Resolving Business Disputes

Estimating Module & Buildxact

• Feedback was requested on the estimating module and the use of Buildxact software.

• One user expressed dislike for Buildxact, citing issues with quote accuracy compared to manual calculations.

• The software reportedly doubled up on costs, leading to significant discrepancies (e.g., 60) in estimates.

• The importance of understanding fundamental takeoff and quoting methods independently of software was emphasized, particularly using tools like Excel spreadsheets and obtaining direct quotes.

Resolving Business Disputes

• The main causes of business disputes are miscommunication and misunderstanding.

• The best approach to solve business disputes is in-house resolution through effective and positive communication is crucial.

• Initial steps include phone calls, emails, and meetings to clarify different positions and find mutually agreeable solutions.

• The goal of dispute resolution should be that no party feels unfairly treated.

• Understanding facts, figures, laws, regulations (including NCC), and explaining them clearly to the other party is vital.

• Often, disputes arise from fear and lack of understanding, especially when technical jargon is used.

• Solutions may involve written explanations, diagrams, examples, or photos to clarify the situation and reduce fear.

• If internal resolution fails, alternative dispute resolution (ADR) methods or state bodies can be used.

• Upcoming session will cover assessments and a role-play exercise involving interviewing disputing parties, recording the interaction, and uploading it.

Contractual Considerations

• Contracts using architects or building designers as administrators often involve bank guarantees and retentions.

• Understanding these contracts is important, as they can affect cash flow.

• Running a successful construction business requires not just trade skills but also business acumen, project management, and financial understanding.

Legal Framework for Building Work in Australia

• Building work in Australia is largely performed under contract and in conformity with common federal and state legislation.

• The legal system is categorized into common law and statute law (acts of parliament).

• Statute law originates from bills debated and approved by parliament, such as the Australian Consumer Law (ACL), part of the consumer competition act.

• Regulations provide finer details and mechanisms for legislation, updated periodically.

Evaluating and Resolving Disputes

• Gathering all relevant information is essential, including contracts, specifications, drawings, data sheets, and communication records.

• Changes occurring after the contract, such as variations, can impact quality, time, and finances.

• Variations, while potentially profitable for builders, can cause disputes if excessive.

• Verbal discussions should always be confirmed in writing to avoid misunderstandings, especially with clients unfamiliar with industry jargon.

• Clear scope of works, detailing inclusions and exclusions, helps prevent disputes.

• Examples of potential causes of disputes include delays, non-payment, and quality of work.

• Good communication can often resolve disputes in-house.

• Poorly written contracts and unclear documentation can lead to confusion.

• Builders range allowances can be a source of misunderstanding.

• Additional requirements imposed by authorities, variations, and delays in completion can also cause disputes.

• Most domestic building contracts include dispute resolution clauses, outlining steps to take if internal resolution fails.

Retention and Bank Guarantee

• Retention: A percentage (typically 5%) of the contract value withheld by the client as a guarantee that the builder will return to finish the job & rectify any minor defects within the defect liability period (DLP).

• Retention money is deducted from each progress payment until the agreed amount is reached.

• Half of the retention is released upon project completion, with the remainder released after the DLP (3-12 months).

• Example: For a 1,000,000 contract with 5% retention, 50,000 is withheld. If the DLP is longer prompt rectification of defects is incentivized.

*Bank Guarantee: An alternative to retention; the builder obtains a line of credit or credit card expiring on completion and after DLP in the client's name.
*If the builder fails to rectify defects, the client can use these funds to rectify the damages.
*Bank guarantees are more common in the commercial sector but can appear in residential projects too.

Statutory Warranties

• These are implied warranties by law, not always expressed in the contract.

• Example: In Victoria, structural work has a ten-year statutory warranty.

Breaches of Contract

• If suspending work, follow the correct legal procedures.

Quality Finishes

• Adhering to government tolerances, Australian Standards, and industry standards is important.

• Clients often research acceptable standards.

Payment Terms

• Deposit amounts are limited by state laws.

• Progress payments must adhere to act prescriptions.

• Builders cannot claim further payments beyond agreed stages.

• Delay in payments can lead to disputes with interest charges applicable as per contract.

Causes of Business Disputes Summary

• Contract and payment issues, differing opinions, dissatisfaction, and structural finish issues.

• Builders may need to absorb dispute costs for client relationship.

• Key personnel involved include reps, administrators, and architects.

• Conflicts often arise from misunderstandings or miscommunication.

• Outside parties include surveyors and authorities. Conflict: is any unhealthy relationship that causes stress.

