According to a 2013 study by the National Building Specification, 30% of construction companies are involved in one of more disputes every single year. 7% of firms stated that they had been involved in 3 or more disputes during this time period. It seems that the construction industry has been directly affected by the economic climate and have now become more adversarial than before.
Where once, disputes of this nature were dealt with through the courts, mediation has shown to be a popular solution. With its mutually beneficial outcomes, it can reduce costly legal bills and form suitable resolutions in a shorter period of time. But, why is the construction industry so prone to such disputes in the first place?
Main construction dispute causes
The economic climate has had a significant impact on the smooth running of construction projects. The NBS reported that the number of non-paying clients and those going bankrupt during the build dramatically increased between 2013 and 2014. Other common reasons for a construction dispute include:
- Uncertainty over the information provided in comparison to the information required to complete the job to a high standard. Namely, if one party makes changes to aspects such as building design, material requirements or league times, this can cause a dispute.
- Required acceleration of a project. In the event that a deadline has to be brought forward or offers a shorter league time than originally stated, a dispute may form. The construction company may struggle to produce the agreed building or work to the same high standard within a shorter space of time.
- Coordination of contract workers – many larger construction firms hire in contractors to complete different jobs throughout the project. Lack of communication or lack of appropriate skill sets in this relationship can cause projects to be completed to a sub-par standard.
- Delays – in the event of a delay, unavoidable or not, a dispute can arise due to the initial agreed completion date within a contract. This can also cause a financial loss to either party.
- Project Complexity – along with having all relevant information required to complete the job, it’s complexity could cause delays or poor construction work. In turn, this would fall beneath the agreement of a contract and cause a dispute.
Mediation in construction disputes
Mediation is commonly used as an effective form of dispute resolution within the construction industry. It is a consensual process of resolution that involves a third-party, unbiased mediator. In many cases, it forms part of a trilogy solution that involves adjudication and arbitration too. There are two forms of mediation that are most likely to be used in these forms of disputes:
- Evaluative – A mediator will give an assessment of the legal strength of the case for both parties.
- Facilitative – A mediator will focus on supporting each of the parties to help define the issues at state.
Once a dispute resolution has been found and an agreement made, it is recorded in written form and forms a mutual, legally binding contract.
Benefits of Mediation
As well as being a quicker and more cost-effective solution to legal action, mediation allows businesses to maintain commercial relationships. Mediators offer an unbiased and independent point of view which allows you to arrive as a fair decision for every party involved. They are chosen by both sides and provide solutions, rather than decisions for the issue at hand. The information shared during a mediation is strictly confidential and cannot be used later on in any future court case.
Many people record a high success rate with their mediation experiences. In most cases, these dispute resolutions are solved within a day and future agreements are reached quickly as a direct result of the mediation process. That’s just one of the many benefits that could make mediation a viable way of resolving a construction dispute.