In this webinar, Barton Legal were joined by Maria Fisentzou, Managing Director of FTI Consulting, who discussing why quality programming comes first, and Karen Gough, Barrister and Arbitrator of 39 Essex Chambers, explores FIDIC contracts and the importance of knowing your risks.
Webinar Speakers
Maria Fisentzou (FTI Consulting, UK)
Maria is a Chartered Civil Engineer, a testified Delay Expert and CEDR Accredited Mediator with over 30 years' experience. Maria started her career working for engineering firms as a structural designer and project manager. Later in her career, she joined the contracting sector where she spent 15 years in construction management, planning engineering and commercial management in different parts of the world. Maria has acted as a party-appointed delay expert on several projects. Her expert witness work for public building construction, shipbuilding, and the oil & gas, wind, nuclear and solar power industries involved carrying out delay analysis, preparation of independent expert reports and liaising with counsel and instructing solicitors. Maria has given oral expert evidence in international arbitration proceedings, domestic adjudication, and mediation proceedings.
Karen Gough (39 Essex Chambers)
Karen Gough practises internationally as counsel, attorney-at-law, arbitrator, adjudicator and ADR neutral. She has specialised, for more than 30 years, in complex construction, engineering, professional negligence and general commercial disputes whether resolved by litigation, arbitration or ADR. She represents a wide range of clients including governments, government agencies, local authorities, educational institutions, contractors, sub-contractors, and major commercial organisations. Her construction practice includes disputes concerning private domestic and commercial industrial and retail developments, major public works and infrastructure projects including water, sewage, energy and power plants, nuclear facilities, hospitals, prisons, schools, roads, rail, and sea defences. She has dealt with all manner of disputes under many SFCs including JCT, NEC and FIDIC, including claims for payment, extensions of time, delay and disruption, termination disputes and other specialist disputes involving complex M&E and building management systems, ground conditions, cladding and roofing projects.
Transcript
00:00 Bill - Introduction
It is genuinely lovely to see everybody. In case you didn't know you guys on bill barton from Barton legal with specialists in construction and engineering and the aim of these webinars is to bring to you at fascinating and fabulous speakers to share their experience and knowledge and today as so we have two Absolutely Fabulous speakers Maria and Karen.
Just some housekeeping just in case you haven't realised whilst we're on zoom this is at the meeting function to whilst with some in the process of the webinar will mute you and we can certainly can resolve but the chat function is open to please or questions in the chat function please continue to put in if you just joined the city and country joined from the form of contract that you're using at the moment and whether you've used dispute board also suggestions for topics for future webinars if there's specific question or particular contract I still look at or if you are able to suggest speakers that would be great ah well I was also going to feedback always welcome feedback and please do share stuff on LinkedIn recently I'd like that to be positive but equally if you got any issues then just drop me a line.
So, I will introduce our two amazing speakers and I'm grateful to them some both because I know that they're both incredibly busy at the moment and it does take a lot of their time to come along and prepare into to think of how to present in in every interesting and engaging way. So first of all, Maria is managing director of FTI forensic mitigation consulting. She's a chartered civil engineer with over 30 years of experience in construction industry never know that. In addition to her BSc degree in civil engineering she possesses msc's in structural engineering construction and dispute resolution so just shows how super braining she is. She's also a testified delay expert often acting on national and international projects in various sectors including public and high-rise building construction but also infrastructure shipbuilding, nuclear energy, wind power, and oil and gas so really you can see the big projects where programming it comes to full. She's also an accredited mediator with Cedars centre reflected dispute resolution and she's given oral evidence in international arbitrations domestic adjudication and mediation soap again bring textbook because she can actually produced to the tribunal which is written paper works not only applied formal dispute proceedings but also for risk assessment and also in negotiated settlement and Maria is fluent in both English and Greek, she is almost certainly the first Greek Speaking speaker we've ever had and so I'm very grateful for again expanding our boundaries. As you know I always ask all speakers from interesting fact and marinas is that she is a fanatic of the Eurovision Song Contest, she spent her childhood watching the Eurovision Song Contest as a family ritual and she still enjoys listening to Graham Norton absolutely beasting the contestants and especially the way he jokes about Greece and Cyprus giving each other top marks so I think will we all know where Marie will be on Saturday the 13th of may and let's just hope that it's not known for for the UK.
