The Best Way to Mitigate an Owner’s Risk of Litigation

The cost of construction project disputes in North America has significantly increased. According to Arcadis’ 2021 Global Construction Disputes Report, the value rose from $18.8 million to a whopping $37.9 million. As an Owner, that dollar amount is undoubtedly alarming. Especially when the number one cause of disputes is contract misunderstandings. But before you go pushing the panic button, there are proven ways to avoid these construction project disputes altogether.

Construction projects include hundreds of moving parts and tons of stakeholders, and if you’re relying on email, calls, and revised spreadsheets to communicate changes, you’re leaving yourself wide open for confusion. Did everyone understand the change order? Did all the impacted stakeholders receive the change order? Even if they received it, did they open the document and actually read it? If you don’t have a clear audit trail for every construction document, your process could land you in litigation.

It’s essential for Owners to have real-time information on any project changes, delays or potential claim risks without relying on your GC, Architect or Engineer to bring it to your attention. After all, it’s your budget that’s being affected. When you have transparent access to all of your project data, you can identify those red flags as they occur and can take care of them before they become litigious problems – without having to play peacemaker between parties as they point fingers.

Resolve Communication Breakdowns

You need to ensure every project stakeholder knows their job responsibilities in order for your project to succeed. Owners, design teams, and General Contractors all need to collaborate on an early and ongoing basis – and clear communication is critical. If even one person on the project team misunderstands a change or misreads a spreadsheet, your project could hit a roadblock.

To keep everyone on the same page and to ensure every project team member works from the very latest information, you need one place to store and manage all construction documents. That way you can reduce your risk for costly rework because everyone has access to the most up-to-date designs. And if there is any confusion, teams can easily collaborate on project threads to get questions answered without stopping the entire project.

Use Audit Trails

Is there a way to resolve communication breakdowns? Implementing and following project management best practices is a great first start, but it doesn’t provide that much-needed audit trail that confirms stakeholders have opened critical documents like revisions and change orders. An owner-focused construction project management system is pivotal when it comes to decreasing your risk for disputes.

The right project management system, designed specifically for Owners, aligns your project teams and increases your project’s success rate. Teams always know where projects stand, information flows seamlessly into personalized task lists, and the latest documents are always available. No one works from outdated designs. And best of all, you have a complete log of actions taking place on every document. And when log entries aren’t editable, the audit record protects the integrity of the audit information, meaning the convenient “I didn’t get that project update” excuse is no longer valid. Just pull up the file on your phone and show them the date they downloaded it.

For example, one of our clients was facing an issue with his General Contractor. The construction team finished the new store, but unfortunately, it was completed based on old drawings. The GC declared he was not at fault because he didn’t receive the revised drawings. Our client was able to log into that project in Projectmates and take a screenshot showing the date and time the GC downloaded the document. When that audit trail was shared with the GC, he knew he was at fault and litigation was avoided.

Lower Your Risk

In a world where efficiency is key, you need to take advantage of the tools available to Owners that can help deliver construction projects on time and on budget. Even a small breakdown in communication can lead to confusion and, ultimately, delays. And, the more delays in your project, the higher your cost and the greater the potential for a dispute. The best and easiest way to insulate your company from disputes due to contract misunderstandings is to use the right construction project management solution. By doing so, you improve team collaboration and information sharing, which leads to productivity gains and cost savings.

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