Reviewed Feb 2017Preparation for disputes starts before a project is initiated, and continues until all disputes are settled.Whether the dispute is only a difference of opinion, a mediation, arbitration or a court action, the preparation requires a thorough understanding of the known facts, and the issues which have the potential to affect the outcome.A dispute (actual or potential) can be seen as a project in itself, planned on the basis of known information, subject to potentially unforseen twists and turns, and managed at both macro- and micro- level. As such, the participants in the process are but a part of it, and their actions and preconceptions are part of a much wider assemblage of information. The outcomes from this project should be based on objective and measurable criteria, but all participants are entitled to their subjective views during the journey toward resolution.
This paper is a checklist of questions and issues to guide such preparation. Whilst the sections are arranged in chronological order, no priority is intended by the order of items within each section, and more or fewer issues may be relevant to a particular dispute.
Agree dispute resolution processNegotiationMediationAdjudicationArbitrationPartnering/Alliancing/DRB[1]Assess the risksProject typeTechnically challengingRoutineLargeComplexBudgetAdequateTightInflexibleIll-definedConsultantsClient typeInformedUninformedPersonalCorporateCommitteeGovernmentTimeframesRealisticDeadlinedLiquidated DamagesQuality expectationsContract typeLump sumCost upGMP[2]Consequences of failureLegal environmentPhysical environmentCheck Contract DocsMaintain ongoing documentationKnow thine enemy!
Cost over-runsTime over-runsPoor qualityPoor communicationPoor documentationMismatch of expectationsDifficult personalitiesUnforseeablesMisjudged risksBotchesOverlapsMaterialsTradesDocumentationUnclear responsibilitiesClient/ConsultantConsultant/ContractorContractor/SubcontractorSupplier/installer
AngerFrustrationCriticismThreatsDamaged PrideLonger lead timesReduced productivityLax managementSlow paymentInflated progress claimsIncreased formalityReduced communicationsIncreased communicationsOutside “experts”
Gather informationCan the problem be definedConfirm what happenedWhy did it happenWho was involvedWhat did they doWhat did they not doWhat were the contract requirementsConfirm intentions of the contractConfirm instructions and context[3]Assess the informationIs it a dispute, or a contract issueWhat are the direct consequencesTo youFor the performance of the contractTo othersWhat are the flow-on consequences?Is the information reliableMeasurement of quantitiesQuality benchmarksRealistic costingsBiased reportingWhat further information is requiredTestsSite examinationsOpening upSolvency investigationsExpert input[4]TechnicalLegalAccountingDispute ResolutionPersonal observations/accountsWilling sourcesUnwilling sourcesWhat is the likely attitude of the other partiesObjectivePossessiveSubmissiveDeviousConfrontationalCo-operativeWhat is the competency of the other partiesExpertTechnicalLegalWidely experiencedNarrowly focussedIgnorantNot familiar with the industryNot attuned to logical argumentWill personalities get in the way of the problem
Solve at the lowest levelWho can solve itWho needs to solve itWhen can it be solvedWho else is involvedHow/WhyDo they knowShould they knowWhenWill they co-operateShared interestsShared positionsShared informationOther relationshipsCan they contributeTimeMoneyExpertiseMaterialsLabourMight they contributeAre they solventWilling to come back to the jobAs the lesser of other evilsAct as soon as preparation permitsCan a simple fix be effectedCould changed circumstances reduce the impactPositions taken by the partiesOffset against other mattersAlteration to contract requirementsTiming issuesBudget issuesWhat are the consequences ofDelaying resolutionFailure of resolution
What are your POSITIONS[5]DollarsPrinciplesContract interpretationBATNA[6]WATNA[7]Are your POSITIONSFlexibleWhat would change themPrioritisedWhat would change the priorityWhat are your INTERESTS[8]HonourGoodwillMarketing advantageRelationshipsClientConsultantsSubcontractorsSuppliersExpediencyMoneyTimeQualityAre your INTERESTSFlexibleWhat would change themPrioritisedWhat would change the priority
