What are the best ways to avoid disputes on construction projects? You’d fully expect me to recommend a decent contract, but don’t just take my word for it. This post reviews the 2021 Arcadis Global Disputes Report to extract the nuggets you need to avoid disputes on your projects.
Tips for avoiding disputes
TL:DR Dispute avoidance starts early.
The 2021 Report includes a roadmap of techniques that can help you avoid disputes and these include:
- training the project team on knowing your contract including documents they need to use/prepare and change management
- managing risks – proactively and not by default
- using a contract that is best-suited for your project including the language used
- good communication throughout the project.
Resolving the causes
The number one cause of global construction disputes continues to be a party failing to understand and/or comply with its obligations.
Interestingly, understanding your contract is not just about training on knowing your contract; it is also about the language and structure of that contract. I was astonished to read that the Report recommends ‘proper standard contract language’ as a way to avoid disputes.
If a contract cannot be understood then, naturally, it cannot be complied with. Task #1 must be to design contracts that can be understood by everyone, and that means an educated 12-year old.
How many of the existing standard form contracts globally could really be understood by an educated 12-year old?
It is that very language – how contracts are worded – which has gotten us into yet ‘another nice mess’ (with apologies to Laurel and Hardy). The Report recommends – without a scintilla of evidence in support – that proper standard contract language is a solution to disputes.
I disagree, vehemently.
What do they mean by proper contract language? They might mean language that is tried and tested by the courts – but means it has failed once and is regularly found wanting by those courts. It would be suitable and effective if it was easy to read, understand and use. In my decades of reviewing contracts, I have rarely come across any construction contracts which were designed to be user-friendly…. If the contract is not user-friendly, it is laying a trap for the parties to fall into and they will become part of the data in the next report because they will fail to understand or comply with the contract.
What about standard contract language? Although it may be that lawyers have read and understood the cases which tell us precisely what those terms mean, that does not mean that clients, contractors, contract administrators, subcontractors and users can read and understand those terms. In my decades of training people on their contracts (including lawyers), I have rarely come across someone with a deep and insightful understanding of all the relevant terms as well as the interplay between them. So standard contract language is not necessarily the solution to ensuring parties can understand and comply.
The 2021 Report continues by using data on uncertainties following the pandemic in the UK to state:
that contract obligations ostensibly drafted in plain English may not be as easily understood by [users] as the lawyers drafting them
If the contract terms are in plain language, then (by its very definition) they can be easily understood by users and lawyers alike. This statement is so wrong and takes no account of the significant weight of global evidence on the benefits of plain language.
Instead of complex, adversarial terms, how about we move towards simple, trust-enhancing terms?
Ones with language which the users can understand. Ones which are inviting and easy to read. Ones which make it clear what actions are required by the parties. Perhaps even ones with visuals.
What should you do?
Reject standard contract langauge if it doesn’t help you to understand or comply with your obligations. Refuse to be another statistic in the 2022 Report.
Ask for simpler contracts. Join my #FightFor500 where you get a contract user guide or summary in no more than 500 words – so you really can read, understand and use it.
By doing so, you could save 14 months in a dispute and $50m (the average in the Report) – nothing comes close to a better ROI than reinventing your contracts!