Construction disputes – maximizing time and costs efficiencies

Introduction

Construction disputes by their very nature, lend themselves to arbitration as opposed to other means of dispute resolution. This is because they often involve international contracting parties, complex disputes around factual issues requiring expert consideration (which parties often wish to keep confidential). They also invariably involve large volumes of material and evidence (factual and expert) to make sense of what actually happened on site.

Whilst no project party wants to end up in arbitration, failure to put systems and processes in place to effectively capture and store project documentation at the outset can lead to unnecessary delays in the event proceedings do become a necessity.

In construction disputes a significant amount of legal time (and therefore expense) is often spent simply locating and trying to understand the relevance of key documents because of poor document management practices throughout the project lifecycle. This is generally compounded by the fact that unresolved disputes are typically referred to arbitration at the end of a project when key project personnel – who often have the best understanding of what happened on site – have moved on to other roles.

Effective management of documentation during project delivery can avoid this issue, as well as

• Reduce the risk of claims being time barred or otherwise invalidated because of non-compliance with contractual notification requirements.
• Dramatically cut down the legal time involved in preparing and reviewing documents for discovery.

This article considers some practical tips for contractors and suppliers on how information can be stored and managed throughout the project delivery phase, to ensure a smoother transition to end of project and dispute resolution.

Capturing information to ensure parties can file, or respond to claims in a timely manner

Construction projects, particularly in the energy and infrastructure space, can involve remote and/or extensive sites. It is often the case that site teams who are performing the work and therefore aware of what is going on in a day to day sense, are physically separated from the team of personnel administering the contract.

This is often the case for many energy and infrastructure projects, for example, in South East Asia, where a contractor may have its contract administration team in its head office in Singapore or Bangkok managing its projects throughout the region. Even on more traditional building projects, such as apartment tower complexes, the team administering the contract may be based in, and rarely leave, the site office.

The result of this physical separation is an information disconnect between those who know what the issues on site are, and those who have the capacity to progress any claims related to those issues through the contractual dispute resolution mechanisms. Where applicable, this can result in claims becoming time barred, and the entitlement to make that claim at a later date being lost.

It can also mean that the information relevant to that potential claim is simply never captured – for example, a photograph is never taken evidencing the issue as it existed at that point in time, and once it is discovered that a claim could be made, that opportunity is lost because work has further progressed.

The key then is to make the transmittal of information from site to those progressing claims as quick and efficient as possible. This could be done by physically locating the teams together, or where this is not possible, by creating regular and frequent meetings/catch ups to discuss the progress of works and ensure that the project is being delivered in an agile fashion.

Contractors/suppliers may also wish to consider the use of technology to facilitate this information flow. For example, the use of apps which can quickly communicate information or the dissemination of tablet devices to the site team to take photos which are automatically geo-located and can be centrally stored for use by the administration team.

Storing information

It is critical to store information centrally and logically. Without a document storage protocol, those on site will store information haphazardly on personal computer drives, in hard copy notebooks, in the same way they stored information on other projects (which may not be the same as others) or, in the worst case, not at all.

Folders should be set up on a shared drive, or project specific drive which separate out, at least

• Claim documentation by claim number. This is the most important of all, as it will save the greatest amount of legal time when drafting pleadings and assessing the merits of various claims.
• Photographs by date (and that where possible, photographs are taken at the same location at regular intervals of the project to show progress over time in specific key areas).
• Documentation such as delivery dockets, bills of lading etcetera are all separately stored by supplier in date order.
• Equipment data (where relevant), showing dates various equipment was on site, and the locations and usage of various equipment.
• Daily site diaries of key personnel, scanned and uploaded at the end of each week.

Transitioning information from site-based personnel to those involved in the dispute resolution phase

It may seem counter-intuitive, but involving your legal team to help manage the transition of information prior to the end of the project delivery phase can actually save time and cost in the long run. This is because the legal team can assist in identifying

• Key potential witnesses, and the physical location of any information they may hold. This means that personal laptops, external hard drives and hardcopy notes can be captured for the subsequent witness statements in the arbitration.
• Any obvious gaps in information which may be able to be corrected before those with the knowledge of the project leave site. For example, equipment logs may be able to be obtained from suppliers prior to them being paid at the end of the job, but once they leave the site those records may be lost.

The Norton Rose Fulbright solution – Deliver&Capture

Norton Rose Fulbright Deliver&Capture

Having been involved in arbitration in the construction sector, both domestic and international, large and small, for many decades, our arbitration group has seen ”the good, the bad and the ugly” when it comes to information storage and the impact on proceedings. This includes information missing at the point of arbitration, or reviewing endless amounts of irrelevant information during discovery. We have also seen valid claim entitlements lost because of a failure to comply with contractual time bars.

To overcome these issues and to streamline project delivery, we have partnered with a major client in the infrastructure space and leading user experience (UX) designers to develop a project delivery tool utilizing the latest technology – Deliver&Capture. Our technology solution has three independent components:

Contract manual

A web-based contract manual in a userfriendly FAQ style format and flowchart to explain contractual entitlements and processes.

Claims portal

An online automated claims management system which diarizes claim dates, pre-populates information and assists users in completing claims for submission throughout the project.

Mobile application

To capture information from the site team in the form of photos and basic data, which is geo-located, and feeds into the claim portal for submission in the form of a claim, if relevant.

We are currently offering this project delivery solution on large scale infrastructure projects to both contractors and principals internationally, but also working with clients to develop a solution which can be utilized on projects of all shapes and sizes.

Conclusion

When it comes to construction arbitration, at the outset of a project hoping for the best but planning for the worst will save participants significant time and cost once it comes time to participate in the arbitral process. Setting up clear guidelines for document management and collection of information are critical to this process and will assist contractors/suppliers in making and evidencing claims in arbitration.