Reasons for construction disputes

Given the technical complexity of construction projects, they can give rise to a wide range of disputes. Below are some of the most common areas:

Delayed or non-payment: When an Owner fails to make timely payments, this can disrupt a Contractor’s cash flow and prevent downstream payments to suppliers and subcontractors, which in turn can stall progress. Alternately, the Owner may dispute whether conditions for payment have been met, such as completion of progress milestones.

Variations: Parties may dispute whether work instructed by the Owner is within the Contractor’s original scope, or constitutes a variation entitling the Contractor to additional compensation. Even when a variation is established, parties may still dispute its valuation.

Defective design and construction work: Design work is considered defective when it fails to achieve its intended purpose or meet required performance levels. Construction work is considered defective when it does not conform to the specifications set out in the contract.

Delays and Extensions of Time: Responsibility for delays can result in significant financial liability. For the Owner, liability may include a Contractor’s costs for the prolonged period of work. For the Contractor, liability may include contractual damages specified for each day of delay.

Unforeseen site conditions: When the actual site conditions deviate from those represented in the tender documents, or which the contractor could have reasonably foreseen, the contractor may have claims for resulting delays and additional costs.

Force majeure: Unforeseeable events beyond a party’s control that make its performance impossible may excuse that party’s obligations, or give rise to claims depending on the specific contractual provisions. Examples of these events include war, COVID-19, and supply chain disruptions.