Performance disputes between contractual parties in construction projects could be caused by factors of different nature and related to increased costs, time, quality, productivity, social factors, health and safety, environmental factors, etc. Some of the top significant factors affecting performance in construction projects are escalation or material prices, unavailability of resources planned, average delay because of material shortage, unavailability of qualified personnel, quality of equipment and raw materials, and leadership skills of project managers (Enshassi, et al. 2009)
Reasons for disputes in construction projects can often be found in fixed-price contracts. When there is an increase in the prices of materials, equipment, supplies, labor, or transportation, the contractors who work perform for a fixed price have little protection, and these unanticipated events may drastically affect their performance, and consequently lead to performance disputes. A solution could be found in including contract provisions that will allow additional time and compensation in an event of adverse contingencies. Other reasons could be related to the misinterpretation of design/defective specifications. Whether it is a DBB or DB project, it doesn’t diminish the responsibility of the contractor. In DB project, the contractor is directly responsible for the choice of the design professional and design issues, and in DBB project, the owner chooses the design professional, but the contractors who are entering such a contract have a duty to report to the owner any defective design solutions. Having some part of control in the process, the contractors are sharing responsibility as well, and cannot claim they have been misled while knowingly entering into a defective specifications contract. The design professionals role in the certification process can generate a variety of claims. Probably the most frequent performance disputes are related to financial issues, such as owner non-payment. Reasons for that are found in undercertification or overcertification. Undercertification impairs the contractors cash flow, and overcertification diminishes the retainage. A solution may be limiting the architect’s approval of progress payments up to a certain percentage, for example not to approve in excess of 85% (Sweet, et al. 2015).
Conflict resolution strategy recognizes several solutions – techniques for resolving conflicts in construction projects including 1. withdraw – avoid, 2. smooth – accommodate, 3. compromise – reconcile, 4. force – direct, 5. collaborate-problem solve (Rauzana, 2016)
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