Construction Disputes: Getting Paid and Staying on Programme

Construction projects run on tight margins, tighter timelines and a long chain of contracts. When something goes wrong, whether it is late payment, a defect, a disputed variation or a delayed handover, the effect travels quickly down the chain and can threaten the viability of a business. Many disputes could have been avoided with better contracts and better record keeping. Involving experienced construction law solicitors at the planning stage, and not only after a dispute has erupted, is one of the most cost-effective decisions a developer, contractor or subcontractor can make.

Why Construction Disputes Are so Common

Construction is complex by nature. Projects involve multiple parties, such as employers, main contractors, subcontractors, designers, engineers and suppliers, each bound by their own contract. Prices are often fixed before every detail is known, ground conditions can surprise, designs change mid-project, and weather and supply issues cause delay. Small misunderstandings in this environment can escalate rapidly, especially when cash flow is under pressure.

The most frequent sources of dispute include late or withheld payment, disagreements about the value of extra work, claims for delay and associated costs, defective workmanship, and arguments over who bears responsibility when a contractor becomes insolvent.

The Contract Is Everything

Almost every construction dispute is resolved by looking at what the contract says. Standard forms are widely used in Ireland, and they contain detailed provisions about payment, variations, time, notices and dispute resolution. Whichever form is used, a few areas deserve special attention:

Scope of work. Vague descriptions invite arguments about what was included in the price.

Payment terms. Dates, valuation methods and any retention should be clearly set out.

Variations. The contract usually requires changes to be instructed in a particular way, often in writing. Ignoring this procedure is a leading cause of unpaid extras.

Time and delay. Completion dates, extensions of time and the consequences of delay, including liquidated damages, should be understood before signing.

Notices. Many contracts impose strict deadlines for giving notice of claims or delay. Missing a deadline can forfeit a valid entitlement.

Payment Rights and Adjudication

Cash flow is the lifeblood of construction, and the law recognises this. The Construction Contracts Act 2013 introduced statutory protections for payment in most construction contracts. Among other things, it requires contracts to have clear payment mechanisms, restricts clauses that make payment depend on the contractor first being paid by the employer, and gives a party the right to suspend work in specified circumstances where payment is not made.

Crucially, the Act also gives parties the right to refer a payment dispute to adjudication, a fast-track process in which an independent adjudicator issues a decision in a matter of weeks rather than the months or years that court proceedings can take. The decision is binding in the short term and can be enforced, even though it may later be revisited in arbitration or court. Adjudication has changed how payment disputes are handled, because it allows an unpaid party to apply real pressure quickly.

It is worth knowing that some contracts fall outside the Act, such as certain agreements with a homeowner for work on their own home, so the particular contract and parties matter. Early advice will confirm whether the statutory process is available to you.

Defects and Snagging

Disputes about defects often arise at completion or during the defects liability period. Employers may withhold sums, while contractors argue the work meets the specification. Practical steps help. Document defects with dated photographs and written notice, give the contractor the contractual opportunity to remedy, and obtain independent expert opinion where the cost is significant. Where a building is later sold, collateral warranties and professional appointments become important in establishing who can be pursued if a hidden problem emerges.

Delay, Extensions of Time and Cost

Delay claims are technical and documentation-heavy. A contractor seeking more time or money needs to show what caused the delay, that it falls within the contract's grounds for relief, and what effect it had on the programme. An employer seeking to apply damages for late completion needs to show the contract entitles it to do so. In both cases, contemporaneous records of instructions, programmes, site meetings and correspondence are far more persuasive than recollections created after the event.

Insolvency and Security

When a contractor or subcontractor becomes insolvent, the consequences are severe: unfinished works, unpaid suppliers and uncertainty over who is liable for what. Protections such as performance bonds, retention and parent company guarantees can make a decisive difference, but only if they are properly drafted and the conditions for calling on them are met. These protections should be negotiated at the outset, not discussed for the first time once trouble has begun.

Common Mistakes to Avoid

Starting work before the contract is agreed. Working on a handshake leaves little to rely on later.

Failing to follow the variation procedure. Verbal instructions on site are hard to prove and easy to dispute.

Missing notice deadlines. Late notice can turn a strong claim into a weak one.

Poor record keeping. Diaries, photographs, emails and meeting minutes are the backbone of any claim.

Waiting too long. Delay reduces leverage, increases cost and can run against time limits.

Ignoring alternatives to court. Negotiation, mediation and adjudication are often faster and cheaper.

Practical Tips for Construction Businesses

1. Have the contract reviewed before signing, particularly payment, variation and notice provisions.
2. Confirm all instructions in writing, even those given verbally on site.
3. Keep a daily site diary and take dated photographs of progress and problems.
4. Diary every notice deadline and respond promptly to notices received.
5. Raise payment issues early, rather than allowing arrears to accumulate.
6. Understand your adjudication rights and what the process involves before you need it.
7. Take advice at the first sign of a serious dispute, while evidence is fresh and options remain open.

Who This Is For

This is relevant to developers and property owners commissioning building work, main contractors managing subcontractors, subcontractors and suppliers seeking payment, and design professionals whose appointments are tied to project outcomes.

Final Thoughts

In construction, good paperwork is not bureaucracy but protection. Contracts that are clear, instructions that are documented and notices that are given on time make the difference between a dispute that is resolved quickly and one that drains time and money. When disagreements do arise, knowing your statutory rights and acting promptly gives you the best chance of keeping a project moving and protecting your business.