Three Dispute Resolution Challenges in Construction:

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1 Three Dispute Resolution Challenges in Construction: 1. Affordable Adjudication 2. Expert Evaluative Mediation 3. Collaborative Contracting to avoid disputes Dr. John Fletcher Product Group Director ADR RICS

2 RICS Dispute Resolution Service (DRS) Founded in 1868 and with over 200,000 students, trainees and members worldwide, the Royal Institution of Chartered Surveyors (RICS) is the oldest and largest professional organisation for the international land, property, construction and related sectors Today RICS represents and supports a large number of specialisms spanning the built and natural environments, with 17 professional groups setting standards, developing guidance and providing information to the industry on best practice

3 RICS Dispute Resolution Service (DRS) Globally DRS makes over 5,000 appointments Appointing, Nominating and referring dispute resolvers in a wide range of matters with the focus on the built environment, covering: Commercial rent reviews Adjudication Rural Miscellaneous disputes Neighbourhood Planning and Independent Examiner Referral Service (NPIERS) Mediation RICS DRS is the oldest and largest built environment-specific Conflict Avoidance and Dispute Resolution service provider in the world.

4 Costs of construction disputes The average value of a UK construction dispute currently exceeds 7m The annual financial cost of disputes in the UK construction industry is measured in billions Disputes also cause immeasurable harm to business relationships and brand reputations Disputes can be painfully slow to resolve through traditional means such as courts and arbitrations

5 Affordable Adjudication Adjudication provides a simple and efficient method of settling disputes An adjudicator assesses evidence presented by parties to reach a legally binding decision (unless the decision is referred to arbitration or the courts, or is settled by the parties themselves) In most cases, final resolution is achieved when an adjudicator reaches a decision

6 Affordable Adjudication Advantages of adjudication: Usually regulated by a strict timetable that ensures decisions are made quickly The strict timescales enables disputes to be resolved as and when they arise, avoiding unnecessary tensions and costs The decision is usually binding, but is not necessarily final as a party may wish to refer the decision to arbitration or the courts. This allows works to continue until the matter is resolved

7 Affordable Adjudication Disadvantages of adjudication for SMEs: Can be too complicated and for unpresented parties Significant input from lawyers and other professional representatives can be costly Uncertainty about how much it will cost, including adjudicators fees, can deter parties from using it for lower value disputes

8 Affordable Adjudication RICS is working with government and industry to develop an adjudication procedure specifically for low value disputes RICS proposes to prepare a set of procedural rules for claims of 50,000 or less The objective is to enable SME contractors, who might otherwise avoid using adjudication because it is too expensive, to engage in a structured and straightforward process which is cost effective and offers clarity around how much each party will pay

9 RICS ACRE Mediation RICS has built upon its traditional, facilitative mediation service to develop a new, robust and evaluative training programme ACRE Mediation. Analytical Commercial Restorative Expert

10 RICS ACRE Mediation The process Analytical RICS mediators help the parties analyse the circumstances, law, evidence, strengths and weaknesses to empower them to make pragmatic commercial settlement decisions Commercial RICS mediation encompasses wide commercial as well as narrow legal realities and so can provide a flexible settlement that courts or arbitration cannot Restorative RICS mediation focuses on restoring the business relationship between parties and is completely confidential to limit further damage Expert RICS mediators have many years experience and expertise in the field of the dispute. They help parties reach a settlement, or narrow the issues in dispute, reducing court or arbitration costs.

11 Expert Evaluative Mediation Our mediators have been trained to provide evaluative mediation, and so are able to: Advise on the merits of various options for settlement which emerge during negotiation Advise on the risks associated with taking the matter to court or arbitration Provide an evaluation based on admissible evidence as to the prospects of success in court or arbitration Give a wider recommendation based on their expertise and experience, as well as commercial and legal grounds.

12 Collaborative Contracting RICS is of the view that the dispute resolution landscape in construction and engineering is set for a major transformation RICS Dispute Resolution Services (DRS) is leading an alliance between RICS, ICE, RIBA, CIArb, DRBF and others to develop new approaches to dealing with conflict in the industry The focus is on collaborative working, conflict avoidance and early intervention DRS is engaging with influential people in the legal and arbitral sectors in the next stage of development of dispute resolution for the industry

13 Any Questions? RICS Dispute Resolution Service Surveyor Court Westwood Way Coventry CV4 8JE t +44 (0) e drs@rics.org w