Construction demand remains strong, but financial pressures are making projects more difficult to deliver.
At the 2026 American Arbitration Association® (AAA®) Construction Conference, “Building Resilience: The Future of Construction Disputes and Alternative Dispute Resolution (ADR) in an Ever-Changing World,” panelists examined the financial and legal challenges reshaping construction disputes.
The message for construction teams: Strong demand does not eliminate risk, and early planning can be critical when project conditions change.
Strong Demand Is Not Easing Project Risk
A busy construction market can create its own pressure. When demand outpaces available labor and resources, projects can become harder to price, staff, and complete.
For owners and contractors, financial planning must account not only for market opportunity, but also for changing delivery conditions. A project that appears viable at the contracting stage may become difficult to complete as costs rise or resources become constrained.
Payment Laws Can Affect Dispute Strategy
Construction payment disputes often turn on more than the contract. State prompt payment laws, lien rights, bond claim procedures, and notice requirements can affect when payment is due, when payment may be withheld, and what remedies are available if money does not move down the project chain.
For construction teams, that makes jurisdiction-specific review important. Parties should understand whether applicable payment laws create obligations or remedies that override, limit, or supplement the contract.
Contract Drafting Matters, but It Has Limits
Clear contract language remains essential, particularly when addressing rising costs, regulatory changes, delays, and unexpected risks. But drafting alone may not resolve problems when project conditions change or parties cannot realistically absorb the risks assigned to them.
Front-end planning and ongoing communication can help parties address costs, substitutions, delays, and contract adjustments while the project is still active.
Termination Disputes Carry Significant Risk
Termination for default can be one of the most consequential decisions on a construction project. These disputes may involve unpaid work, completion costs, defective work, warranties, liquidated damages, bond claims, and whether the termination was justified.
Because termination can shift leverage and create significant exposure, parties should carefully assess the contractual, financial, and practical consequences before taking that step. Once termination occurs, the dispute may become more difficult and expensive to unwind.
Payment Bond and Surety Issues Need Early Attention
Payment bonds can create additional procedural and timing challenges if they are not aligned with the underlying construction contract. Disputes may arise over notice, default procedures, forum selection, joinder, contract balance, and whether an arbitration award will bind the surety.
Addressing these issues early can help avoid parallel proceedings and delayed recovery. When a bond may be involved, parties should consider how the contract, bond, and dispute resolution process work together before the dispute escalates.
Read the Full Report
The AAA report, “Building Resilience: The Future of Construction Disputes and ADR in an Ever-Changing World,” examines the financial, legal, technological, and operational risks reshaping construction disputes.
Download the report for insights on identifying risk earlier, managing claims, and using ADR to keep complex projects moving.