Construction Disputes Still Expected To Peak

- Sep 07, 2018-

"The expected increase in disputes comes as the sector has been dealing with a rise in high profile contractor insolvencies over the past two years," she said.

On the positive side, the industry in New Zealand had enjoyed a wind shift with the Construction Contracts Act and its adjudication provisions, avoiding lengthy and costly court cases, she said.

The single biggest factor was lack of understanding about contract obligations, with amendments reportedly not always read and understood by all parties.

Employers and contractors identified variations by the employer as the leading cause of delays.

But they didn't agree on what the other leading causes were – employers blamed the slow pace of construction and the consent process, while contractors blamed the quality of design.

Most respondents to the survey believed disputes had risen over the past two years.

"While some causes of a rise in disputes appear to be structural to the industry, others particularly around relationships, risk allocation and contractual terms are within the parties' control," co-author Crook said.

Suggested ways of decreasing the risk of disputes included improving construction contracts, and improving industry conditions.

Employers were more focused on remedying skills shortages through training and immigration, while contractors were calling for more standardisation of contracts and rethinking risk allocation.

The type of legal contract used by about 80 per cent of the industry was the NZS3910.

The report concluded that before signing a contract the parties needed more sophisticated assessment of project risk, fairer allocation of risk, and standardised contracts.

During contract negotiations, the focus needed to be on the relationship and project outcome, he said.

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