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Construction contract disputes: how they happen and steps to take

If you work in the construction industry, you know how incredibly complex the average building project is. So many different parties are involved, all with their own fields of expertise. Add to that the inevitable surprises in virtually every project -- weather and hidden pre-existing conditions being two of the biggest variables -- and you can almost count on there being a problem that must be resolved.

If you're not an industry veteran, these problems can be extremely stressful because you may not know how to approach them. Property owners who are new to construction contracts would do well to understand the basics of a dispute: the most common reasons, who is typically responsible for resolving them, and what the steps are to ensure the project is completed as quickly and smoothly as possible.

First, understand that like any other dispute, disagreements involving construction contracts can quickly devolve into a blame game with the general contractor, architect/engineer and owner all pointing fingers at each other. It's natural, especially when large amounts of money are at stake. But do your best to stay focused on resolving the issue. Failure to do so can easily result in delays, which will cost even more time and money.

Most disputes boil down to unexpected changes in the work or poor communication and documentation in the drawings. Changes to the work are usually the result of concealed conditions (it can be impossible to know what's really behind a wall until it's torn down) or defective work. Correcting those problems raises the cost. Other times, the problem starts with the architect's drawings (perhaps there's a conflict with where lighting and ductwork intersect) but isn't discovered until well into construction.

Problems like these can often be resolved through regular conversation if they weren't specified in the contract. But if the dispute escalates and the parties can't agree on who's responsible for swallowing the extra costs, they can arrange a formal negotiation where all of the factors can be examined more closely and cause and effect determined.

If a formal negotiation doesn't resolve the dispute, arbitration is the next option. In fact, this step is often stipulated in contracts to avoid lawsuits, which are very costly and can drag out a project for years. If one or more parties does choose litigation, it's crucial that all documentation of the project thus far is as clear as possible; missing, sloppy or confusing documents do not bode well for parties in the courtroom.

If you're in the throes of such a dispute, you don't need to wait for this litigation step to consult a lawyer who practices construction law. An attorney well-versed in this very complex area of law can be a cost-saving ally at any stage in the process.

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