Who else has INTERESTSWho else has POSITIONSDo you know those interests and positionsHow can you find outWhat are theyHow do they differ from yoursWhyHow can they be brought closer to yoursIf you were themHow would they see your positionsHow would they see your interestsDo they need youDoes a resolution establish a precedenceHow would that affect your future InterestsWhat are the power issuesHow can you influence themThe Golden Rule ($)[9]Authority by positionAuthority by knowledgeAuthority by size/muscleExisting and future relationshipsResolution process optionsIgnore the problemNegotiationSet by the contract termsFormal opinionMediationArbitrationAdjudication under the CCA[10]Parallel processesShould you initiate the process
Create a recognisable structureLay the “ground bait”Bring out the factsExplain the involvement of othersProvide proof, validation, and referencesEstablish the relevance of the informationRepeat the key issuesSummary and conclusionOr (put another way) – the JourneyWhere we are goingHow we get thereThese are the markers along the wayAlmost there – how far it is to goWe are there (you can tell because…..)Deal with the easy stuff firstUse objective tests and benchmarksCompare with understood criteriaApply logical extensionsIf this….. then…..Because of….. then…..What if….. then…..Don’t personaliseProblemsAttitudesArgumentsCriticismThis is not MY problemIt’s OUR problemLets face it togetherLets solve it together
You have to give a little to gain a littleNot often is there gain without painWhat doYou know that they knowHow does their view differ from yoursYou know that they don’t knowYou think they think you knowYou think they might know, that you don’tPrepare to moveSignal aheadCreate the room for movementRecognise common interestsEmphasise the positivesWhen to moveIf other side recognises the signalsIf they provide room for movementIf they acknowledge commonalitiesIf they acknowledge the positivesWhy moveIf they moveIf they can’t move because you won’tIf there is a shift from POSITIONS to INTERESTSTo deflect a potentially damaging blowNew adverse factsUnwinnable argumentThe application of adverse powerNew directions you haven’t prepared forMovement to issues you want to avoidHow far to moveNot too far too soonAre your interests still intactConsider your BATNAConsider your WATNAIf they were you, but knowing what they knowWhat is the best they could do nowWhat is the worst they could do nowHow far would they move nowHow will they react toThe worst you can do nowThe best you can do nowConsider their BATNAConsider their WATNACompare to what they think you could doConfirm and celebrate movement as objective progressWhat other openings are thus presentedHow has it affected the dynamics of the processMove from holding positions to meeting interestsSUMMARY: KEY CONCEPTSBefore the contractWhoWhatHowContextWhat ifDuring the contractPeopleTasksInformationPerformanceUncertaintiesPotential contract disputesAttitudesInformationInterestsPositionsConflictsDispute resolutionDifferencesCommonalitiesConsequencesOptionsSatisfactionCommitmentReferencing:[1] DRB: A Disputes Review Board is a standing committee or appointed individual who monitors the contract for emerging disputes and advises on how to minimise or solve them.[2] GMP: Guaranteed Maximum Price contract[3] Context: Issues external to the contract which may affect it; eg. government or corporate policies and objectives, highly geared or speculative project, client living on/near the site[4] Experts: Recent Court decisions have reinforced the concept that experts should match the point being addressed. For example a WHRS assessor would not be acceptable as an expert about an architect’s performance – that would require another architect as an expert.[5] Interests and Positions: For example, your position might be that your child must be in bed by 9pm; your interest is that they succeed at school the next day……[6] BATNA: Your best alternative to a negotiated settlement[7] WATNA: Your worst alternative to a negotiated settlement![8] Interests and Positions – see above[9] The Golden Rule: “Them wot got th’ gold make th’ rules”[10] CCA: The Construction Contracts Act imposes a mandatory regime of adjudication on construction contracts[End of Paper]