In the heart of New Zealand’s bustling construction industry, a pressing issue has been quietly gaining attention: disputes. These conflicts, ranging from minor disagreements to major project derailments, can have significant commercial impacts, causing delays, cost overruns, and damaged relationships. However, a recent study by Pramod Malaka Silva from Massey University is shedding light on how to avoid these disputes before they even begin.
Silva’s research, published in the journal ‘Construction Economics and Building’ (translated to English as ‘Construction Economics and Building’), focuses on pre-contract measures to avoid potential disputes in the New Zealand construction industry. This is a critical area, as disputes can have far-reaching consequences, including financial losses and reputational damage.
The study identified 84 pre-contract measures to avoid potential construction-related disputes, categorized under five themes: clarity & communication, risk management, proper documentation & standardization, review & continuous improvements, and collaboration. Silva explains, “The most responsible party or parties and the most applicable pre-contract stage for each dispute avoidance step have been presented. This is crucial because it provides a clear roadmap for industry professionals to follow.”
One of the most highlighted avoidance measures was clear scope documentation. Silva notes, “This is about ensuring everyone is on the same page from the start. It’s about managing expectations and preventing misunderstandings that can lead to disputes.” Another key measure was expectation management meetings, which help to align all parties’ understanding of the project’s goals and requirements.
The implications of this research are significant for the construction industry, particularly in the energy sector where large-scale projects are common. By implementing these pre-contract measures, companies can potentially save millions in dispute resolution costs and avoid project delays.
Silva’s research also paves the way for further studies. “This study has only been limited to construction projects in NZ that followed the traditional procurement path,” Silva says. “There’s a need to investigate dispute avoidance strategies for other procurement paths and to further study practically workable ways of documenting the construction scope clearly.”
As the construction industry continues to evolve, the need for effective dispute avoidance strategies becomes ever more critical. Silva’s research provides a valuable starting point, offering practical measures that can be implemented immediately. It’s a step towards a more harmonious, efficient, and profitable construction industry.