Unit 1 Conflict : Disputes & Arbitration

Objectives List and group potential causes of complaints or disputes during construction Describe the actions available to the parties in the event of complaints or disputes arising List and describes sources of external advice available to the respective parties involving in the complaint or dispute Formulate a working plan to review each project with respect to avoiding and/or minimising complaints or disputes using proactive management techniques

Objectives Establish a contingency plan to accommodate unforseen complaints or disputes

Complaints Discuss complaints you’ve had on jobs Processes to avoid and minimise these complaints List types of complaints you’ve had on the job Disputes come in all forms It is important to stop the complaint becoming a dispute Good communications Good practice to avoid all disputes

Contracts What is a Contract ? Contracts are legally binding agreements between private parties Enforced by the Government through the courts Everybody has freedom to contract anything within the law Parties to the agreement must comply to the terms of the contract Real or Perceived non compliance can lead to complaints & disputes

Contracts Contracts should be used in all cases Home building act requires that projects valued over must have a written contract for the builder to be able to claim payment There are various types of contract Standard form MBA, HIA Standard form Department of Fair Trading Specific purpose prepared by either builder or client

Contracts What other ramifications on type of contract MBA HIA contract usually favour builder DFT usually favour client Specific purpose contract – if somebody goes to the trouble, you can guarantee it will favour the drafter of the contract

Contracts Remember contracts are legal documents Make sure you understand the requirements as you will be legally bound Having this understanding of the requirements will be the first step in minimising complaints

Complaints What is the most common type of complaint ? Most complaints are caused by lack of communication

Builder and Client Disputes Obviously between builder (you) and Client (the person you’re building for) Client may also include Architect (Bayline v ……..Child Care) Engineers Financers (Wintertons Vs Hambros) Architects and other professional agents of the client – ultimate dispute is with client

Builders and Client Dispute Disputes may be wide and varied Types of finishes specified in contract More confusingly, items not specified in contract lead to disputes What type of bath ? What type of skirting ? Who pays power fees? A building contract needs to be very detailed

Builder & Client Disputes Quality of Work Is the same standard of work required in a Department of Housing Unit as in a unit at Vacluse Variations Client always thinks it’s included builder thinks it’s an extra

Builder and Client Disputes Extension of time Contracts will specify format of claim How much delay is caused by rain ? Client can’t make up mind in deciding of tiles Is it a critical item ? – Not all delays are critical

Builder and Client Disputes Performance and completion What is the date for practical completion ? This is dependent on delays, variations, extension of time Liquidated damages ? Is the job complete ?

Builder and Client Disputes Document interpretation Specification says granite bench tops Plans say laminate Contract should specify order of precedent Where does precontractual documentation and correspondence fit in ?

Builder and Client Disputes Progress payments Has work been completed ? Is payment due ? Retention ?

Builder and Client Disputes Disputes may affect Cash flow Company reputation Which may in turn affect the viability off the company That’s why conflict resolution is an important business management tool

Builder and Union Neglect award conditions Neglect safety Disputes may start from very minor issues e.g. pie ovens, dim sim allowance Disputes may cause stoppages which may be very expensive

Builder and Sub Contractor These types of disputes are similar to client builder disputes Builder is normally called principal/head contractor Sub contractor contracts to builder contracts to client – Sub contractor cannot sue client under contract and vice versa

Builder and Sub Contractor Quality off work Client, builder and Sub contractor may not necessarily agree with each other on required quality of finishes Client, builder and Sub contractor may not necessarily agree on materials to be used

Builder and Sub Contractor Performance and attendance Sub contractor may also claim extension of times Delay may not be caused by client issues – this may lead to Sub contractor having more time to complete works than builder has with client Subcontractor may have many jobs This conflict will inevitably lead to builder client conflict

Builder and Sub Contractor Variations Builder has two different contracts First contract builder to client second contract builder to contractor Extremely rare to be same type of contract inevitably there is conflict between the two Example - Head contract may include rock excavation, Sub contractor may not include it

Builder and Sub Contractor Payments Payments scheduled on head contract may not match Sub contract – affecting cash flow What happens if client doesn’t pay and Sub contractors payment is due – non payment is not caused by Sub contractor

Dispute Resolution What do you do? Firstly try identify the cause You may be in the wrong It may be a simple misunderstang

Dispute Resolution Next Step? Meeting between the parties – try reach mutaul agreement