CPCCBC4024A: Construction Dispute Resolution, Avoidance & Procedures

This report addresses a construction dispute scenario, analyzing causes and proposing resolution methods. It begins with a disagreement over project delays and penalties between a client and a contractor, identifying involved parties and their roles. The report includes a letter from the contractor disputing the penalty, citing external factors like client clarifications, supplier delays, and neighboring property issues. Various dispute resolution options are explored, including adjudication, arbitration, mediation, and expert determination, outlining their benefits and drawbacks. Strategies for dispute avoidance, such as risk assessment, partnering, and contract clauses, are discussed. Part B focuses on dispute resolution procedures within an organization, covering common disputes related to plans, specifications, shop drawings, site conditions, and subcontractor substitutions. The use of settlement documents under the Employment Relations Act or common law is recommended for documenting dispute resolutions. Desklib offers a platform for students to access this and other solved assignments and past papers.

CPCCBC4024A: Assessment 2 – Project 3
1. The dispute is resulting from delays in managing the set timelines for the completion of
the task. While the provisions pertaining time were set to have lapsed 4 weeks earlier, the
contractor finds himself behind schedule and this is attributed to various factors among
which were beyond his control. The client decides to impose a penalty in compensation
of the delays of which the contractor feels is not called for as per the prevailing
circumstances. The parties to the dispute include the client, contractor, property owners
of the neighboring property and the suppliers. The client failed to make necessary
clarifications on time while the supplier of the aluminium windows delayed in making
the supplies thereby prompting delays in the construction process that saw the client
dragged into the mess.
2. Letter to the client
JOANATICAL CONSTRUCTION COMPANY LTD.
P.O. BOX 4512-20020
JOHANNESBERG
22ND FEBRUARY 2018
TASMEGS DEVELOPMENTS

P.O. BOX 1542-010010
MICELES
RE: DISAGREEMENT WITH PAYMENT DEDUCTION
The above subject matter refers. I have been notified in writing from your office of your
intentions to levy a penalty of $40000 in compensation of the damages caused to you due to the
delays in the completion of the construction process of the project by four weeks.
The delays in the completion of the project results from causes that were beyond and out of my
control thereby there was very little I could do despite my efforts and goodwill to have the
project delivered within the stipulated timeline. My office experienced delays from your office
with the delivery of some clarification that were fundamental in starting the project as well as
delays from the manufacturer of the aluminium windows who delivered the supplies three weeks
later than the negotiated delivery date. Still, we had issues with the property owner of the
neighboring property that consumed quality time to solve before I could process with the
construction process of the project.
The above-mentioned issues were the elements that led to the delay in the completion of the
project as per the stipulated timelines. As can be observed from the stated reasons, none of the
factors lied within my capacity to handle and amicably solve in order to continue with the
process of construction. This leaves the option of levying a penalty on me in compensation of the
damages caused to you by the delay to be of not in any good faith.

The purpose of this letter therefore to inform of my disagreement with your action to impose a
penalty on me in line with the delay in the completion of the project and instead ask you to
consider the aforementioned justification while making a decision on this moving forwards.
Yours faithfully
Joanatical
3. Dispute resolution options
Adjudication: This is where a third party who is perceived to be neutral gives a decision on an
existing dispute and is in most cases referred to as pay first, argue later dispute resolution mode.
The decision made by the adjudicator is binding to both parties not unless or until it is revisited
and revised in litigation or arbitration. The client or the contractor upon winning the dispute
through the adjudication process then can apply to the Technology and Construction Court so as
to seek enforcement of the decision of the adjudicator. Among the benefits of adjudication as a
dispute resolution option include:
 It is less expensive in comparison with the proceedings of the court
 The decision of the adjudicator settles the dispute even though the parties involved in the
dispute may still go to court
 It is quick as thus designed in such a way that there is continuous cash flow into the
construction process
 The adjudicator is neutral and never engaged in the day-to-day running of the
construction project
The disadvantages include:

