Dispute Avoidance: Navigating Complex Infrastructure Projects with a specific focus on airport developments Andrew Mackenzie 18 February 2016 Simmons & Simmons LLP 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
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_EMEA1:3889530v1
Today s focus is on airport projects 2 / B_LIVE_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
Payment Payment Terms Advance payments normally insufficient cash flow issues Self funded Sub-contractor or suppliers 11 / B_LIVE_EMEA1:3889530v1
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 emails are secure 12 / B_LIVE_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
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_EMEA1:3889530v1
Questions? Andrew Mackenzie Construction, Insurance and Dispute Resolution andrew.mackenzie@simmonssimmons.com 17 / B_LIVE_EMEA1:3889530v1
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