Conflict avoidance, management and dispute resolution procedures – Part I

Conflict avoidance, management and dispute resolution procedures for RICS APC candidates – Part I

A guide for construction professionals who want to achieve the RICS chartered status

Conflict is inevitable in any construction project, as different parties have different interests, expectations and perspectives. However, conflict can also be costly, time-consuming and damaging to the relationships and reputation of the project participants. Therefore, it is essential for construction professionals to have the skills and knowledge to avoid, manage and resolve conflicts effectively and efficiently, in accordance with the RICS standards and the UK laws.

In this blog post, we will discuss the following topics that are relevant for the RICS Assessment of Professional Competence (APC) candidates, who need to demonstrate their competence in conflict avoidance, management and dispute resolution procedures (CAMDRP) as part of the mandatory competency framework:

• Negotiation - Record Keeping

• How standard forms of contract deal with conflict avoidance and dispute resolution

• Conflict avoidance

• Partnering

• Negotiation

• Mediation

• Conciliation

We will also provide some real-life examples and references to the RICS guidance notes and the UK laws that govern the CAMDRP processes.

1 Negotiation - Record Keeping

Negotiation is the process of reaching an agreement between two or more parties through communication and bargaining. Negotiation can be used to resolve disputes, as well as to prevent or minimise potential conflicts, by clarifying the expectations, obligations and risks of the parties involved in a construction project.

Record keeping is an essential aspect of negotiation, as it provides evidence of the negotiation process and the outcome, as well as the basis for future actions and decisions. Record keeping can also help to avoid misunderstandings, disputes and claims, by documenting the facts, issues, positions, interests, options and agreements of the parties.

According to the RICS guidance note on Negotiation (2018), the following are some of the key principles and good practices of record keeping in negotiation:

• Keep a record of all communications and meetings related to the negotiation, including the date, time, place, attendees, agenda, minutes, actions and follow-ups.

• Use clear, concise and accurate language, avoiding jargon, ambiguity and emotive terms.

• Confirm and verify any oral agreements or commitments in writing, as soon as possible.

• Use formal and appropriate methods of communication, such as letters, emails, contracts, notices and invoices.

• Store and organise the records securely and systematically, in accordance with the data protection and confidentiality requirements.

• Review and update the records regularly, and share them with the relevant parties, as appropriate.

An example of record keeping in negotiation is the use of a negotiation log, which is a tool that records the key information and progress of the negotiation, such as the issues, positions, interests, options, offers, counter-offers, agreements and disagreements of the parties. A negotiation log can help to track and monitor the negotiation process, as well as to identify and resolve any gaps or inconsistencies. [3]

2 How standard forms of contract deal with conflict avoidance and dispute resolution

Standard forms of contract are pre-written contracts that are widely used and accepted in the construction industry, as they provide a common and consistent framework for the rights and obligations of the parties, as well as the procedures and mechanisms for dealing with various aspects of the project, such as variations, payments, delays, defects, risks and liabilities.

Standard forms of contract also contain provisions for conflict avoidance and dispute resolution, which specify how the parties should prevent, manage and resolve any conflicts or disputes that may arise during or after the project. These provisions may include the following elements:

• The roles and responsibilities of the parties, the contract administrator, the project manager, the engineer, the architect, the quantity surveyor and any other consultants or agents involved in the project.

• The methods and criteria for communication, notification, consultation, cooperation and collaboration between the parties and the project team.

• The procedures and timeframes for submitting, assessing, approving and rejecting any claims, variations, extensions of time, loss and expense, or other contractual entitlements or obligations.

• The processes and stages for escalating and resolving any disputes, such as negotiation, mediation, conciliation, adjudication, arbitration or litigation.

• The rules and guidelines for appointing, instructing and remunerating any third-party neutrals, such as mediators, conciliators, adjudicators, arbitrators or experts.

