Noah had it easy when he built the ark.
Unlike today’s contracts, Noah’s verbal contract with God didn’t include inaccurate plans, it didn’t include confusing specifications, there wasn’t an inexperienced contract superintendant, there was no union interference…and he did the job on time, within budget, to a satisfactory quality and with a 100% safety record.
Hasn’t contracting become unnecessarily complicated and litigious since then!
I have seen current day contractors smile at the quote “a verbal contract isn’t worth the paper it is written on.” It seems hard to believe now, but when I commenced work in our industry, this saying wasn’t necessarily true: in general people could be relied on back then to keep their word.
With the passing of time and the toughening up of people’s attitudes, I think a more accurate quote today is: “a contract is an agreement between two parties that is binding only on the weaker party”…and this can lead to problems. Unfortunately it is often the contractor who lacks the muscle to see any dispute through to a principled resolution.
So where am I heading with this? Today many of us carry out the bulk of our business using the written contract. However, even with these written contracts, disputes between the contractor and the client occur much too often.
Time hungry
These usually revolve around time delays, work quality or non payments, and can consume a lot of time. The cost of pursuing a dispute is often out of proportion to the value of the claim. Even just one dispute on a project can distract us sufficiently, by occupying our time and our resources, to thereby add to the overall cost of the project.
With the number of contractual disputes increasing, it is therefore important for us to increase our knowledge, and have a better understanding of the available dispute avoidance techniques and the dispute resolution alternatives.
Far and away the best method of dispute avoidance is by negotiation when a disagreement or difference of opinion first becomes apparent. This has the potential to maintain relationships and future work opportunities.
Unfortunately the ability to undertake difficult conversations promptly is not a skill many of us possess, and the conflict can remain unresolved and often fester, to the point where neither party is willing to give way. From this time, we really don’t communicate, we just take turns talking. Disputes, unlike a good red wine, do not improve with aging.
Complex, expensive
Methods of dispute resolution range from arbitration, mediation, expert determination, conciliation, adjudication through to litigation. They can be complex and expensive and we need to pursue our claims in a way that suits our best interest and best meets our needs.
To help overcome this continuingly worsening problem, the CCF along with others, provided funding to the Cooperative Research Centre (CRC) for Construction Innovation to produce a Guide to Leading Practice for Dispute Avoidance and Resolution. (Earthmover, September 2009, Construction industry incurs $5bn to $7bn of dispute costs annually).
The aim of the CRC research was to “identify and communicate to key industry stakeholders, strategies to avoid contractual disputes, and where disputes cannot be avoided, to manage disputes more effectively”.
Following input from Rob Dahan, Bob Seiffert and Chris White from the CCF, and members of the Task Force, the guide has now been completed and is available on the CCF National webpage. Hard copies are available from CCF offices.
One disappointment
The document includes sections on Identifying the Cause of Disputes, Dispute Avoidance Check list, Managing Disputes, etc and contains a great deal of useful information. My only disappointment with the document, is its lack of emphasis during the procurement process, on the type of hard dollar contracting that most of our CCF members rely on for their main source of income.
So what should the CCF do now that the Guide has been completed? Firstly we could accept that it is possible to achieve the outcomes offered in the guide. Then we could fight tooth and nail to see that those aspects of its content that suit our members are implemented.
But meaningful implementation will not be easy; it will require a significant shift in the attitudes of contractors, superintendents and clients. A cultural change is required. People tend to live up to the expectations of others and the expectations of all parties to construction contracts to date, have not been high.
