Global Construction Disputes Report 2018” prepared by Arcadis, a design and consultancy firm, disputes over construction contracts are becoming more complex and expensive. The report also found that the length of construction disputes in North America averaged 17.7 months in 2017, representing an increase from 15.6 months in 2016.
Looking at causes
The report points to errors and omissions as the primary cause of disputes in 2017. Next was poor contract administration. The report also listed failure to understand or comply with contractual obligations, whether by the contractor, subcontractor or project owner.
With reference to 2017 construction projects, the report found that the most effective means of claims avoidance was contract and specification review. A willingness to compromise on issues early on was critical in either mitigating or resolving disputes. In fact, employing early resolution techniques had a success rate of 82 percent in reaching settlements.
The larger the construction project, the more opportunities exist for misunderstandings and disagreements among those who have a stake in the venture. Still, a construction project does not have to cost millions for problems to develop. Disputes can arise over the quality of work, failure to perform, change orders and contract terms. These issues can arise in a project of any size. Commercial builders may find fault with contractors or vice versa. Liens of various kinds can result from nonpayment or breach of contract. Those who have come to an impasse can explore their options under Florida commercial real estate law. Well-crafted agreements designed to reduce liabilities, minimize costs and protect assets can prevent contract disputes.