Construction disputes rarely begin with the goal of ending up in litigation. Most parties start with the hope that a disagreement can be resolved quickly so the project can move forward. But when negotiations break down and disputes intensify, the costs often extend far beyond attorney fees and expert expenses. While legal costs are easy to identify on a balance sheet, many of the most significant consequences of unresolved disputes are much harder to measure.
The cost of distraction
Construction projects require constant attention. Owners, contractors, subcontractors, and project managers have limited time and resources, and every hour spent dealing with resolution of a dispute during the project is time taken away from progressing the project to completion or attending to other ongoing projects.
As a dispute progresses, key personnel may find themselves gathering documents, preparing for depositions, meeting with legal counsel, reviewing expert reports, and responding to discovery requests. Those tasks are necessary, but they also pull experienced professionals away from the work that generates revenue and moves projects forward. Over time, distraction alone can become a significant cost.
Delay has a price
Lingering disputes can also create uncertainty that affects decision-making. Parties may postpone work, delay payments, hold reserves, or defer future investments while litigation remains unresolved.
In some cases, a dispute over a relatively modest amount can create ripple effects throughout a project. But if the receivable is sizable, cash flow concerns, strained relationships, and unresolved claims can make it more difficult to operate the business successfully on a day-to-day basis. The longer a dispute remains unresolved, the greater the risk that those business impacts begin to outweigh the value of the claims themselves.
Relationships matter in construction
The construction industry is smaller than many people realize. Owners, contractors, subcontractors, architects, engineers, and suppliers will often encounter one another again on future projects.
Not every business relationship can be preserved, nor should every relationship be preserved. However, prolonged litigation can sometimes damage relationships that might otherwise remain productive. Even when parties ultimately resolve their dispute, years of contentious litigation can make future collaboration difficult on new projects and opportunities.
Mediation provides an opportunity to address disagreements before positions become so entrenched that business relationships are permanently affected.
Looking beyond the lawsuit
One of mediation’s greatest advantages is that it allows parties to consider the broader business consequences of continuing the dispute, both internally and externally. Legal claims are important, but they are rarely the only factor that matters.
A successful resolution may eliminate uncertainty, free up management time, release reserves, improve cash flow, or allow key personnel to refocus on active projects. A successful resolution may also preserve an advantageous relationship that otherwise could be severed through a protracted dispute. Those benefits do not always appear on a damages spreadsheet, but they can have a meaningful impact on a company’s long-term success.
The takeaway
When evaluating a construction dispute, it is important to consider more than the potential recovery at trial. Litigation costs, management distraction, project delays, lost opportunities, and strained business relationships all carry real consequences. Understanding those hidden costs helps parties make informed decisions about whether continued litigation serves their business objectives.
Mediation does not guarantee settlement, but it provides an opportunity to evaluate the full cost of the dispute and explore solutions that allow everyone to focus on what they do best: building successful projects.
Michael R. Bosse is a construction and litigation attorney with nearly three decades of experience representing developers, contractors, subcontractors, and suppliers across New England. Known for his diplomatic, client-focused approach, Mike advises on contract negotiation and administration, construction claims, mechanic’s liens and Prompt Payment Act matters, eminent domain, condemnation cases, and more. He can be reached at [email protected].
Bernstein Shur’s Construction Group helps developers, contractors, and construction professionals manage risk and keep projects on track at every stage of the project lifecycle. The group provides sophisticated legal solutions spanning contract negotiation, project administration, dispute avoidance, and litigation, drawing on deep experience in the construction industry.