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Thompson Builder on Common Reasons for Litigation in Construction – What Can Businesses Do to Avoid Pressing Legal Issues?


Construction companies big and small start their projects with the intentions of abiding by the contract between them and their clients. This means that, if things do not go according to plan, companies may have to deal with both an unsatisfied customer and the potential for legal disputes.

Thompson Builders-a Bay area-based general construction services company- knows that there are many issues in the world of construction that can end in litigation. To help construction businesses evaluate their risk for legal troubles, Thompson Builders examines a few of the most common reasons for litigation in the construction industry.

Delays and Timeline Conflicts  

It is not uncommon that construction work takes longer than expected. You never know when you are going to start a project and discover issues that require additional work, or if inclement weather will negatively impact the timeline.

One difficult aspect of delays is that, even if they are not directly the fault of the company, there can still be penalties and potential lawsuits.

According to Thompson Builders, litigation due to delays and timeline conflicts can best be mitigated by keeping clear expectations of the job. It may not be possible to control weather, natural disasters, or the status of sick or injured employees, but several aspects of communication are within a company’s control.

Construction companies should be sure to reach out with updates in the event of a delay, as these can help strengthen documentation by showing that there is an explanation for halted work. Companies that try to hide problems out of fear of upsetting clients run the risk of making a situation even worse.

Quality of Completed Projects

In California, construction companies need to adhere to some of the highest safety and industry standards in the industry- and the same is true in a variety of other states as well.

There are many reasons that a completed project can differ from expectations, however, if a build is unsafe or fails to meet project specifications it can be grounds for a lawsuit.

Avoiding issues like these means ensuring that your company is abiding by procedures and completing tasks to the best of their ability. If the issue is a consequence of issues such as a lack of time, consider discussing it with a client rather than rushing through a job.

Fixing flawed construction will mean more labor, costs, and time will be needed from your business. For this reason, it is best to get the project done within the discussed specifications the first time. Keeping documentation along the way and tracking the progress of a build will help you proactively catch issues before they become a major problem.

Workplace Injuries

Construction sites can be dangerous places. Even with safety protocols and common sense, accidents in the industry still occur every day.

Workplace injuries are a common reason for litigation in construction in part because there are a lot of things to consider when establishing fault. Workers who have not had proper safety education or are working in unsafe conditions often have a strong legal case if prevented from accessing workers’ comp.

Thompson Builders knows that litigation involving these injuries is best avoided by maintaining a safe environment for employees. This involves ensuring that construction sites are as safe as possible- meaning there are no tools or equipment are where they shouldn’t be, workers are well educated on safety principles, and projects are not expected to continue if things become unsafe.

Injuries can be devastating both to a worker and to a company. If you take care of the wellbeing of those responsible for carrying out a job, many of the most common sources of injury can be prevented.

Project Abandonment

If a property owner feels as though a construction company has abandoned a project before it has been completed, they are well within their rights to consider litigation. After all, an unfinished project means that a client would need to pay out additional funds just to another company just to get the job done.

Abandonment can certainly be an issue with less reputable companies. Even still, it is usually more likely that there is a reason why work has been halted.

Companies need to be vocal about their reasonings for seemingly abandoning a project before it is completed. Reason being open communication keeps clients up to date with the status of a job.

If clients need to come to you after several days of being MIA with no explanation, it shouldn’t be a surprise if they want to involve legal proceedings.

Payment Disputes

Sometimes all the work gets done according to the contract and there is still an issue getting the agreed upon funds from the property owner. This is one of the most common reasons why construction companies become involved in litigation when the issue is not the work itself.

Nonpayment issues can be difficult for construction companies- especially those with only a limited amount of manpower or funding at their disposal. Legal proceedings can be slow, and businesses can have issues paying workers who have already shown their worth and completed the job.

There are a variety of ways that contractors can deal with nonpayment in an efficient way. In some states, they can file a mechanics’ lien to help secure payment. Mechanics’ liens make the property a “security” for outstanding debt- and eventually a contractor can attempt to collect by forcing a sale of the property in extreme cases.

Thompson Builders recommends trying to get to the bottom of a nonpayment issues while examining your options for securing payment for best results. It is always possible that the issue is something simple to clear up.

How Can Companies Prevent Litigation?

To Thompson Builders, litigation issues are best mitigated by remaining proactive and open. Maintaining strong channels of communication with clients, keeping documentation of projects before issues occur, and doing everything possible to facilitate a successful project are among the most important things for companies to internalize.

Companies often discover much too late that failure to communicate allows problems in the construction industry to quickly escalate. Do not be afraid to have those tough conversations. If you show clients that you are committed to working with them to complete quality work, many of the common reasons for litigation can be solved amicably.