• Healthy responses include empathy and positive communication while unhealthy responses include aggression or ultimatums.

Communication Skills

• Important skills are speaking and listening, use open questions, reframe to show active listening by clarifying or paraphrasing, summarizing and patience.

Contractual Arrangement and Responsibilities

• Analyze contractual arrangements and responsibilities, referencing relevant legislation like the Domestic Building Contract Act or Australian Consumer Law.

• New construction contracts must be in writing with plans and scope of works.

• Ensure all parties are on the same page regarding inclusions and exclusions to have proper expectation to avoid liability.

• Builders must document everything and carefully examine the information with facts to be on the right side of common law, consumer law and building contract law.

Privacy

• Protect client/employee data under the Privacy Act.

Risk Management

• Risk management involves establishing context, risk assessment (identification, analysis, evaluation), & risk treatment (mitigation, transfer, or acceptance).
  Risk = Likelihood \times Consequence
  Mitigation: insurance etc., Transfer: subcontractors, Accept: small stuff, Avoid: if you really wanna run away.

• Disputes can disrupt productivity, lower morale, increase stress, & harm reputation.

• Favorable recommendations are the best marketing strategy.

Dispute Resolution Guidelines

• Misunderstandings, non-compliance, & non-conformance can cause disputes.

• Attempt internal resolution first.

• Escalate through emails or registered mail.

• Lodge online applications with relevant organizations (HIA, council, etc.). The goal is to resolve, not simply win.

• There are two theories of conflict resolution - 1) mutual understanding 2) some wealth and power are always dominant.

• Organizations' policies should align with procedures to manage complaints.

• Document all information so that it is easy for senior manager to help find solutions and be sought after.

• Take all feelings out of it, get 3rd party to help, find expert lawyer to assist the members where possible.

• Healthy respect where resolution is possible is important. The best thing to do is to get facts down.
  Record: dates, times, what happened, why, where people are coming from in all conversations.

• It is very important to accommodate everyone given diverse groups of any community, document, negotiate and maintain a balance of everyone's interest.

Alternative Dispute Resolution (ADR)

• ADR involves non-court processes (negotiation, mediation, arbitration, litigation) to resolve disputes.

• ADR advantages include party control, time efficiency, cost efficiency, confidentiality, and relationship maintenance.

• Disadvantages: not legal precedence, not open to the public and not recorded.

*Mediation: Involves a neutral third party facilitating communication (psychologist) without giving opinions, is non-adversarial, and focuses on parties resolving the dispute. The mediator doesn't give opinions just try to facilitate what is being said.
*Expert determination: Involves an expert conducting an investigation and issues an opinion about who is more in the right. DBDRV.
*Conciliation: Is a process similar to mediation which is party driven.
Both verbal solution, written solution.
*Arbitration: Is a mini private court. This has all the lawyers and witnesses but very expensive.

Tribunals & Court System

• Tribunals such as VCAT and NCAT are alternatives to court, offering quick, informal, and lower-cost resolution. (although there is an extremely long wait list)

• The court system resolves state disputes through laws and regulations, but it is expensive ,is an adversarial process , judge made law and has a formal evidence of the process.

Dispute Resolution Procedure Summary

• Review, evaluate, analyze, identify risks, seek advice, secure agreements, interview parties involved, inspect, develop and offer solutions.

• In summary mutual resolution is satisfying everyone equally and should reference all obligations, decisions and the common law.

• Implement ADR, consult those who may have great experience with these processes and make sure to communicate with the clients. Is always a great idea to communicate and make sure clients can reach you. (to avoid the issue of suing)

Estimating Module & Buildxact

Feedback on estimating module and Buildxact software.

• User disliked Buildxact due to quote accuracy issues compared to manual calculations.

• Software doubled costs, causing discrepancies (e.g., 60) in estimates.

• Understanding takeoff and quoting methods independently of software is crucial (Excel, direct quotes).

Resolving Business Disputes

• Main causes: Miscommunication and misunderstanding.

• Best approach: In-house resolution via communication.

• Initial steps: Calls, emails, meetings for clarification.

• Goal: No party feels unfairly treated.

• Understanding facts, laws, and clear explanation is vital.

• Disputes arise from fear/lack of understanding (technical jargon).

• Solutions: Written explanations, diagrams, examples.

• If internal fails: ADR or state bodies.

• Upcoming session: Assessments, role-play, recording interactions.

Contractual Considerations

• Contracts with architects/designers involve bank guarantees and retentions.

• Understanding impacts cash flow.

• Successful business: Trade skills, business acumen, project management, financial understanding.

