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Common causes of contract disputes in the construction industry

With so many factors involved in construction, it's inherent that there will be disputes between contractors and employers, or other involved parties. The most frequent contestations arise from issues with the contract. It's important to know the common causes of contract disputes so you can avoid them and recognize when litigation is necessary.

The contract contains errors and omissions

In 2014, errors and omissions were the primary reason for construction disputes, according to National Real Estate Investor. The bigger or more complicated a project is, the likelier there will be errors. Many of the problems are due to not being specific enough in discussing the scope of work, leading to different interpretations of each party's obligations. The contract needs to be clear and detailed about expectations to ensure everyone knows and fulfills their duties properly. Consider having an attorney review the contract to eliminate errors, omissions and ambiguity. Also, double-check the design and dimensions before beginning construction, and thoroughly document all amendments to the plans and contract.

The parties don't understand or administer the contract correctly

Sometimes misunderstandings and noncompliance are the result of mistakes, vagueness or missing specifications in the contract. Other times, they can happen because people have different ideas and perspectives on information. What may be clear to one person may not be to another or may mean something different than intended. Communication is vital in preventing conflict. Make sure that all parties have the same understanding of the contract.

The contract has ill-defined or incomplete cost estimates

Money is often the root of most business arguments, and it's no different in the construction industry. Costs that are unclear or incomplete lead to disputes when projects end up going over the proposed budget. Clients don't want to spend more money than they expected to. In bidding a particular job, the definition of the scope of work must be precise so that the estimate will be as accurate as possible. Disputed projects are usually over budget and late, so avoiding these two problems may reduce the chance of litigation.

What to do if you have a dispute

Unfortunately, no amount of preparation and clarity can guarantee there won't be any contract disputes. Some clients may be difficult to work with or find fault no matter what you do. If you find yourself facing a legal battle, you need to hire an attorney with experience in construction litigation. Having the right representation can save you time, money and your reputation as you settle the dispute.

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