Conflict Avoidance, Management & Dispute Resolution

Question 1

Are you aware of any RICS documentation for conflicts?

Answer 1

Yes, the RICS Practice Information (guidance): Conflict avoidance and dispute resolution in construction.

Question 2

What is a conflict?

Answer 2

A conflict of interest as when a member’s or firm’s duty to act in the interests of a client conflicts with another duty

Question 3

What can you do to ensure conflicts are mitigated?

Answer 3

1. Communication.
2. Record keeping and minutes of meetings.
3. Good payment practice.
4. Good management.
5. Proactivity.
6. Clear contract structure.
7. Clear responsibilities.

Question 4

You mentioned you have knowledge of the common dispute resolution techniques, what are these?

Answer 4

1. Formal (ALA)

a. Arbitration
i. A procedure for the resolution of disputes which is under control of the parties and has been used to resolve disputes for a long time.
ii. Arbitration Act 1996 (Arbitration Act).
iii. 5 Objectives:
1. Fair, cost effective and rapid.
2. Promote party autonomy (respect each parties choices).
3. To ensure the courts have supportive powers when needed.
4. Ensure language used us user friendly and accessible.
5. To follow the model law where possible.
iv. The arbitrator’s award is final and binding on the parties.
v. Timescales for conclusion of Arbitration set between all 3 parties.

b. Litigation
i. Litigation is used when a claimant decides to take a case to court in order to obtain a ruling on the matter.
ii. Governed by the Civil Procedure Rules 1998.
iii. Claimant sends a ‘Letter before Claim’ to the person in dispute typically proposing an Alternative Dispute Resolution technique is used in the first instance (MCN – mediation, conciliation or negotiation).
iv. Recipient given 30 days to respond to the proposed remedy.
v. If goes to court, the barrister will give a binding decision.
vi. Pros = can be most effective way if no other alternative resolution, sets a precedent, and potentially cheaper costs if resolved quick by courts.
vii. Cons = time consuming, damage to relationships, court backlog.

c. Adjudication
i. Introduced under the ‘Housing Grants, Construction and Regeneration Act 1996’ – Section 108.
ii. If the HGCRA applies to a particular construction contract, then section 108 provides any party with the right to refer a dispute at any time to adjudication.
iii. Once the dispute has been referred, an adjudicator should be appointed and the dispute referred to that adjudicator within seven days of issue of the notice. Typically stated within the JCT contract (RICS).
iv. The decision must be given within 28 days of issue of the referral. The referring party can extend the period by up to 14 days, but any further extension must be approved by both parties.
v. Obligation on the adjudicator to act impartially and fairly. In effect, this means that the adjudicator must give both parties a reasonable opportunity of putting their case and responding to the case before them.
vi. The adjudicator’s decision will be binding.

Question 5

Can you summarise the difference between Arbitration and Adjudication?

Answer 5

1. Adjudication
   d. Adjudication is a rapid process which takes 28 days (or possibly 42 if extended) to reach a decision.
   e. Unique to the construction industry.
   f. Designed to resolve disputes quickly and efficiently.
   g. Can not recover costs from opponent
   h. Governed by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA) and the Scheme for Construction Contracts (England and Wales) Regulations 1998.
   i. Amount of evidence required is typically less than Arbitration.
   j. Can appeal an Adjudicators decision however limited circumstances.
2. Arbitration
   a. Can take a long time due to additional time allowed for statements of case, evidence and disclosure.
   b. May be able to recover costs from opponent.
   c. Governed by the Arbitration Act 1996.
   d. Binding decision. No appeals.

Question 6

Can you explain what the JCT D&B says about disputes?

Answer 6

1. Negotiate first.
2. Mediate second.
3. Arbitration or Adjudication third.

Question 7

What is Mediation?

Answer 7

An informal process where the parties are assisted by an independent third party in their efforts towards settlement. The third party assists the parties in their communication. The mediator is impartial, and trust develops during the negotiation process between the parties and the mediator in order to allow the mediator to develop a settlement for or with the parties. Not a binding decision.

Question 8

What are the timescales for Adjudication?

Answer 8

1. Once notice is served, an Adjudicator should be appointed within 7 days.
2. Decision provided within 28 days.
3. Binding decision.

Question 9

Can you summarise a time where you have negotiated and how this was resolved?

Answer 9

During the UCB Reception refurbishment project, the contractor was claiming for additional costs associated to the breaking out of the concrete seating area due to deeper foundations than planned. I negotiated this with the contractor and explained that the contractor had taken on the risk for this item contractually, which was confirmed in the amendments and the clarification register.

Question 10

Can you confirm a time where you have conceded during negotiations?

Answer 10

On the same project (UCB Reception), the contractor advised that the distribution board did not have enough remaining capacity and as such claimed for this within the valuations. I advised that the contractor was given sufficient time and resourced to undertake surveys of the existing distribution board, however, given the nature of additional power and data instructions, this item was conceded.