• The effects and consequences of any dispute resolution outcomes, such as binding or non-binding, final or interim, enforceable or appealable.

Some examples of standard forms of contract that are commonly used in the UK construction industry are the Joint Contracts Tribunal (JCT) contracts, the New Engineering Contract (NEC) contracts, the Institution of Civil Engineers (ICE) contracts, the International Federation of Consulting Engineers (FIDIC) contracts and the Engineering and Construction Contract (ECC).

Each of these standard forms of contract has different approaches and features for conflict avoidance and dispute resolution, depending on the nature, scope and complexity of the project, as well as the preferences and expectations of the parties. Therefore, it is important for construction professionals to understand and compare the advantages and disadvantages of each standard form of contract, and to select and tailor the most suitable one for their specific project.

3 Conflict avoidance

Conflict avoidance is the process of preventing or minimising the occurrence or escalation of conflicts, by identifying and addressing the potential sources and causes of conflicts, and by establishing and maintaining positive and constructive relationships between the parties and the project team.

Conflict avoidance can benefit the construction project, as it can enhance the collaboration, cooperation and communication of the project participants, as well as reduce the costs, delays and risks associated with disputes and claims.

According to the RICS guidance note on Conflict Avoidance and Dispute Resolution in Construction (2017), the following are some of the key principles and good practices of conflict avoidance:

• Engage in early and regular dialogue and consultation with the parties and the project team, to clarify the expectations, objectives and requirements of the project, and to identify and resolve any issues or concerns.

• Adopt a proactive and cooperative approach to project management, to monitor and control the progress, performance and quality of the project, and to deal with any changes, variations or challenges promptly and effectively.

• Implement a fair and transparent system for administering the contract, to ensure that the parties comply with their contractual obligations and entitlements, and to avoid any ambiguities, discrepancies or misunderstandings.

• Encourage a culture of trust, respect and goodwill among the project participants, to foster a positive and constructive working environment, and to avoid any conflicts or disputes arising from personal, professional or cultural differences.

• Use appropriate and effective methods of communication, documentation and record keeping, to ensure that the information, decisions and actions related to the project are clear, accurate and consistent, and to provide evidence and support for any claims or disputes.

• Seek and provide feedback, evaluation and learning opportunities, to improve the performance and quality of the project, and to prevent or minimise the recurrence of any conflicts or disputes. [2]

An example of conflict avoidance is the use of a conflict avoidance panel (CAP), which is a panel of independent and impartial experts who are appointed by the parties to a construction project, to provide advice, guidance and recommendations on how to avoid or resolve any conflicts or disputes that may arise during the project. A CAP can help to prevent or reduce the escalation of conflicts, by providing a neutral and confidential forum for the parties to discuss and address any issues or concerns, and by facilitating a collaborative and constructive dialogue and negotiation.

4 Partnering

Partnering is a process of establishing and maintaining a long-term and strategic relationship between two or more parties who are involved in a construction project or a series of projects, based on mutual trust, respect, cooperation and collaboration, and aligned with common goals, objectives and values.

Partnering can benefit the construction project, as it can improve the efficiency, effectiveness and innovation of the project delivery, as well as reduce the adversarial and contractual nature of the project relationship, and enhance the satisfaction and loyalty of the project participants.

According to the RICS guidance note on Partnering (2016), the following are some of the key principles and good practices of partnering:

• Select and appoint the project partners based on their suitability, capability and compatibility, as well as their commitment and contribution to the project goals and values.

• Develop and agree on a partnering charter or agreement, which defines the vision, mission, objectives and values of the project partnership, as well as the roles, responsibilities and expectations of the project partners.

• Establish and implement a partnering management system, which provides the structure, processes and tools for planning, executing, monitoring and reviewing the project partnership, as well as for resolving any issues or conflicts.

• Create and maintain a partnering culture, which encourages the communication, coordination and integration of the project partners, as well as the sharing of information, resources and risks.

