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Construction Dispute Resolution

Construction disputes can spring from contract disagreements, delays, defects, or payment issues. But with the right solicitor by your side, overcoming these challenges becomes much easier. At Lawhive, our construction dispute resolution solicitors are experts in construction law. We're here to offer fast, affordable, personalised solutions to safeguard your interests and secure the best outcome.

Whether you're a contractor, subcontractor, developer, or property owner, we're here to back you up. Let us handle the legal stuff so you can focus on moving your project forward. We'll navigate negotiation, mediation, arbitration, or litigation—whatever suits your situation. Contact our Legal Assessment Team for a free case review and a clear, fixed-fee quote.

What is construction dispute resolution?

Construction dispute resolution is the process of sorting out disagreements that come up during building projects.

These disagreements can be about any number of things, but the goal of construction dispute resolution is to find a solution that works for everyone involved and gets the project back on track.

What are the common causes of construction disputes?

Common causes of disputes during construction projects include:

Unclear contract terms

Contracts in construction projects are often complex, with lots of technical terms that may be interpreted differently by different parties. Ambiguities or uncertainties in contract terms can lead to disagreements over each party’s rights, obligations, and the scope of work. Example A contractor is tasked with providing "adequate waterproofing measures" for the building's basement. However, the contract does not specify the exact materials or methods required. When water damage occurs due to basement leaks, the property developer blames the contractor for not fulfilling the waterproofing obligation. The contractor argues that the contract's vague language did not provide clear guidance. This ambiguity leads to a dispute over responsibility and costs.

Changes in project scope

Construction projects are dynamic, and changes to the original project scope are common. However, disagreements can arise when parties disagree on the extent of changes, associated costs, and timelines. Projects can also be delayed because of unforeseen circumstances like bad weather or supply chain disruptions. When this happens, arguments can arise over whether delays justify extensions of project timelines and who pays for it. Example The client requests changes to the original design to accommodate additional features. However, the contract lacks clarity on the process for managing changes and does not specify how additional costs and delays will be addressed. When the project is delayed and costs escalate due to the changes, the client and contractor disagree on who should bear the additional expenses and whether the delays justify extensions to the project timeline.

Responsibility for defects or errors

Defects or errors made during construction projects can be costly, not to mention potentially dangerous. If these kinds of problems are discovered during construction or after project completion, arguments may arise over who is responsible for putting the problems right. This often comes down to finding out whether defects or errors occurred because of poor design flaws, poor workmanship, or material deficiencies, however, working this out can be contentious. Example During a construction project, structural cracks appear in the walls of a new commercial property. The client blames the contractor for poor workmanship, arguing that the defects compromise the building's integrity and safety. However, the contractor claims that the design provided by the client's architect was flawed and did not account for the structural load requirements.

Payment disputes

Unsurprisingly, payment disputes are a common reason for disagreements in construction projects. Parties may not agree on the timing of payments, how much is owed, change orders, or retention amounts. Payment disputes in construction projects can be particularly damaging for many reasons, leading to strained relationships between parties that can be difficult to resolve without expert help. Example The contractor completes a significant milestone according to the agreed-upon schedule. However, the client delays payment citing budget constraints. The contractor insists on timely payment to cover ongoing expenses and subcontractor payments. Disagreements arise over the interpretation of payment terms, including milestone payments and payment schedules outlined in the contract.

Performance and quality standards

Construction contracts typically include specifications and standards that must be met by certain parties. If one side believes that work carried out does not meet the specified quality standards or there are disagreements over the acceptance criteria for completed work, this can be difficult to respond without input from a neutral third party. Example The client notices that the flooring does not meet the quality standards specified in the contract. They raise concerns about gaps between floorboards, and inconsistent finishes. The contractor argues that the quality of the flooring meets industry norms and complies with the contract specifications. However, the client insists on rectifying the deficiencies to meet their expectations.

How to avoid construction disputes

Clear communication and detailed documentation are key to avoiding construction disputes.

Here are a few practical tips:

• Conduct thorough due diligence on all parties involved, including contractors, subcontractors, and suppliers. This may involve verifying their credentials, reputation, financial stability, and regulatory compliance.

• Make sure contracts clearly state each party’s responsibilities, project scope, timelines, payment terms, and dispute resolution mechanisms;

• Keep communication open and transparent. If issues come up, address them quickly and document any changes or agreements in writing;

• Identify potential risks early in the project planning process and put in guardrails to mitigate them where possible. This can be accomplished through site assessments and establishing contingency plans for unforeseen circumstances (i.e. bad weather);

• Put in place robust quality control measures to make sure workmanship and materials meet agreed standards. Arrange regular inspections backed up by quality assurance procedures to identify and address issues before they escalate;

• Have a clear process in place for managing changes to the scope, schedule, or budget of your construction project. Make sure all changes are documented in writing, along with associated costs or adjustments to the original timeline. All parties should approve changes before moving forward.

• Stick to payment terms agreed in the contract. Make sure invoices are submitted on time and accurately. If payment disputes do come up, address them quickly to avoid the breakdown of relationships;

• Include provisions for dispute resolution in the contract to provide a structured process for resolving conflicts efficiently and amicably if they arise.

As with most things, prevention is better than cure when it comes to construction disputes.

