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Difficult conversations

Escalation paths: taking a dispute up the chain calmly

By Review.LivePublished 3 min readHow we write

For the second month running, the owner's payment certifier has cut $86,000 from your progress claim with a one-line note: "disputed extras". Your emails to the owner's project manager have gone unanswered for three weeks. The subcontractors who did the work have started calling about their own payments.

Four people meet around a table in a glass-walled meeting room, seen from the landing outside.
Photo: Rodeo Project Management Software on Unsplash

A dispute escalated in anger — a threatening letter, a slowdown, a call to the owner's president — hardens positions, and skipping the contract's steps can cost you rights. Dispute resolution is a process set out in the contract; it can include negotiation, mediation and arbitration. One federal department's construction conditions, for example, give the contractor fifteen working days to dispute a decision in writing, then require negotiation at project level and then at senior level before mediation.

  1. Read the dispute clause first: the steps, the notice, who takes part at each level and every deadline.
  2. Keep building unless your contract or your lawyer says you may stop; some contracts require you to continue during a dispute.
  3. Give notice in the form the contract sets: the decision you dispute, the amount, the clauses you rely on and what you ask for.
  4. Meet at project level first with a one-page summary of the facts, the backup and the gap, and record what was agreed.
  5. Escalate to the next level — your principal and the owner's senior manager — when the contract's time for the first step runs out.
  6. Move to the third-party step the contract names, such as mediation or arbitration, with legal advice.
  7. Put any settlement in writing, signed by people with authority.

Moving up a level

  1. You:We've met twice at project level and we're still $55,000 apart. Under the contract, the next step is our principal and your director.
  2. Owner's PM:Is that a threat?
  3. You:No. It's the process we both signed, and the work carries on as normal. I'll send a one-page summary tomorrow and propose two dates.

Common mistakes

  • Missing a notice deadline while trying to sort it out informally.
  • Slowing the work as leverage.
  • Going around the owner's project manager without telling them.

Action list

This week, if a dispute is building

  1. Find the dispute clause and list every deadline
  2. Write a one-page summary: facts, amount, clauses, request
  3. Send notice in the form the contract requires
  4. Book the project-level meeting
  5. Keep the work going
  6. Tell the affected subcontractors what is disputed and what comes next
  7. Record each step with a date

Check your understanding

Why follow the contract's steps when a call to the owner's president might settle it faster?

Show the answer
Skipping a step can cost you the claim if a notice or deadline is missed, and it embarrasses people you still work with. The contract's levels bring in more authority one step at a time, with the facts already on paper, which persuades a senior manager far better than an angry call.

Sources

  1. Contract Administration in Construction ContractsOffice of the Procurement Ombud, Government of Canada · accessed
  2. Construction general conditions, GC8 – Dispute ResolutionFisheries and Oceans Canada · Canada, federal (one department's standard construction conditions, dated April 13, 2011; an example only — your own contract governs) · accessed
  3. Jurisdiction and Powers (adjudication under the Construction Act)Ontario Dispute Adjudication for Construction Contracts (ODACC), the Authorized Nominating Authority under Ontario's Construction Act · Ontario, Canada · accessed

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