We're also joined by Karen 39 Essex chambers. Karen practices internationally at council certainly at law arbitrator adjudicator and an ADR neutral she specialised again for more than 30 years, what is it about 30 years, in complex construction engineering professional negligence and general commercial disputes whether through litigation arbitration ADR. She's a recognised expert on disputes arising after project governed by fidic and as such she's also an expert friendly reviewer the fidic. In 2017 she was appointed to and is a member of the Asian international arbitration centre panel of experts on the new standard forms of building contract launched there in August 2017. She's on the Advisory Board are that you make international arbitration centre. She's a past president of the Chartered Institute of arbitrators, chartered arbitrator, a certified international ADR resolution practitioner of the Asian institute of alternative dispute resolution and an accredited technology and construction bar adjudicator. I don't know how Maria and Karen have time for work getting all these qualifications and experience it's just amazing karen's got a strong commercial practise in Caribbean really I think it's time that the case over there and in April 2016 she completed a course at the Norman Manley law school at the university of West Indies and open was awarded a legal education system that gave her rights of audience across the wider Caribbean and in 2016 choose admitted to practise 1000 attorney at law in the courts of Jamaica and then in later that year in Trinidad and Tobago. She's being shortlisted for the legal 500 international junior council and in 2020 for construction junior of the year. So a fun fact about is a popular says she loves dogs and is always owned at least one lurcher. So if you don't know what I'm lurcher is there are sighthound crossed with working dogs said to be the dogs of princes and poachers. Karen currently has 2 lurches she says of fantastic pets and easy to keep but she's also got the Romanian girl dog puppy she claims more like polar bear. I'm not quite sure Karen whether you think you're a Princess or a poacher with your dog.
anyway we're going to start with Maria as I say chat function is open please put your questions in the chat I'll collect them all at the end and then when Maria has finished will ask a few questions and then we'll go over to Karen. so over to you thank you very much
07:21 Msris Fisentzou
Thank you very much bill. Thanks for that wonderful introduction and your good words and thank you very much for the opportunity to talk about quality programming comes first because it's a subject very dear to ah to my heart. It's a subject I've been dealing with for many years now and I think it's a wonderful opportunity to share my experience and knowledge with our peers so thank you very much for the invitation to speak to today.
can I have the first slide please the introductions slide, thank you very much Rachel.
Slide 1: 08:06
OK So what am I gonna talk about today. First of all, Time. Possibly time is the biggest risk in construction so I'm going to I'm going to talk about the importance of time.
I'm going to expand on the fundamental ingredients that a good construction programme needs to have I'm gonna touch it of it on monitoring reporting, when I say a little bit more is only going to be one bullet point in my slides. Basically I want to emphasise the important information that needs to be collected when we're updating a programme. Why using a single programme is something that I feel very strongly about. Some people disagree with me, contractors disagree with me, it's OK, its good to disagree but I want to share with you today the importance on having a single programme and of course why are all these important why programming quality comes first and that brings me to my next slide and can I have the next slide, is the why.
Slide 2: 09:28
When Bill invited me for these to speak about this subject I did wonder why he felt the need of organising this webinar all why did Karen and I felt the need for talking about this subject that some people think it's a panel, its outdated we are in the 21st century I was actually reading BBC News the other day and apparently Elon Musk will take us to Mars in five years time and we are still talking about the need of having a good quality programme.
I'm afraid yes there is a need and I will tell you why based on my own experience.
