When a project begins to experience real stress the pressure on all parties rises, and businesses begin to interrogate their project teams with increasing scrutiny. In these scenarios its often contractors and the supply chain to first feel significant commercial strain. Whoever feels that pressure first can be the first to adopt tactical, defensive, or leverage seeking approaches in order to best protect their position. In many cases, these behaviours are not necessarily because of poor performance or impropriety. They are predictable responses to distress in a commercial environment where time, cost, and contractual obligations are tightly interlinked and can have a snowball effect.

For principals, a common misstep is immediately assigning blame and resorting to a rigid approach to the contract and claims, where recognising the risk of escalation and further impact on delivery should be a key consideration when formulating a strategy to address the underlying project-level issues.

It’s an unenviable position to be in and impossible to apply a “one size fits all” approach given the variables on any distressed project, so the aim of this article is to help senior decision makers understand what typically happens when it is a contractor that has its back against the wall, and how to manage the situation constructively. This framing is equally important for senior leadership within contractor organisations. Project level tactics often emerge from localised pressure, not always strategic intent. If executives are not aware of the tone, positioning, or claims strategy being used on a live project, they risk unnecessary escalation, reputational damage, or undermining future client relationships. Understanding the common patterns, and ensuring alignment with the wider business, is essential to avoiding unintended consequences.

1. What happens when pressure rises: A common playbook

Distressed projects often follow a pattern. As pressure increases, a contractor’s tactical posture tends to evolve in predictable ways. None of these approaches are inherently unreasonable and many stem from genuine frustration, deteriorating relationships, or ambiguity in the contract. Principals should therefore expect them on a distressed project and have a clear, solutions-focused strategy to address them.

Claim flooding

An early indicator is a sudden increase in notices, variation claims, extension of time requests, and long, detailed correspondence. The volume itself becomes a tactic: overwhelm the principal, exploiting gaps in contract administration, and creating negotiating chips even when some claims are contractually weak. The best response is procedural discipline as claim flooding only tends to work where responses are slow or disorganised. However, there is a toll for both parties in that precious time and cost for everyone is spent focusing on addressing claims (which can have diminishing merit as time goes on) rather than resolving the underlying issues causing the pressure on the contractor and project generally.

Ambiguity maximisation

Ambiguities in contract terms or technical schedules, especially the scope, become fertile ground for expanding entitlement or arguing the toss on obligations. As does any inconsistency in application of the contract by the principal over the course of the project. Failure by the principal to have enforced rights or insist on compliance with obligations can also be exploited when distress hits the project. It's important to consider what benefit, if any, there is in being drawn into debate around what the contract requires, where there is a clear internal view as to the interpretation. Giving oxygen to meritless or high-risk positions can actually signal a party considers some risk of its position, which can have a cascading effect.

Delay leverage

When the programme becomes opaque, delay narratives can become an effective tactic to create leverage. The contractor may slow interfaces, drip feed information, or issue serial requests for information to build a story that delay is caused externally. Similarly, in extreme cases, if a project is so delayed that a contractor will cap out on liquidated damages, this can turn into leverage where it knows the principal is desperate for practical completion to be achieved and the contractor adopts a “nothing left to lose” mindset.

The best protection comes from disciplined programme governance: enforcement of obligations such as updated programmes, logic linked updates, interface records, and contemporaneous evidence that tracks cause and effect. Retrospective delay arguments rarely survive with a well-documented baseline. If you have this discipline, it can help the parties conserve precious resources to address the underlying issues rather than play a game of cat and mouse with delay.

Inflated anchoring in quantum or time

Parties should expect high anchoring when a project is in distress and dispute: it is one of the most common negotiation tactics and one of the easiest traps for both sides to fall into. Even when everyone recognises what is happening, the anchor can still influence internal decision makers and shape perceptions of the organisation’s total risk exposure. The bigger risk is not just that it distorts negotiations, but that it becomes a reference point inside the claiming organisation itself, particularly where senior stakeholders are further removed from the detail. 

Tactics that target governance, confidence, and control

When disputes fail to resolve, contractors may shift focus from pure entitlement arguments to ones aimed at the project’s governance structures or undermining decision makers’ confidence. These approaches can be effective, particularly where the other side is unprepared. They include:

• Threatening the broader relationship: signalling that unless certain positions are accepted, the long-term partnership or pipeline may be at risk. 
• Withholding key documents such as as-builts, commissioning data, test records, or design files, particularly near important delivery milestones. 
• Challenges to the impartiality of the Engineer or Independent Certifier. Sometimes concerns are genuine; sometimes they are tactical.
• The provision of global claims: aggregated delay and disruption claims, that do not map specific causes to specific effects. 

Together, these behaviours share the same purpose: shifting leverage by unsettling governance or slowing information flow. Principals who remain process driven, disciplined, open minded and evidence based are well placed to address these tactics in a constructive way.

2. What can you do: Limiting the ability of issues to spiral 

The most effective way to reduce escalation on distressed projects is not to push back harder but instead build a delivery environment where issues cannot easily spiral. A few habits consistently support stability, fairness, and constructive resolution for both principals and contractors.

A stable project starts with a reliable programme. A validated baseline and regular logic linked updates give both sides a shared understanding of time, criticality, and impact. When the programme and progress is transparent, delay narratives have far less room to breathe, and effort can be directed to genuine problem solving rather than positioning.

Just as important is contemporaneous evidence. Clear minutes, instruction logs, daily diaries, interface records, photographs, and agreed data points form a factual foundation that shrinks disputes and avoids the selective recollections that appear when pressure mounts. When both parties can see the same facts, conversations become shorter, easier, and more commercial.

Governance discipline is equally important. Change boards, project steering groups, and agreed escalation pathways can give parties a structured way to surface issues early, evaluate them consistently, and prevent tactical behaviour from bypassing the contract or creating avoidable conflict. Good governance should not slow projects down: if done well, it can prevent avoidable cost and delay.

Communication discipline also matters. Timely, neutral responses reduce the temperature and keep momentum. Teams can underestimate how much tone influences escalation. A project under pressure needs fewer sharp letters and more clear, factual exchanges that enable progress. The Engineer or Independent Certifier plays a stabilising role in this environment. Timely, well reasoned decisions supported by transparent evidence help maintain confidence on both sides and reduce opportunities for challenge. 

Finally, mature projects maintain a clear boundary between entitlement decisions and relationship management. When commercial tension emerges, addressing the project issue through governance while handling relationship strain through executive to executive conversations helps avoid conflating the two.

These tools do not eliminate the pressures that lead to distressed project behaviour, but they smooth the frequency and impact. They help the project environment be more predictable, more transparent, and ultimately more capable of navigating conflict without damaging the wider partnership.

Conclusion

Distressed project behaviours are predictable. They follow recognisable patterns that surface whenever pressure, uncertainty, and commercial strain converge. When principals and contractors understand these patterns and respond through structure, not emotion, projects become far easier to stabilise. Strong programme discipline, contemporaneous evidence, and consistent governance don’t eliminate conflict, but they give both sides a fair platform to address issues early and constructively. In difficult environments, that is often the difference between a dispute that escalates and one that can be managed sensibly.

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