 The adjudicator has limited powers
 Both disputing parties must air the dispute before the commencement of the adjudication
process
 In cases where the losing party fails to honor the decision of the adjudicator, court
proceedings will still be required to enforce such decisions
Arbitration: This is a dispute resolution option in which the disputing parties agree to get the
dispute resolved by a third party called the arbitrator. In this option, the resolution of the dispute
is based on the material facts, relevant principles of law and documents. Acts that govern
arbitration exist that ensure that arbitrations are rapid, fair and cost-effective besides ensuring
that the law takes its course while settling international disputes on construction contracts or
projects. The language use in arbitration should be kept friendly and accessible to both the
arbitrator and the disputing parties. Among the benefits of arbitration, include:
 Relatively quick in comparison to court proceedings
 Highly flexible
 A confidential process
The disputing parties can agree on an arbitrator of their choice with expected experience
The disadvantages include:
 Can have similar costs as those of litigation at court
 The disputing parties bear the responsibility of the cost the venue and arbitrators
 The arbitrator has limited powers to compel or sanction any of the parties that fail to
abode by the directions offered
 Appeal rights are limited during the duration of appealing

Mediation: This where the disputing parties get to meet at least once before the commencement
of the litigation so as to engage in discussions that would be more appropriate in the resolution of
the dispute. Among the benefits that come with mediation, include:
 Helps in keeping a business relationship
 Confidentiality of the proceedings
 Relatively quick as mediations last for not more than 2 days
 Less costly in comparison with litigation
 The mediator is the dispute is an independent person who does not advise, make
decisions or judge but instead facilitate engagements between the parties geared towards
resolving the dispute
The disadvantages are:
 The cost of mediation goes to waste and the dispute remain unresolved should the
disputing parties fail to agree
 The disputing parties risk disclosing confidential information to one another that may
work to the advantage of the opponent should the disputed matter be taken for trail in
litigation
Expert Determination: This is one of the most informal ways that is used in the resolution of a
dispute and is commonly used in cases where there is a valuation dispute. The option employs
the use of an expert who upon being agreed upon by the disputing parties, the decision would be
binding. Among the advantages, include:
 Quicker and less expensive in comparison with formal dispute resolution methods
 An economic way of finally resolving valuation disputes

The disadvantages are among them:
 Arbitration or further court proceedings are required in the enforcement of the report
from the expert
 Experts are less tied to legality and legal processes hence a hiccup to challenge the
judgment of an expert
4. How the dispute could be avoided
Prevention of a dispute in a construction project requires an in-depth understanding of the
particulars of the specific construction project to be undertaken. This calls for the need of
involving a third party who is impartial throughout the project’s lifecycle. Such impartial parties
may be a dispute review board and adds value through assisting the parties in coming up with
applicable techniques of preventing disputes among them risk assessment, partnering and
contract clauses. Risk assessment and allocation entailed the details of the scope of the project
and its definition. This is where the project is clearly defined to the contractor and any missing
information is availed before the project timelines are stipulated. The contractor is briefed on
what is expected of him from the project deliverables and this offers the contractor an
opportunity to organize the requirements as per the project. Partnering brings together the
various stakeholders in the construction of a project and ensures they both read from the same
scripts when it comes to setting the goals of the project.
Part B

1. Dispute resolution procedure for the organization
It is common that the construction industry would face disputes arising from various aspects of
the construction process. These disputes are facilitated by the hard nature of the economic times
and the fact that money and related resources have become scarce. In this light, no stakeholder in
the construction industry would be willing to take the burden of any risks that are associated with
failure to observe the required specifications of the task to be undertaken. Most of the disputes
may end up being sorted out in the corridors of justice a phenomenon.
Among the disputes that may arise in the organization, include the following:
Dispute over plans and specifications or scope of work: Such disputes in most cases occur
between the client and the main contractors. The contractors and sub-contractors at time tend to
interpret the documents presented to them differently especially in cases where the specifications
or the description of the scope of the work is either ambiguous or unclear. This can also be
experienced when the plans contradict the specifications.
Dispute over shop drawings and submittals: Result from delays in the timelines of the contractor
or the subcontractor. It can also be caused by delays in the timelines of the design professionals
that fail to respond to the various concerns in a timely fashion. This dispute can also because by
an interplay between the design professionals and the contractor or sub-contractor where the
design professionals reject for whichever reasons, which they may fail to give, the submittals
from the contractor or sub-contractor
Dispute over changes in the orders, introduction of extra or out of scope work: These go down
with the changes in the prices of orders. It as well concerns whether the contractor or the
subcontractor would be awarded more time to compensate the extra load. It is common that the

