Avoiding formal disputes throughout the construction project lifecycle
How people in different project job roles can contribute to avoiding disputes
In this series of 9 articles, Blake Newport sets out good practice and provides the benefit of 40 years’ expertise in supporting our clients negotiate the commercial contract minefield across all construction sectors in the UK and overseas.
In the fourth article in the series, Gary Bone discusses common project job roles and how people in those roles can contribute to avoiding disputes.
Construction disputes are not the preserve of the commercial and legal teams within a business. In fact, by the time the legal team becomes involved, a dispute has usually already arisen which is rooted in decisions or indecisions made by others long before. This article covers general roles on a project, common issues that may end up in a dispute and how they might be dealt with in order to avoid such a dispute.
Whether it is a design and build contract or a traditional employer-designed project, clarity and the correct level of detail at defined points in the project is crucial. Standards such as the RIBA Plan of Work, GRIP, BIM Task Group and OGC define what should be completed at each gateway. Certain gateways may provide the point that contractual responsibility for the design transfers from one party to another. The reality is that there may not always be an absolute cut-off point and grey areas and overlaps may exist. In order to try and avoid arguments, it is important that there is a formal process that records what has been completed at each stage. There may be a temptation to take on an incomplete design for expediency and the good of the project, or for a contractor to fill in the gaps for missing Employer’s Requirements.
because the employer is not even aware that their input is needed. Such acts of goodwill and collaboration still require the work to be completed and can lead to it being undertaken by the wrong party, according to the contract. Inadvertently, this could lead to a wrong decision or a blurring of the lines of responsibility or defined baseline from which to measure change.
An example would be the inclusion of a set of drawings in a design and build contract, where some of the drawings have been revised since the versions that were issued as tender documents. It may be that the drawings that were provided in the tender documents were not adequately completed but the revised drawings included in the contract were. The contractor would only be entitled to measure change from the contract revision, but in reality, the employer’s team may have since done further work to the design – work that should have been done in the first place and which was not reflected in the contractor’s price. An argument may ensue where on the one hand the contract drawings simply reflect design development which the contractor would always have been responsible for, versus the view that the contract drawings have in fact changed the employer’s requirements. Clarity and checking that designs include what both parties expect them to is essential to avoid disputes.
The Project Manager
Under an NEC form of contract, the role of the PM is crucial and clearly defined. However, this is not necessarily the case in other forms of contract. Generally speaking, the role of a construction PM is to ensure the managed delivery of the project and to react to communications and notices in a timely manner in order to maintain the programme or agree extensions of time for delays or additional work as appropriate.
Decisions and response times from one individual can therefore often be crucial to the overall success of the project because the impact of a PM’s decisions or indecisions can cascade down through the supply chain.
Being busy with a month-end report, for example, when a response is either contractually or reasonably required is not an adequate excuse for not providing that response on time. and being late with such a response may result in a dispute or series of disputes. A busy PM must delegate some decisions. However, signing off an instruction drafted by others without giving due consideration to its implications can also result in disputes. A careful balance should therefore be sought in this respect because considering what is ultimately best for the critical path of the programme is generally a good decision, although other commercial factors should also be considered.
As mentioned in previous articles in this series, pushing risks onto parties who are not best placed to manage them can often result in time-consuming, costly disputes and damage to supply chain relationships. A ‘Project Manager’ should be just that. Batting away contractor’s claims or grievances as a matter of course is often a bad idea – not just because engaging may well avoid a dispute, but also because it is ultimately a prudent business decision to deal with such issues head-on.
The Construction/Operations Manager and Supervisor
Records, records, records. A well-used construction mantra for good reason because records are vitally important in analysing why events deviate from a plan. Blake Newport is often appointed when a problem on a project is already in existence. Parties can become entrenched in their positions and there may be a breakdown in communications which can often result in a genuine belief that the other party’s actions were the sole cause of the dispute.
In my experience, site-based decisions are often made for sound reasons by those on the ground but sometimes these decisions will adversely affect another party through no fault of their own. Being able to explain why a decision was made and recognising its consequences at the time is so important to heading off a dispute.
It is a fact of life that not everything will go according to plan. ‘Just in time’ deliveries will be late or difficult to unload. Adverse weather will affect access roads. Attendances may be affected by third parties. Employers may make operational decisions which affect productivity. When such things happen, regardless of fault, it is important to record what actually happened, when it happened, why it happened, what plant and labour were affected and for how long these resources were affected.
If the form filling is cumbersome and difficult then speak to the project team to make it a simpler task. Ultimately the most important thing is that it is recorded, so if necessary, write it on a piece of paper or in an email. If both parties’ records match, all the better because this gives the respective commercial teams a chance of resolving the matter before it results in a dispute. if the parties’ records do not match, the more comprehensive and detailed records completed at the time are likely to be the more persuasive.
The Quantity Surveyor/Commercial Manager
A common misconception is that the role of the commercial team is to deal with claims and disputes. Much like PPE is the last form of protection from accidents, the commercial team can be the last line of defence before formal dispute resolution occurs. Quite often, as highlighted above, the cause of dispute has already occurred or is about to occur.
The role of the QS or commercial manager at this point will be to ensure that all parties do what the contract says. If the contract says send an early warning in order for the parties to mitigate the effects of a likely impending event which could delay the programme and/or cost someone more money, then that is what should happen. If there should be a notice of a change or delay and a quotation sent within a certain timeframe then the commercial team should ensure that happens. If the contract says quotations should have a certain level of detail or evidence then that should also happen.
Often, the issuing of such communications may be perceived by project teams as being unduly ‘contractual’. However, the contract regulates the deal the parties struck and its procedural requirements should therefore be followed., This will also be useful to the receiving party if done correctly, as it will provide timely warning of issues that the parties will need to be resolved. Issuing such communications is often wrongly seen as causing a dispute, whereas issuing them incorrectly, belatedly or not at all is often the actual cause of dispute.
An example would be sending ‘budget’ change costs with evidence ‘to follow’ which is subsequently provided during final account negotiations. Very few standard form contracts would advocate this approach yet it seems to happen regularly. This often leads to over or under-stated interim accounts which are difficult to resolve in the final account as members of the project team have moved on, records are lost or simply unavailable and companies have already relied upon the reported sums. This often leads to a dispute. Each party holding the other to the deal throughout the project lifecycle will most likely lead to a better outcome.