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Common disputes and how to minimise/avoid them

By Uwe Pulitz

The choice of an appropriate standard form construction/building contract (SfC), or a bespoke contract, must be determined at project initiation when the scope and parameters are defined. The more information and the greater the resolution of direct and peripheral matters the better the ultimate delivery of the project in accordance with defined quality and performancce criteria for delivery on time and within budget and to limit/avoide possible disputes.

    Project criteria can be refined in time – but should not change:

    • Who has the necessary expertise?
    • Is there a fixed completion date?
    • How important is performance of the works by a particular date?
    • Is certainty of the final cost more important than the lowest cost?
    • Where can the risk best be managed?
    • What is the total tolerable risk for contractors?
    • How important is cross contract co-ordination to achieve project objectives?

    Specialist (sub)contractors may be appointed for the design, supply, installation and commissiong of building services (including building management systems, electrical reticulation and lighting, fire safety, etc at an early design stage to incorporate their expertise in the final design. This practice is particularly successful on large complex projects to mimimise abortive design time, speed up and integrate all disciplines to save time and aggrevation during the construction phases. Access to cloud computing on site replacing paper documents with tablet computers prevents working on outdated drawings and specifications.

    Why do projects fail…?

    Simple errors can often be avoided by following the “four eyes principle”: An outsider is more likely to spot ‘incongruities’ in the text, calculations and/or the drawings without being immersed in a project’s day to day activities.

    Most projects fail for the same reasons:

    • The project objectives lack of alignment with the strategic direction of the business;
    • A lack of clarity around the objectives of the project;
    • An understated or unrealistic budget and timescale;
    • A project management structure that stifles decision making;
    • Inexperienced resources or a general lack of resource to manage the project;
    • A lack of engagement with the key stakeholders;
    • Decisions late in the project life cycle are generally costly and cause delays … that can often be avoided with a little forethought and planning.

    So, what can go wrong? Let us look at the six phases of project execution:

    1. PROJECT INITIATION AND BRIEFING
    2. Project initiation and briefing is an activity and cost which often falls outside the project execution phases and budget – that may lead to superficial project definition!

    3. PROJECT CONCEPT AND FEASIBILITY
    4. The project team must test the assumptions made during the project initiation phase by restating such information in measurable terms to determine a first realistic ‘guestimate’ of the likely cost and durations:

      • The scope of the project, workflow and workspace requirements, equipment to be housed in (or outside) a building;
      • Location – ranging from the (re)location of a (new) facility, founding conditions and opportunities for expansion, etc;
      • Statutory compliance including social and environmental criteria;
      • Design and construction of the proposed facility including the evaluation of different design options and construction methods, the choice of materials, the buildabilty of such structures and the ease and cost of maintenance during the facility’s economic life.

      At the conclusion of this phase the project team must confirm that the optimum solution has been identified and can be achieved before the project is allowed to proceed, or not?

    5. PROJECT DESIGN DEVELOPMENT
    6. The design is now developed in greater detail, resulting in a firm decision after the evaluation of options identified in the earlier phases.

      Aborting the project may have to be considered if circumstances have changed. While the cost for abortive work is high, it is cheaper than an unsuitable final product.

    7. PROJECT TENDER DOCUMENTATION AND PROCUREMENT
    8. Project performance criteria must be finally confirmed before the employer proceeds with the procurement phase.

      Depending on the nature and complexity of the project certain professional service providers may not have to be appointed during the ‘initiation and concept phases’ must now be appointed.

      The practice by some clients to procure professional services on a tender basis has resulted at timed in appointments for a fee below the cost of providing a competent professional service. The amount of detail and the quality of construction documentation and contract management must suit the project, its location and the skills of the construction team.

    9. PROJECT CONSTRUCTION, DOCUMENTATION AND MANAGEMENT
    10. Regardless of the method of building and the SfC chosen, the agents will have to produce the appropriate documentation for construction.

      All statutory requirements must have been complied with before construction can start. The contractor has the right to refuse to work and will be entitled to claim for the construction time lost and costs incurred.

      A potential source of unhappiness is when the standard of finishes is not as envisioned by the employer. If ‘quality’ has not been specified in measurable terms it is almost impossible to argue with the contractor, and the employer may have to live with such a product.

      Should a dispute arise that cannot be solved over a cup of coffee or two, the parties should consider appointing a mediator before invoking the provisions of the SfC dispute resolution clauses.

    11. PROJECT CLOSE OUT
    12. A project is only complete once all relevant paperwork has been done including the issue of ‘as built documentation’, product or service warranties and operational information needed to facilitate use and maintenance of a building.

      The employer must apply for an occupation certificate from the local authority before the completed building may be occupied. Occupation without such certificate is illegal and any damage will not be covered by insurance.

    CONCLUSION

    Dispute avoidance is not rocket science – it is simply applying common sense, working methodically, being proactive and recording and filing information systematically. To quote Apollo 8 astronaut Frank Borman … ‘a superior pilot uses his superior judgement to avoid situations which require his superior skill’.