Unit 1 Conflict : Disputes & Arbitration. Objectives List and group potential causes of complaints or disputes during construction Describe the actions.

Unit 1

Conflict : Disputes & Arbitration

Objectives• List and group potential causes of complaints or

disputes during construction• Describe the actions available to the parties in

the event of complaints or disputes arising• List and describes sources of external advice

available to the respective parties involving in the complaint or dispute

• Formulate a working plan to review each project with respect to avoiding and/or minimising complaints or disputes using proactive management techniques

Objectives

• Establish a contingency plan to accommodate unforseen complaints or disputes

Complaints

• Discuss complaints you’ve had on jobs• Processes to avoid and minimise these

complaints• List types of complaints you’ve had on the job• Disputes come in all forms• It is important to stop the complaint becoming

a dispute• Good communications• Good practice to avoid all disputes

Contracts• What is a Contract ?• Contracts are legally binding agreements

between private parties• Enforced by the Government through the courts• Everybody has freedom to contract anything

within the law• Parties to the agreement must comply to the

terms of the contract• Real or Perceived non compliance can lead to

complaints & disputes

Contracts

• Contracts should be used in all cases• Home building act requires that projects

valued over must have a written contract for the builder to be able to claim payment

• There are various types of contract• Standard form MBA, HIA• Standard form Department of Fair Trading• Specific purpose prepared by either builder or

client

Contracts

• What other ramifications on type of contract• MBA HIA contract usually favour builder• DFT usually favour client• Specific purpose contract – if somebody goes

to the trouble, you can guarantee it will favour the drafter of the contract

Contracts

• Remember contracts are legal documents• Make sure you understand the requirements

as you will be legally bound• Having this understanding of the

requirements will be the first step in minimising complaints

Complaints

• What is the most common type of complaint ?• Most complaints are caused by lack of

communication

Builder and Client Disputes

• Obviously between builder (you) and • Client (the person you’re building for)• Client may also include• Architect (Bayline v ……..Child Care)• Engineers• Financers (Wintertons Vs Hambros)• Architects and other professional agents of

the client – ultimate dispute is with client

Builders and Client Dispute

• Disputes may be wide and varied• Types of finishes specified in contract• More confusingly, items not specified in

contract lead to disputes• What type of bath ?• What type of skirting ?• Who pays power fees?• A building contract needs to be very detailed

Builder & Client Disputes

• Quality of Work• Is the same standard of work required in a

Department of Housing Unit as in a unit at Benalong Point

• Variations• Client always thinks it’s included builder thinks

it’s an extra


• Extension of time• Contracts will specify format of claim• How much delay is caused by rain ?• Client can’t make up mind in deciding of tiles• Is it a critical item ? – Not all delays are critical


• Performance and completion• What is the date for practical completion ?• This is dependent on delays, variations,

extension of time• Liquidated damages ?• Is the job complete ?


• Document interpretation• Specification says granite bench tops• Plans say laminate• Contract should specify order of precedent• Where does precontractual documentation

and correspondence fit in ?


• Progress payments• Has work been completed ?• Is payment due ?• Retention ?


• Disputes may affect • Cash flow• Company reputation• Which may in turn affect the viability off the

company• That’s why conflict resolution is an important

business management tool

Builder and Union

• Neglect award conditions• Neglect safety• Disputes may start from very minor issues e.g.

pie ovens, dim sim allowance• Disputes may cause stoppages which may be

very expensive

Builder and Sub Contractor

• These types of disputes are similar to client builder disputes

• Builder is normally called principal/head contractor

• Sub contractor contracts to builder contracts to client – Sub contractor cannot sue client under contract and vice versa


• Quality off work• Client, builder and Sub contractor may not

necessarily agree with each other on required quality of finishes

• Client, builder and Sub contractor may not necessarily agree on materials to be used


• Performance and attendance• Sub contractor may also claim extension of

times• Delay may not be caused by client issues – this

may lead to Sub contractor having more time to complete works than builder has with client

• Subcontractor may have many jobs• This conflict will inevitably lead to builder

client conflict


• Variations• Builder has two different contracts• First contract builder to client second contract

builder to contractor• Extremely rare to be same type of contract

inevitably there is conflict between the two• Example - Head contract may include rock

excavation, Sub contractor may not include it


• Payments• Payments scheduled on head contract may

not match Sub contract – affecting cash flow• What happens if client doesn’t pay and Sub

contractors payment is due – non payment is not caused by Sub contractor

Dispute Resolution

• What do you do?• Firstly try identify the cause

• You may be in the wrong

• It may be a simple misunderstang

Dispute Resolution

• Next Step?

