The following is a guest post by construction industry blogger James White.
Common construction lawsuits range from a dispute in the construction process, stolen equipment to contract conditions. While lawsuits can undoubtedly hurt your business, there are ways for contractors to fix construction lawsuits and prevent them.
According to Engineers Daily, design deficiency accounts for about 38 percent of construction disputes. A design deficiency is a poorly designed, inaccurate or incomplete plan. The deficiency may cause conflicts between sub and general contractors, and contractors and owners, as well as additional costs or delays in completing the project.
A fast-track construction project is an example of how a design deficiency dispute becomes a construction lawsuit. Maybe the building owner wants the project sooner than feasible because of his or her economic needs. In a rush, the contractor, engineer or architect unknowingly provides uncoordinated drawings, incomplete designs or unattainable completion dates. All of these issues lead to cost overruns and/ or deficient designs.
Other design deficiency examples include:
- Performance specification — For instance, a designer uses a particular method to find a project’s design specifications, but the project comes out differently than anticipated. The design specifications cause a problem completing the project.
- Incomplete risk analysis — The costs of possible project delays, overtime costs during delays and other factors are included in a risk analysis conducted by a contractor. When these factors are not computed into the final costs, project overruns occur.
- Defective plans — The majority of construction plans are defective in some way, but the defects are minor. Plans included in this category result in extra costs because of the designer’s mistakes.
- Construction defects — During the project, an owner may discover construction workers are deviating from specifications or plans. The subcontractor or contractor may disagree and a dispute arises.
In the construction industry, finishing a project on time is just as important as keeping the project within budget. This means time is a construction project’s enemy or friend. Proper project scheduling and planning keeps a construction project running efficiently. However, a time delay stops a project temporarily or permanently.
A time delay occurs when a project goes beyond the contract’s completion date because of one or more disputes. The extended project date may cost the owner or contractor additional expenses. There are multiple common reasons for time disputes and construction lawsuits, such as:
- Project equipment or materials
- Changes in design, specification or other requirements
- Inadequate or lack of labor
- Defective plans
- Conflicting site conditions
- Owners interfering with the project or contractors
Any time delay has ramifications, especially in terms of cost. Incurred cost includes office overhead and idle employees.
Owner’s Reaction to the Finished Project
The construction project is finished. The owner has his new building designed according to plans. The project was completed on time and on budget, but the owner has an unfavorable reaction to the finished construction. The owner’s reaction may start as a dispute and become a construction lawsuit.
This type of lawsuit typically happens when a building owner is not satisfied with the outcome because of some perceived or real design flaw. For example, maybe the constructed building doesn’t support the required heat or electricity needed. However, the designer met the design requirements. Whether the owner is right or wrong, he may have a dispute with the contractor or designer. This dispute may be decided by a judge unless the lawsuit can be fixed.
How to Fix Common Construction Lawsuits
Evidence and communication are vital to resolving common construction lawsuits before they move further into the court process. Documenting issues like delays, changes or design deficiencies during a construction project can show lack of negligence or wrongdoing by the contractor. It’s important to gather documentation from the project before moving forward.
In many cases, construction disputes arise months or years after the finished project. Unfortunately, memories have faded and personnel have changed. Showing written or photographed documentation helps to quickly resolve construction lawsuits involving time delays and owner’s reactions because of undisputed evidence.
Many contractors use TrueLook to quickly end a construction lawsuit. TrueLook is a construction camera with live jobsite video and security recording. It also has the ability to provide time-lapse video on one turnkey system. The project time lapse camera capability automatically creates a video recording of how the project progresses and could put to rest any false claims. Using security cameras will also help deter and catch robbers or employees who steal or misuse equipment.
Mediation is often the most satisfying approach to fixing a lawsuit. Mediation involves the two parties explaining their side of the disputes to a neutral mediator. The goal of mediation is to agree on a non-binding solution to the dispute.
Dispute resolution boards, or DRBs, are usually included in contracts. A board comprised of construction industry professionals listens to all involved parties during the construction project. Decisions are admissible in court or arbitration, but are non-binding.
Open communication and documenting events on the work site may minimize construction lawsuits. However, if you experience a problem that leads to a lawsuit, there are ways to resolve them prior to going to court.
BIO: James White is a content specialist for a variety of construction and heavy equipment companies , and blogs in his free time about his journey in building his own home at Homey Improvements. Follow him on Twitter @JGtheSavage.