I. Introduction: Why Are Construction Disputes Inherently Complex?
Construction disputes differ materially from ordinary commercial disputes. They are characterized by the following features:
- Involving high contract values;
- Extending over prolonged periods of time;
- Simultaneously implicating legal, technical, financial, and scheduling issues;
- Hồ sơ chứng cứ đồ sộ nhưng thường thiếu tính hệ thống.
Practice shows that most construction disputes do not arise from a single isolated breach, but rather from a chain of accumulated issues arising throughout the course of contract performance.
2. Issues Relating to the Scope of Work and the Quantity of Work Performed
(Scope of works & quantity disputes)
This is the most common category of disputes in construction projects.
Common manifestations include:
- Inconsistencies between design documents and cost estimates;
- Insufficiently detailed description of the scope of work in the contract;
- Phát sinh khối lượng nhưng không có lệnh thay đổi hợp lệ (variation order).
Legal Risks
- The contractor is not paid for additional or variation works;
- The employer is required to make payments beyond the approved budget.
- The dispute is prolonged due to the need for a technical expert determination.expert determination).
3. Issues Relating to Schedule and Extension of Time for Contract Performance
(Delay & extension of time – EOT)
Delays are a “hot spot” in construction disputes, particularly in EPC projects.
Common Causes
- Late handover of the construction site;
- Design changes during construction;
- Actual site conditions differ from the tender documents.
- Weak project management.
Core Legal Issues
- Whether there is entitlement to an extension of time (EOT);
- Allocation of responsibility between the parties;
- Whether liquidated damages for delay apply.
Judicial practice shows that site diaries and correspondence records are decisive factors, rather than emotional arguments.
4. Issues Relating to Payment and Final Account in Construction Contracts (Payment & final account disputes)
(Payment & final account disputes)
Payment directly affects cash flow; therefore, disputes in this area tend to escalate rapidly.
Common Scenarios
- The employer delays payment or fails to make full payment;
- Disputes over the final account value;
- Disagreement regarding the validity of payment documentation.
Practical Risks
- The contractor faces financial difficulties and construction delays;
- The employer is exposed to claims and compensation demands;
- Chain disputes arise with subcontractors (back-to-back disputes).
5. Issues Relating to Contract Price Adjustment (Contract price adjustment)
(Contract price adjustment)
Amid fluctuations in material and labor costs, disputes over price adjustments have become increasingly common.
Common Trigger Points for Disputes
- Lump-sum contracts affected by force majeure events;
- Lack of agreement on the price adjustment mechanism;
- Incorrect application of price indices or adjustment timing.
Legal Note
Contract price adjustment is only accepted when all contractual and statutory conditions are fully satisfied; it cannot be inferred solely based on “actual costs incurred.”
6. Issues Relating to Defects Liability and Construction Quality (Defects liability & quality disputes)
(Defects liability & quality disputes)
Disputes commonly arise after the works have been handed over.
Typical Issues
- Determining whether defects result from construction or operation;
- Responsibility for repair and rectification;
- Retention of warranty/retention money.
This category of disputes requires a close integration of legal assessment and technical expert evaluation.
7. Systemic Limitations Leading to Prolonged Disputes
From a practitioner’s perspective, the above issues are often exacerbated by:
- Poorly drafted dispute resolution clauses;poor dispute resolution clause);
- Unprofessional project document management.
- Legal counsel is engaged only when the dispute has escalated into confrontation.
8. Practical Recommendations from Legal Practice
- Identify potential dispute triggers at the contract drafting stage.
- Design a multi-tier dispute resolution mechanism.
- Manage construction records as a legal protection tool.
- Legal counsel should be involved in a preventive and strategic capacity, not merely for litigation.
Conclusion
Construction disputes are not inherently alarming.
What is truly concerning is when businesses fail to properly identify the core legal issues and respond too late.
In many cases, the outcome of a dispute is shaped by how the contract and project records are managed from the outset, rather than at court hearings or arbitration proceedings.
Nguyen Tat Thang Managing Partner – DTLaw Managing lawyer, specializing in advisory and dispute resolution in construction, commercial contracts, investment projects, and EPC matters, with practical experience before courts and commercial arbitration (construction dispute resolution, commercial arbitration).
DTLaw – A law firm providing legal advisory services to enterprises and investors.