How do you handle claims and disputes with subcontractors and suppliers?

1 Identify the sources of disputes

The first step to manage construction claims and disputes is to identify the potential sources of conflict and misunderstanding, such as poorly defined scope of work, lack of communication, unrealistic expectations, changes in design, errors or omissions in drawings, delays in delivery, quality issues, payment disputes, and warranty claims. Taking proactive measures to prevent or minimize disputes can help clarify the contract terms, establish clear lines of communication, document progress and changes, and resolve issues quickly.

2 Implement a dispute resolution process

The second step to manage construction claims and disputes is to implement a dispute resolution process that is fair, efficient, and enforceable. This process could involve negotiation, where the parties attempt to reach a mutually acceptable solution through direct communication and compromise. Additionally, mediation may be used, with a neutral third-party mediator facilitating the dialogue and helping the parties find a voluntary settlement. Alternatively, arbitration may be employed, where the parties submit their dispute to one or more arbitrators who make a binding decision after hearing the evidence and arguments. Lastly, litigation may be resorted to in which the parties go to court and a judge or jury decides the outcome of the dispute. It is important that the dispute resolution process is agreed upon by the parties in advance and written into the contract; this should also include details such as rules, procedures, time frames, and costs involved. The parties should then follow the process in good faith and comply with the results.

3 Prepare and present your claim or defense

The third step to manage construction claims and disputes is to prepare and present your claim or defense in a convincing manner. This can include a clear statement of the facts and issues, a detailed calculation of any damages or losses, relevant contract clauses, laws, or standards that support your position, and supporting documents and evidence. You should also consider proposing a reasonable settlement or resolution. When preparing and presenting your claim or defense, it is important to do so as soon as possible and in accordance with the dispute resolution process. Additionally, it is wise to keep a record of all communications and negotiations related to the dispute, being prepared to negotiate and compromise, but also to defend your rights and interests.

4 Seek professional advice and assistance

The fourth step to manage construction claims and disputes is to seek professional advice and assistance when needed. Construction disputes can be complex and technical, so it is important to consult with lawyers, consultants, and accountants as early as possible. Lawyers can advise on legal aspects and represent you in the dispute resolution process, while consultants can provide expert opinions on technical issues. Accountants can advise on financial aspects such as cost estimates or damage calculations, and provide financial records to support your claim or defense. It is essential to communicate regularly with professionals and provide them with all necessary information and documents.

5 Learn from the experience and improve your practices

The fifth step to manage construction claims and disputes is to learn from the experience and improve your practices for future projects. Construction disputes can be expensive and overwhelming, but they can also present the chance to learn and progress. You can utilize the feedback and lessons gained from dispute resolution to review and modify your contract terms, improve communication and coordination skills, enhance project management and quality control systems, build trust with your partners, and avoid similar disputes in the future. By taking this step, you can reduce the risk of construction claims and disputes, as well as increase the likelihood of success in your real estate development projects.