The best contracts prevent disputes; the worst precipitate them

Regardless of the size of the project, the root-cause of failure isn't contracts - it's always, ultimately, relationships. That said, a bad contract can put pressure on the relationship and preciptate failure. Or as Jonathan Shahady once put it to me: "You show me the contract and I'll tell you the disputes to come."

Of course, this was too good to pass up as the subject of an Artful Argument! Fast-forward 6 months and sure enough, at our event in July, Jonathan delivered the Opening Argument you see below - which I highly recommend you watch if you work on either side of a contract-based project.

But while we talk a lot about disputes, the truth is they're the exception, not the rule. The vast majority of projects face changes and emerging risks - even the odd black swan - but they get resolved through negotiation and collaboration. These projects don’t make headlines, they just quietly get delivered.

Key takeaways from Jonathan's Opening Argument:

✨ Projects are doomed from the outset when the contract ignores key risks, scope is misaligned, and change is treated as a threat rather than an opportunity.

✨ There are two ways to incentive contractors: carrots and sticks - and sticks don't work. Incentives and shared gains work far better than penalties.

✨ Fight about the dollar, not 10 dollars. Raise and resolve disputes sooner (when they're relatively cheap to resolve) rather than later (when they're not) - or as they say in Defence: "go ugly early!"

✨ Disputes that get to court are nearly always a lose-lose outcome. Most get settled on the court steps after years of stress and wasted money.

At the end of the day, contracts should enable good project management, effective leadership, and collaborative relationships. The goal should be outcomes, value for money, and space for collaboration, pain-share/gain-share, and innovation. And once again, it always comes down to culture.

Watch the full argument:

The best contracts prevent disputes; the worst precipitate them

Thank you, Jonathan, attendees, and our 2025 Artful Sponsors: UniPhi, NEC Contracts®, Australian Cost Engineering Society (ACES), Elysium EPL, and IPMA-Australia.

The Artful Argument is a unique professional learning and networking event for senior project leaders to engage in collaborative conversations about today's increasingly complex, shared challenges in project delivery.

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