A Guide To Resolving Building & Engineering Disputes

This guide, originally published in November 2013 and aimed and supporting those in need of information with regard to resolving construction disputes, has now been updated to support those facing engineering disputes. (October 2014)
Stewart Patterson, Barrister

Building, Engineering & Construction Disputes Can Be Resolved Without Court Action

Disputes on critical projects, both large and small are a plague right across the United Kingdom, blighting building projects everywhere. Their very nature means that they are complex and long term. They are fully able to cripple building projects, sometimes terminally. Various unpredictable factors regularly impact projects in negative ways including working conditions, logistics, human temperament, Mother Nature, machinery, finances and so on.

The Build Asset consultancy EC Harris, a firm which works heavily with barristers and infrastructure professionals, has recently produced a report highlighting the growing nature of these disputes. Their estimates suggest the overall value of these disputes increased by 41% across the 2010-2011 period to £6,500,000. Also the time taken to resolve them increased from an average of 6.7 months to 8.7 months across the same period. This is proving hugely expensive to all of the parties involved.

Construction Dispute Resolution

Construction and Building Disputes occur in projects of all sizesAs well as being a barrister I specialise in construction & Engineering mediation and arbitration. As a result I get to see the effects of these disputes first hand.

One thing is certain, for the UK’s construction and project engineering industries, it is very bad news. Many times I see parties involved in these burgeoning disputes jump in with both feet, sometimes contentiously, causing deeper rifts in their relationships with the opposing parties as they do.

Being prepared is the key. Knowing what are the primary causes of such problems is important, as is how to resolve them successfully without causing further damage as you go. Ultimately most disputes are resolved through simple personal one-to-one negotiation, this being the quickest, easiest and most satisfactory process of them all.

If personal negotiations fail and early resolution is not achieved, actions will escalate. Now you will be looking at bringing in independent professionals such as mediators, arbitrators and barristers who are specialists in this field.

Fortunately, these independent third party services are swift to implement and are often available at fixed costs which are considered relatively low. Procedures such as these are conducted privately away from the courts. However, beyond this the next step is litigation. In some circumstances this becomes necessary and is the best path to follow. However litigation is time consuming, lengthy in nature, and is both public and expensive – and don’t forget that the decision by the judge may go your opponents way!

Primary Causes of Construction Disputes

Poor project management

In every building project there are multiple tasks that require co-ordination between different groups of people. The same applies to projects both big and small, it is just a matter of scale and overall complexity. These include different contractors working together on the same project, whether it be for design, electrical, building or for materials and supplies.

Simple communication and coordination errors caused by an ineffectual management approach can easily set back any project weeks or months, costing a great deal of money in the process. When this happens, the work is delayed, the client is upset, and before you know it all sides are reaching for the phone to contact the nearest barrister!

Contractual problems

Typically construction contracts run over extended periods of time while the projects that they govern involve many stages of operation to complete. As a result, and almost inevitably, projects run into uncertainties and complexities that would have been hard to predict.

Unforeseen situations are often not addressed in the contract at the drafting stage, so when they arise later problems ensue because there is no pre defined path or mechanism for dealing with them.

Occasionally you will find even large contracts meet with disaster because they are set out and acted on without detailed terms and conditions. Other times building or engineering contractors will have their own personalised terms or perhaps a bespoke contract will be put in place. In the end though, the contract effectiveness will depend on how well their terms have managed to cover all possible eventualities. In many cases using a standard form contract which is professionally adapted to your circumstances is best, as they are generally quite comprehensive and able to cover any circumstances that are likely to arise.

Just like everybody else, business owners enjoy the prospect of an easy life, and they will work assiduously to avoid or prevent construction disputes, yet as soon as ambiguities or uncertainties start leading to financial losses, reduced cash flow and extra expenditure, thoughts of reconciliation tend to blow away with the wind.

construction disputes

Contractor and subcontractor goals

When working on a building project, you will quickly notice that contractors working on site will have different goals and commitments to those contractors that are working on the supply side. While each and every contractor and subcontractor works at his or her own pace, although hard to gauge ahead of time, compatibility is key. Where goal disparity rules, construction disputes will follow.

In these circumstances a whole range of reasons lead to protracted construction disputes like delays, conditions on site, access, design errors, poorly scrutinized tenders and more.

Cultural factors

The running of contracts is dependent on people, and the United Kingdom is a welcome home to many people from countries worldwide. Construction projects often are packed with skilled artisans who have traveled from Eastern and Central Europe.

Having such varied cultures working within crucial departments such as designing, purchasing, managing, planning, constructing etc. leads to communication problems and even clashes. These in turn can work to the handicapping of any project as they may lead unwanted to misunderstandings and delays.

It is every company’s responsibility to avoid or resolve disagreements in an impersonal and professional way whatever the reasons may be.

Methods To Resolving Engineering & Construction Disputes

Building projects can have serious consequences, so before embarking on one it is advisable for you to be aware of the legal consequences of such a journey. In the past individuals and smaller companies have used the advice and services of solicitors. This is, of course, a well established method of sorting out such problems, however it can drag you onto an unknown course of ever spiraling costs.

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Another alternative approach, which offers you financial control is to engage the services of a barrister. This is suitable for most types of business cases, particularly with construction disputes.

This is called Direct Access and comes with a number of distinct advantages. In order to avoid your costs unwittingly escalating beyond what you would want to pay, barristers generally agree to work on a pre-arranged fixed fee basis. This is a welcome relief and removes the anguish of not knowing what your costs are.