• Meeting between the parties – try reach mutual agreement

Dispute Resolution

• Next Step – Dependant on Contract – Limited by Home Building Act

• HIA Contract Specifies meeting must be held within 10 days after formal notice of Dispute

• Independent Arbitration – not allowed!

Dispute Resolution – Non Residential

• Contracts dealing with non residential building contract will specify Dispute Resolution.

• May Specify Arbitration/Concilliation before any court action taken

• Legal Action may proceed through the courts or Consumer Claims Tribunal

Dispute Resolution

• Home Building Act requires that initial complaint to be made through Department of Fair Trading

• DFT will investigate and may issue rectification notice – notice is only advice

• DFT will not become involved in contractual matters

Dispute Resolution

• If DFT cannot resolve matter options are either

• Consumer Claims Tribunal (CCT) – has a mandate to solve disputes through conciliation. If this is not Possible will make binding ruling

• Magistrates, District and Supreme Court depending on limits

Consumer Claim Tribunal

• View CCT Video

Dispute ManagementSteps to Take

• Set up your contract requirements- use quotes from pre printed books with you conditions

• Note contract law requires that conditions are brought to notice of your client. Otherwise the conditions will not apply.

• These forms will evolve as you pick up mistakes


• Similarly use a standard form for your contracts

• This will also evolve as you pick up errors• Make sure your clients and subcontractors

clearly understand the contract.• Ensure that written contract reflects the

agreement and all its conditions


• Install a process of quality assurance

• This is more value on larger jobs

• This may be a requirement on government jobs

Company Working Plan

• This is simply a policy or plan of management practices that will reduce the chances of complaints & disputes arising

• This policy should be designed to prevent complaints developing into disputes

Documentation• All disputes should be documented • This will provide a good evidence trail in the

event the matter is taken further. Importantly

- the initial complaint- your response and your offers to settle (remember CTT has a mandate to settle disputes by conciliation)- keep minutes of any meetings, send a confirmation

Documentation

• Provides a working plan for future disputes

Contract

• It is important that contract reflects your agreement

• Complies with the requirements of the Home Building act- Be in writing- Binding Arbitration not allowed

Contract Administration

• Contract should be enforceable What should the contract cover

• Names of the Parties• Extent of Works• Payment Schedule• Dispute Resolution Process (Note Home Building

Act has specific procedures)• Required Notices – Extension of Time etc• List Others ?

Industrial Relations

• Employer has legal obligation• OHS – What is primary requirement?• A controller of a workplace must provide a

safe workplace to ensure the SAFETY of employees & visitors. Sec 9 OHS act (2000)

• An injury is evidence of breach. You have to mitigate


• Workers Compensation• Must have a policy that covers all employees• If no policy exists then employer is personally

liable• If you employ someone under A.B.N are they

an employee for Workers Compensation Purposes?


• Taxation, Rates of Pay, Superannuation• Employers must collect Tax and remit to ATO• 9% of Ordinary Time for superannuation


• If you employ someone under A.B.N are they an employee for Tax Purposes? – This a tax issue

• What is the 80/20 Rule


• If you employ someone under A.B.N are they an employee for Superannuation Purposes?

• – This is a Common Law Issue


• Management of the previous issues is important to avoid industrial disputes.

• If your workforce is not “WORKING” you aren’t making money. –

Your Overheads are still accumulating!

Contingency Plans

• Forecasting disputes

• Records and/or Experience will tell areas that traditionally lead to disputes – What have you found consistently cause disputes

• What use can previous records provide?

Planning & Organisation

• Once identified you can anticipate disputes

• You can take put management strategies in place

Controlling

• Define the Problem• Gain the facts• Review the evidence• Consider Alternatives• Develop plan

Co-ordination

• You as the builder must co-ordinate the process

• Manage the Client/Architect• Manage the Suppliers• Manage the Subcontractors

Review

• Forecast & Predict• Planning & Organisation• Controlling• Co-ordinating

Unit 1 Conflict : Disputes & Arbitration. Objectives List and group potential causes of complaints or disputes during construction Describe the actions.

Documents

client disputedisputes

client disputesperformance

client contractswhat

client disputesobviously

building contract

unforseen complaints

event of complaints

written contract