Legal

June 4, 2025 Published by South Alberta Chapter - By Johnathon Bain

When We Just Disagree: Construction Disputes and Adjudication

From the Spring 2025 issue of the CCI South Alberta CCI Review

Many years ago, a friend told me that “if you never argue in your marriage, then you married a robot.” Indeed, experience has taught me that disagreements are inevitable and can be a healthy way for relationships to grow if approached with the right mindset. I have also come to recognize that our willingness to work towards a resolution and our response to conflict are more important than the cause of the disagreement itself.

As with many things in my life, I often draw parallels between my personal and professional life. When working on a capital project, it is not a matter of IF a disagreement will happen, but WHEN it will happen. In most cases, such disagreements are resolved quickly and amicably as the parties involved (i.e., the Condo Corporation, Engineer, Contractor, and Condominium Manager) are all working towards the same goal. However, a disagreement may occasionally arise that stops a project in its tracks, resulting in delays, increased costs, frustration, anger, etc. This is called a construction dispute. So, how do we navigate a construction dispute?

The Start of a Dispute

Various situations can contribute or directly lead to a dispute. A significant change in the scope of work due to unknown conditions such as rot and decay of the building structure, unexpected costs for a Contractor’s change order, an interpretation of the design that leads to extra costs, and so on. Most of these disputes have one thing in common: MONEY. It is often that more money is needed than was planned for to complete the project when an unforeseen issue is discovered during the work.

Generally, when such situations occur, the first course of action is by the Contractor, who will seek extra costs for the additional work. However, if the parties involved do not agree on the scope or value of the additional work, the Owner will not pay and the Contractor will not proceed. When money stops flowing in a construction project, construction grinds to a halt, and additional costs are racked up. The costs of a dispute are not limited to the disputed amount, and may include the following additional hard and soft costs:

Condo Corporation: When a dispute happens, it costs real money in the form of reduced property value, reduction or loss of rental income, additional fees for the Property Manager to field calls from concerned residents, and additional fees for the Consultant’s services during the dispute. Time spent navigating the dispute, communicating with the condo community, and explaining why construction has slowed or halted are all time-related costs for the Corporation.

Condominium/Property Managers: When a dispute happens, it costs time to respond to emails and calls from upset residents, to handle the Contractor’s request for payments and to negotiate with the Consultant who is seeking an extra fee to deal with the dispute. All while juggling other properties that are screaming for attention.

Contractors: When a dispute happens, it costs time and money to navigate the dispute with the Owner and Consultant, to edit pricing and seek additional quotes, to pay the project manager, estimator and other employees for additional unbudgeted hours, and to account for lost productivity from the superintendent. It goes on!

Consultants: When a dispute happens, it costs time and money out of the Consultant’s budget to provide additional services and guidance for the Owner during the dispute, to assist with negotiations between the Owner and Contractor, to negotiate a fee for additional consulting services provided during the dispute, to account for any NON-RECOVERABLE time, and to continue paying employees for additional unbudgeted hours.

Time is money. This is why resolving a dispute quickly is critical!

Resolving the Dispute

Ideally, the parties involved will agree to sit down and work together to find a resolution within a week or two of the dispute rearing its head. If the parties are too far apart or unwilling to compromise, another option is available: Construction Adjudication.

Ideally, the parties involved will agree to sit down and work together to find a resolution within a week or two of the dispute rearing its head. If the parties are too far apart or unwilling to compromise, another option is available: Construction Adjudication.

Under the Prompt Payment and Construction Lien Act in Alberta (PPCLA), construction adjudication is an option for resolving a dispute. While there are specific criteria for what disputes can be adjudicated, the vast majority of disputes you encounter will qualify for adjudication. Adjudication is meant to provide cost effective and quick resolutions to construction disputes so that the project keeps moving forward and the money keeps flowing.

The adjudication process in Alberta is intended to take about 60 to 90 days in total and the results of the adjudication are binding for the project but can be challenged in court after the project has been completed. Adjudicators (which there are 14 currently in Alberta) are trained and experienced in the construction and/or legal industry. Further, costs for adjudication are regulated, published, and generally as follows:

Dispute Value	Adjudication Cost
$15,000 or less	Hourly capped at about $3,000 (unless otherwise agreed between parties and Adjudicator)
$15,000 to $100,000	Hourly capped at about $6,000 (unless otherwise agreed between parties and Adjudicator)
$100,001 +	Hourly, no cap (unless otherwise agreed between parties and Adjudicator)

See https://adralberta.com/prompt-payment/ for full explanation of fee structure.

Rough Justice

Construction disputes have a real cost, and it is critical to understand and identify that cost. That is the beauty of adjudication. You get a decision on your dispute, you avoid the lost costs of a prolonged dispute, and it is binding. It keeps the project moving and the money flowing. Your progress meetings are not bogged down for months debating a change order or payment issue. While it can be seen as “rough justice”, the value of keeping your project on track cannot be underestimated!

So, am I advocating going to adjudication at the first sign of poor weather? Absolutely not! Disputes are best solved by the people involved at the table when they occur. However, adjudication is an option when a disagreement drags on, or when one side is not responsive.

For more information on adjudication and an indepth guide, the Alternate Dispute Resolution Alberta website has extensive resources. They can be found at https://adralberta.com/promptpayment/. Alternatively, feel free to reach out and I’ll answer your questions as best as I can.

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Johnathon Bain, P.Eng., Q.Adj.(Const)

For nearly 20 years, Johnathon has practiced Building Science and construction across Western Canada. His experience includes evaluation, restoration, and maintenance of existing buildings. He is a published technical author, technical presenter, currently sits on the IIBEC Interface technical journal Peer Review Board as a Peer Reviewer and is a Past Chair for the APEGA Calgary Branch Board. Johnathon is also one of 14 Construction Adjudicators licenced to practice in Alberta.