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The Future for ADR in Construction and Engineering

Building & Construction

by Martin Burns RICS, Head of ADR Research and Development

On 28 November 2016, a group of about 30 influential people from the construction and engineering industry sat around a boardroom table at the Institution of Civil Engineers and discussed the future for dispute resolution. The group was comprised of senior members and personnel from the UK’s foremost professional institutions, along with leaders of major public and private companies, lawyers, academics and contractors. The discussion was chaired by Dr Robert Gaitskel QC of Keating Chambers.

Over the past two decades, the financial costs of disputes in the UK construction industry has been measured in £ billions. The length of time it takes to resolve disputes through litigation is frequently measured in years, and implications on capital and other resources is immense. Frequent causes of disputes in construction and engineering include: poor contract management, poor communication between employers and contractors, and misaligned priorities.

Every person around at the roundtable meeting agreed that the industry needs to reduce the costs of conflict, and deliver major infrastructure and property development projects on time and on budget. A notable product of the discussion was consensus that the future for dispute resolution was actually less dispute resolution, and more dispute avoidance.

Sue Barrett, speaking on behalf of Transport for London, and Stephen Blakey for Network Rail spoke about their experiences and demonstrated that conflict avoidance is already being embraced in a big way. The Conflict Avoidance Process (CAP), which TfL has embedded into contracts for the refurbishment of the London Underground network since 2015, has resulted in significant financial savings. CAP is also helping to safeguard future business relationships between TfL and main contractors by helping them to avoid getting into adversarial mode, and nipping disagreements in the bud, before they intensify into serious conflicts.

Issues between TfL and contractors, which might otherwise have developed into long drawn out disputes, requiring adjudication or even litigation, have been resolved quickly and early. Whereas, previously, disagreements might have led to disputes costing an average of £50k to £500k to resolve, matters were now being reconciled at an average of £15k.

Most, if not all of those who attended the roundtable discussion in November acknowledged that the future for dispute resolution is about improved communications, collaborative working and embracing techniques that will deal with developing conflict at an early stage.

Contract forms, such as the NEC and JCT, should not only require parties to act in the spirit of mutual trust and cooperation, they must also include procedures to deal with conflict at an early stage.

Going forward contracts should include five fundamental features, which enable differences of opinion to be avoided where possible and, when they do occur, to be dealt with effectively.

Contracts should be written in plain, simple English, avoiding legal terms and jargon. The objective should be that a contract should be easy to read and understood by all the people using it. Also, a contract should be designed to be suitable for use on the type of works it is intended to cover, and in the location where the works are to be carried out. A contract should be agreed only after parties have undertook a thorough risk analysis and have agreed on specific tools for managing the project risks in the way which best meets the objectives for the particular project, including early warning procedures and timely conflict management techniques.

The relationship between employer and contractor should encourage and allow the identification of, and communication about, problems early. There should be a joint approach to solving problems quickly and amicably, thus minimising the risk of a major disagreement developing out of a relatively minor event.

Where there is genuine disagreement over a matter which cannot be resolved, a contract can enable matters to be referred to a quick pronouncement or recommendation by one or more impartial subject matter experts. The purpose of the exercise would be to support and inform discussions between the parties, and enable them to settle their differences promptly. TfL’s use of the CAP process, and a similar approach which has been undertaken by Network Rail, has revealed that the more informed the relevant parties are, the better they can appreciate each other's views. Advice and recommendations by impartial third parties supports discussions in the boardroom which might otherwise end in acrimony and leave matters heading towards confrontational adjudication,arbitration or litigation.

The roundtable meeting in November concluded with an agreement to support a Conflict Avoidance Pledge. The substance of the pledge, which will be promoted to across all levels of the construction industry, is a commitment to collaborative working and the use of early intervention techniques to try to resolve differences of opinion before they escalate into full blown disputes.

The aim is to encourage the industry to recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of controlling and managing potential conflict, and preventing the need for formal, adversarial dispute resolution procedures.

The future for dispute resolution in construction and engineering is being driven by a coalition of professional and industry bodies. Together they have committed to informing the industry about the benefits of avoiding disputes and, if they do occur, working with non-adversarial methods to resolve them early and effectively 

 

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