August 11, 2008

Construction Contract Law

Rely on closely monitored schedules to avoid contract disputes, consultant advises

DAN PELTON

correspondent

The old adage “an ounce of prevention is worth a pound of cure” is particularly relevant in the construction industry when it comes to matters of dispute resolution.

Matthew Nicholas, a senior consultant with Revay and Associates Ltd., said prevention is what the consulting company preaches to its clients.

“They should read the contract. The contracts are coming out with a number of unfair clauses. The contractors are bidding in a very competitive market and sometimes they ignore some of these clauses that may become real issues or disputes later on,” he said.

Revay deals with construction industry dispute resolution, as well as project management and consulting. In business for more than 35 years, the company has offices in Vancouver, Calgary, Montreal, Toronto and Ottawa.

Its principal aim is to act as a third party — not financially or emotionally involved with a project — that can offer an objective analysis of problems and unbiased recommendations for their resolution.

Over the years, Revay has prepared or evaluated over 2,500 claims that ranged in value from $10,000 to $150 million.

The tight industry network in construction means that word of disputes between owners and contractors can spread and cause damage to reputations, Nicholas explained.

Thus, a contractor may find it more difficult to find work and owners may be regarded with an unfair degree of suspicion when it comes to negotiating with contractors.

Nicholas said that delays in a project are a major reason for disputes.

“Sometimes owners and contractors are very optimistic. Then they experience delays that get kicked up to the dispute level,” he said.

His company doesn’t actually participate in the process of preparing contracts and the tendering.

It can, however, share its experience by providing consulting assistance to the principals involved.

Often, Nicholas pointed out, disputes can be avoided when the parties involved draw up a schedule and adequately monitor its progress.

“Having one allows the owners to monitor the progress of the project. Even though they may prepare detailed specifications, the owners often don’t employ the proper personnel to monitor them,” he said.

“It is also good for the contractor. By consulting the schedule, he can identify the risk factors and provide contingency plans. Further, he can use the schedule to monitor the progress and substantiate delay claims.”

Consultants can help develop and update a detailed project schedule.

Should such problems arise, however, Nicholas said the best dispute resolution mechanism is that each party be reasonable and keep an open mind.

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