Further, acting on your behalf,  barristers are able to advise you or write letters. If earlier steps are unsuccessful in resolving your dispute and litigation is required, the same barrister will be the one who represents you in the courtroom.

When using the traditional approach where you have engaged a solicitor, that solicitor will very often have to refer elements of the case on to a specialist barrister in order to receive the correct authoritative advice. Whenever this occurs you are responsible for the costs of both barrister and solicitor. Fortunately, the Direct Access system that allows you to bypass the solicitors services avoids this, significantly reducing your costs.

Appointing And Using A Contract Administrator

Independent mediator for construction disputesWhere there are problems relating with interim payments for work done or minor disputes occur on site, using a contract administrator to help resolve things is often the first step to take. An appointed Contract administrator is often a surveyor or an architect. This is normally a friendly low level approach and any decision made by the Contract Administrator can be altered by the courts at a subsequent date.

When To Call In An Independent Expert

Sometimes the dispute is over an issue which is technical in nature. This is best resolved through jointly appointing an expert who will then impartially make his decision about the issue.

Negotiation – Officially Speaking

Negotiations can be entered in to immediately any disputes arise and can save all parties a tremendous amount of time and money. An important point with negotiations is that should they fail, any offers that have been made during this process cannot later be referred to in court. This is with the proviso that they have been conducted “without prejudice”, as they should be.

If seemingly irreconcilable differences can be overcome during negotiations the process is cheap. Additionally, for them to succeed all parties need to feel that they have equal control, because without that talks will often breakdown leading to protracted and painful consequences.

Some companies opt for hiring barristers or chartered surveyors and so have ‘supported negotiations’. Having these professionals engaged can be extremely beneficial as they are level headed, experienced negotiators and can bring a spirit of non-adversity to the table.

Mediation in Construction & Engineering Disputes

building stopped work because of construction disputesA process that is strongly encouraged by the courts is mediation. A form of Alternative Dispute Resolution (ADR), Mediation is fast, effective and relatively informal. Conducted at a time that suits both parties with the assistance of an experienced mediator, the procdeure is conducted in private .

The skilled mediator sets the scene for a mutually beneficial outcome. Unlike most other processes, the mediator does not make any decisions, his task is to facilitate the two parties to make their own binding agreement. This method of approach has a very high success rate.

Operating on a fixed fee basis that most parties find manageable, mediation services offer the option of parties having legal representation present. Turning a deadlocked dispute into an amicably settled issue is the goal of the skilled mediator. Saving the cost and possible penalties of litigation, mediation is low cost, flexible and fast.

It also helps to preserve the working relationships of everyone involved, so that it is more than possible to move on with the projects.

Going To Arbitration

Stewart Patterson barrister, construction and property legal services, arbitrationConstruction Dispute Arbitration is a process which can allow you to avoid going through lengthy court processes. Arbitration is a regularly used ADR process meant for settling disputes away from the courtroom. The entire process is presided over by a nominated arbitrator it is conducted in private, ensuring that confidentiality is maintained.

One significant difference between this process and that of mediation is that the arbitrator makes a formal decision which is binding and enforceable through the courts. Courts can review these decision, but only on a point of law. When contracts are drawn up properly, arbitration is normally provided for.

While providing a binding decision, proceeding this way is often a lot less expensive than litigation and altogether faster. Parties have the option of agreeing on their arbitrator, or failing that one, with the relevant expertise will be appointed.

The Final Recourse: Litigation

People embroiled in international and domestic construction and engineering disputes go to court when the the methods listed above are not suitable or have failed to produce a viable result. When in court, cases are proceeded on with witnesses being called, documents disclosed, barristers argue their points and experts are called upon to offer their opinions. Based on the complexity and value of any particular case, proceedings can be shifted across to a specialised Construction Court. Altogether this is a very expensive process and the value of the case can often be outstripped by the costs of the proceedings.

Stewart Patterson barrister, construction and property disputesAs anyone who is professionally involved in building projects will tell you, disputes are common in any construction contract. When an issue revolves around a legal interpretation, litigation is often the best course of action. However it is exacting and will deliver a binding decision that may or may not go your way. While it is the most decisive of all construction dispute processes it burns up a lot of valuable time and is expensive.

What To Do Next…

This guide has covered in general terms the main topics related to construction disputes, looking first at the problems that cause them and then looking at the primary routes to finding the solutions. I hope that you have found it useful, and that enough light has been shed on the subject for you to feel confident in taking the next step to resolving your issues.

Most importantly, review your situation now and see if their is any more room for personal negotiations. If you feel that there may be an opportunity for more talking, carefully pursue that course before proceeding with anything more formal. If not you can contact me direct either by phone or email and I will be happy to help with your specific case.

Further resources:

More links that relate to this can be found here: Building & Construction problems
You can find more general information on civil law (common law) on the Wikipedia Civil Law page

Construction and Building Disputes Barrister, Mediator and Arbitrator

How To Contact Me

If you are facing a dispute and would like professional advice you can call me on 01962 690061 or use the contact form below. I am a highly experienced barrister and I will give you the guidance that you need straight away

Construction & Engineering Dispute Resolution Services

Contact Information

We wholeheartedly welcome you to contact us regarding any legally related issues or concerns. We're easy to talk with and will very quickly steer you in the right direction.

Stewart Patterson
Barrister, Mediator & Arbitrator

Pump Court Chambers,
31 Southgate Street,
SO23 9EB
Tel: 01962 690061
Fax: 0845 259 3240
DX: 2514 Winchester