Lec4 Cem124 Construction-Conflicts

Confronting Construction Conflicts
Confronting Construction Conflicts
• During times like these, when the world is

experiencing economic troubles and money is
tight, disputes often arise because
construction project participants are not as
willing/able to compromise and use cash to
smooth over the rough spots. As a result,
many of these disputes ultimately must be
resolved in the legal system.
Types of Conflicts
Following is a sampling of the types of conflicts that
frequently arise as the subject of either litigation or
arbitration on a construction project.
• Plans and specifications/scope of work — Disputes
over the contract scope of work, represented by
the plans and specifications (as modified or
amended), are some of the most significant areas
of dispute on a construction project.
– Typically occurring between the owner and the general
contractor/subcontractor, contractors and design
professionals often interpret the documents differently,
particularly if the description of the work in the
plans/specifications is unclear or ambiguous — or when
the plans are contradictory to the specifications.
Types of Conflicts
– Presumably, the purpose of the request for

information (RFI) process is to handle problems
related to the interpretation of the
plans/specifications. However, that process often
fails for a number of reasons, among them being
the delay in responding to RFIs, the failure or
refusal of the design professional to acknowledge
or recognize problems, the crossover between
project design and construction means/methods,
and the contractor's abuse or misuse of the RFI
process.
Types of Conflicts
• Shop drawings and submittals — A corollary to

disputes arising from the plans/specifications
are disputes arising over shop drawings and
other submittals.
– Primary among these are delays, either in the
timeliness of the contractor/subcontractor
submitting shop drawings and submittals or in the
design professionals responding back in a timely
fashion.
Types of Conflicts
• Change orders/extra or out-of-scope work —

Typically, disputes over change orders and
extra work or out-of-scope work boil down to
the change order price and whether or not the
contractor/subcontractor is entitled to extra
time.
– Frequently, the owner requests pricing for the changed
work but then disagrees with that price and time extension
request — ordering the work to proceed as scheduled.
This situation leaves the parties to fight over the amount
and time at project's end.
• Differing site conditions — There are two
different approaches regarding the owner's
responsibility for existing site conditions.
– The majority approach is that the owner has the duty to
disclose all information in its possession. Even if there are
no studies, the owner warrants that the construction is
feasible and cannot contract away that implied warranty.
Therefore, general exculpatory clauses arguably do not
relieve the owner of its warranty.
– The other minority approach — only applicable to public
owners — is to enforce exculpatory clauses that put the
responsibility for site conditions on the contractor. This is
only if the owner has engaged in fraud or intentional failure
to disclose known information.
• Construction sequencing/project access —
The owner typically warrants that the
contractor/subcontractor will have access to
the project site.
– Disputes arise, for example, when the owner fails
to provide access particularly in remodels of
occupied buildings, to obtain required permits or
easements, to coordinate multiple prime
contractors, or to timely provide owner-supplied
equipment.
• Subcontractor substitution — In the public
setting, disputes over subcontractor
substitution occur relatively often in those
states that have legislation to protect
subcontractors from bid shopping and bid
peddling.
– Private owners often provide a requirement in their
contracts that they must approve subcontractors.
• Construction defects — During the course of
construction, the owner may identify work that
is not in conformance with the
plans/specifications.
– If the contractor/subcontractor does not agree with
the owner's assertion of that defective construction,
a dispute arises.
– Typically, both the general contract and
subcontracts allow the owner and general
contractor, respectively, to order the removal and
replacement or repair of the allegedly defective
work
Termination
• Termination, whether by the owner or the
contractor, is the ultimate “dispute.”
• Typically, contract provisions allow the owner to
terminate the contractor for cause (i.e., a default
termination) if the contractor:
(1)fails to supply properly skilled workers or proper materials; (2)
fails to make payments to subcontractors;
(3)disregards laws, statutes, ordinances, codes, rules, and
regulations; or
(4)substantially breaches the contract documents. The contractor,
whether provided in the contract or not, can terminate if the owner
is in material breach of any of its contractual obligations, the most
prevalent of which is failure to pay.
Dispute resolution methods
• Designer/initial decision maker — Some

contracts provide that the design professional
is the initial decision maker.
– Others even provide that the design professional's
decision is binding on all parties.
– Over the years, the contractor side of the equation
has felt that such a procedure is unfair in that the
design professional works for the owner.
– Therefore, newer contracts have the parties
deciding in advance whether or not the design
professional or a neutral initial decision maker will
resolve ongoing disputes.
• Dispute resolution boards (DRBs) —

– Many contracts now provide for DRBs, which are
often comprised of senior and/or retired individuals
who were actively involved in the construction
industry, such as project engineers, managers,
and executives.
– These individuals conduct truncated hearings and
provide their decisions with respect to disputes
that the parties bring before them during the
course of a project.
– Although the DRB's decision is admissible in a
court of law or an arbitration setting, they often are
not binding on the parties.
• Mediation —
– Whether it's during the course of construction (less
frequent) or after the project is complete, mediation is
arguably the most satisfying of dispute resolution methods.
– It can occur as early in the process as the parties are able
to organize a mediation and identify/schedule a mutually
agreeable mediator.
– However, a mediation is typically most successful after the
parties, their attorneys, and the consultants have had an
opportunity to review the other side's project files and
prepare whatever impact/delay analysis may be necessary.
• Arbitration —
– Beginning in the '80s and through the '90s, arbitration was
the favored form of dispute resolution in the construction
industry, at least when the owner was able to dictate the
form of dispute resolution.
– The theory was that arbitration was both speedy and
economical because the parties and arbitrators scheduled
it at their convenience.
– Unless the parties otherwise agreed, there was no
discovery or jury as there is in litigation, and no appeal.
– Finally, the arbitration panel was comprised of individuals
knowledgeable in the construction industry.
• Litigation —
– Litigation is dispute resolution in the courts, where all parties are
subject to all of the forms of discovery, such as interrogatories,
requests for admission, document production demands, and
depositions.
– The parties then have a trial, either by a court alone or by jury. If
the parties are dissatisfied with the results, they have an appeal
as a matter of right. Historically, litigation has a reputation for
being a long, expensive process.
– That's one key reason why arbitrations came into vogue on
construction disputes. However, at about the same time that
arbitration lost a bit of its luster, some state and federal courts
made the process significantly faster and less expensive.
• Government claims procedures —

– In the public sector, there are often requirements
that contractors must first file a government claim
and even go through an administrative hearing
procedure before they can proceed to arbitrate or
litigate their claims.
Reference
https://www.ecmweb.com/ops-amp-
maintenance/confronting-construction-conflicts

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Confronting Construction Conflicts

Confronting Construction Conflicts

• During times like these, when the world is

– Presumably, the purpose of the request for

• Shop drawings and submittals — A corollary to

• Change orders/extra or out-of-scope work —

• Designer/initial decision maker — Some

• Dispute resolution boards (DRBs) —

• Government claims procedures —

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