Escalation Ladders
Disputes are inevitable. Good contracts provide a structured "ladder" to resolve them without burning the project to the ground.
Before the Ladder: Notice and Evidence
Most disputes are won or lost on process, not principle. Builders protect themselves by being disciplined:
- Give notice early: follow contract notice clauses for variations, delays, latent conditions, and direction disputes.
- Keep contemporaneous records: diaries, photos, emails, meeting minutes, program updates.
- Separate facts from emotion: “what happened, when, who directed it, what it cost, what it delayed”.
1. Senior Executive Negotiation
The first step is usually a formal meeting between senior decision-makers (not the site foreman and the client's rep who are arguing) to try and do a commercial deal.
2. Mediation
An independent third party facilitates a discussion. The Mediator does not decide who is right; they just help the parties reach an agreement. It is non-binding until a settlement deed is signed.
3. Adjudication (SOPA)
A "pay now, argue later" system. An independent Adjudicator reviews the Payment Claim and Schedule, decides on a "progress payment" amount, and enforces it. This is fast (weeks) and keeps cash flowing, but it doesn't permanently resolve the contractual rights.
4. Arbitration / Litigation
The nuclear option. Expensive, slow, and public. Everyone loses except the lawyers.
Practical Ways to De-Escalate
- Use a “without prejudice” channel: separate settlement discussions from formal contractual positions.
- Offer options: propose 2–3 settlement paths (time, cost, scope) so the other party can choose a face-saving outcome.
- Protect the program: agree interim arrangements so the site doesn’t stall while paperwork catches up.
Builder’s note: dispute clauses are contract-specific. Always follow your contract steps and time bars—missing a step can cost leverage later.