Construction Contract Conversion: An Approach to Resolve Disputes

Abstract A construction contract is a mechanism to bind a project owner and a contractor in a legal agreement to construct a project against a designated monitory consideration. However, projects are usually assembled over a long period with high uncertainty and complexity. Under such a dynamic business transaction, current static contracts fail to arrange for an appropriate and stable transaction. This paper reveals, through a questionnaire survey that was sent to all grade1 and 2 contractors and all owners in Riyadh-Saudi Arabia, the most common construction contracts in Saudi Arabia and the use, causes and benefits of contract conversion. The lump sum and the unit price are the most dominant type of contracts. Owners who select the former convert them during construction to unit price contracts leading to considerable benefits to contract parties including successful project completion with negligible disputes and better relationship. Owners are advised to include a clause in the construction contract to give them the privilege, not the obligation to convert the contract from one type to another.