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James Gallagher is the director of Resolution Management Consultants in Marlton, New Jersey. Opinions are typical of the author.
Construction Disputes continue to increase by 2025. However, the complications that triggered these disputes often reduce payment, changes, deadlines or schedules and the quality of work.
That is why it is important how a contract is written.
In construction projects, it usually occurs. A correctly written contract can eliminate many of the potential areas of dispute by providing a resolution roadmap. Although most construction contracts are professionally written, a number still contains gaps that open the door to disputes.
James Gallagher
Courtesy of resolution management consultants
By more effectively addressing these lagoons, interested parties can reduce the number of conflicts that arise as a project progresses. Although this is not legal advice, our experience and research have identified eight of the most common contract errors that lead to disputes and litigation.
1) A detailed process is missing to communicate and manage changes.
Virtually all projects undergo changes during its construction. Contracts should stipulate a formal process to communicate, approve and make changes followed by all and approved by all. When this process is followed correctly, it is easier to keep track of where and how they were monitored.
2) The force majeure clause must be updated.
In the past, uppercase force clauses have been developed to cover catastrophic events, such as floods and earthquakes, most of which have a relatively low probability of producing. The concept of force majeure has evolved to include modern catastrophes, such as interruptions in the global supply chain, wars and other calamities. In modern construction contracts, it is important that the force majeure clauses are reviewed to provide current realities.
3) The scope of the project is not well defined or the writing is too general.
For example, instead of writing “lighting installation”, the scope must include a detailed description of the full scope and steps of the lighting project. Different people understand things differently. The best contracts allow all parties to understand the same things in the same way.
4) Missing the deadlines and poor defined deadlines.
What defines the completion, as well as the expectations of the time needed to complete the tasks? How do you identify the contract Who is responsible for the slowdown and delays? What are the consequences of missing deadlines? Without properly defining these aspects, it is difficult to determine the instigator, the action, the degree of interruption and the penalty.
5) Missing definitions for payment.
The specifications on which the payment, the completion, the line of time for the payment constitutes, and even a process of payments must be detailed and agreed.
6) Interested parties use a single size contract.
Each project is unique. Each presents details, descriptions and distinctive deadlines. This means that the contract must also be unique. Unique contracts that adapt to all are usually too general to adapt to a wider range of projects. But that is also why they are more likely to open the door to misunderstandings and disputes.
7) There is no process to manage and solve disputes.
When disputes occur, it can save a lot of time and money to have an already agreed process to resolve disputes that details the negotiation, retention of payment, mediation, arbitration, litigation and other ways to the resolution.
8) The contract does not assign the distribution of risks and risk.
Care must be taken to define the risk and identify who is responsible for delays, defects, interruptions, price increase and other factors.
Finally, although it may seem obvious, it is important for all parties to sign the contract and approve all changes and reviews. Without signatures OK, contracts and changes may not be binding.
To reduce the number of disputes, the interested parties must be proactive. This means anticipating the problems they will consider, in order to avoid them more easily or mitigate them after the fact.
Instead of waiting until disputes, the application of a lens to each of these eight areas during the contract development process can be quite valuable. Anticipation of disputes and accepting the methods to solve them will make a long way to avoid them, saving potentially important time and money.
