Practical Law

Last time, we explained how collaborative working is helping Network Rail to reduce the number of disputes it faces. We touched upon the reasons why Network Rail established a Dispute Avoidance Panel (DAP) pilot and looked at some aspects of the process.

This time, we explain some of the challenges we have encountered, the broad themes that have emerged from the process and the feedback we have received from the DAP pilot.

The pilot programme

As we mentioned last time, it was decided to run the pilot over six months and to select a mixture of different contracting strategies, from a multi-party collaborative alliance to a standard two-party contract.

A number of projects were nominated by the Commercial Directors’ Forum (CDF), and we set about making the necessary arrangements to ensure that we vigorously tested the approach. In order for this process to be beneficial to all parties, it was essential that the project team, from the leadership to the practitioner, were fully committed and that as many people as possible were able to participate on the day of the site visits.

Some of the challenges

As might be expected, we faced a number of challenges including:

• Leading up to the site visit:
  • ensuring invitation and full support of the alliance/project leadership;
  • ensuring availability of appropriate DAP team members for the day;
  • timely receipt of the pre-read pack in advance of the visit in order to maximise the visit; and
  • appropriate briefing of the DAP members so that they understood and were committed to the concept.
• During the site visit:
  • time management during discussions;
  • availability of project team members (we were keen not to interfere with the “day job”).
  • engagement of project team members (some may not have been advised of the DAP visit or its purpose);
  • ensuring the format and content remained flexible; and
  • development of an open and honest relationship with the team. This is not an audit.

What did we learn?

Despite these challenges, it was evident that the majority of the project team members were willing participants, and this was vital to allowing open and honest conversations to be held. These open conversations allowed the DAP members to utilise their experience in understanding the genesis of a dispute, and they unearthed a number of observations that were brought to the attention of the project leadership. Broad themes emerged, including:

• Clarity of language within the change order provisions and those provisions relating to rectification costs.
• Disparity between the expectation and interpretation of the “actual cost” provisions in respect of design fees.
• Stresses in relationships and competing priorities with wider businesses, for example with the corporate or group HQ.
• Lack of integration, particularly with traditional forms of contract.
• Poor contract administration.
• Poor communication.

Through our experience of the DAP visits and the range of observations noted (some that were critical to the project’s success), it was important that we could articulate and, if possible, evaluate the pilot’s success. Part of this process involved seeking feedback from the pilot projects to obtain their views. A sample of the comments we received included that:

• The DAP is independent, which gives an excellent neutral view, and the individuals have significant expertise and experience, which is invaluable.
• People can speak freely.
• DAP members have a different perspective and it is not just another audit or peer review.
• Having the DAP make observations (irrespective of whether they are already known to the team) has significant benefit, particularly if it is going to be shared across projects and with the client (for lessons learned, monitoring trends and so on)
• The DAP can offer insights and examples into best practice from other major programmes.
• Solutions as well as observations would be useful.

Industry endorsement

Following the pilot, it was important that we could reconcile everyone’s experiences and articulate to what degree it had been a success. While it was impossible to define a specific metric to measure “what success looked like”, it was possible to draw some positives:

• All the feedback from participants (DAP members, project leaders and practitioners) was positive.
• After the site visit, one project was quick to recognise the benefits and paid for a second visit, by which time, the project had fully considered the observations made and addressed them properly.
• One project has now agreed to deploy a DAP for the remainder of the contract duration, with two visits per year.
• Other projects are now starting to show interest.

Armed with this knowledge and experience of the pilot, it was important to ensure that the supply chain continued to support this initiative. Accordingly, in June 2016, we went back to the CDF seeking industry endorsement. We presented two recommendations and the response was overwhelmingly in favour:

• Do you believe that we have run a credible pilot to test the DAP concept? Yes (83%).
• Do you accept the working group’s recommendations to deploy the DAP in an increased selection of projects? Yes (95%).

Following this endorsement to deploy DAP more widely, we now have seven proposed projects running this process with a target to reach fourteen projects over the next 12 months, including some drawn from other sectors (such as highways).

And of course we have issued a DAP guidance note to industry to articulate the DAP’s practicalities, which has been “picked up”, reviewed and promoted across industry, including by RICS and CICES.

Conflict avoidance pledge

In addition, Network Rail’s DAP initiative caught the attention of a coalition of professional institutions (including RICS, CICES, CIArb, ICE, ICC and DRBF) looking for industry support in the development of a conflict avoidance pledge and raising the profile of the range of techniques available in avoiding the conflict associated with claims.

Network Rail has now joined this coalition and, in July 2017, the membership of CDF reviewed and committed to the conflict avoidance pledge, not due for formal launch until January 2018.

Clearly, there is a burgeoning appetite from industry to avoid claims and if you are interested, you should take a look at the RICS’ conflict avoidance pledge website for details on the coalition and the DAP process, so as to consider how you might deploy it on one of your own programmes.