Dispute avoidance

Helping you prevent and manage disputes

Disputes in the construction industry can be costly, time-consuming, and damaging to relationships between project stakeholders. They generally arise from projects that operate within a defined contract period, where delays, misunderstandings, or mismanagement can lead to conflict. However, not all disagreements need to escalate into formal dispute-resolution processes like litigation or arbitration. By adopting proactive measures and best practices, it is possible to avoid or mitigate disputes while maintaining project timelines and fostering collaborative relationships.

At Novus Resolve, we aim to help you avoid these situations entirely. Through strategic, commercial, and contractual advice, we provide you with the tools to create smoother project operations. By focusing on dispute avoidance, we ensure you maintain a balanced negotiating position without resorting to sub-standard settlement terms.

The importance of proactive measures

Dispute avoidance begins long before a project starts. Proactive measures should be an integral part of your construction project planning to minimise the likelihood of disagreements or misunderstandings. Here are some effective strategies to consider:

Clear contract management:

Ensuring contracts are well-drafted is fundamental. Contracts should be comprehensive, outlining responsibilities, payment terms, timelines, and dispute resolution mechanisms clearly and concisely. Ambiguous clauses or poorly defined terms are common triggers for conflict, so invest time upfront in the contract creation phase.

Regular communication:

Open and frequent communication between all parties involved in the project is critical. Regular meetings to address progress, challenges, and next steps can help align expectations and resolve minor issues before they evolve into major disputes.

Early identification of risks:

Conduct thorough risk assessments at the outset of the project. Identify potential problem areas, such as delays, changes in site conditions, or budget constraints, and develop contingency plans to address them proactively.

Education and training:

Educating your team about dispute avoidance and resolution techniques is an often overlooked but valuable step. Training sessions on effective communication, negotiation techniques, and specific dispute-resolution frameworks can empower teams to handle tensions constructively.

By implementing these steps, you create an environment where disputes are less likely to arise. This proactive approach not only saves time and costs but also protects professional relationships and reputations.

The role of dispute resolution boards

Dispute boards are increasingly used as an effective tool in preventing disputes in construction projects. These boards provide an informal avenue for resolving disagreements before they escalate into more serious, adjudicative processes. By offering early reviews and recommendations, Dispute Boards can help bridge the gap between parties and guide them towards amicable solutions.

What are dispute boards?

Dispute boards are independent panels established at the start of a construction project. Dispute Board consists of experienced professionals who primarily monitor project progress, identify potential issues, and provide impartial advice as challenges arise. Rather than arbitrating outcomes, Dispute Boards work to foster collaboration and communication, ensuring conflicts are mitigated at an early stage.

Types of dispute boards

Dispute review boards (DRBs):

Typically consultative in nature, DRBs review project developments regularly and offer non-binding recommendations when disputes arise. These recommendations act as guidance to help both parties reach an agreement.

Dispute adjudication boards (DABs):

DABs, on the other hand, have the authority to render binding decisions on disputes referred to them. While these decisions may be subject to further review through arbitration, they provide an interim resolution to keep the project moving forward.

Combined dispute boards (CDBs):

Combining both advisory and adjudicative powers, CDBs can issue binding decisions when necessary but usually start with non-binding recommendations.

Given their unique ability to address issues informally and in real-time, Dispute Boards are increasingly favoured worldwide. Their presence acts as a safeguard, ensuring disagreements are tackled constructively without derailing project progress.

Effective management of contracts and relationships

The success of any construction project lies in effective management—not just of contracts but also of interpersonal relationships among stakeholders. Ongoing communication and well-defined roles are essential to maintaining harmony and preventing unnecessary conflicts.

Managing contracts

Contracts form the backbone of any project, outlining the expectations and obligations of all parties involved. To prevent disputes linked to contractual issues, consider the following best practices:

Clarity in scope of work: Clearly delineate the project's scope to avoid misunderstandings about deliverables.

Payment mechanisms: Include clear terms about payment schedules, methods, and penalties for late payments.

Change management: Include procedures for managing variations, ensuring all parties agree upon any adjustments.

Managing people

Interpersonal conflicts are a common cause of disputes in construction projects. Relationships between contractors, subcontractors, and clients can become strained without proper management. Regular stakeholder engagement, combined with transparent communication, can foster trust. Furthermore, promoting teamwork and aligning everyone on shared objectives reduces misunderstandings and strengthens collaborative efforts.

Informal dispute resolution

Not every issue within a construction project requires formal intervention. Often, informal assistance can resolve misunderstandings long before they develop into intractable disputes. Examples include mediation sessions facilitated by a neutral third party or assistance from industry specialists to clarify technical matters.

By focusing on informal avenues of resolution, you keep the dispute process cost-effective and less disruptive. This approach also preserves working relationships, which are critical in long-term partnerships.

Why avoid formal disputes?

While formal dispute resolution mechanisms, such as adjudication, arbitration or litigation, provide structured pathways for resolving severe disagreements, they are not without drawbacks. Formal disputes often lead to significant delays, incur costly legal fees, and can harm relationships between all involved parties.

The advantages of avoiding formal disputes include:

Time savings: disputes resolved informally or avoided altogether lead to uninterrupted project timelines.

Financial benefits: reducing the need for formal legal proceedings saves on associated costs, such as legal fees, expert consultations, and court appearances.

Relationship preservation: collaboration and goodwill between parties remain intact, paving the way for future opportunities.

The increasing use of Dispute Boards worldwide

The construction industry is witnessing a growing trend in the use of Dispute Boards, largely due to their ability to reduce dispute escalation. From large-scale infrastructure projects to smaller contractual setups, Dispute Boards are proving their worth as a cost-effective and efficient method of managing conflicts. Their flexible approach and ability to issue binding or non-binding decisions make them a versatile tool in modern construction project management.

Globally recognised standards, such as those laid out by FIDIC (Fédération Internationale des Ingénieurs-Conseils), promote the integration of Dispute Boards in construction contracts. This framework ensures that projects benefit from proactive conflict management, giving stakeholders access to timely advice and practical solutions.

Choosing Novus Resolve for dispute avoidance

At Novus Resolve, we understand that the best dispute is the one avoided altogether. Our years of experience in the construction industry allow us to offer tailored advice that helps you identify potential risks and implement strategies to mitigate them. Whether you’re managing a commercial development, residential project, or large-scale public works, our expertise can safeguard your operations from unnecessary conflict.

Our team includes highly skilled professionals with specialised knowledge in construction contracts, project management, and dispute prevention techniques. We can also assist in setting up and managing Dispute Boards to ensure disputes don't escalate and derail your project timeline.

Final thoughts

Avoiding disputes in construction projects requires diligence, proactive planning, and a commitment to open communication and collaboration. By investing in measures like clear contracts, effective management, and the early involvement of independent experts or Dispute Boards, you can significantly reduce the likelihood of conflict.

For a project built on solid foundations, trust Novus Resolve to provide the tools and guidance needed to maintain a smooth and amicable construction process. Contact us today to learn more about how we can support your dispute avoidance efforts.