A paper presented at a Shapiro Hankinson & Knutson and Revay & Associates joint seminar held in Vancouver, February 17th, 2004. Copyright, Bryan Shapiro, 2004.
Published here November 2004.

Introduction | Tailoring Your Contract to Your Project
Compatibility of Interests | Using Contracts to Achieve Dispute Prevention
Guiding Principles of Risk Allocation: 1, 2 & 3 | 4 | 5 & 6 | 7, 8 & 9 | 10, 11 & 12 
In Conclusion

Compatibility of Interests

The nature of the beast of construction being what it is, and as an indication of why construction disputes will likely be with us forever, no matter how sophisticated we become, one need only look at the volatile construction process. When the parties' objectives and interests are not compatible, their interpretation of contract documents, terms and conditions can diverge, leading to conflict.

The conflict-prone nature of construction projects is primarily based upon the incompatibility of the parties' initial interests and objectives. Incompatible project objectives are responsible for frequent disagreements on how to approach and complete a project. For example, on most construction projects, the owner wishes to obtain maximum quality, functionality, aesthetics and capacity at minimum cost. On the other hand, the contractor seeks to achieve financial goals that are advanced by expending the minimum resources required to meet a minimum scope of work.

Each construction project is unique, and requires a detailed analysis, prior to entering into a particular project delivery method. The parties on each project must assess specific project characteristics to develop a joint creative and effective approach to dealing with and resolving conflicts before they lead to disputes.

The structure of a construction project in terms of which project delivery method is employed, and the manner in which the parties relate to one another, can reduce or create conflict amongst multiple project participants. As an example, reviewing the traditional relationships on a design/bid/build delivery system, illustrates a situation where the design professional and the contractor have only a communication relationship with one another, but their roles on the project are defined in their separate contracts with the owner. Accordingly, it is important to ensure that both the design contract and the construction contract are compatible with one another, notwithstanding the fact that they represent entirely different relationships with the owner.

Because the owner and the contractor are expecting the consultant to provide certain contract administration functions during the course of the construction project, and as envisioned in the construction contract, it is important that the consultantís own contractual mandate with the client give him the power to perform those functions.

Tailoring Your Contract to Your Project  Tailoring Your Contract to Your Project

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