“Of course everyone wants to avoid disputes”, exclaimed my domestic boss as she read my website bio. Her eyes sharpened by a career in communications; “Isn’t that obvious?”
What does my bio claim? That “Darren leverages off his strengths in construction law and alternative dispute resolution … [and] adds value by avoiding costly and inefficient disputes between the client and contractor.”
Unfortunately, this is not obvious to everyone, especially in construction. All too often differences between the client and contractor escalate to disputes that require adjudication.
Building Contracts
With this in mind, many standard form building contracts require the parties to bring differences to the contract administrator. A hope that conflicts can be nipped in the bud before they escalate to full blown disputes. The PSSCOC and SIA Minor Works contracts have such provisions. The SIA Building Contract 2016 D&B forms have it too, and even go so far as to require the parties to “perform this contract in good faith”.
This topic is important to me. I have always highlighted it when lecturing to future architects in the NUS practice module and the SIA’s Architectural Practice Course for profession exam candidates. Albeit an irony considering my credentials in arbitration and expert determination. But maybe not unexpected considering insights from my involvements in construction law and acting as an expert witness.
Reasons to avoid disputes
There are many reasons why disputes are undesirable. First to mind:
– the cost of litigation, arbitration or other ADR,
– the disruption to cashflow pending resolution,
– the negative effect on the culture, teamwork & synergy within the project,
– the burning of bridges to future working relationships,
– the loss of collaborative trust,
– the prioritisation of self-protection & hedging rather than of the greater good for the project.
But 3 reasons that are less considered:
(1) A dent to one’s reputation: word of mouth rendering the client as unreasonable and unfair, and the contractor as incompetent and claim-conscious.
(2) Opportunity cost: the lost opportunity for new projects and profit-making while the party’s time and resources are consumed in fighting the battle.
(3) The risk to project: the undesirable consequences to work quality, safety and site management as parties are distracted by their quarrel.
No doubt, undesirable consequences. Of course everyone wants to avoid disputes!
A hope that conflicts can be nipped in the bud before they escalate to full blown disputes.