Making the conflict avoidance process work

Construction News talks to a client and a contractor who have used the Conflict Avoidance Process (CAP) to resolve issues which have cropped up on contracts.

The CAP was established six years ago to help parties avoid expensive legal proceedings to resolve disputes.

Read CN‘s full article about how the CAP is gaining traction within the industry

The client’s perspective

Sue Barrett webSue Barrett is head of contracts & procurement at the Houses of Parliament Restoration and Renewal. She was previously head of commercial for construction at TfL. Here, she speaks to Ian Weinfass in a personal capacity.

We used the CAP to bring projects in within their budget. What we were trying to do was close issues as they arose.

In construction, the longer you leave an issue the bigger impact it will start having on your programme and time is our biggest enemy.

What we were looking at with the contractors was how we could close down our contract administration as and when it happened in accordance with the terms of our contract, rather than keep giving extensions.

One driver for CAP is that you deal with things in real time as you go along.

A good example was when we had a complex issue on ground conditions.

It was not a small issue by any stretch of the imagination – ground conditions rarely are. There was loads of stuff in there that nobody expected. It was just a horrendous claim.

If we had gone to adjudication, we would have had programme experts, ground condition experts and it just would have kept going.

My experience of adjudication was quite extensive before that, and it’s a lengthy process by anybody’s reckoning – and a very costly one. We thought it’s got to be worth having a go to try and sort this out. The contractor wanted to, and I wanted to.

We jointly appointed a CAP panel member and they really made me do some soul-searching as the client rep sitting there. My counterpart at the contractor was made to do the same thing and then we agreed where the liability, or entitlement, lay.

The panel member who was put forward had an engineering background, was well versed in programme issues and was an adjudicator.

So we had somebody who was properly at the top of their game who could unravel a really complex issue on every level, from the contractual to the engineering to the programme level.

The quality of the CAP panel member and the quality of the reports was such that it’s a compelling thing to go back to your business with, because it’s something that’s been considered by an absolute professional.

Once you get over your first hurdle, other hurdles start unravelling, so the CAP panel lead told our planner and the contractor’s planner to go away and agree what they could on the programme and bring back what they couldn’t resolve.

On the issues they couldn’t resolve, the commercial director and myself managed to reach a resolution and implement solutions.

A contractor’s perspective

Andrew Dixon 240328 STRABAG .uk 105A8678 webStrabag managing director Andrew Dixon tells Ian Weinfass about his experience of the Conflict Avoidance Process CAP while working at various contractors.

A lot of the work we do is highly complex and unexpected things happen. It isn’t unusual to have a difference of opinion with clients over whether we’re entitled to additional time or payment because we’re working in really complex ground conditions, for example.

And we’re comparing what we are experiencing with predictions that were made when we entered into the contracts.

The relationship between a client and contractor is important and generally a good relationship delivers a much better project because you can’t deliver them without each other. Protecting the quality of that relationship is really important.

If you then have a big difference of opinion over something, the normal route to resolution is legal [with lawyers], through adjudication or litigation, which is a win-lose situation.

It pits you against each other. When CAP came out as a potential way of resolving differences collaboratively and quickly, the contracting fraternity embraced it.

Using CAP gives you the same quality of analysis, decision-making and application of the law to the facts as you get under the legal process. It’s a reliable decision.

One case I recall was an unexpectedly complex ground conditions situation on a tunnelling contract. The difference of opinion between us was £20m.

Using a CAP panel member, we managed to settle without any recourse to the typical legal route. Ordinarily it would have gone to adjudication and litigation and would have cost £2m to prosecute. We settled it for a cost of about £250,000 for the whole process, so £125,000 each.

Members of the respective teams that were involved also had a lot of value-add as a result of going through the process.

If we’d gone down a legal route, the issue would have been taken away from the project and it would have been managed and run by the legal team, whereas the project teams still owned it.

The people on the project got involved in discussing it and I think it brought them together more closely for the future of the job.

We want the project teams to find agreement themselves, we don’t want to bring [CAP panels] in. We only escalate when they can’t solve it.

CAP isn’t a panacea because if you have a pure legal point, something that might turn on a black-and-white legal interpretation, that’s not for CAP, that’s for a judge or a specialist legal mind.

CAP makes sense with the technical part of applying the law to complex facts: the facts reasonable for a contractor to have allowed for, or for how the contractor should have responded.

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