How Arbitration Prevents Construction Project Delays

Every day of downtime can translate into significant cost overruns and strained stakeholder relationships. From rising material prices to labor shortages, projects already juggle complex variables in the construction process. Adding contract disputes to the mix often amplifies delays, jeopardizing both timelines and budgets. By embedding a robust arbitration provision into construction contracts, parties gain access to an alternative dispute resolution method that emphasizes speed, expertise, and confidentiality—helping to curb costly delays before they spiral out of control. This article explores how arbitration clauses, when drafted and managed effectively, act as a proactive tool for construction dispute resolution and prevent small disagreements from derailing entire construction projects.

Understanding Arbitration in Construction Contracts

Arbitration is a form of commercial arbitration where parties agree—via a contractual provision—to resolve their construction contract disputes outside of court. Rather than navigating formal proceedings in English courts or another jurisdiction’s civil procedure system, claims move through a private arbitration process guided by arbitration proceedings rules. Because parties can select experienced construction arbitrators with deep sector expertise, the dispute resolution method aligns with industry standard expectations for technical understanding and procedural efficiency.

Unlike statutory adjudication or appealable court judgments, domestic construction arbitrations conclude with a binding award that’s enforceable under international construction arbitration conventions. This streamlined approach reduces the risk of protracted litigation and limits opportunities for cross claims or delay tactics. By setting clear dispute resolution methods at the outset—often modeled on widely recognized dispute resolution provisions—owners, contractors, and subcontractors can maintain momentum on site while preserving rights to fair adjudication of contractor claims, prolongation claims, or expense claims related to head office overhead costs and residual cost assessments.

Common Causes of Construction Disputes and Delays

Construction disputes often arise from events that extend the actual project period beyond the original contract period. Prolongation claim notices, defects claims, and bars for claims linked to design changes or unforeseen site conditions all trigger formal claims. When contractors submit a notice of claim without contemporaneous records or a detailed claim for damages, disputes over cost approach or cost assessments can stall progress.

One frequent question is: What is the delay clause in a construction contract? A delay clause—also called an extension of time provision—sets out notice requirements, timelines (for example, an 84‑day period to submit a detailed claim), and how prolongation costs are quantified. By adhering to that clause, contractors preserve their right to additional compensation for disrupted periods, avoiding retrospective arguments over expense claims. Properly drafted delay clauses in standard form contracts guide both the injured party and decision makers through reasonable periods for review, ensuring that cost overruns due to project delays don’t metastasize into full‑scale disputes in construction contracts.

Drafting Effective Arbitration Clauses for Construction Contracts

A well‑crafted arbitration clause is the cornerstone of effective construction dispute resolution. At a minimum, it should reference:

• The scope of disputes covered (e.g., breach of contract, notice provisions issues)
• The seat and governing law (to clarify the contract procedure)
• The number of arbitrators and selection method (ensuring access to experienced construction attorneys and arbitrators)
• Fee provisions and administrative cost allocation

What is the arbitration clause in a construction contract? It is the contractual provision that obliges parties to submit specified disputes to arbitration rather than courts. Typically embedded under “Dispute Resolution Provisions,” it references applicable rules—whether industry‑specific or bespoke—to govern initiation, hearings, and the award. Including Sub‑Clause 20.1 [Contractor’s Claims] language familiar to many standard form building contracts ensures that contractors follow a clear path when raising claims for additional costs or civil procedure–level complexities.