Dispute risk rises as NI construction industry begins recovery

A survey by the Federation of Master Builders and Chartered Institute of Building (CIOB) found a 36% increase in workloads for construction firms based in the region, with sentiment improving among builders.

But with the same report warning of a sharp rise in problems finding skilled labourers and increased costs, the door has been opened to much greater risks for firms operating in Northern Ireland of disputes and contractual issues impacting on projects.

“While a rebound in building activity is welcome news, these often bring with them a surge in contractual friction,” warned Jennifer Lee, an expert in construction disputes with Pinsent Masons in Belfast.

“As projects resume or accelerate, parties may find themselves grappling with a greater risk of delay claims, especially with supply chain disruptions and labour shortages which could cause projects to slip.

This also brings an increased risk in cost escalation disputes and pricing conflicts as projects evolve to adapt to market conditions.” 

The survey found that that 77% of builders had been hit by a lack of skilled tradespeople affected their work, with plumbers and heating installers the most difficult to find.

This las led to a rise in delays, with 50% of survey respondents reporting projects had been held up, and 39% admitting it had caused cancellations.

Pinsent Masons’ building disputes expert Meghan Kirk said the FMB’s call for support for small and medium sized building firms in the current market showed the risks the sector faced.

“SMEs often lack the legal resources to manage complex disputes, making them vulnerable to aggressive claims or payment delays,” she warned.

“All companies but especially SMEs should conduct proactive risk management, including early legal review of contracts, and clear documentation around delays and making use of use of adjudication to resolve payment disputes.”

“In this climate clarity and robustness of contract terms will be critical.”