5. To the extent that disputes arise as a result of how a PFI Contract is being managed, both parties would be well advised to consider what a "win" would look like in the context of resolving that dispute. Ideally, that analysis would be undertaken at the outset of any dispute, well in advance of expending the significant time and money that can be required by a major dispute. Performing this analysis can often be very challenging though, because it forces the relevant party to contemplate making concessions and focus on what it "needs", rather than what it "wants". A number of consultees shared with us examples of very long disputes and their views as to why the dispute had not been resolved much earlier. Feedback suggested that for some parties (especially the public sector), making the decision to continue pursuing the dispute can often be easier than reaching compromise through negotiation, perhaps because relying on a third party (eg an adjudicator) to settle a dispute is less open to public scrutiny than the details of a negotiated settlement. We also received feedback from the public sector to the effect that the private sector is often quick to involve legal advisers at the very outset of disputes, which from the public sector's perspective, has the effect of making the dispute feel immediately adversarial and can result in the parties losing the opportunity to reach a commercial resolution.
6. Some consultees shared that, with hindsight, they wished they had worked harder to settle their dispute, rather than let it run the full course. Interestingly, when consultees shared these comments with us, we got the strong impression that any regret was perhaps more a reflection of the fact that the outcome of the formal dispute resolution process was unexpected, rather than that they considered any marginal benefit achieved by continuing with the dispute as not being worth the time and cost that needed to be invested.
7. The feedback from consultees has caused us to conclude that it is more the exception, rather than the norm, for Public Authorities to analyse in advance of commencing disputes, what a good outcome would look like. The problem with not undertaking this analysis is not only that the scope for unexpected outcomes is increased, but also that there is no "playbook" from which the dispute can be managed, increasing the risk of inefficiency and wastefulness in terms of time and money. As noted elsewhere in this report, the significant majority of disputes are settled through negotiation; however, many of those settlements are reached at the "11th hour", to avoid the uncertainty associated with relying on a third party to resolve the dispute. To the extent that formal dispute resolution should be seen as a last resort, then the objective should be to increase the number of disputes that are resolved in advance of any formal dispute resolution process being commenced. Achieving this objective is invariably only going to be possible to the extent that relevant parties have a clear strategy at the outset of any dispute, as well as a good sense of what the range of outcomes could be and an understanding of which of those outcomes would be "optimal", "sub-optimal" or "unacceptable", recognising that "sub-optimal" outcomes are not necessarily "bad" outcomes.