How to avoid disputes with contractors

Gordon Jaabackin Consultancy

journal cropped 1 1Any sizeable project involving a contract sum can initiate dispute between the contractor and client. No contract agreement or specification can be so complete that there will be no difference of opinion in the nature, method or cost of individual items in the contract works.

The contractor is only human and must make a profit to survive. Left in control of a contract, and responsible only to the client, there can be a conflict of interest when decisions have to be made.

The documents

The specification describes the work to be done. Any vagueness in description or responsibility is soon picked up by experienced contractors. It is a known fact that often the 'extras' in a contract account the most towards profit. The careful use of the most appropriate and explicit wording can contribute to a clear understanding between contractor and client. On the other hand, a small slip or omission can create sizeable extra cost for the client.

IMG 0786 1 2In the schedule of quantities, on which the contract is priced, the wording and, in particular, the cross reference to the specifications will determine the extent and detail of the item of work to be priced. Completing this schedule in a tender is an art. Experienced contractors know what items to load knowing where the extra volume of work will come from. There is often difficulty in relating the specifications, the schedule of quantities and working drawings. Cross reference is vital, but the ruling condition should be clear in the instance when there is conflicting instructions from two or three of these documents.

The 'special conditions of contract' or 'information to tenderers' can iron out much of the misunderstanding that often leads to conjecture during a contract. In addition to the general conditions of contract, whether they be ICE or JCT publications, the special conditions, custom-written for a specific site, should make the requirements, limitations and no-go areas quite clear. They should present the level of contract in a clear and undisputable format. Their presence, and the degree of detail, should clearly announce how the contract is going to be managed and will influence the compilation of the tender.

On site

In most cases, the contract documents are put away in a file and seldom referred to if the contract gets off to the right start and there is a clear understanding of the duties and responsibilities of both parties. However, on site, there will always be unforeseen circumstances. The special conditions should have made clear how these are to be handled.

IMG 0762 1 1Nevertheless, it is the handling of crisis points as they arise that can put a brake on spiralling costs. Technical and practical decisions on the spot are forever required in the duration of a contract. The speed with which they are given contributes much to controlling costs as well as to the final outcome of the contract.

Irrespective of the detail with which the tender documents are compiled, the overall plan is often overshadowed by the sheer unforeseen nature of happenings on the contract site. Just to see the scale of the increases in the construction of the new Wembley Stadium illustrates this point.

They can originate from the actions of individuals, changing weather conditions, the variable nature of the inherent soil profile, limitations in the property of materials or the sequence of treatments undertaken. Adequate working drawings, specifications, soil surveys, topographical studies and preliminary site investigations can never account for all the relatively sudden occurrences that become evident on the contract site.

Regular site meetings, properly minuted, bring a degree of control to the contract. Clearing matters of dispute as they arise offers the best solution for both parties. IMG 2293 1 1The good understanding that comes from regular monitoring of progress on site can become the foundation to a sound contract, and it is only when the contractor and client are happy with their lot that the outcome of the project is successful.

A 'hurting' contractor is a dangerous animal and will stop at little to cover his costs and take advantage where he can. With a good and fair understanding from the start, the contractor is able to get the most from his resources without ever reaching panic stations. All testing, planning and final procedures, tackled in good time, lead to a favourable outcome for both parties.

When it comes down to extra work, the decision cannot be independent and unbiased. The contractor will aim to solve problems with the least amount of aggravation and good reward for the extra work, and he cannot be blamed for this approach. On the other hand, the client is looking to save money and achieve the most cost effective solution.

Disputes can lead to a souring of the contract/client relationship and every effort should be made to resolve differences as soon as they arise. They should not be left to haggle over at the end of the contract when memories have faded.


The appointment of an independent qualified person as a consultant is often side-stepped because of the apparent additional cost. On a closer look, however, there are a number of points that make this decision beneficial to both parties.

IMG 0787 1 2Ideally, a detailed professional investigation of the project beforehand should identify most of the risks that could be encountered, and a comprehensive work plan and specification gives the contractor a clear idea of the scope of work. This reduces the number of items of work where he must allow for risk.

An independently prepared set of contract documents also enables the client to compare quotations from different contractors to carry out the same specified work under the same terms and conditions.

Independent monitoring and regular site meetings controlled by a consultant should ensure nothing is overlooked. He is present to attend to changes in plans and extra costs. Being on hand to attend to disputes, he can assist in keeping the contract duration on time and within budget. Technical decisions reached early can prevent unnecessary costs. Nothing is more costly to a contract than repeating an item of work that should have been done correctly the first time.

The allowance of a contingency amount in the schedule of quantities enables the consultant to make an unbiased decision on any extra costs that emerge without overstepping the budget. It is vital for decisions to be made at critical stages in the contract and the client cannot guarantee to be available at these times. Incorrectly completed work can result in unnecessary costs at a later stage - apart from the inconvenience in delaying completion.

Finally, the professional fee charged can be insignificant when extra costs are controlled, the contract is systematically managed and the outcome is pleasing to the client.


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