Conflict Avoidance, Management & Dispute Resolution Procedures

Question 1

What guidance notes are relevant to Conflict Avoidance?

Answer 1

Conflict Avoidance and Dispute Resolution in Construction

Question 2

What do you know about the HGCR Act?

Answer 2

• This is the Housing Grants, Construction and Regeneration Act 1996
• It introduced a statutory right to adjudication
• Commonly referred to as the ‘Construction Act’

Question 3

What else does the construction act do?

Answer 3

It introduced a timeline for valuations and payments, stipulating that payment notices should be issued no later than 5 days after the due date.

Question 4

In your submission you state that you work collaboratively to avoid conflicts, can you just elaborate a bit on that?

Answer 4

I work proactively to avoid a dispute evolving to the point where adjudication is required, I do this by;
- Keeping close communication with the Contractor and build a rapport
- Keep formal written records in the form of meeting minutes
- Adhere to the change control procedure so both parties know where they stand

Question 5

In your submission you include a couple of points regarding actions that can be taken to avoid conflicts in the first place, what are these?

Answer 5

• Drafting unambiguous contract documentation
• Agreeing change control procedures
• Collectively reviewing risk registers with clear assignment of risk owners (to those best able to manage the risk)
• Effective communication

Question 6

Your submission states you have experience with JCT contracts, can you just tell me how the JCT deals with collaborative working?

Answer 6

The contract includes a Supplemental Provision called “collaborative working”

Question 7

You mention a risk register as a way of pre-empting disputes, what typically goes into a risk register?

Answer 7

• Any perceived risk that has a likelihood of occurring on a project which could impact on the programme and introduce additional costs
• Typically includes the risk, a risk rating system, risk owner ship, and mitigation measures.

Question 8

Are there any more common risks included within risk registers?

Answer 8

• Insolvency of the contractor / failure to perform
• Discovery of unknown asbestos
• Also; Works undertaken by statutory undertakers, Changes in Law, Budget shortfall

Question 9

You mention assigning risk owners / clearly allocating risks - why is that important?

Answer 9

• To ensure the party best able to manage that risk is responsible for it
• As the varying level of risk from project to project will influence the Contractors tender price i.e., will risks associated with the ground sit with the contractor or client?

Question 10

You mention below ground risks, be that obstructions or contamination - who typically takes the risk with below ground in a traditional standard form

Answer 10

The client

Question 11

Does that vary on a design and build contract?

Answer 11

Yes, the Contractor would take the risk for ground conditions

Question 12

With regards to provisional sums - do you know who takes the risk on a provisional sum under the contract?

Answer 12

In terms of cost, the Client takes the risk

Question 13

What is the distinction between an undefined and defined provisional sum?

Answer 13

• Defined = Contractor allows to undertake the works within their contract programme + pricing of Preliminaries
• Undefined = Not allowed for within the programme or pricing of preliminaries

Question 14

If a conflict arises, how would you deal with it initially?

Answer 14

Try to resolve the conflict through communication and negotiation

Question 15

What would you do if an attempt to resolve a dispute through communication is unsuccessful?

Answer 15

Refer the matter to an alternative dispute resolution (ADR)

Question 16

What types of ADR are there?

Answer 16

• Negotiation
• Mediation - (impartial third party introduced to mediate; non-binding)
• Conciliation
• Adjudication - binding
• Arbitration
• Litigation

Question 17

What is Adjudication?

Answer 17

• It is a UK statutory dispute resolution procedure (under the Construction Act)
• It does not have to be consensual (as mediation, negotiation and arbitration), either party can refer a matter to adjudication at any time.
• It is viewed as a relatively quick / simple process to limit the number of cases heard in court
• The decision is binding

Question 18

Can you explain how the Adjudication process works in terms of timelines?

Answer 18

• One of the parties requests the appointment of an adjudicator by serving a Notice of Dispute
• Adjudicator must be appointed with 7 days of serving the notice
• A Referral Notice must be issued at the end of the 7 day period after Notification of Dispute
• The Adjudicator has 28 days from issue of the Referral within which to issue a decision
• This can, however, be extended by 14 days by agreement with both parties

Question 19

Give me an example of where you’ve avoided adjudication by resolving a conflict through negotiation and communication

Answer 19

On my Dale Hall School ceiling replacements project, the contractor claimed significant additional costs due discovering the issued drawings were not to scale:
- This was an error in the existing CAD file provided by the client, however they were not willing to pay amount the contractor was claiming
- The submitted costs were reviewed and were found to be inconsistent with the original pricing and current market rates
- A respectful conversation was had with the contractor to resubmit their costs based on their original pricing and current market rates
- The client was consulted explaining the validity of the variation and the contractors willingness to ensure a fair cost was submitted.

Question 20

Who pays for the Adjudication?

Answer 20

• This depends on the terms of the contract
• Parties cannot recover their own costs incurred as a result of the adjudication
• The Adjudicator can usually decide which party is liable to pay the Adjudicators fee

Question 21

How does Adjudication differ to Arbitration?

Answer 21

In order to Arbitrate, there must be an agreement by both parties - whereas, either party can refer to Adjudication at any time

Question 22

What is the TCC?

Answer 22

Technology and Construction Court

Question 23

What is an Expert Witness?

Answer 23

An independent expert in the field of dispute who provides an unbiased and independent opinion

Question 24

Are you aware of some of the processes the RICS Practice Information document lists to avoid conflicts?

Answer 24

Yes, some examples include:
- Good management of clients, contractors, design team
- Clear contract documentation
- Good payment practice
- Record keeping

Question 25

What are the 3 pillars of dispute resolution?

Answer 25

Negotiation, Mediation, Adjudication