Legal Framework

• Work under contract, federal/state laws.

• Legal system: Common law and statute law.

• Statute law: Bills approved by parliament (e.g., ACL).

• Regulations provide details, updated periodically.

Evaluating/Resolving Disputes

• Gather all info: Contracts, specs, drawings, records.

• Changes after contract (variations) impact quality, time, finances.

• Variations: Potential disputes if excessive.

• Confirm verbal discussions in writing.

• Clear scope of works prevents disputes.

• Dispute causes: Delays, non-payment, quality.

• Good communication resolves in-house.

• Poor contracts/documentation cause confusion.

• Builders range allowances can be a misunderstanding source.

• Additional authority requirements, variations, delays also cause disputes.

• Most contracts include dispute resolution clauses.

Retention and Bank Guarantee

*Retention: 5% withheld as guarantee for finishing job & rectifying defects (DLP).

• Deducted from progress payments until agreed amount reached.

• Half released upon completion, remainder after DLP (3-12 months).

• Example: 1,000,000 contract, 50,000 withheld.
  *Bank Guarantee: Alternative to retention; line of credit expiring after DLP.

• Client uses funds if builder fails to rectify defects.

• More common in commercial sector.

Statutory Warranties

• Implied warranties by law.

• Example: Victoria, structural work has a ten-year statutory warranty.

Breaches of Contract

• Follow legal procedures if suspending work.

Quality Finishes

• Adhere to government/Australian/industry standards.

• Clients research acceptable standards.

Payment Terms

• Deposit amounts limited by state laws.

• Progress payments adhere to act prescriptions.

• Builders cannot claim further payments beyond agreed stages.

• Delay can lead to disputes (interest charges).

Causes of Business Disputes Summary

• Contract/payment issues, differing opinions, dissatisfaction, structural finish issues.

• Builders may absorb costs for client relationship.

• Key personnel: Reps, administrators, architects.

• Conflicts: Misunderstandings/miscommunication.

• Outside parties: Surveyors, authorities.

• Conflict: Unhealthy relationship causing stress.

• Healthy responses: Empathy, communication. Unhealthy: Aggression, ultimatums.

Communication Skills

• Important skills: Speaking, listening, open questions, reframing (active listening), summarizing, patience.

Contractual Arrangement and Responsibilities

• Analyze arrangements, referencing legislation (e.g., Domestic Building Contract Act, ACL).

• New contracts: Written with plans and scope.

• Ensure all parties agree on exclusions/inclusions to avoid liability.

• Builders must document everything, examine information with facts.

Privacy

• Protect client/employee data under the Privacy Act.

Risk Management

• Risk management: Context, risk assessment (identification, analysis, evaluation), & risk treatment (mitigation, transfer, or acceptance).

• Risk = Likelihood \times Consequence

• Mitigation: insurance etc., Transfer: subcontractors, Accept: small stuff, Avoid: if you really wanna run away.

• Disputes disrupt productivity, lower morale, increase stress, harm reputation.

• Favorable recommendations best marketing strategy.

Dispute Resolution Guidelines

• Misunderstandings, non-compliance, & non-conformance cause disputes.

• Attempt internal resolution first.

• Escalate through emails or registered mail.

• Lodge online applications (HIA, council, etc.).

• Goal: Resolve, not win.

• Two conflict resolution theories: 1) Mutual understanding 2) some wealth and power are always dominant.

• Organizations align policies with complaints procedures.

• Document everything for senior manager assistance.

• Remove feelings, get 3rd party help, expert lawyer assistance.

• Healthy respect where resolution is possible is important.

• Record: Dates, times, events, reasons.

• Accommodate diverse groups; document, negotiate, balance interests.

Alternative Dispute Resolution (ADR)

• ADR: Non-court processes (negotiation, mediation, arbitration, litigation).

• ADR advantages: Party control, time/cost efficiency, confidentiality, relationship maintenance.

• Disadvantages: No legal precedence, not open to the public, not recorded.
  *Mediation: Neutral party facilitates communication (psychologist) without giving opinions, is non-adversarial, focuses on resolution.
  *Expert determination: Expert investigates and issues opinion.
  *Conciliation: Process similar to mediation.
  *Arbitration: Mini private court (expensive).

Tribunals & Court System

• Tribunals (VCAT, NCAT): Alternatives to court, quick, informal, lower-cost.

• Court system resolves state disputes; expensive, adversarial, formal evidence.

Dispute Resolution Procedure Summary

• Review, evaluate, analyze, identify risks, seek advice, secure agreements, interview,