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Cost-cutting efforts related to materials could lead to litigation

On Behalf of | Jan 24, 2024 | Construction Disputes

There is little question that material costs are one of the biggest expenses involved in construction work. Particularly when working on residential properties, the materials that clients request can be incredibly expensive.

Sometimes, the demands of the clients are not particularly realistic given their budget or the building qualities of the materials that they request. Construction companies may have to make material substitutions to keep a project on budget or to comply with building codes. However, material substitutions can trigger frustration and even anger in clients who feel tricked or defrauded.

Transparency is the best protection

A client who believes that a construction company or contractor intentionally used cheaper materials to save money could very well decide to take legal action against that business. They might point to the terms set in the contract or details negotiated via email as an indicator that the final product does not align with their expectations.

Construction firms and contractors then have to validate their choices. The best way to prevent a client’s anger about a material substitution is to communicate openly with them about any substitutions required. If there are supply chain issues that would cause a delay in the project, they may agree to use a different type of stone or hardwood. If there are cost issues, they may either agree to pay the difference when the cost for certain materials suddenly increases or might approve a substitution.

In some scenarios, there may be structural concerns about the use of certain materials. It is sometimes possible to meet a client’s requirements while still sticking to the budget. For example, a contractor might use brick for parts of the exterior facing the road or driveway of a home but not in the rear of the property where curb appeal is less of a concern.

Discussing these issues in writing with a client and providing them with advance notice of any material substitutions are among the most effective means of limiting potentially damaging litigation triggered by the need to substitute one material for another. Including the right terms in the initial contract with the clients can also prove quite important for limiting conflict after the completion of the project.

Both clauses that provide a contractor with a degree of discretion regarding a project and those that require alternative dispute resolution attempts before litigating could potentially benefit those who own or operate a construction company. Proactively seeking to limit construction defect claims by planning for potential building material challenges can benefit businesses that rely on word of mouth to succeed.