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How to deal with contract disputes?

How can the project manager deal with contract disputes, especially those disputes between the suppliers and the company? I am asking this question because I am currently experiencing such a dispute: I'm a construction project manager (this is my second project) and the concrete supplier decided to raise the prices without consulting with us. The contract explicitly states that any change in prices should be approved by both parties to take effect. We have refused but the supplier insists on the new prices (claiming global inflation and all this nonsense).

What can we do in this situation? Can we consider that the contract is void and search for a new supplier (which will be a costly and a lengthy process)? Do we have to resort to courses (which is probably the worst action to be taken)? Shall we just keep our mouths shut and approve the new prices?

Last question: Do contract disputes (and other supplier/vendor related issues) fall under conflict management?
asked 9 years ago by anonymous

1 Answer

There should be a process in the contract itself on how to deal with contract disputes. Failing that, the contract should be followed as is, so if your supplier decides to raise the prices then you should discuss the unexplained raise in prices with your supplier first, and then decide on your course action. Note that it is legal for you to get out of the contract and to sue your supplier. But, of course, you should take the best interests of your project and your organization into consideration. Can you afford to switch supplier at this very moment? Are other suppliers providing cheaper prices? Is the current supplier reliable when it comes to on-time delivery and material quality? Pondering these questions and answering them honestly (in other words, taking your ego out of your equation) should guide you on what you should do!

To answer your last question, yes, contract disputes fall under conflict management. Conflict management encapsulates suppliers, vendors, stakeholders, and team members.
answered 9 years ago by MaplePM (46,940 points)

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