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How can a lot of money turn into a little?
Litigation!
Your contracts should have a clause for an ADR, or alternative
dispute resolution. This diverts any dispute from going to civil
litigation, meaning instead of the courthouse- and suffering the
costs involved in that- you have an alternative means of achieving a
solution. But before you can even think about your alternatives in
this area, you must be sure that this is included in your
conditions, and your customers understand it. And, then, hope you
never have to use it. But in the case you do, you will be prepared.
There is a course of action you can take that involves several steps
to come to terms between contractor and client. The first step can
be a casual conversation. Invite the clients to your home and over
coffee, listen to their point of view, and also let yours be heard.
You each have the chance to be heard, and maybe over the friendly
chat, a solution can be approached.
If not, the next step would be to bring in a third party, in this
case,
a mediator. A mediator is a paid professional whose skill lies in
dispute resolution. They use different strategies to get both
parties to start talking, and consider each other’s points of view.
They encourage, and sometimes even push for a resolution.
However, mediation is non-binding, which means that either party can
call it off when they want. But, a good mediator will usually keep
the conversation going, and remind both parties of what the next
step could be in the climb of resolution. In addition to money being
restored, respect can be as well, since this creates conversation.
The next place to go, if mediation fails, is small claims court. A
fee does not have to be paid to anyone, but a small fee to the
court. You prepare the case and go before a judge, which saves time
and money. But, even if you win, you still sort of lose. If you
lose, you are out money. And, if you win, there may be some
bitterness from the client because you brought them to court. That
can be damaging to your reputation. But still, you have a right to
what you are entitled, and this may be the way you have to go.
Finally, there is arbitration. This is not court per say, but it has
the elements of it- a judge, lawyers and cross-examinations. But, it
is not as dragged out of a process. You get in; you win or lose, or
split, and get out. This is, however, more costly than mediation.
This is something that you may want to point out to your customer
prior.
Taking precautions, such as making sure change orders are
formalized, and making sure there is an ADR clause, you will have a
strong contract. You and your customers will be protected through
preventing the most common forms of conflict (unexpected work) and a
cost-effective way of dealing with it.
Construction Estimating Software
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