• Measure and evaluate the performance and outcomes of the project partnership, using appropriate and agreed indicators and criteria, and provide feedback, recognition and rewards for the project partners.

• Review and improve the project partnership, using the lessons learned and best practices from the project experience, and identify and pursue any opportunities for continuous improvement and innovation. [1]

An example of partnering is the use of a framework agreement, which is a long-term contract that establishes the terms and conditions for the delivery of a series of construction projects or services, between a client and one or more contractors, consultants or suppliers. A framework agreement can help to create and sustain a partnering relationship, by providing a consistent and streamlined approach to the procurement, management and delivery of the projects or services, and by fostering a mutual understanding and trust between the parties.

5 Negotiation

Negotiation is the process of reaching an agreement between two or more parties through communication and bargaining. Negotiation can be used to resolve disputes, as well as to prevent or minimise potential conflicts, by clarifying the expectations, obligations and risks of the parties involved in a construction project.

Negotiation can benefit the construction project, as it can preserve or enhance the relationship and reputation of the project participants, as well as save the time, money and resources that would otherwise be spent on formal and adversarial dispute resolution processes.

According to the RICS guidance note on Negotiation (2018), the following are some of the key principles and good practices of negotiation:

• Prepare and plan for the negotiation, by identifying and analysing the facts, issues, positions, interests, options and alternatives of the parties, as well as the objectives, criteria and strategies of the negotiation.

• Engage and communicate with the other party or parties, by establishing rapport, trust and credibility, by listening, questioning and understanding, and by expressing, explaining and persuading.

• Explore and generate options, by brainstorming, creating and evaluating possible solutions, and by identifying and addressing any barriers, constraints or challenges.

• Bargain and agree, by making, receiving and responding to offers and counter-offers, by using appropriate tactics and techniques, and by reaching and confirming a mutually acceptable and beneficial agreement.

• Implement and follow-up, by documenting and communicating the agreement, by fulfilling the obligations and expectations of the parties, and by monitoring and reviewing the outcomes and performance of the agreement. [3]

An example of negotiation is the use of a without prejudice meeting, which is a meeting between the parties to a dispute, where they can discuss and negotiate the issues and options for settlement, without affecting their legal rights or positions. A without prejudice meeting can help to facilitate and expedite the resolution of a dispute, by providing a flexible and informal opportunity for the parties to communicate and cooperate, and by allowing them to make concessions or proposals without fear of prejudice.

6 Mediation

Mediation is a process of resolving a dispute between two or more parties, with the assistance of a third-party neutral, called a mediator, who facilitates the communication, negotiation and settlement of the dispute, without imposing or dictating any outcome or decision.

Mediation can benefit the construction project, as it can provide a confidential, voluntary and flexible way of resolving a dispute, that can preserve or restore the relationship and reputation of the project participants, as well as achieve a satisfactory and durable outcome that meets the needs and interests of the parties.

According to the RICS guidance note on Mediation (2019), the following are some of the key principles and good practices of mediation:

• Select and appoint a suitable and qualified mediator, who has the skills, knowledge and experience to mediate the dispute, and who is independent, impartial and neutral.

• Prepare and participate in the mediation, by agreeing on the terms and conditions of the mediation, by providing and exchanging the relevant information and documents, and by attending and engaging in the mediation sessions.

• Communicate and negotiate with the other party or parties, by expressing and understanding the facts, issues, positions, interests, emotions and perspectives of the dispute, and by exploring and generating options for settlement.

• Reach and record an agreement, by evaluating and agreeing on a mutually acceptable and beneficial solution, and by documenting and signing a mediation agreement or settlement agreement.

• Implement and enforce the agreement, by complying with the terms and obligations of the agreement, and by seeking and obtaining any legal or contractual recognition or validation of the agreement, if necessary. [4]

An example of mediation is the use of a mediation clause, which is a clause in a contract that requires the parties to a dispute to attempt to resolve the dispute through mediation, before resorting to any other dispute resolution process, such as adjudication, arbitration or litigation. A mediation clause can help to encourage and facilitate the use of mediation, by providing a clear and agreed procedure and mechanism for initiating and conducting the mediation, and by ensuring the cooperation and commitment of the parties.

