We asked our lead instructor Sid this question and here was his response:
Sid, what is the best way to resolve construction disputes?
All right. We first have to make sure it's an actual construction dispute. A lot of times it may not really be related to construction. It may be an entirely emotional situation between the owners and the general contractor.
I've been on jobs where the contractor has performed the scope of work exactly according to the documents and the customers, when they finally realize what they're getting, they are sometimes highly disappointed in what the final item looks like or how the finish was done.
So a lot of times it's a matter of really taking time to listen to what their actual dispute is. Is it in regards to workmanship? Or is it coming strictly out of their emotions because it's not what they thought they were going to get? And all of us have been there before. We know that a lot of times the customers are thinking they're getting a whole lot more than what they're ... They want a whole lot more than what they paid for. Or the old term was they were willing to pay for a Ford, but they were expecting a Lincoln.
Well it can’t always be done that way…
So the best way to resolve an actual dispute is to listen and see if it falls under your scope of work. And the very first way we take care of that is with an ADR clause in our contract. There has to be an ADR clause in our contracts to resolve these issues ahead of time.
And what is an ADR clause?
An ADR clause is ... It's termed "alternative dispute resolution." And there's several ways to resolve a dispute.
Mediation is pretty much on its way out. Mediation, both parties have to find a mediator who's on neutral ground and that's the hard part. So what we ended up doing is going to facilitation and/or arbitration. And I say "and/or" because in many contracts, facilitation's used first. Okay? And facilitation is where the homeowner's attorney and the contractor's attorney find an attorney who is familiar with construction documents. And they let that attorney act as a facilitator, going back and forth, trying to resolve the issue. If you and I had a facilitation in our contract agreement, you and I could probably with our attorneys resolve a conflict dispute within two to three weeks. Okay?
If we're not able to resolve it at facilitation, then our contract says if facilitation fails then we go to arbitration. And arbitration is put together by the American Arbitration Association, and is binding. Whatever they determine in the dispute is binding on both parties. There's no going to a higher court to resolve it. It is what it is. And because it's binding, the end result is that the problem would be resolved.
But in saying that ... Okay. I've been through arbitration facilitation hearings in the past. And many times, it could have been resolved if people would have just been calm and kept cool heads. In one particular case, I remember a contractor who felt that he was going to have to give up too much of his pride to do something over again. The actual cost of doing what he had to do was minimal compared to the aggravation. It would have been a whole lot better if he smiled and took care of the problem, because this customer probably would have had other things done or been a good reference to him.
Again, every situation's a little bit different.
But if you can resolve it at a minimum impact on your company, I would recommend highly doing it, and save the money for the attorneys and take that money and use it to make the correction. And get it done quickly. The faster you get done, the happier the customer will be. And they'll probably be most appreciative of the fact that you swallowed your pride and took care of the problem.