Bigger and More Complex Projects: Mediation

When growing a construction firm, and adding larger, more complex projects, it’s realistic to anticipate that more complex disputes are a possibility too. Since litigation turns out to be costly and disruptive to relationships, reputations, and the bottom line, mediation is an important strategy to keep front and center—and even include in a contract via a clause. Read on for guidance on leveraging mediation to keep your business moving forward.

Structured Negotiation Process 

At For Construction Pros, Scott Belton of HUB International explains that mediation is “a confidential, nonbinding process in which all parties agree to seek a resolution to the dispute outside the usual legal channels. Through a structured negotiation process with a trained mediator, parties work together to create an outcome that is acceptable to everyone.” Because construction mediators bring industry familiarity to the issue at hand, they can often drive problem solving negotiations to quicker, less costly, and less damaging resolution than traditional courtroom processes. Noting that “Mediation groups in the construction space claim a success rate of 85-90%,” Belton shares these advantages of using mediation for dispute resolution:

• Time. Meditation is typically resolved within a few days. There’s no need for lengthy trial planning or waiting for a court date. The project doesn’t have to come to a grinding halt while you sort things out. The leaders come together fairly quickly to discuss the issue and reach a resolution so everyone can get back to work.
• Money. Of course, with a smaller time investment, there’s also no need to pay lawyers and expert witnesses….
• Relationship. When two parties participate in a drawn-out litigation, there’s a near guarantee that you’ll never work together again….When both sides come together voluntarily to resolve a problem, both sides can feel like the winner and there is an easier path forward.
• Reputation.…Lawsuits can be very public, with all the gory details shared….But mediation is more private and it leaves all sides in a positive light. 

Take The Work of Contracting Seriously

Although mediation can be effective, it’s of course better to prevent major conflicts in the first place. Toward that end, remember that a properly written contract can actually serve as the roadmap to resolution in the event conflicts do arise while work is underway. James Gallagher of Resolution Management Consultants advises carefully reviewing construction contracts to avoid these three common mistakes:

• A detailed process for communicating and handling changes is lacking.

Virtually all projects experience changes during their construction.  Contracts should stipulate a formal process for communicating, approving and making changes that is followed by all and approved by all….

• The Force Majeure clause needs to be updated.

….The concept of Force Majeure has evolved to include modern day catastrophes, such as the pandemic, global supply chain interruptions, wars and other calamities. In modern construction contracts, it is important that Force Majeure clauses are revised to provide for today’s realities.

• Project scope is not well-defined, or the wording is too general.

For example, instead of writing “install lighting,” the scope should include a detailed description of the complete scope and steps for the lighting project. Different people understand things differently. The best contracts enable all parties to understand the same things the same way.

While in contract, it’s also a wise idea to include a mediation clause, as Belton explains: 

“While you don’t have to be contractually bound to agree to mediation, it can be challenging to get both parties to agree to mediation after a dispute has arisen. That’s why many organizations add a clause to the contract stipulating that any disputes should go through mediation in an effort to resolve them. Many professional associations offer standard language construction firms can use in their contracts that you can use.”

Good To Know: Performance Bond?

A performance bond guarantees that a contractor will complete a project according to the contract, protecting the project owner if the contractor defaults. Colonial Surety Company issues performance bonds directly as the carrier, with online application and fast turnaround. Because Colonial Surety Company is the bonding company rather than a broker, contractors get underwriting decisions and bond issuance without an intermediary, which matters when a bid or contract award is on a deadline.

Ready to Get Growing?

Colonial Surety Company makes pain-free, easy and speedy surety bonds of all kinds, including Bid Bonds, Performance Bonds, Payment Bonds–and many more. 

Colonial Surety Company supports construction businesses of every size, in every state, with our specialized bond programs. 

As direct bond writers, we work directly with you—no more waiting around, shuffling back and forth or tagged on fees. 

For Bonds up to $500K: Use our Hometown Bond Program. It is credit-based, with no financial statements required. 

For Larger Bonds: Get armed with single and aggregate bonding limits, in writing, and even issue your own instant Bid Bonds, via The Partnership Account® for Contractors. Once qualified, get a surety bond line of credit for up to 20 million single, and 40 million aggregate. Receive free financial scores just for completing our easy pre-qual

Surety Bond programs for construction businesses of every size are right here: 

Bonding Programs at Colonial Surety Company

In business since 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Let’s connect today: Colonial Surety Company.