April 2008 - ICE London 2012 Conference

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Avoiding disputes to deliver success
What types of problem can escalate into disputes?
Richard Bayfield FICE FCIArb
(www.richardbayfield.com)
Ice.org.uk
Adjudicators Workshop – Jan 2008
Construction now familiar with “lessons learned workshop” but 2012
will be too late – T5 / Wembley / Emirates will be relevant
Workshop - approx 40 ICE Adjudicators present – following
questions asked:
Who has NEC experience – as a Construction Professional? – and as
an Adjudicator / Disputologist?
What disputed issues have you been involved with as an Adjudicator
and / or Advisor under NEC?
What advice would you give to reduce potential disputes before
2012?
What do you think are the key 2012 risks?
Construction Industry – History 1 of 2
Construction Industry – History 2 of 2
Feedback
What issues have you been involved with as an
Adjudicator and / or Advisor under NEC? - 1
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Extension of time
Programme Information (Absent)
Resource Information (Absent)
Contract Data (Missing / Incomplete)
Works Information (Missing / Incomplete)
Non-compliance with Compensation event procedures – time limits
Non-compliance with Compensation event procedures – Project
Manager
Valuation of Compensation Event
i.e. Lack of knowledge by all parties
Feedback
What issues have you been involved with as an
Adjudicator and / or Advisor under NEC? – 2
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PM absents him/her self (i.e. does not get involved, avoids
issues / problems – e.g. does not approve a programme or else
rejects a programme without any reason)
Non adherence to “time limits” for reply within contract – 7 days
Does not carry out his / her role under the contract
i.e. - Project Manager Failure
Contract assumes design is complete when it is not – result is
1000’s of compensation events –c.f. global claim
Mis-apply / mis-understand Targets (e.g. lane rental bonus)
Contract amendments (e.g. use of “contract data 3”)
Effect of decision of external auditor
i.e. - Strategic Failure
Feedback
What issues have you been involved with as an
Adjudicator and / or Advisor under NEC? – 3
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Valuation of Compensation Event (after disagreement between
Contractor and Project Manager)
Matters which were not addressed within the contract negotiation and
contract documents – matters not anticipated by either party
Falling out between 2 key individuals
Financial difficulty
External Factors – Politics / Environment / Economics / Social /
Technical (PEST Factors)
i.e. – “Unavoidable” dispute issues above
Whereas “lack of knowledge, PM failure and strategic failure”
disputes are all largely preventable
Adjudicator workshop Key Risks 1
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Modifying contract without understanding effect
Lack of resources
Competence (lack of) – importance of good people / teams / project
management
Design changes (not managed / wrong contract form)
Insufficient time before 2012 – poor programme management
Ground conditions (adverse)
Poor quality
Supply chain – not “back to back” – not “integrated”
i.e. INTERNAL (to construction delivery team)
Adjudicator workshop Key Risks 2
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Change of Mayor (and change of Policy) – Politics
Terrorism
Oil shortage / price £ / $ – economy – inflation
Stake Holder Management
Industrial Action
Change in Law
i.e. EXTERNAL (to construction delivery team)
Advice to ODA
Countermeasures to key risks:
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Invest in training the professionals (some estimate 75% never worked
under NEC before) – recognise NEC is a culture (early warning / preempting etc) as well as a contract (e.g. 7 day period) – lack of
knowledge dispute
Strong / robust / competent Project Management (avoid PM inaction
disputes) – c.f. Adjudication – answer the right question – Project
Manager failure dispute
Avoid contract amendments
Avoid “creeping” design into construction period (if contract assumes
design is complete) – potential of multiple Compensation Events (c.f.
global claim)
- Strategic failure dispute
Competence – c.f. “lack of knowledge” disputes
Reference HSE (WWW.HSE.GOV.UK):
To be competent, an organisation or individual must have:
Sufficient knowledge of the specific tasks to be undertaken and the risks
which the work will entail; and
Sufficient experience and ability to carry out their duties in relation to the
project; to recognise their limitations and take appropriate action in order
to prevent harm (c.f. damage) to those carrying out construction work, or
those affected by the work
Competent designers eliminate hazards and reduce risks –
manage the risk, not the paperwork
Overview
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What types of problem did escalate into disputes?
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Many different types of problem but common thread is lack of
knowledge (NEC is sophisticated contract – parties go into it with
“eyes open”)
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Internal Factors (pre-empt or countermeasure):
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Competence / Competence / Competence
Experience / Education / Training
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External Factors (respond to or anticipate)
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Politics / Environment / Economics / Social / Technical
(i.e. PEST Factors)
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