It’s vital to create good relationships with everyone we work with, including employees, colleagues and in the context of this article, contractors. However, as good as those relationships may be, it is still likely that issues will arise. A disagreement can escalate into a dispute, and before we know it, we’re losing time, money and potentially even the relationship. Knowing how to deal with conflicts when they arise, and they will, can save disruption to a business. By having an issue resolution process in place, you can be confident that disputes will be resolved efficiently.

Why do Issues Arise with Contractors?

So, if we’ve worked hard to build relationships with our contractors, why do disputes happen? Unfortunately, misunderstandings are a part of life, and when it comes to business and money, it’s not so easy to agree to disagree. Disputes can be caused by:

  • A real or perceived violation of a contract and its obligation
  • A lack of understanding of the conditions of a contract
  • A delay on a contract
  • A failure to deliver on a contract
  • A claim that is unsubstantiated or incomplete
What Happens when Disputes Aren’t Managed?

The main result of poorly managed disputes is that they cost your business time and money. If the necessary contractor safety management isn’t in place, you may suffer long term damage to your business, its reputation and your relationship with the contractor.

When disputes are poorly managed and escalated, they can lead to a breach of contract. When this happens, the contract may be terminated, or a claim made against a contractor’s surety bonds. When disputes can’t be settled, they may even end up going to court, an expense that every business should try to avoid.

What is an Issue Resolution Process?

An issue resolution process is just that, a process to help resolve issues. The intent is to make things easier for all involved when an issue arises and to get to a solution as quickly as possible. Having an issue resolution process in place doesn’t mean creating another complicated document with rigid rules, jargon and communication flows. It does, however, need to be a well-defined, step-by-step process for how differences in opinion will be communicated, managed and addressed.

Issue Resolution Methods

An issue resolution process within a contract clearly sets out the steps each party should follow in the event of a dispute. The steps follow a logical progression, aiming to help the dispute to be resolved with as little disruption as possible. However, the steps cover all eventualities and explain the process should the dispute end up in court. Key issue resolution methods include:

  1. Negotiation – communication is key within every business and should be the first port of call in the event of a dispute. By approaching negations calmly and professionally, listening and being prepared to compromise, expensive and time-consuming legal proceedings can be avoided.
  2. Mediation – when negotiation between the two parties isn’t sufficient, a third-party can be used to give a neutral opinion. While mediation isn’t a legally binding process, it can be an effective way to resolve the situation.
  3. Adjudication – when mediation isn’t effective and the two parties can’t find a resolution amongst themselves, an adjudicator can be used to give a final decision. This takes the decision away from the parties involved; however, the adjudicator’s decision may still need to be taken to court to be enforced.
  4. Arbitration – this again uses an independent third-party but in a more structured process. The arbitrator will consider all documents and facts and can decide in favour of one party or the other. Arbitrations can be legally binding, but the costs are significantly higher than other methods.
  5. Litigation – when there is no other method found to resolve an issue, it can end up going to court. Litigation involves a trial and is legally binding and enforceable. This is the most costly and time-consuming way to resolve a dispute.
How to Reduce the Possibility of Disputes Arising

Better still than any of the issue resolution methods we’ve talked through is not facing the issue in the first place. Fortunately, you can take proactive steps before working with any contractor to try to avoid disputes. Preventive measures include careful and detailed planning, identifying risks in advance and creating the processes and systems to ensure a safe working environment for everyone involved.

Hopefully, you won’t need to use it, but by having contractor safety management in place that includes an issue resolution process, you should be able to save time, money and stress while keeping your business running smoothly.

For more information contact us on +61 2 8883 1501, or subscribe to our newsletter for regular updates.

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