The first example I want to share with you is that I have come across contractors that they don't know they are contractual start date, they don't know their contractual finish date, basically they don't read their contracts and possibly they never read their contracts. So what is the result of this? Huge delays accompanied by possibly thousands or millions of damages.
The other reason that we need to talk about quality of programmes, is the fact that we come across contractors or projects that they are never they never ever prepared a single programme. Works are executed without a programme, without a contract programme without a programme update. Here I can share with you an example I was involved in an international arbitration for the construction of two oil tankers. In this case the shipyard the contractor didn't have a single programme and of course the project was terminated because he passed the longstop date are we surprised why? No, we are not. So they went to arbitration and few years later the contractor that she had to pay about four million euros in arbitration costs accompanied with the relevant damages.
I have a third example for you we have contractors that they do, is excellent, they do have a contract programme. Again, it's something I have come across this contractor did prepare a contract programme, very colourful very beautiful. We all know how beautiful programmes look with the blue and red and green bars and the vertical and horizontal lines. So this contractor, he did prepare the contract programme but actually he was printing it to use it as a wrapping paper for presents, I kid you not. Yes he was not using it to monitor the works no or plan the works but as a wrapping paper and I've seen it with my own eyes the contractor was rightfully terminated and subsequently paid the associated damages.
A third example we have the contractors where they go absolutely mad in preparing programmes it's that they prepare their Contract programme which is great. They prepare a programme for their own eyes only. They prepare a programme for the employers eyes only, for the funder eyes, for this subcontractors eyes. So you can see that you have all these different programmes, not communicating between them they collect conflicting information when it comes to reporting the progress and of course its extremely difficult to either monitor the progress and when it comes to me, let's say for a delay, then which information do I use? Which is the true information that I need to take into consideration for analysis? So that's why we still need to talk about the need for quality in programmes.
Slide 3: 14:24
so we're here to talk about quality in programming but I think we need to go to first principles first. I love going to the third going back to first principles. So the question we need to answer what is the starting point of a programme? What are the fundamental ingredients of a construction programme? I think there are two fundamental ingredients: the first one is the scope of the work we need to plan for the school what are we going to be it.
The second ingredient we need to know when we're going to build it and this is, it is there when that it's defined by time. so that's why I want to talk about the importance of time.
While preparing my slides I thought I did wonder what is the definition of a time so I looked in the English Dictionary that I have on my desk and the definition of time is allow me to read it from my notes: time is the continuous passage of existence in which events pass from a state of potentiality in the future. Which is exactly what we do when we plan, we plan for the future and we programme for the future through the present. It is today that we plan for the future but it passes to a state of finality in the past and this is what I want to emphasise the most this state of finality in the past because it's exceptionally important when it comes to delay analysis. You cannot go back in time. You cannot go back in time time it's an irreversible process of events and especially when it comes to delay analysis we look into the past we observe what actually happened in the past and we need good programmes to get that information we need good as be programmed to get that information. So we need good time management we need a good quality programme because time management will allow us to take control of time to take control of the events rather than following the flow of others I'm sure main contractors would want to take control of the time of the events and they don't want to they don't want to follow the flow of their subcontractors so we need ah the programme.
Slide 4: 17:51
Time is limited, I'm sure you are all aware the contracts, contract agreement they provide for a contractual completion date so time is limited and programme with allow you to programme in order to achieve that contractual completion date. It also allows you to accomplish more with less effort because when we take control of time, we improve the ability to focus and when we improve their ability to focus, we are more efficient and when we are more efficient then we can complete the tasks within the prescribed time but also we can complete the task with the quality we want. so it will allow us to complete the task in time and with good quality.
