Contractual Claims and Dispute Resolution

Contractual Claims and Dispute Resolution

Introduction

The construction industry is one of the most prone industries to issues concerning disputes related to delays. All the stakeholders should, therefore, be well informed on the actions and procedures that they should take in case such disputes arise. The delivery of a project on time and according to the stipulated budget is something that of importance in the construction industry. However, looking at the situation o the construction industry, it is evident that delays in projects are very difficult, if not impossible, to avoid. These delays could happen at any stage of the construction period from the start to the completion of the project. The unsuccessfulness of completion of projects in time is very common, and contractors should, therefore, be able to make their claims in case there arise disputes due to delays.

In cases where the delays are not a result of the contractor’s fault, then they should not be asked to make a payment or incur pay cuts for compensations of the delays. Various factors may lead to delays in payments. The three major categories that cause delays in the construction industry include the internal environment, input factors, and exogenous factors.

To be able to solve disputes related to delays in construction, it is crucial to first understand the nature of the delay so as to establish the steps to be followed in dealing with the delay. Delays may either be excusable or inexcusable. For instance, delays that occur due to unforeseen factors such as bad weather or new government laws and regulations pertaining to the contract are excusable. Delays are also excusable when they are caused by unusual and untimely deliveries by the other party or change in transportation deal and adjustments of schedules by the other party.

 

 

Statement of the Problem

In this issue, the dispute is between Reactor Assembly Co (RAC) and Unscrupulous Contractors Limited (UCL). RAC engaged UCL to install a nuclear reactor at a new nuclear power plant. The completion date was 14 February 2019, but as of now, the works are still far from complete. This does not go well for the employer (RAC) as they are keen to avoid negative press as the project is very high profile. The project is also being undertaken under the NEC3 Engineering and Construction Contract and provides for Delay damages (liquidated damages) at a £ 1million per day from the Completion date. This has prompted RAC to start reviewing the bids submitted by contractors for the remaining two reactors and wants UCL to make compensations for the delayed damages. However, UCL has made no compensation plans and considers it may have a claim for time and money due to various reasons that contributed to its delay in completing the project. RAC, on the other hand, implies that it may make deductions or claims for various reasons, including delays and defective works.

This report contains an analysis of how UCL can advance its claims and respond to RAC’s claims. It explores the claims of both the employer and the contractor so as to determine the nature of the dispute and address the different approaches than UCL can use in order to resolve the existing dispute while making its claims. The aim is to ensure that while making its claims and responding to those of RAC, UCL does not end up losing its contract. UCL needs to maintain its relation with RAC in order to secure the construction of the other two reactors that are yet to be started. Therefore, it is important to consider dispute resolution methods that are more accommodating, compromising, or resolution oriented than competitive or forceful ones in order to maintain a good relationship with the employer and be able to secure another contract.

Analysis of the Dispute