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From CAP to DAP: developments in dispute avoidance

Some of you may recall that back in 2015 I wrote about the Conflict Avoidance Process (CAP) developed by RICS’ Dispute Resolution Service and Transport for London. Since then CAP provisions have been included in the contracts of four major TfL projects, and there have been memoranda of understanding signed on other projects to allow the parties to use CAPs.

There have been over 15 CAP referrals to date, and the feedback received has been positive. Parties have found that the non-binding recommendations made by CAP members during the course of major projects have helped them to make informed judgments on how to proceed and avoid more formal dispute resolution proceedings. Certainly my experience when acting as a CAP member has been that parties have generally embraced the process.

However, since I wrote my blog about CAPs, there have been more developments in dispute avoidance.

Network Rail’s Dispute Avoidance Panel

The Dispute Avoidance Panel (DAP) has been developed by Network Rail and key rail industry stakeholders, and I was fortunate enough to hear one of the architects of this process, Paul Cacchioli of GT Fairway, speak about it last year. (He’s also written about it on this blog, with Stephen Blakey of Network Rail.)

It is quite clear that changing the words “Conflict” to “Dispute” and “Process” to “Panel” are not the only differences between the CAP and the DAP. Unlike the CAP, where the CAP member(s) are normally appointed once a dispute or difference has arisen between the parties, DAPs work with parties on live projects to provide observations on potential areas where disputes could arise. As Stephen Blakey, Network Rail’s Commercial Projects Director, said:

“At its heart, DAP is about being on ‘fire watch’, looking for the smouldering embers of dispute, and getting them put out before the fire can begin.”

The principle objective of the DAP is set out in the associated guidance note. It is to:

“… identify and report observations on possible sources and warning signs of potential disputes through the review of live project reports, programmes and commercial data as well as the assessment of current behaviours and practices via interviews with key practitioners and stakeholders. The DAP Review Report will allow early management intervention to avoid or minimise the potential exposure of all parties to contractual disputes and to safeguard reputations.”

Once the DAP is constituted, they visit site and conduct interviews and then produce an observations report that comments on programme, commercial and behavioural matters. The DAP also produce a summary of their observations and apply one of three categories of status to each observation (critical, essential or recommended), which relate to the propensity for a dispute to arise from an issue.

I can already hear some of you saying to yourselves that there are some similarities between DAPs and standing dispute boards. While this is undoubtedly true, there are also some very important differences to the standing dispute boards that we are used to under FIDIC contracts and the like:

  • The pool of DAP members are not just legal, technical or commercial, they also include behavioural experts. Given that so many disputes seem to arise as a result of the behaviour of the individuals involved in projects, in my view the use of behavioural experts is a really interesting and useful addition to any dispute avoidance procedure.
  • Unlike a CAP or standing dispute board, the DAP is not constituted to decide disputes. They are also not to advise the parties or mediate any disputes. Rather, they produce observations that can then be used by the parties to action matters. While I can understand why this approach has been taken, it does mean that if disputes do arise, the parties have to go to a third party dispute resolver such as an adjudicator, in circumstances where the DAP might actually be better placed to decide the dispute, whether that is binding or not.

I understand that DAPs have been deployed on seven major projects to date and, by all accounts, the observations made have helped the parties avoid future disputes.

Conflict Avoidance Pledge

There is no doubt that, as an industry, construction suffers from a high incidence of disputes. In part, this can be explained by the nature of construction, where no two projects are the same. However, there is now an increasing focus on collaborative working and the use of early intervention techniques to try and resolve differences of opinion before they escalate into full blown disputes, for example CAPs and DAPs.

A number of professional bodies and infrastructure employers (RICS, ICE, ICC, RIBA, CIArb, DRBF, ICES, TfL and Network Rail) have formed a coalition to help the industry reduce the costs of conflict, and deliver major infrastructure and construction projects on time and on budget. Their ambition is to promote a greater understanding of conflict avoidance techniques, and they have developed a conflict avoidance pledge. The pledge states:

“We believe in collaborative working and the use of early intervention techniques throughout the supply chain, to try to resolve differences of opinion before they escalate into disputes.

We recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of identifying, controlling and managing potential conflict, whilst preventing the need for formal, adversarial dispute resolution procedures. We commit our resources to embedding these into our projects.”

As part of the pledge, signatories commit to:

  • Working proactively to avoid conflict and to facilitate early resolution of potential disputes.
  • Developing their capability in the early identification of potential disputes and in the use of conflict avoidance measures.
  • Promoting the value of collaborative working to prevent issues developing into disputes.
  • Working with industry partners to identify, promote and utilise conflict avoidance mechanisms.

To date the pledge has been signed by a number of major contractors, consultants and employers, and the coalition is currently developing a toolkit to provide those that have signed the pledge with a guide to best practice, tips and implementation.

Although the pledge is voluntary and self-assessed, it nevertheless shows that those firms and organisations that have signed it are committed to avoiding disputes, and should be welcomed.

MCMS Ltd Jonathan Cope

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