In the construction industry, disputes are a common challenge due to various factors including the complexity of projects and the multitude of stakeholders involved. While disputes may sometimes seem inevitable, proactive conflict avoidance strategies can significantly mitigate risks, saving time, resources, and preserving professional relationships.
This article examines some of the root causes of disputes, barriers to effective conflict avoidance, and practical steps for embedding a culture of proactive risk management in construction.
Common the Causes of Disputes
Disputes in construction typically arise from issues related to time and cost such as project delays, budget overruns, and contractual disagreements. These challenges are often compounded by poor communication, inadequate record-keeping, and ineffective contract administration. A lack of clarity around contractual obligations and entitlements further increases the likelihood of disputes escalating unnecessarily. Addressing these issues at an early stage can significantly reduce conflict and enhance project outcomes.
Barriers to Conflict Avoidance
Despite the clear benefits of conflict avoidance, several structural and cultural barriers hinder its widespread adoption. Unfortunately, the hierarchical nature of the construction industry, combined with the complexity of contracts, often results in rigid, adversarial positions. Additionally, traditional industry practices and a reluctance to embrace collaborative approaches create an environment where disputes are more likely to arise. Without clear conflict avoidance mechanisms, misunderstandings and contract mismanagement persist, leading to unnecessary and avoidable legal and financial consequences.
The Evolution of Conflict Avoidance Practices
As construction disputes become increasingly complex, the need for effective conflict avoidance measures has never been greater. The Technology and Construction Court (TCC) has reported a rise in disputes pertaining to cases involving complex software systems, IT infrastructure, and fire protection issues. According to the TCC, the rise in these disputes follow from the implementation of the Building Safety Act 2022 and heightened scrutiny on materials such as flammable cladding (Judiciary UK, 2024). However, while these specialised disputes have increased, the overall number of claims issued in the TCC has declined by 7.49%, and applications heard have dropped by 17.2%, indicating a shift in the nature of cases rather than a wholesale rise in litigation (Law Gazette, 2024).
This evolving landscape highlights the importance of early intervention and proactive risk management to prevent disputes from escalating. The industry's gradual move towards collaborative dispute resolution reflects a growing recognition that conflict avoidance is not just an aspirational goal but a practical necessity for efficient project delivery and sustainable industry practices.
Key Strategies for Embedding Conflict Avoidance
Contract Awareness and Risk Management: A thorough understanding of contractual obligations, entitlements, and associated risks is fundamental to preventing disputes. Early contract reviews, risk assessments, and clear documentation can help mitigate conflicts before they arise.
Effective Communication and Collaboration: Transparent and consistent communication is vital for successful conflict avoidance. Establishing clear communication channels from the outset, conducting pre-start meetings, and agreeing on contract administration processes ensures all parties have a shared understanding of project expectations
The Role of Independent Third Parties: Independent dispute resolution professionals, such as mediators and adjudicators, play a crucial role in maintaining working relationships while resolving contentious issues. Their involvement enables a structured approach to conflict resolution, addressing single-issue disputes without disrupting project progress.
Legal and Commercial Considerations
Businesses must take a proactive approach to risk management, as the usual contracting practice in industry is to shift liability down the supply chain (i.e. flowing down the risk). This can be detrimental to subcontractors and smaller firms, placing financial and operational strain on those least equipped to absorb the risks. Robust contract administration and fair risk allocation are critical for fostering a sustainable and balanced industry landscape.
The Financial and Reputational Costs of Disputes
Failure to implement effective conflict avoidance measures can lead to substantial financial and reputational repercussions. Disputes divert resources from core business activities, cause project delays, and can damage professional relationships. In a sector where reputation is a key driver of future opportunities, avoiding disputes through proactive conflict management is not just beneficial, it is a strategic necessity.
The Conflict Avoidance Pledge: A Commitment to Change
The Conflict Avoidance Pledge, launched by the Royal Institution of Chartered Surveyors (RICS), is a growing initiative aimed at fostering a culture of early intervention and cooperative dispute resolution. With over 400 signatories, the pledge promotes best practices such as pre-contract preparation, early intervention, and amicable resolution. Increasingly, contracts are adopting plain English drafting to improve clarity and facilitate better communication, further supporting conflict avoidance efforts.
Future Outlook: The Growing Adoption of Conflict Avoidance
The construction industry is progressively moving towards conflict avoidance as standard practice. With increasing support from the courts for alternative dispute resolution (ADR) and a growing emphasis on fairness in contracting, the industry is expected to embrace a more collaborative approach. Reducing the transfer of excessive risk down the supply chain and promoting equitable contracting will be key factors in minimising disputes and fostering sustainable industry relationships.
Conclusion
Conflict avoidance in construction is not just a desirable approach, it is a fundamental requirement for delivering projects efficiently and maintaining strong industry relationships. By improving contract awareness, fostering effective communication, and leveraging third-party intervention where necessary, stakeholders can reduce disputes and create a more collaborative working environment. Initiatives such as the Conflict Avoidance Pledge, combined with evolving industry practices, are paving the way for a future in which disputes are the exception rather than the norm.
Find out more in the BESA Conflict Avoidance Webinar available on demand now.