Dispute Avoidance: Navigating Complex Infrastructure Projects
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1 Dispute Avoidance: Navigating Complex Infrastructure Projects with a specific focus on airport developments Andrew Mackenzie 18 February 2016 Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
2 Introduction Specific focus today managing mega infrastructure projects, with a focus on airport developments Despite the current financial climate, there are still huge opportunities in infrastructure: vast expansion planned for the aviation industry in particular (Africa, Iran, MENA, Asia) What are the types of problems that can arise on these projects? design issues, construction, resource delivery, claims management, payment etc. How do you go about managing them? 1 / B_LIVE_EMEA1: v1
3 Today s focus is on airport projects 2 / B_LIVE_EMEA1: v1
4 Vast Expansion Planned or already underway Al Maktoum International Airport (Dubai) Incheon International Airport (South Korea) Berlin-Brandenburg Airport Bao'an International Terminal 3 (Chain) Midfield Terminal (Abu Dhabi) Beijing Daxing International Airport Hamad International Airport (Doha) Ankara International Mexico City International Developments across Africa, South East Asia, Latin America etc. 3 / B_LIVE_EMEA1: v1
5 So what makes airport projects so problematic? Airport projects are enormous undertakings Symbols of wealth and success the designs are becoming increasingly more complex Funding Multiple different contract packages Multiple parties on site Complexity and scale Integrated systems Volume of labour 4 / B_LIVE_EMEA1: v1
6 The Design Designs are becoming increasingly more complex The design development stage can be either too short or too long Delays in implementation can cause problems Is the final design truly final? Be mindful of changes / government requirements / RFIs and design submittals 5 / B_LIVE_EMEA1: v1
7 The Tender Funding Who is going to tender the project? Who is going to run the tender? How is it to be tendered? 6 / B_LIVE_EMEA1: v1
8 The Various Contract Packages Airport projects are usually broken down into a number of different contract packages: The design and engineering works The main construction works foundations, civil works, structural works, MEP works Cladding works Glazing works The special systems can be very problematic Signage Roads Baggage handling and cargo handling systems Internal fit out works including, lounges, catering, retail outlets 7 / B_LIVE_EMEA1: v1
9 Coordination and the Contract The number of contractual packages creates a vast coordination issue Projects sometimes proceed without a formal signed contract in place This leads to confusion as to the scope of the works or services that should be carried out beware of design creep Professional indemnity issues Limitation of liability issues Clarity on key terms notice provisions back to back provisions 8 / B_LIVE_EMEA1: v1
10 Labour and Supplies Most notably an issue for the large contractors Quite normal to have anywhere between 10,000 15,000 workers on site Visa issues/authorised labour local law issues be mindful What about material supplies? Quality control and approval processes? Sourcing the material are there geographical restrictions? What about access? What impact does this have on the programme? 9 / B_LIVE_EMEA1: v1
11 Construction Familiarise yourself with the construction programme Ensure you are complying with your contractual obligations re coordination with other contractors on site beware the blame game Be mindful of variations to the design chaos theory Do not forget the inspection and approvals process linked to payment QA/QC procedure Appoint a qualified quality control manager 10 / B_LIVE_EMEA1: v1
12 Payment Payment Terms Advance payments normally insufficient cash flow issues Self funded Sub-contractor or suppliers 11 / B_LIVE_EMEA1: v1
13 Records, Records, Records The life blood of the project Standard forms Install and manage a document control system Third Party companies e.g. TransPerfect Legal Solutions Document management protocol Keep back-ups of your back-ups Store the records off site and ensure s are secure 12 / B_LIVE_EMEA1: v1
14 Claims Management Keep an eye out for the common signs What can be done to manage this process? Familiarity with project management tools cost reports etc. Familiarity with daily, weekly and monthly reports Notify the client in writing Meet with the relevant parties to ascertain what the issue is document this meeting to ensure its on the record Track the claim Document everything Double check your rights and obligations under the contract Consider bringing in external counsel early on Do not let the claims build up 13 / B_LIVE_EMEA1: v1
15 Disputes Try to avoid them if at all possible they are the nuclear option Manage the process early on, do not wait until proceedings are raised to seek advice Proper project management early on can save you from expensive litigation later a stich in time approach 14 / B_LIVE_EMEA1: v1
16 Choice of Forum Court v arbitration If no arbitration provision then it will usually default to the local courts and litigation unless it specifies another jurisdiction be mindful Make sure you have a contract in place and a proper dispute resolution provision: Many different ways to frame it LCIA, SIAC, DIAC, ICC, DIFC Courts etc. Bilateral investment treatise (BITs) 15 / B_LIVE_EMEA1: v1
17 In Summary Good management! Airports are complex projects Be mindful of the problems and mange them early on Manage the contract process ensure your rights are protected from the start Do not forget to use the contract once it is signed Know your obligations and rights and set them out clearly to your wider team as early as possible Manage the claims process early on try to avoid claims building-up Keep those records and install a document management system If in doubt seek advice 16 / B_LIVE_EMEA1: v1
18 Questions? Andrew Mackenzie Construction, Insurance and Dispute Resolution 17 / B_LIVE_EMEA1: v1
19 18 / B_LIVE_EMEA1: v1
20 simmons-simmons.com elexica.com This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmonssimmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address. 19 / B_LIVE_EMEA1: v1
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