When companies in Louisiana and elsewhere enter into a contract with a federal agency to construct a building or design an addition to a current structure, much time, effort and planning must be exerted. These are frequently huge projects with tight deadlines. However, even the most carefully planned construction project is not executed without any flaws or setbacks. Thus, it is important to understand why construction disputes occur in a federal contract so proper steps can be taken to remedy them.
Based on a 2015 study, it was discovered that the most common cause for construction disputes when a federal agency is a party was due to cost adjustment denial. Cost changes in these types of contracts frequently occur due to unforeseen problems or issues that arose over the course of the construction project.
This study also found that construction disputes in a federal contract also arose due to the failure to communicate. In these matters, it was discovered that both parties failed to communicate important information or details. These types of projects are frequently complex and involve a significant amount of upfront communication to not only plan the project but also reach a consensus on the issues arising throughout the process.
With regards to the denial of cost adjustments related to unexpected problems or issues arising over the course of the project, these disputes are most commonly centered on misunderstandings regarding the specifications of the project. In situations where the government agencies were deemed to be at fault, the recent study found that the resulting disputes occurred because the government agency failed to properly communicate the changes in specifications.
While the basis for a construction dispute can vary, it is essential to determine the cause and whether there is a workable resolution. This will not only help the project stay on track but also help the non-breaching party recover any damages incurred.
Source: Ibamag.com, “Communication key to avoiding construction disputes with federal agencies,” Allie Sanchez, July 4, 2016