Dispute Management

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Disputes in the construction and engineering industries are common and often involve large amount so money. This page looks at dispute management from the perspective that preventing disputes is better than resolving disputes. But when a dispute arises you need to know how to respond effectively.

Topics included in Dispute Management in construction and engineering:

- Dealing with poor performance
- Contract & Commercial Management
- Dispute Management
- Useful External Web-links & Resources.

Other related sections of the PMKI:

- Claims and Forensic Analysis
- ADR and Dispute Management


Dealing with poor performance

At all stages, of dispute management, procedural fairness is vital.
 
Art: Fairs Fair - Process & Procedural Fairness. When you have to deliver bad news to a person, the processes you use are at least as important as the decision you have made.

ConfusionManaging a contractor (or subcontractor) that is failing to perform raises some interesting legal and contractual challenges. My suggestions are:

What not to do: Don't get involved in 'helping' the contractor plan its work, if you do you will accept some responsibility. But do be responsive to sensible suggestions to overcome issues.

What to do:

  1. Make sure payments accurately reflect work actually accomplished.
  2. As far as possible make sure all of the client inputs are delivered in accord with the original program requirements. If these are delivered later than this the contractor can claim 'pacing' if the deliveries actually cause a delay the contractor can claim the delivery was the overriding cause of the delay and seek EOTs with costs - see concurrent and parallel delays on our claims and forensic analysis page.
  3. Keep really accurate records of everything done on a daily basis. Date stamped photographs help. Signed records are good. Make sure the progress information is shared with the contractor (no surprises).
  4. Expect lots of claims from the contractor and gear up early.
  5. Don't assume the contractors Head Office knows what is going on. Regular requests to the head office to explain schedule slippages each month (eg, contract issued last month was for 1000cu.m. only achieved was 700cu.m - please explain) will put pressure on the site to perform. Focus these requests on one or two key metrics only.
  6. It may help to get expert advice early (but this tends to be expensive).

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Contract & Commercial Management

Preventing disputes is better than resolving disputes. The introduction of Adjudication in the UK and Australia has pressurized project administration, causing a radical re-think of many traditional project management and contract management processes. The Acts apply to every business involved in Building and Construction including contractors, subcontractors, clients, suppliers and professional firms. Construction industry professionals need to address and manage the impact of the Acts on projects in which they are involved.
For examples, see the Casewatch series on Adjudication.

Effective contract management requires:

  • Leadership – Executive exposure to the concept of commitment management [see: Leadership & Motivation]
  • Strategy – Policy formation for robust, systematized mapping of strategic and operational goals [see: Aligning Projects, Programs and Strategy]
  • Stakeholder engagement – Plan and track business relationships [see: Advanced Stakeholder Engagement]
  • Risk Management – Implementation of effective risk management [see: Advanced Risk Management]
  • Solution Requirements Management – Design & segmentation of product/service categories for management effectiveness
  • People Development – Closing skills gaps and development of team members as trusted advisors.
  • Financial – Link contract terms and conditions to price and cost analysis, pay for performance
  • Execution & Delivery – Strong focused on results, performance based contracting, regular reviews of the procurement systems
  • Information Systems / Knowledge Management – Procurement support using automation to systematically capture and manage contract and relationship performance

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Dispute Management Resources

WP: Issues Management. Before declaring something a dispute, consider managing it as an ‘issue’, at least to begin with. Defining a problem an ‘issue’ rather than a ‘dispute’ means you can apply normal project management techniques to manage the problem.

WP: Negotiation & Mediation. Increases the formality and introduces ‘sides’ into the process. The negotiation process remains totally within the control of the parties and may be assisted by a trained mediator.

WP: Win-Win Negotiations. A win-win approach to negotiation can deliver higher value at lower risk than a win-lose scenario. .

WP: Dispute Management in Contracts. An overview of the options and consequences of disputes.

Blg: Using a Risk Management approach for Assessing Claims. Balancing the inevitable costs of pursuing a claim against the possible gains is a difficult but necessary decision before moving forward.

WP: Contract Termination. When all else fails contract termination may be the only option; but beware - terminating a contract is a high risk activity. This White Paper takes a layman's look at the risks and issues.  

CRC For Construction Innovation - The CRC-CI website closed 30th March 2010, Documents from the CRC-I project, a Guide to Leading Practice for Dispute Avoidance and Resolution are available for download:
- Guide to Leading Practice for Dispute Avoidance and Resolution
- Guide to Leading Practice for Dispute Avoidance and Resolution: An overview
- Dispute Avoidance and Resolution (literature review)
- Causal Ascription of Disputes (report)
- Strategies for Dispute Avoidance (report)
- An exploratory study of project dispute pathogens (journal article)
- Causal Modelling of Construction Disputes (refereed conference paper)

Delay and Disruption Protocol - The Society of Construction Law (UK): https://www.scl.org.uk/

Mosaic's Claims and Forensic Analysis page

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Useful External Web-links & Resources

Construction and Engineering Disputes

Doyles Construction Lawyers - Australia’s largest specialist construction law firm: https://doylesconstructionlawyers.com/ 

Resolution Institute (formally IAMA and LEADR) - Australia's largest, independent and most experienced arbitration and mediation service: https://www.resolution.institute/

The Society of Construction Law (UK). The society works to promote education, study and research in the field of construction law and related subjects (including adr, arbitration and adjudication), both in the UK and overseas: https://www.scl.org.uk/

Society of Construction Law Australia. A single national organization of members, at all stages of their professional career, who share an interest in construction law: https://www.scl.org.au/


Construction and Engineering Good Practice

The Chartered Institute of Building (CIOB). the world's largest and most influential professional body for construction management and leadership: https://www.ciob.org/about

Constructing Excellence - CE (UK) aims to achieve a step change in construction productivity by tackling the market failures and promoting continuous improvement: http://www.constructingexcellence.org.uk

IACCM - The International Association for Contract & Commercial Management world-class standards in contracting and relationship management process and skills: https://www.iaccm.com Publishes the IACCM Capability Maturity Model to benchmark contracting processes: https://www.iaccm.com/services/contracting-capability-maturity-assessment/

ICPMA - The International Construction Project Management Association (ICPMA) is an international umbrella association focusing on international Knowledge Management, the General Annual Meeting, working groups and publications: http://www.icpma.net

Major Projects Knowledge Hub (UK). Brings together learning, innovation and good practice from many different sources such as learning legacies by major projects, other related knowledge hubs and websites: https://www.majorprojectsknowledgehub.net

Strategic Forum for Construction (SFfC) UK. SFfC brings together the organizations representing the UK construction sector to work collaboratively for a better industry: http://www.strategicforum.org.uk/

 

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A course in a book

Communication management template


A course in a book

Communication management template


A course in a book

Stakeholder management tools