What happens when a construction claim is disputed
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onstruction disputes arise as a result of a perceived or real violation of a construction contract and the obligations set forth therein. Construction projects tend to have a large number of stakeholders, property owners, contractors, subcontractors and more, so even a well-planned construction project can run into problems. Disputes typically arise due to: • Cost overrun • Concealed conditions • Delay • Scope disputes • Surety bond claims • Builder’s risk • Termination • Schedule • Subsurface • Acceleration • Liens
• General liability • Default insurance claims • Inefficiency • Environmental issues • Impact • Design and construction defects • Professional liability • Default If a dispute to your construction contract arises, the first place to look is at the contract itself. The construction contract should explicitly spell out the forum to resolve a dispute. Below are some of the dispute resolution forums often included in construction contracts: • Arbitration • Partnering techniques • Technical Mediations • Technical Arbitrations • Litigation • Mini-arbitrations • Mediation
By Brian Sanvidge
• Early Neutral Evaluations • AAA (American Arbitration Association) • JAMS proceedings • International forums, such as ICC, ICDR and UNCITRAL Construction companies may find themselves on either side of a dispute. When a subcontractor does not meet its obligation of a construction contract, the general contractor may sue the subcontractor for a loss in profits, lost opportunities, hefty fines, a need for increased financing or even additional interest and operating expenses incurred. On the flip side, if a general contractor is unable to deliver on a construction contract, the property owner may bring a claim against the general contractor for any damages they sustained. When disputes occur, the parties will often find themselves at odds not only over liability but also over the Eastern Contractors Association 31
