Bridging the Technical and Legal Divide in Construction Disputes
The question of all questions in the construction industry is: Are we an industry that learns from its mistakes? Both the time it takes to resolve disputes and the value of disputes increase every year. Labour shortage, problems with implementing digital transformation, as well as increased complexity of projects are some of the main reasons contributing to already high tensions, getting even higher. It’s widely known that the construction process is often far from smooth and can be more akin to managing chaos. A project is a complex, technical, technological, organizational, financial and legal venture; and even a well-planned one can run into problems (and most do).
Top 10 reasons behind a construction dispute
A project environment is particularly challenging, with those involved coming from different fields, playing different roles, and each there with different objectives, (vying for the best cut of the deal) – it’s no wonder conflicts become inevitable and are a top factor preventing successful completion of projects. Disagreements can occur due to a wide range of reasons. And if parties fail to reach an amicable agreement, the contract usually provides further procedures to resolution such as mediation, conciliation, arbitration, and even litigation as an ultimate solution. Historical data shows certain reasons for dispute often and persistently appear in construction projects, regardless of the type of structure being built or form of contract applied. Bearing in mind our unique knowledge and experience in delivering iconic projects across the globe, here’s our top 10:
1. Inappropriate contract selection;
2. Errors or omissions in the contract;
3. Failure to properly administer the terms of contract;
4. Poor communication between parties;
5. Poorly drafted or incomplete/unsubstantiated claims;
6. Problems regarding site conditions;
7. Incomplete design or employer requirements;
8. Unfair & inappropriate risk balances in the contract;
9. Failure to meet deadlines;
10. Issues with site access.
How to prevent a construction dispute?
Prevention is unarguably the best solution and the only way to ensure this is to pay attention to Contract Risk Management in the pre-construction phase. This critical phase is in the best interest of all parties involved and is when key project risks are identified and formally assigned to responsible parties. It’s important to note that the contracting phase cannot be studied independently from the construction-execution phase. To do so would be to work without clear insight into preventing or solving potential disputes. If we had to choose a few important elements to implement, here’s what we’d pick:
The use of FIDIC, AIA, NEC, JCT and other standard forms of Construction and Consultancy contracts;
The careful drafting, review and critique of all contract documents, proposals, and bid packages to identify and eliminate potential inconsistencies, ambiguities, conflicts, errors, scope-gaps, and omissions.
It’s important to remember, though, that all the good work done in the pre-contract phase can be futile if the parties fail to implement strict contract administration and filing procedures to ensure complete project records are available at all times. This should be managed together with regular reviews and updates of the Risk Assessment and Mitigation plan, as well as the Risk Register.
What to do when a dispute arises?
The reasons behind a construction dispute are one thing but being able to resolve them is another.
The former usually stems from ‘harmless’ claims, with the latter’s traditional route being court or arbitration which involve significant time and money. That’s why whenever possible, parties should attempt to resolve issues via mutual agreement with the assistance of a mediator or dispute advisory expert. This way, precious time and huge sums of money can be saved. Some widely accepted alternative forms of dispute resolution are:
2. Early Neutral Evaluation;
3. Dispute Adjudication/Advisory Boards.
It’s interesting to note that even law firms have started to see the benefit of appointing dispute advisory experts in order to provide insights related to technical aspects of claims at an early stage. Almost all issues likely to arise require an authoritative view of technical strengths and weaknesses of the case as well as the thinking-out of the basis of technical, contractual, and practical arguments that caused the problems. The way of the near future to conduct these analyses is to use game-changing big data search engines and specifically tailored software that can search over both structured and unstructured data quickly, assisting dispute advisory experts sift through millions of files and folders to locate the useful data necessary for decision-making.
Why hiring the right Expert is essential?
In today’s world of construction, especially internationally, expert evidence in dispute resolution is a routine requirement and a significant cost driver. When you consider the complexity of current construction projects, it’s reasonable to assume the disputes that arise could require numerous multidisciplinary experts such as quantum and delay experts, architects, building performance standards experts, mechanical electrical, structural, soil and fire engineers, landscape architects, acoustic, corrosion, materials and waterproofing specialists, and so on. Hiring the right expert is critical. Here are some common mistakes you and your legal counsel should strive to avoid:
1. Leaving the search to the last minute or delegating it to others;
2. Failing to understand the expert’s relevant qualifications and similar experience;
3. Forgetting to request reports, transcripts and publications, and interviewing the expert; and
4. Meeting the expert in person.
Historically, lawyers have struggled with allocating sufficient time to coordinate and manage all communications with the various individual experts involved in a case. Extensive experience in managing coordination between numerous experts in large international construction disputes suggest that structure and management of the team are extremely important and should focus on gathering relevant forensic analysis of the issues in a dispute in order to help the legal team understand the various technical aspects and nuances of a case. The ability to determine the best approach to submit expert evidence is essential and should most definitely be handled by professional dispute evidence coordinators.
After years of stagnation, the construction industry has now begun to rapidly evolve and become more complex, BIM oriented, integrated, and collaborative. But has the expert witness market followed? In order to resolve disputes with the least amount of damage for the parties at dispute, bridging the legal and technical divide in construction disputes is essential and should be managed by dispute experts with hands-on experience on complex projects across the globe. A coordinating or lead expert who oversees a team of multidisciplinary experts will help mitigate this divide. In a situation where we have complex disputes with numerous issues, a consistent approach from each discipline, appropriate management of a diverse group of individual experts, coordination of information flow through a single point-of-contact, progress monitoring, and uniformly structured reports are the pillars of the bridge that need to be built between the legal and technical aspects of the dispute.
What then, forms the deck of that bridge? We’ll discuss this in our next issue, coming soon.
By: Abel B. Duran