Disagreements, conflicts, and disputes aren’t uncommon in business, and the construction industry sees its fair share.
Even small construction projects can suffer setbacks and unforeseen issues resulting in delays, payment issues or client disputes.
But while these things might not be completely preventable, there are steps a contractor can take to reduce the likelihood of disputes with their subbies.
You’re more likely to avoid disputes and maintain good relationships if you have a comprehensive and bespoke contract in place. The contract should outline the terms of your working relationship, making it clear what the expectations are and who is responsible for what.
Having a written contract between contractors and subcontractors reduces misunderstandings around the scope of work, payment terms, and notice provisions.
Are disputes within the construction industry common?
Unfortunately, disputes over construction projects and construction contracts are not uncommon. This is because a construction project, especially a large project, involves so many elements, and there are so many things that can go wrong.
Project delays can occur for all kinds of reasons, from bad weather to missing materials to inadequate labour. There’s also the chance that a major problem could occur, such as a fire or a mass accident, or some other unforeseen disaster.
When these things happen, it can cause a dispute between the main contractors and the client or between the main contractors and their subcontractors.
Why do disputes happen between contractors and subcontractors?
Disputes between contractors and subcontractors happen for various reasons. For example, if a contractor fails to meet the terms of an agreement or if project delays occur because a subcontractor does not complete work to a satisfactory standard.
The best way to avoid disputes is to ensure all parties have a detailed understanding of the project requirements before commencing work.
What can contractors do to avoid construction disputes?
You may think you have a good relationship with your subcontractors, but these relationships can quickly go bad when a problem arises, especially if that problem involves money. You need to take reasonable steps to protect your business from avoidable disputes.
Be proactive. Ensure effective project management and proper planning. Put clear contracts in place. Keep all the relevant parties updated and ensure any documents required for the project are easily accessible.
Set reasonable construction project timelines
Work with project managers to ensure timescales are realistic and that it’s possible to meet the developer’s requirements. Give subcontractors sufficient time to complete work to the required standard.
If there are issues with sticking to the original timescales, make sure all respective parties are informed. Involve developers in discussions so you can find solutions quickly and avoid any disputes. Good communication is vital.
Set up contractual terms and agreements
Before you commence work, make sure you have a robust contract in place and all the contract documents have been signed. If the project is particularly complex, obtain legal advice to ensure the contract terms are fair.
As well as having a contract with the client or developer, it’s extremely important to have a written contract between you and your subcontractors. A formal contractor-to-subcontractor agreement goes a long way towards avoiding disputes.
To learn more about what should be in a contract, check out our blog.
Get help from construction contract professionals
With any project, there will be a certain level of due diligence required. Even when you are carrying out work for existing clients, disputes can arise. An off-the-shelf construction contract won’t always protect you, which is why it is a good idea to get bespoke subcontractor contracts.
Maintain good working relationships and communication
Communication is the key to any good working relationship. Be clear about the scope of work and terms of the contract. Include a dispute resolution clause in your contract if you feel it necessary. Give the other party time to read the contract and collate any other documents you require (such as insurance policies, licences, training certificates etc.)
Once contracts are in place and work has commenced, ensure all parties are regularly updated with any relevant information or changes to the scope of work. Keep subcontractors informed of anything that might impact their work.
How can contractual disputes be resolved?
Encountering disputes for the first time can be stressful, but it’s important not to get emotional. Quite often a minor dispute can be resolved without legal action, especially when there is a signed contract in place.
If the dispute is serious then obtaining legal advice prior to taking any drastic action can prevent you from making poor decisions which could come back to bite you later.
Negotiate with subcontractors
Dispute resolution can require negotiation. If the dispute is minor and you have a good relationship with your subcontractor, you may be able to come to a suitable compromise between you.
In other cases, it might be necessary to bring in a mediator to resolve the dispute. Legal battles can be time-consuming and expensive so they are best avoided if possible.
The best way to limit disputes arising between you and your subcontractors is to put a bespoke, watertight contract in place.
Get help with your contracts with HardHats
You might think a bespoke contractor-to-subcontractor contract sounds expensive, but with HardHats, you could cover yourself for around £3 per subcontractor per month (find out more about our fees here).
We think that’s pretty reasonable, considering we not only create the contract but we also do the hard work of getting them signed electronically by all of your subbies.
Plus, you can use our software as a subcontractor management tool at no extra cost. Securely store digital copies of any documentation relating to your subbies, including training and insurance certificates, invoices, expense claims and payment details.
And the best part? We don’t take over your payroll, meaning you keep control of your cashflow, and your subbies don’t have to pay a fee every time they want their wages.
Sound good?
Find out more about how HardHats can protect you by contacting us to get started.