In the construction industry, disputes can arise between parties due to various reasons and at different stages of the contract implementation process. This is a common occurrence in the construction sector and can affect the interests of all parties involved. In this article, TNTP will identify the typical disputes that arise in the construction industry, so that companies can prepare and take precautions in their operations.
1. Disputes related to construction quality
This is perhaps one of the most common issues that arise in disputes in the construction industry. One of the most important criteria, when parties sign a construction contract, is to ensure that the project quality meets the contractual standards. Typically, the contractor will have to commit to ensuring the quality of the construction work as agreed upon in the contract with the owner, and the owner, before choosing a contractor to build, will have to evaluate the contractor’s ability to meet the quality and progress requirements of the project.
In a construction project, there will usually be many different contractors involved, such as construction contractors, suppliers of construction products and materials, and consulting contractors. When errors related to construction quality occur, it is necessary to determine the responsible party to develop a plan to resolve the issue.
In addition, an important factor is the improper evaluation of the contractor’s capacity before proceeding with the owner’s project. Accordingly, the owner can only evaluate the contractor’s capacity based on their capacity profile and information about the projects in which the contractor has previously participated. However, the reality shows that many subcontractors have polished their capacity with “beautiful” profiles that do not accurately reflect their true capacity. The owner’s lack of ability to select suitable subcontractors also poses many risks related to construction quality during the construction process.
2. Dispute related to construction progress
Construction delays can be caused by many different reasons, including subjective and objective factors, specifically:
2.1 Objective factors
Weather conditions, natural disasters, epidemics, or force majeure cases. Or technical errors that are beyond the control of the parties, due to changes in laws leading to project design adjustments, planning adjustments, delays in the construction permit process, or scarce building materials resulting in a lack of input supply, etc.
These reasons do not originate from the parties’ contract performance errors but from a third party’s influence. Objective factors are beyond the parties’ control and directly affect the parties and the project’s progress.
2.2 Subjective factors
Usually, subjective factors are the main reasons leading to construction delays, typically including:
Mistakes made by the investor such as ineffective project supervision lead to contractors’ quality and progress issues affecting the entire project’s progress.
Mistakes made by contractors such as failure to ensure construction quality lead to project delays due to the need for changes and repairs.
These subjective factors stem from the investor or contractor’s errors in the project. The failure to perform their rights and obligations has led to the consequence of delayed project progress. Therefore, to solve arising issues, if the cause originates from the parties’ errors, the parties need to be aware of their mistakes to come up with a solution. If the parties cannot negotiate to settle disputes, they can bring the case to the competent authorities, including commercial arbitration or the people’s court.
Above is the article of TNTP regarding disputes arising in the construction industry, hoping that the article is useful for businesses’ activities.