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Dealing with disputes
How much time did you spend dealing with conflict at work this week? A study reveals that employees spend an average of 2.8 hours per week, dealing with disputes.
Imagine that you are leading a significant construction project, with a high level of technical complexity, which requires multiple stakeholders' collaboration.
If you are the manager of such a project, you will probably spend a lot of your time resolving all kinds of conflicts.
● site conditions other than those you anticipated at the time of the call for tenders;
● contractual ambiguities which give rise to different interpretations between the parties;
● the disagreement between the parties when requesting compensation;
● significant changes to the contract or the accumulation of a multitude of late or non-late modifications during the realization.
The costs and delays caused by construction disputes hinder the success of projects. Fortunately, various methods make it possible to avoid conflicts in construction projects or limit their number and extent significantly.
Few large-scale projects go off without a hitch. From the planning stage, it is essential to identify the aspects of the project that could lead to a dispute and the steps that will then be necessary to resolve it.
All risks cannot be eliminated, hence the importance of adequately identifying, sharing and managing them. Also, a fair and realistic assessment of timetables and budgets will prevent many disputes.
Those responsible for the project manager must have an excellent understanding of the contracts and the rights and obligations of all stakeholders involved in the project. It includes the project owner (the client) and the contractor and consultants, subcontractors, site managers and insurers.
An adequate provision for contingencies and risk reserves, a straightforward decision-making process and comprehensive studies are also effective measures to deal with potential claims.
Finally, the longer we delay recognizing a potential problem, the greater the magnitude of the consequences and the risk of resolving a dispute. It is, therefore, necessary to provide for internal conflict management mechanisms.
Internal management processes are the best barrier to construction disputes: precise planning of the procedures and steps to be followed to avoid conflicts or to identify and manage them quickly is required.
It implies the implementation of several complementary project management processes.
● The client must collect the relevant information to follow up disputes or possible claims and make appropriate decisions.
● Each request must be scrutinized by specific tools, such as estimates and schedule models.
● The influence on costs and delays must be known, and notice must be given as to the claim's admissibility in terms of damages and liability.
Project management processes are therefore essential, especially the strategies for managing deadlines, contract changes and risks. It is necessary to allocate time and resources to these processes for them to be practical and rigorous.
The contracts must be clear and precise, dictate each's roles and responsibilities, where applicable, specify the methods of dispute resolution, and define the orders of precedence of documents and decisions.
These measures involve different negotiation sessions at various meetings; diligent work, in good faith, in a climate of cooperation and transparency, is the best way to reach an agreement that maximizes the benefits or minimizes the damaged person.
Negotiation should be the first step in any conflict resolution, as soon as a possible dispute is identified. It helps keep good business relationships and will be less costly than any other formal resolution form.
An effective negotiating style is then essential, as it often determines the outcome. organizational conflicts precisely correlates the results of negotiations according to the type used: the "integration" style (identification of problems, exchange of information, joint search for a mutually acceptable solution) is the most effective in obtaining a functional outcome (resolution of the dispute and maintenance of good relations) and the "compromise" style (seeking compromise, exchange of acceptable practices) is also useful in the event of an impasse; these are the skills to be sought among the stakeholders (project managers, expert advisers, etc.) who will have to find solutions to disputes.
Likewise, these stakeholders must have sufficient authority to make effective decisions during the meetings without involving their superiors. However, healthy negotiations cannot exist without cooperation between the client, the contractor and the professionals.
According to the provisions of the contract between the parties, they generally have the right to arbitration in the event of a dispute or claim, or to take the case to court. The issue is then settled by an arbitrator or judge's binding decision, who must often rule on complex construction problems while referring to expert opinions.
In either case, the process leading to this decision is costly and can take several months or even years. It is, therefore, a waste of time and money to be avoided as much as possible. In all cases, the best way to obtain a favourable decision is to act in good faith and respect the contracts, particularly the conditions precedent (respect of communication deadlines, documentation processes, etc.).
However, in the event of failure of the negotiations, and before resorting to a resolution by legal means, one should first resort to Alternative Dispute Resolution Methods.
Alternative dispute resolution methods or out-of-court settlements often allow stakeholders to find their solutions effectively to resolve their construction disputes. Tensions are then often alleviated internally, quickly and confidentially, which prevents the degeneration of conflicts. Alternative dispute resolution methods can thus save parties a lot of resources, costs and time.
Several methods exist, including the appointment of a contract administrator who must rule on disputes. It can be a professional, but ideally, this should be an independent speaker paid by the various parties involved.
We can thus act at different levels to prevent construction disputes and effectively settle disputes during claims. It is nevertheless important to always follow a conflict management process tailored to each project, according to the stakeholders' common objectives and the expectations in terms of business relations, costs, equity, etc.
Alternative dispute and legal resolution methods should only intervene in the event of failure of negotiations to reach amicable settlements. Recourse to litigation will only be considered as a last resort, in the event of disagreement. All of this must be written down in a contract that must be approved by legal advisers before signing.
But above all, "a conflict resolution is managed". Although it is impossible to prevent conflicts, good project management, including content, deadlines, costs, information, communications, risks [6], changes and decision-making, as well as an adequate provision of contingencies and risk reserves are the most effective mechanisms to reduce the frequency and intensity of complaints and disputes.