7 Conciliation

Conciliation is a process of resolving a dispute between two or more parties, with the assistance of a third-party neutral, called a conciliator, who facilitates the communication, negotiation and settlement of the dispute, and who may also provide advice, guidance and recommendations on the possible solutions or outcomes of the dispute.

Conciliation can benefit the construction project, as it can provide a confidential, voluntary and flexible way of resolving a dispute, that can preserve or restore the relationship and reputation of the project participants, as well as achieve a satisfactory and durable outcome that meets the needs and interests of the parties.

According to the RICS guidance note on Conciliation (2019), the following are some of the key principles and good practices of conciliation:

• Select and appoint a suitable and qualified conciliator, who has the skills, knowledge and experience to conciliate the dispute, and who is independent, impartial and neutral.

• Prepare and participate in the conciliation, by agreeing on the terms and conditions of the conciliation, by providing and exchanging the relevant information and documents, and by attending and engaging in the conciliation sessions.

• Communicate and negotiate with the other party or parties, by expressing and understanding the facts, issues, positions, interests, emotions and perspectives of the dispute, and by exploring and generating options for settlement.

• Reach and record an agreement, by evaluating and agreeing on a mutually acceptable and beneficial solution, and by documenting and signing a conciliation agreement or settlement agreement, or by accepting and adopting the conciliator's recommendation or proposal, if any.

• Implement and enforce the agreement, by complying with the terms and obligations of the agreement, and by seeking and obtaining any legal or contractual recognition or validation of the agreement, if necessary. [5]

An example of conciliation is the use of a conciliation board, which is a panel of one or more conciliators who are appointed by the parties to a dispute, to provide advice, guidance and recommendations on how to resolve the dispute, based on the facts, issues, positions and interests of the parties. A conciliation board can help to facilitate and expedite the resolution of a dispute, by providing a neutral and authoritative opinion or suggestion on the possible solutions or outcomes of the dispute, and by encouraging the parties to accept or adopt the conciliation board's recommendation or proposal.

8 Conclusion

In conclusion, effective conflict resolution mechanisms are essential for successful construction projects. Negotiation, record keeping, standard forms of contract, conflict avoidance strategies, partnering approaches, mediation, and conciliation all play crucial roles in fostering positive project outcomes. By adhering to principles such as clear communication, proactive management, and collaborative problem-solving, construction professionals can mitigate risks, prevent disputes, and maintain constructive relationships throughout the project lifecycle. Utilizing tools like negotiation logs, conflict avoidance panels, mediation clauses, and conciliation boards facilitates efficient resolution processes, preserving project integrity and promoting mutual satisfaction among stakeholders. Ultimately, employing these practices ensures smoother project execution, enhances stakeholder trust, and contributes to the overall success of construction endeavors.

9 References

1. RICS (2016). Partnering. RICS professional guidance, UK. Retrieved from https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/construction/partnering-1st-edition-rics.pdf

2. RICS (2017). Conflict Avoidance and Dispute Resolution in Construction. RICS professional guidance, UK. Retrieved from https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/construction/conflict-avoidance-and-dispute-resolution-in-construction-1st-edition-rics.pdf

3. RICS (2018). Negotiation. RICS professional guidance, UK. Retrieved from https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/dispute-resolution/negotiation-1st-edition-rics.pdf

4. RICS (2019). Mediation. RICS professional guidance, UK. Retrieved from https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/dispute-resolution/mediation-1st-edition-rics.pdf

5. RICS (2019). Conciliation. RICS professional guidance, UK. Retrieved from https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/dispute-resolution/conciliation-1st-edition-rics.pdf