client would request for to be briefed over the price for the new order made only to end up
rejecting the payment adjustments and the extra time extension requested.
Dispute over differing site conditions: It is the responsibility of the client to disclose the
information on the prevailing site conditions of a construction site to the best of his knowledge
and ensure that the information disseminated is as honest as possible. A dispute may arise should
a contractor or subcontractor notice that the conditions encountered on the actual site are
different in terms of materials and composition from those availed in the contract documents and
that the conditions are unusual in nature. Under such circumstances, the contractor may request
for more money and time in order to deal with the differing site conditions.
Dispute over the substitution of a subcontractor: These mainly occur in states that offer
protection to subcontractors against substitution from bid peddling and bid shopping. In some
cases, the client may include approving a sub-contractor as part of the construction contract. The
likelihood of such a dispute arising tend to be very low as in most cases the client is never
charged with the responsibility of enforcing anti-doping laws and in do not quite often concern
themselves with what subcontractors do on the project deliverables and specifications.
Disputes over sequencing or project access: Access to the project site is by the contractor is
normally guaranteed. Disputes arise when the client fails or is not willing to allow the contractor
have access to such particulars as remodels of the occupied buildings, permits that are used in the
coordination of multiple prime contractors.
The organization may use the settlement document recognized under either the Employment
Relations Act or the traditional common law Deed of Settlement to document the disputes
settlement or resolution procedure. While using the Settlement Agreement as the document of

dispute, the organization would need to have a record of statement as part of the document.
Record of statement s used in the settlement of simple issues such as those regarding payments
as they provide an easier and cheaper means of enforcement of the dispute resolutions. A
Settlement Agreement would be ideal in the solution of complicated and more involving issues
that would require high levels of confidentiality and restraints of trade.
Dispute resolution processes that the organization may adopt are among them:
Arbitration- This is a dispute resolution option in which the disputing parties agree to get the
dispute resolved by a third party called the arbitrator. In this option, the resolution of the dispute
is based on the material facts, relevant principles of law and documents. Acts that govern
arbitration exist that ensure that arbitrations are rapid, fair and cost-effective besides ensuring
that the law takes its course while settling international disputes on construction contracts or
projects. The language use in arbitration should be kept friendly and accessible to both the
arbitrator and the disputing parties.
Adjudication: This is where a third party who is perceived to be neutral gives a decision on an
existing dispute and is in most cases referred to as pay first, argue later dispute resolution mode.
The decision made by the adjudicator is binding to both parties not unless or until it is revisited
and revised in litigation or arbitration. The client or the contractor upon winning the dispute
through the adjudication process then can apply to the Technology and Construction Court so as
to seek enforcement of the decision of the adjudicator.
Mediation: This where the disputing parties get to meet at least once before the commencement
of the litigation so as to engage in discussions that would be more appropriate in the resolution of
the dispute.

Expert Determination: This is one of the most informal ways that is used in the resolution of a
dispute and is commonly used in cases where there is a valuation dispute. The option employs
the use of an expert who upon being agreed upon by the disputing parties, the decision would be
binding.
2. The need for parties to a dispute to remain calm and proceed in a rational manner
It is very easy for a person to get mad or upset whenever an argument or a dispute comes up. It is
during these moments of being overwhelmed and carried away with anger that the situation is
most likely able to go from bad to worse. Remaining calm helps in washing over oneself the
anger, upset and rage that comes with arguments and reduce such feelings fairly fast. It is from
being calm that it becomes possible to deal with the issues that resulted into the dispute. That
way, through remaining calm or getting back to a state of calm helps in allowing the discussions
aimed at resolving the dispute to continue. Still, through remaining calm, one is able to make
prudent decisions as well as being able to diffuse the situation that is causing the dispute. This
makes solving the dispute a possibility within the shortest while possible.