Navigating Construction Disputes: A Guide to Resolution

By BMA Law Research Team

Direct Answer

When a construction dispute arises, the first step is to review the contract for any mandatory dispute‑resolution clause. Most commercial construction contracts require the parties to give written notice of a claim, attempt a good‑faith negotiation, and then proceed to mediation or arbitration under the rules of the American Arbitration Association (AAA) or JAMS. If the contract does not contain such a clause, the parties can still elect arbitration under the Federal Arbitration Act, 9 U.S.C. §§1‑16, which permits an agreement to arbitrate even if it was not originally in the contract.

After notice is given, gather all relevant documentation, drawings, change orders, daily logs, invoices, and correspondence. Preserve any physical evidence, such as defective work, because the parties may need to present it during mediation or arbitration. Engaging a neutral mediator early can help clarify the issues, narrow the scope of the dispute, and often lead to a settlement without the cost and delay of litigation. If mediation fails, filing an arbitration demand under the chosen rules sets a timetable for discovery, hearings, and a final award that is enforceable under the Federal Arbitration Act.

Key Takeaways

• Check the contract for mandatory notice and dispute‑resolution procedures.
• Provide written notice of the claim within the time frame specified in the contract.
• Collect and preserve all project documents and physical evidence promptly.
• Consider mediation first; it is confidential, faster, and less costly than arbitration.
• If mediation does not resolve the issue, proceed to arbitration under AAA or JAMS rules, which are enforceable under the Federal Arbitration Act.

Why This Matters

Construction projects involve large sums of money, tight schedules, and multiple subcontractors. A unresolved dispute can halt work, cause cost overruns, and damage relationships that are essential for future projects. Moreover, court litigation often takes years and may result in a judgment that is difficult to enforce across state lines.

By following the contract’s dispute‑resolution process and using mediation or arbitration, parties can resolve conflicts more quickly, keep control over the outcome, and protect their financial interests. An enforceable arbitration award provides a clear, binding resolution that can be executed under the Federal Arbitration Act, reducing the risk of prolonged uncertainty.

How It Actually Works

1. Collect and organize all project documents. Gather contracts, change orders, payment records, correspondence, and any site logs that show the timeline of work and disputes.
2. Identify the dispute resolution clause. Review the construction contract to determine whether the parties agreed to arbitration, mediation, or a hybrid process, and note any procedural requirements such as notice periods.
3. Send a formal demand or notice of dispute. Under the Federal Arbitration Act and most state statutes, a written notice triggers the dispute‑resolution mechanism and preserves the right to proceed.
4. Select a neutral forum and professional. Choose an arbitration or mediation provider (e.g., AAA or JAMS) and a neutral arbitrator or mediator with construction‑industry experience.
5. Prepare a concise case brief. Summarize the facts, legal theories, and relief sought; attach supporting evidence such as invoices, photographs, and expert reports.
6. Engage in the chosen process. Participate in mediation sessions or submit pleadings and exhibits for arbitration, following the procedural rules of the selected organization.
7. Obtain and enforce the outcome. If arbitration yields an award, file it in the appropriate court for confirmation under the Federal Arbitration Act; if mediation produces a settlement, draft a binding written agreement.

Common Mistakes

• Waiting too long to issue the required notice of dispute, which can forfeit arbitration rights.
• Failing to preserve electronic communications and metadata that may be essential evidence.
• Choosing a neutral without specific construction expertise, leading to misunderstandings of industry standards.
• Submitting incomplete or disorganized evidence, causing delays and weakening the party’s position.
• Ignoring the procedural deadlines set by the arbitration rules, resulting in dismissal of claims.
• Relying on informal settlement talks without documenting the terms, making enforcement difficult later.

Frequently Asked Questions

Can I compel a contractor to continue work through arbitration?

Arbitration itself does not order performance; it resolves the dispute over what has already occurred. If the arbitrator finds the contractor breached the contract, the award may require payment for unfinished work or damages, but it cannot force the contractor to resume construction. Enforcement of any monetary award is handled through the court system.

What is the difference between mediation and arbitration for construction disputes?

Mediation is a voluntary, non‑binding process where a neutral facilitator helps the parties reach a mutually acceptable settlement. Arbitration is a binding adjudicative process; an arbitrator hears evidence and issues a decision that is enforceable under the Federal Arbitration Act and most state laws.

How long does a typical arbitration take in a construction case?

Timing varies with the complexity of the project and the rules of the chosen forum, such as the American Arbitration Association. Most construction arbitrations are scheduled to conclude within three to six months after the hearing, though expedited procedures can shorten that window.

Are arbitration awards enforceable in state court?

Yes. Under the Federal Arbitration Act, an award may be confirmed and entered as a judgment in any state court, giving the prevailing party the same enforcement mechanisms available for court judgments.

Next Steps

If you are facing a construction dispute, gather all relevant contracts, change orders, and communications, then consult a qualified mediator or arbitrator to assess your options. Promptly initiating the chosen process can preserve evidence and reduce the time and cost of resolution.