Blog 043 -The Game of Disputes - Win by Avoiding the Fight

When you play the game of thrones, you win or you die. There is no middle ground - Cersei Lannister (Game of Thrones).

This applies to disputes, win or lose, no middle ground, your best bet is to avoid the dispute and optimise the middle ground!

In the demanding world of construction, few things are as draining or damaging as a contractual dispute. For Specialist Contractors, the prospect of entering a dispute often feels like a "lose/lose situation", where even a 'win' can come at a significant financial and reputational cost. If it is the Specialist who is out of pocket and initiates the dispute resolution procedures, even if successful in adjudication, they can be tarnished as a 'troublemaker'. How do you win this lose/lose situation? The only answer is to avoid it altogether. Avoiding disputes prevents tying up costly resource and enabling you to focus on delivering new work.

Here are the simple steps to avoiding disputes in the first place:

1. Write good scopes. The responsibility for a clear scope lies with both parties. While the Main Contractor drafts the scope, the Specialist Contractor should proactively read and comment on it until it is agreed as an accurate and detailed description of the works. As the true experts in their field, Specialist Contractors are uniquely positioned to identify potential ambiguities or omissions in a scope.... Detailed scoping reduces the likelihood of unexpected variations and ensures everyone understands the project's requirements. Always remember, scopes should include clear schedules of attendances, outlining what the Main Contractor or Employer will provide to assist your works. I have provided one for in the downloads section of my website, so there is no need for this to become a point for dispute in your contracts anymore.

2. Agree good contracts. A strong contract starts with a good scope, as mentioned above. Other essential elements to include are precise wording regarding the time taken to complete the works, the price of the works, and the specific contract clauses the parties are to be bound by. My suggestion will always be to use an unamended or minimally amended standard form contract, such as JCT or NEC. However, in the real world, these forms are often heavily amended. To minimise disputes, remove clause amendments that are not relevant and ensure that any amended clauses are done so for good reason, are equitable, and unambiguous. Use practical solutions when constructing contracts, including specifying clear terms for variations, extensions of time, and payment. Be particularly wary of "All Risk Lump Sum" contracts, which are often designed to pass all risk down to the Specialist Contractor.... Always negotiate clear caps on your liabilities, especially for Liquidated Damages, and seek "holiday periods" or incremental scales of damages where appropriate to protect your business.... Remember, a contract should work for both parties, ensuring a fair distribution of risk and responsibilities.

3. Do good work. Beyond contractual obligations, your reputation is everything in this industry. Delivering high-quality work, without compromising safety or standards, is crucial for fostering trust and securing future opportunities.... Good work inherently reduces the likelihood of defect claims and expensive rectifications down the line.

4. Be a good team mate. Construction is inherently collaborative, relying on effective interface management and strong daily working relationships. Good clients and good Specialist Contractors operate as a team, akin to the 'Early Warning' and 'Risk Reduction' strategies found in NEC contracts. Proactive communication and mutual problem-solving can de-escalate issues long before they become formal disputes.... Avoid taking everything 'on the chin' without tracking the true cost, and ensure relationships are two way!

5. Give good warning. Do not delay in formally notifying your client of potential issues that could affect your time or cost. This aligns with the 'Early Warning' principle and provides your client with the opportunity to collectively mitigate problems. Ignoring potential issues in the hope they resolve themselves is a common pitfall that can lead to larger, more entrenched disputes down the line. Keep accurate records, daily site diaries, and plenty of photographs to support your position and ensure transparency.

Despite best efforts, disputes can arise. It's a stark reality that each year, the UK construction industry sees between 2,000 and 2,500 adjudications, with a significant 90% going unchallenged. While mechanisms like JCT's new Dispute Adjudication Board (DAB) clauses are being introduced, they remain largely untested and may not be a complete solution, potentially leading to further proceedings. This underscores the immense financial and reputational burden of disputes, highlighting why proactive avoidance remains the Specialist Contractor's most effective strategy....

For Specialist Contractors, avoiding disputes isn't just about sidestepping costly battles; it's about safeguarding your cash flow, reputation, and the very future of your business.... By adopting these proactive measures, you can transform the 'lose/lose' scenario of disputes into a genuine win for your business and your client.

If you want to discuss how to implement these strategies, strengthen your contracts, or navigate any potential issues, drop me an email and let's have a conversation.