How to resolve a construction dispute

It’s always advisable to include provisions for dispute resolution in the original contract. That way, everyone is clear on the process for resolving disputes if they arise. It’s important to take a structured approach to resolving construction disputes that puts communication and negotiation front and centre.

Communication

In the first instance, if a construction dispute arises, all parties should be encouraged to discuss their concerns openly to find common ground and reach a mutually satisfactory solution. This is by far the least stressful and most productive way to field a dispute and prevent it from escalating. However, if necessary, more formal dispute resolution mechanisms may be needed.

Negotiation

If possible, identify areas of common ground and contention between parties and try to work together to find compromises or (even better) solutions that meet the needs and interests of all parties involved. Negotiation is most effective when all involved parties are open-minded about finding a solution. This might involve exploring alternative options, revisiting contract terms, or offering concessions to resolve.

Mediation

If direct negotiations don’t turn out a workable solution to a construction dispute, mediation may be the most appropriate next step. This involves engaging a neutral third-party mediator to facilitate productive discussions.

Mediation is most definitely a less adversarial and more cooperative approach to dispute resolution that enables parties to explore creative solutions to issues without reaching the costly extreme of taking the problem through the courts.

Arbitration

Housing Grants, Construction and Regeneration Act 1996 provides a legal avenue for resolving construction disputes through adjudication, offering parties a swift and practical solution to issues that may arise during a project. Adjudication aims to minimise disruption by requiring adjudicators to decide within a tight 28-day timeframe. However, it's important to note that adjudication may not be suitable for all disputes, especially those of a more complex nature. For particularly complicated conflicts, arbitration may be considered. In arbitration, an impartial arbitrator or panel hears evidence and arguments from both sides and then issues a binding decision that resolves the dispute. Arbitration offers a more formal process than mediation but is typically faster and less costly than litigation. An adjudicator's decision is binding, but it is often considered a temporary solution until the dispute is fully resolved through other means such as court proceedings, arbitration, or mutual agreement between the parties. Additionally, while adjudication is generally more cost-effective than litigation, the successful party may not recover their full costs, as adjudicators typically determine who should bear the costs associated with the adjudication process.

Litigation

Litigation should be a last resort in construction disputes. It involves presenting evidence to the court, which will make a legally binding decision based on this evidence and arguments. Litigation is often costly, time-consuming, and adversarial, so it should be considered only when other avenues for resolution have been exhausted with no positive outcome. Ultimately, the most effective approach to resolving a construction dispute will depend on the specific circumstances and preferences of the parties involved. If you’re unsure how to proceed with a construction dispute, our expert solicitors are here to help and provide insight as to the most constructive next steps for your case. Contact us today for a free case evaluation and fixed fee quote.

What is the Pre-Action Protocol for Construction and Engineering Disputes?

The Pre-Action Protocol for Construction and Engineering Disputes outlines steps parties must take before starting litigation if they are locked in a construction and engineering dispute, including professional negligence claims. The aim of the protocol is to:

1. Exchange enough information so that all parties understand each other’s positions and can make informed decisions about settling the dispute or moving forward with legal action (known as pre-action disclosure);

2. Try to resolve the dispute before formal proceedings, with a specific focus on alternative dispute resolution methods.

The protocol is not a tool to be misused by parties to gain an advantage or create unnecessary costs.

Steps involved in the Pre-Action Protocol for Construction and Engineering Disputes

1. The claimant sends a letter of claim to each proposed defendant containing details like names and addresses, a summary of the claim, and any experts they plan to use. They also confirm whether they want to use the Protocol Referee Procedure for assistance in following the protocol;

2. Within 14 days of receiving the letter of claim, the defendant acknowledges it and may provide their insurer’s details. If they have objections to the claim they must raise them within 28 days;

3. Within 28 days of receiving the letter of claim, the defendant sends a response, including a summary of their response, any experts they’ll use, and third parties they might involve in the process;

4. If the defendant makes a counterclaim, the claimant must respond within 21 days;

5. Within 21 days after receiving the defendant’s response, or after responding to a counterclaim, the parties usually meet to discuss the main issues, explore settlement options, and consider ADR.

When does a claimant not need to follow the Pre-Action Protocol for Construction and Engineering Disputes?

In some circumstances, the pre-action protocol does not need to be followed to start legal proceedings if the claim:

• Is to enforce a decision made by an adjudicator under the Housing Grants, Construction and Regeneration Act 1996;

• Includes a request for a temporary court order for interim injunctive relief;

• Is likely to be decided quickly through a summary judgment under Part 24 of the Civil Procedure Rules;

• Deals with the same or very similar issues as a recent adjudication under the 1996 Act or another formal dispute resolution process.

Alternatively, if all parties involved in a construction dispute agree in writing, the pre-action protocol can be skipped. Or, if complying with the protocol might cause the claim to be time-barred, claimants can start proceedings without following the protocol, but they must seek court directions at the same time.

Get expert legal help with construction dispute resolution

While construction disputes aren’t uncommon, they don’t always have to end up in the courtroom. At Lawhive, our team of construction dispute resolution lawyers is experienced in handling various issues, from small disputes to more complex, contentious matters. We have a track record of working closely with companies of all sizes to offer practical advice and do what we can to prevent the escalation of construction disputes and instead find solutions that are commercially focused and viable. For expert legal advice, contact us today for a free case evaluation and fixed fee quote from our Legal Assessment Team.