The top 6 causes of construction disputes and how they are resolved
In 2022, the cost of construction disputes in the United States totaled $42.8 million. Unfortunately, construction disputes are widespread due to the complexity of most projects and the involvement of multiple parties and contractors. Construction disputes often happen due to a disagreement or misunderstandings between parties. Arbitration can be an effective way to handle a construction dispute, and is perceived by many to be faster and more economical than litigation.
No matter the size or scale of the project, construction disputes arise for many of the same reasons. Construction disputes are complex because they involve technical engineering or design concepts, logistical issues, contractors and subcontractors, or multiple individual claims within a construction project. From single-family dwellings to complex multimillion-dollar commercial buildings, here are the six most common causes of construction disputes:
Lack of written contract terms
Failure to document changes
Misinterpretation of contract terms
Improper site inspections
Damage from trade work
Conflict over budgets or project schedule
Resolution of Disputes Through Arbitration
Construction arbitration is a procedure that involves submitting a dispute to one or more arbitrators who make a binding decision that can only be appealed in very rare circumstances. It is a private construction dispute resolution procedure and does not involve going to court. The process may involve the business owner, contractors, subcontractors, architects, engineers, financial stakeholders, and suppliers.
Benefits of Arbitration
Other benefits to arbitration include:
Flexibility and control over the dispute resolution process
Protects professional reputation as arbitration matters are private
Offers the ability to select an experienced arbitrator with specialized construction knowledge, expertise, and legal understanding
Hilger Hammond is frequently engaged in arbitration both in the role as the advocate and as the arbitrator. If we could be a resource, please do not hesitate to contact us with any questions.