Performance of international construction and engineering contracts is often spread over several years and involves considerable amounts of money.
Performance of international construction and engineering contracts, such as tunnels, dams, bridges, highways and university complexes, is often spread over several years and involves considerable amounts of money. Small-value, short construction time and repetitive construction contracts are an exception to this general rule. Disputes may arise because:
Work performed does not comply with the contractual requirements;
Work is not completed within the contractually stipulated time;
Construction requires new or more materials or structures (variations) that were not provided in the contract and the agreed price;
Government authorities impose new requirements that materially impact the scope and cost of the works;
Subcontractors do not perform in accordance with the contractual stipulations agreed between the main contractor and the owner;
Owner fails to provide a payment guarantee or fails to pay some or all of the agreed price;
Contractor fails to provide a performance guarantee or other required guarantee.
Often several disputes may have to be settled during the various phases of a construction project. It is important to Aoid interrupting the construction schedule while these disputes are being addressed. Because of the length, scope and high costs of operations in construction contracts, elaborate dispute resolution clauses are often developed, either on an ad hoc basis or in accordance with established standards.
Large project tend to include a combination of both a dispute board and arbitration. Differences arising during a long term construction project are first submitted to the dispute Board while the project continues. Disputes not resolved by the dispute board are later referred to arbitration.
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