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Strategies to Avoid Construction Arbitration

Arbitration is one of the easier methods for resolving construction disputes, but construction companies still want to avoid arbitration altogether, if possible. This is because the process itself can take months and lead to problems, even in the best of projects. Prevention is the best method for avoiding arbitration and other disputes throughout construction projects. In this article, one of our Houston construction attorneys discusses strategies to avoid construction arbitration.

Related: What Construction Businesses Need to Know About Using Arbitration as a Method of Dispute Resolution

Adhere to the Contract

Perhaps the best way to avoid construction arbitration is to avoid disputes. This is possible by adhering strictly to the contract that you signed. Most disputes arise when one of the involved parties feels that the contract is not being fulfilled. Whether this is true or not, your construction company can find itself in court in the middle of an arbitration process. To prevent this, adhere strictly to the contract so that there is little reason for any of the other parties involved to raise a dispute.

Where many construction companies get into trouble with contracts is when they do not understand the contract that they signed. Contracts can be complicated, which is why companies should always have one of our Houston construction dispute lawyers review the contract before signing it. Once you sign a contract, you agree to abide by everything that is in it without exception. Not understanding part of the contract is no excuse for violating it.

Review all new contracts thoroughly to make sure that your company can abide by all of the parts of the contract, and take steps to make sure that everyone involved understands their responsibilities and obligations. Then, put systems in place to ensure that everyone does what they need to do. The more diligent you are about enforcing the contract within your own operations, the less likely there is to be a violation that can lead to a dispute and arbitration.

Improve the Planning Process

More often than signing a contract that cannot be fulfilled, construction companies fail to effectively plan construction projects before developing and signing a contract. The planning process is not only essential for the construction project itself but also for the other operations of the business. Failing to plan effectively will make the project unprofitable and hurt your business in the long run. To avoid issues with unrealistic project guidelines, it’s important for construction companies to find ways to improve the planning process.

There are many steps to go into the planning process, including determining construction costs, organizing operations, and bidding projects. Implementing an audit process to review each of these steps and look for ways of improving them can be an effective strategy for improving the planning process. The more problems you can eliminate in the planning process, the better the outcome for each project can be.

Related: Common Questions About Construction Arbitration

Be Ambitious But Not Too Ambitious About Projects

One aspect of improving the planning process that needs special attention is setting goals for projects. Construction companies tend to try to outbid each other by reducing costs and completion time, among other factors. While this can be an effective way to bid on a project, it can often lead to unrealistic goals. Once the goals for a project become unrealistic, it can be very difficult to correct those goals in the minds of the project owner. Your company could quickly find itself in a position where it negotiated a contract that it cannot adhere to because the goals for the project are too ambitious.

When this happens, it’s difficult to manage the project without consistent problems and will likely cost more to complete the project since timelines and other factors cannot be adhered to. Preventing this problem is often the only method of solving it, which is why construction managers should take a long and thorough look at how their company develops its project goals. Otherwise, a construction company can find itself in a position where it needs the assistance of a Houston construction arbitration attorney to resolve the dispute.

Discuss Potential Problems Ahead of Time

Controlling internal processes can lead to an effective change in how the company negotiates contracts, but those negotiations involve other companies that may not have the same view of construction projects. Because of this, it’s likely that, although your company avoids creating problems in the contract, the other company may suggest parameters that lead to problems. The best way to deal with this is to discuss potential problems ahead of time.

During the negotiation process, everyone involved should discuss potential problems and look for solutions. Being proactive about these issues is an effective way to mitigate their impact. This is especially important when one of the parties is trying to negotiate a position that will create significant problems for the other parties. This is the time to speak up and try to head off the problem before it becomes an issue. Otherwise, it will be too late once the contract is signed.

Related: The Arbitration Process and the Construction Industry

Work Together to Find Solutions

While it may not be possible to prevent disputes in construction projects entirely, it may be possible to avoid arbitration by working together to find solutions to problems as they arise. Arbitration is reserved for trying to resolve problems where both sides cannot seem to agree on a solution. In essence, arbitration forces a resolution to the problem rather than having the two sides negotiate and try to find a solution. It is possible, however, to avoid arbitration altogether if both sides can work together to find solutions before they feel that arbitration is needed.

Construction contracts are complicated, which is why many construction companies rely on Houston construction law attorneys to resolve issues before they become problems. Arbitration can be an effective method, but its impact on projects can be avoided by taking simple steps to address problems as they arise. If you have questions about construction arbitration, contact one of the Houston construction attorneys.

If you would like to speak with one of our Houston construction law attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.