Prevention is better than cure...

Kirsteen Cacchioli, Technical Director Driver Trett UK discusses why prevention is particularly relevant for disputes which arise in the construction industry. 

The time, cost and pain involved in resolving disputes (whether on complex multi-billion pound international projects, or smaller domestic contracts) is draining and damaging, both in terms of internal resources and external relationships.

As a result, we are increasingly finding that clients are trying to avoid unnecessary costs and time involved in dispute resolution; primarily by taking steps earlier in the project life-cycle to better understand potential risks and common pitfalls, to train their teams to be aware of their obligations under the contract (whether in terms of time, cost or quality) and to be more proactive in managing potential disputes as they emerge, rather than kicking the can down the road and hoping for the best.

There are many ways to try and avoid disputes arising on a project (or to better manage them if they do arise), none more so than reviewing and understanding the contract, and building the project team’s awareness of their obligations under that contract at the outset. 

It is still so commonplace for the contract to be left in the bottom drawer, or for the team to simply not understand the implications of the contract they are working to, or the terminology which sets out their obligations under the contract. A detailed contract review can therefore be hugely helpful, particularly if it is followed up with an interactive, open-forum, team workshop. This encourages discussion between the team, the sharing of problems and experiences and the identification of key areas for risk management and commercial improvement. The administrative requirements associated with all contracts (not just the NEC) are such that a failure to comply with particular obligations can be fatal to entitlement, with missed opportunities to be ‘on the front foot’ in commercial discussions and negotiations.

Establishing simple procedural checklists at the outset can be of enormous benefit to the project team, identifying which notices need to be issued when (by both parties), and whether there are any unique (or particularly important) requirements under the contract which need to be highlighted for compliance. Reference to a carefully (but simply) drafted schedule of notifications and records helps to focus the project team during the cut and thrust of the day to day delivery of a project.

Reviewing, validating and stress-testing the baseline programme is another area which can provide long-term benefits for the project. An understanding of the practical implications of the baseline programme at the outset, whether it is achievable and whether there are any potential constraints on its timely delivery, are all essential ingredients in managing the programme for the duration of the project. Good programme management is now an essential component of any project (and is more often than not a contractual obligation), and provides a benchmark for entitlements to extensions of time, adjustments of the contract sum and loss and expense recovery amongst others.  The team’s ability to understand and handle this important tool is crucial.

Detailed project monitoring and careful progress reporting is another area which can prove invaluable in alerting the team to potential problem areas before they become too established or have a disproportionate effect on the progress and costs of the project.  An objective overview of the progress of the works, backed up with clearly labelled and catalogued photographs and other site records, works as both a proactive management tool and a reliable resource for retrospective analysis (whether for cost or time).

The same can be said of records. Not only are they often a contractual requirement, but accurate, detailed, and easily accessible records really can make or break a dispute, whether in providing support to continuing project-level discussions to avoid disputes developing (or expanding), in senior level negotiations, or formal dispute proceedings. A good record management system is essential, as is the team’s buy-in to the efficient management of disputes.

Dialogue and exchange of information are vital to the avoidance of further disputes. So keep talking! Constructive dialogue between the parties keeps the prospect of satisfactory commercial settlements alive, thereby avoiding the uncertainty that comes when you place decisions for your dispute in someone else’s hands.