24 Sep 2017
Competing interests and conflicting priorities make for complex relationships between contractors and employers, which often result in disputes.
Increasingly, it is also becoming a norm for construction projects to cost 30-40% more than the original contract target price due to ‘risk pricing’. This inevitably leads to parties arguing over the overall cost escalation instead of the successful delivery of their project. When such disagreements arise, it is better to address them early to prevent them turning into a full-blown dispute.
At this year’s Cityscape event held in Dubai, Yasmine Nashawati discussed how disputes are caused,
and how best they can be resolved without spending exponentially.
Conflict Avoidance is any method that addresses issues through early intervention, before the need to go to court. It offers many benefits to stakeholders, such as:
- Saves time and money.
- Allows parties to focus on successful delivery and fosters innovation.
- Maintains confidentiality.
- Provides opportunity to balance and hedge against litigation or commercial risks.
- Preserves brand reputation.
- Parties can create bespoke solutions outside the range of legal outcomes.
- Allows flexibility by letting parties to select a process that suits them. Can be culturally sensitive and adaptable.
- Has a high success rate.
Efforts to improve the process
The need to improve the way relationships are managed and differences of opinion are handled has brought to light the increase of disputes in the industry. A formal Conflict Avoidance Process created by RICS for Transport for London (TfL) encourages cooperation between parties and resolves disagreements early, has proven to be highly successful in the UK. The Conflict Avoidance Process (CAP) helps resolve all issues amicably, without them progressing to litigation or formal dispute resolution.
The CAP, a contractual mechanism that helps stakeholders to avoid and control issues, works as a preventive technique. An independent panel makes non-binding recommendations on contractual issues and to date, 14 emerging disputes have been resolved amicably using a CAP. Costs in the region of £50,000 to £500,000 have previously been spent when settling disagreemens in courts, however the CAP has allowed issues to be reconciled at fraction of the cost (£15,000 on average).
RICS is actively engaged in discussions with stakeholders across the region where a move towards a collaborative contracting environment is paramount due to the current economic climate and the time sensitive projects under construction.
Finding global solutions
In order to encourage collaborative working and the use of early intervention techniques, seven leading professional and institutional bodies have joined together to form a Conflict Avoidance Pledge. Professional bodies representing surveyors (RICS), engineers (ICE and ICES), architects and others such as Chartered Institute of Arbitrators and International Chambers of Commerce, hope to make harmful and expensive disputes a rare occurrence through this pledge.
This coalition aims to drive behavioural change in the land, property and construction industry by encouraging all organisations to consider their working practices and move away from the culture of dispute heavy business.
The key objectives of the pledge are to:
- Promote a more collaborative working culture in the construction industry
- Help reduce legal spend in the industry
- Protect brand reputations
The pledge has been signed by leading industry stakeholders, including; Carillion, CIOB, Atkins, Mott McDonald, Turner & Townsend, Siemens and Faithful+Gould.
Find out more about the Dispute Resolution Service in the Middle East, or contact Yasmine to discuss in more detail.
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