UAE Contractors Association has started training sessions for local contractors to resolve disputes emerging as a result of slowdown in the construction sector.
There has been an increase in the number of disputes lately in the construction sector, as developers delay payments and projects are being put on hold.
The problems faced by contractors are on the rise and the association has been conducting various training programmes to help them handle the situation, a senior official of the association told Emirates Business.
"The slowdown has resulted in various types of disputes. Our goal is to bring about an amicable settlement. Dispute resolution is of primary importance and we have been helping the contractors to understand the legal and other aspects of resolving a conflict," said Imad Al Jamal, Vice-Chairman of the association.
The primary cause for a dispute, according to a leading contractor is the cancellation or termination of contract.
"It is mostly a result of renegotiation of contract where developers are more keen on unilaterally fixing a lower and revised value for the contract," said the contractor who did not want to be named.
"It is true that the construction cost has reduced as a result of falling material prices and a sudden drop in demand. But any re-evaluation of the cost should be done in co-ordination with the contractors working on the project. It is unfair for developers to force the contractors to accept their revised cost," he added.
Lack of liquidity has also forced many developers to delay payments, sometimes by several months, leading to further disputes.
"Usually the time frame for payment is 45 days, but of late payment schedules have gone haywire. Several innovative techniques are being used these days to delay payments. There have been several instances where in one of the major projects we are currently working on, the developer manages to find some sort of error in the work procedure in an effort to delay payment," said another contractor.
Although figures are not available for the number of disputes in the UAE market, legal firms are of the view that the number of cases have significantly increased. There has also been an increase in the number of cases registered at arbitration centres.
However, according to sources the most preferred way of resolving disputes is through an amicable settlement. Only when such negotiations fail and all options are exhausted do contractors prefer to register their complaints before the arbitration.
According to Al Jamal, it is very important to train contractors to follow proper tendering and contract awarding process. "We have also been looking into the problems in detail," he added.
The paper yesterday reported about the drastic increase in the number of property-related cases, which went up to 883 during the first six months of 2009.
Interestingly, findings of a recent survey by this paper revealed that though at a time when the slowdown has affected most sectors negatively, a majority of legal firms in the country have seen their profits increase over the past 12 months.
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