As every year, Arcadis' Global Construction Disputes Report 2019 gives us food for thought. The number of disputes, compared to last year, remained the same. The length of dispute increased slightly overall, but significantly in the Middle East. As in past years, and perhaps not surprisingly, the most common causes of disputes continue to be the failure to understand or comply with contracts, poorly drafted contracts and inadequate project management and administration. It would be tempting to look for solutions in ever more complex, more detailed contractual documents purporting to foresee every risk and address all possible issues. Experience shows, however, that such an approach is both unrealistic and in itself a source of disputes. Complexity and excessive detail all too often camouflage gaps and omissions and prove impossible for employers, engineers, project managers, contractors and sub-contractors to apply and administer. A contract should be, first and foremost, a document that speaks, clearly and fairly, to those actually involved in the project on a day-to-day basis. But better contract drafting is not a panacea. No matter how well drafted and balanced a contract is, construction projects are inevitably complex and problems are bound to arise in their execution. It is at that point, that is, as soon as a risk arises, that potential disputes should be addressed and avoided. I would suggest that at least three building blocks are needed for successful dispute avoidance and resolution: (1) contractual mechanisms whereby risks are identified early and parties are obliged to consider how to address them; (2) appropriate training of staff on the specifics of the contract and ongoing specialist technical support, including legal support, throughout the execution of the contract; (3) a readily available contractual dispute avoidance mechanism in the form of a Dispute Avoidance Panel or a DAAB as under the 2017 FIDIC suite of contracts - although we can be more imaginative here, especially in terms of devising more cost- effective mechanisms for lower value projects. In the end, we need a cultural change but this cannot be left only to goodwill. A new way of thinking about dispute avoidance should be embedded in appropriately drafted contracts and implemented in effective contract administration and support.
Professor Renato Nazzini King's College London |