CONSTRUCTION JOURNAL

Preventing construction disputes

A new industry steering group is leading the way in developing a culture of collaboration and reducing the number of disputes in construction

Author: Stephen Blakey and Martin Burns

09 October 2020

For many years, there has been a prevailing acceptance in the construction industry that complex, protracted and costly disputes over contractual entitlement are almost inevitable. Adding to this, the COVID-19 emergency has created the potential for a tsunami of disputes, which could cause immense long-term damage to the industry.

In recent times, government and sectoral decision-makers have made significant moves to improve the divisive nature of the industry. A key feature of these moves has been a desire to establish an integrated approach to prevent disputes spiralling into litigation. Major industry bodies have embraced collaboration, and some have underpinned their approach by engaging in effective conflict avoidance procedures or mechanisms that facilitate prompt resolution of emerging disputes.

“Major industry bodies have embraced collaboration, and some have underpinned their approach by engaging in effective conflict avoidance procedures”
Industry examples

Network Rail is the UK’s largest infrastructure client, with a demanding multi-billion-pound capital works programme delivering enhancements and renewals over a 5-year control period up to 2024. The contractual regime for much of this work is done via long-term frameworks and collaborative forms of contract, for which Network Rail and its suppliers have built a robust capability. Network Rail’s answer to the disputes problem was to create a model procedure for Dispute Avoidance Panels (DAP), developed in collaboration with its key suppliers, that looked at avoidance and prevention rather than early intervention, seeking to stop disputes from arising in the first place.

A DAP comprises subject matter experts who understand the genesis of disputes and practical ways to avoid them. The terms of reference for these subject matter experts are prevention, not intervention – they watch for signs of potential disputes and alert stakeholders to the danger via an Observations Report that highlights potential issues, and invites the project’s leadership team to remove the key components that would otherwise nurture and give rise to a dispute.

A successful pilot has proved that this approach can be highly effective, and Network Rail has incorporated provisions to instruct a DAP is included in its major framework contracts, and a cluster of active DAPs is emerging.

Transport for London (TfL) has focused on early intervention and has been successfully using the RICS Conflict Avoidance Process (CAP) for several years. The RICS CAP involves the introduction of an independently nominated subject matter expert who provides impartial advice and recommendations for settlement of an issue before it escalates into a lengthy dispute. One of the benefits of the RICS CAP is that the presence of an early intervention regime in itself can have a preventative effect. TfL has reported that the introduction of the RICS CAP process has stopped a number of disputes from arising in the first place.

The Conflict Avoidance Pledge

Both Network Rail and TfL have joined with professional membership bodies such as ICE, RIBA, ICES DRBF, ICC, CIArb and CECA to establish the Conflict Avoidance Coalition Steering Group, which is chaired by RICS. The coalition’s purpose is to support the development of a collaboration culture and reduce the number of disputes as well as the damage they cause to relationships, finances and reputations. The coalition has issued a pledge which commits organisations to adopt conflict avoidance and early intervention techniques for their projects.

To date, about 200 organisations have signed the pledge, at least 80 of whom signed up after the beginning of the COVID-19 lockdown.

A number of other bodies are encouraging the widespread adoption of this pledge. On 7 May the Cabinet Office issued guidance to contracting bodies on responsible behaviours – the guidance encourages contracting parties to sign up to the principles in the pledge for avoiding and resolving disputes.

The Construction Leadership Council (CLC) published the construction industry Roadmap to Recovery on 16 June, which references the coalition’s work and encourages parties to adopt the pledge. In Scotland, the Construction Industry Coronavirus Forum (CICV Forum), which is made up of 24 key industry bodies and advises the Holyrood government, signed the pledge and effectively made a commitment to conflict avoidance on behalf of the Scottish construction industry. More recently, the Wales Construction Federation Alliance (WCFA) has prepared its own 12-point short-term Industry Recovery Plan which encourages industry bodies to sign up to the pledge.

RICS is inviting large institutional public- and private-sector clients to consider making reference to the pledge as part of their procurement process as an indicator of a commitment to cultural and behavioural change. To celebrate the organisations that take the further step of signing the pledge and transforming the declaration into practice, the coalition has launched a recognition scheme which differentiates organisations into the following groups.

  • Bronze:

    confirms that the business is a signatory to the pledge and has made a cultural commitment to actively support avoidance and early intervention techniques.

  • Silver:

    confirms that the business is signatory to the pledge and, in addition to a cultural commitment, has taken formal steps to incorporate policies. This could include, for example, provisions in framework arrangements and individual contracts that encourage collaboration in the early identification and disposal of issues along with amicable settlement in the event of disputes beginning to emerge.

  • Gold:

    confirms that the business is a signatory to the pledge and in addition to a cultural commitment, has taken formal steps to incorporate policies and procedures, as well as actively engaging in conflict avoidance and dispute management procedures. This could include, for example, utilising dispute avoidance panels, training key personnel in dispute avoidance and management techniques, and putting conflict avoidance and dispute management mechanisms into practice.

Despite the difficulties posed by the COVID-19 pandemic, it has also mobilised industry by drawing attention to the existence of tried and tested techniques such as DAP and the RICS CAP for avoiding and managing disputes. The UK construction industry has a clear need for conflict avoidance and early intervention practices, and COVID-19 may accelerate the proliferation of these techniques.

“RICS is inviting clients to consider making reference to the pledge as part of their procurement process as an indicator of a commitment to cultural and behavioural change”

stephen.m.blakey@networkrail.co.uk

mburns@rics.org

Related competencies include: Conflict avoidance, management and dispute resolution procedures

Advice from RICS

In order to avoid disputes and enable early resolution in as many cases as possible, RICS advises that businesses operating in the construction industry:

• behave responsibly, as advised by the Cabinet Office
• take note of the CLC Roadmap to Recovery and similar initiatives shared by devolved administrations
• talk to RICS Dispute Resolution services about the Conflict Avoidance Toolkit and measures that can be put in place to enable early identification and disposal of emerging disputes
• sign the Conflict Avoidance Pledge.

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