Every time you prepare for a new construction job, whether you are a contractor, subcontractor, supplier or some other link in the chain, you open yourself up to disputes.
However, even though disputes may be inevitable, litigation is not. Here are some ways you can avoid lawsuits and strengthen your construction business.
Put everything in writing
One of the first steps is to always put everything in writing. Do not rely on an oral agreement and a handshake to solidify a business decision. When you create your contract, make sure it hits all the details as well as the standard legal language, but include terms that allow for some wiggle room when inevitable delays crop up.
Change orders are a necessity in construction. Just like your first contract, put all the details in writing every time your timetable, material orders, pricing or some other factor needs an adjustment.
Address disputes before they arise
Obviously, you cannot anticipate every eventuality, and your contracts and change orders are not always going to be adequate for resolving disputes. Prepare for those times when disagreements crop up by including alternative dispute resolution methods in your contract.
You and the other parties may want to start with negotiations, so you may want to set parameters for these ahead of time. If negotiations fail, mediation is a logical next step. This involves having a neutral third party trained in conflict resolution to help you and the other party come up with creative solutions to your problems. These are not legally binding like a judge’s decision until you and the other party contractually agree to them.
Arbitration is another alternative dispute resolution option that many construction professionals turn to rather than litigation. Both parties to the dispute choose the arbitrator, who, unlike a judge, is usually an expert in the field. Both sides may provide documentation, expert witnesses and other evidence in presenting their side of the case. The arbitrator hears both sides and then makes a binding decision. The arbitration process is not a matter of public record like a court case is, and it also usually takes much less time than litigation.