Slide 5: 20:10
I'm sure you are all familiar with this diagram time quality and cost. A very important concept the relationships between these three parameters in construction industry I don't want to go into detail is not is not what we are here for but what I want to share with you is, what I want to emphasise is that:
I have to say a colleague of mine saw this slide and he said there is a mistake may be useful that mistake yes the health and safety parameter is not there and please allow me a bit of poetic licence because I wanted you to focus on these three parameters rather than health and safety. So these three parameters are interrelated sometimes they are in harmony sometimes they are not and sometimes they actually I believe that there they carry inherent conflict between them but out of these three I believe time is the most important parameter for the reason I explain later you can never go back in time unless you have a time machine my colleague told me so and he's absolutely right so that's why time is very important.
Slide 6 22:25
so we talked about time, we talked about the importance of time, we talked about why we need a good quality programme. What I want to share with you next is what a good programme should how a good programme should look like what a good programme should incorporate
Slide 7 23:01
so or what I'm sharing with you this morning is not an exhaustive list of what add a good construction programme should incorporate but I believe from personal experience these are the most important elements of equality programme.
(23:24) First of all a programme should identify the critical paths and near critical paths. As a delay experts like I cannot emphasise enough how important it is for the contract programme for all the programme updates for programme revisions to clearly show, to clearly identify the critical parts.
Some people think that delay analysis is very complex, it is, it is complex, but there is only one thing that we look into when we provide an opinion on entitlement of extension of time. We look at the delays on the critical path so critical path is the alpha and Omega of your programme. Near critical path are also important cause during the process during the life of the project near critical paths made turn critical so it is important for both monitoring their works and delay analysis to know to analyse this switches between critical and not critical or near critical to critical so that's why we need to show critical path.
The second bullet point also extremely important should be a complete logically linked dynamic network, why? We need to how we need to plan for the entire school we need to integrate the pre construction phase the design the procurement construction the handover and all these needs to go on a single programme. If you have all these areas of the project on different in different files in different programmes and they do not communicate then you will have a great a very difficult task to either monitor the works and then we escalate how experts we have even a more difficult task to analyse the delays so we want all the areas in your project to talk to each other to go on a single programme and for a programme to be complete we must use the logic links available to us. Remember I talked about the interdependencies before their injured interdependencies logic links between project teams the concept team between the design team the procurement if you need to Add all those links into the programme to be complete. I want to add at this point is not on this slide but we not only have logical the links that represent the logical sequence of the words but we also have resource links, we have geographical links, we have the side logistic links, for example you it is a building project, you have a tower crane you need to take that into consideration and then think when the tower crane is going to be removed what are the remaining works to complete some are so that's what I call inside logistic links so we need a critical path analysis programme complete logically linked dynamic network an include all possible links available.
Slide 8 (27:58)
It must have a unique activity identification structure and he should make use of correct and easily traceable where breakdown structure. What I'm refering to now is the activity ID of the activities in the programme I need to be unique. It's a problem that we come across again and again because to determine causation we normally compare the plan and the as built situation when it comes to programmes where we have 50,000 activities we obviously need a computer to do that for us and for the software to do that and when the software does that for us the software compares the activity IDs so we want those ideas to be unique for each description in the programme and of course for your work breakdown structure it needs to be easily traceable provide for the areas of the project provide for the different phases of the project and of course allow for your wps need to follow the method of execution.
The third bullet point is it's a recommendation from the Society of construction low protocol that approach the maximum activity duration and lag should be 28 days, and look at your contract as well some contracts specify activity duration and lag so you need to follow that the importance here is that we need the minimum duration we need short durations for activities because of course it is easier to monitor but at the same time is easier to trace the delay or easier to trace the effect to determine the effect of the delay. Use appropriate calendars define working hours do not leave to chance think about your calendar think which activities work on a 5 day calendar think which activities work on a six day calendar and incorporate that. Does not include duplicate activities. It's many times that people ask me about the appropriate detail over programme is not an easy question to answer but the very first thing I say avoid duplications because if you have duplicated activities then sometimes you have conflicting information when you come to update the programme and is not useful to monitor and is not useful for deley analysis
Slide 9 31:00
clearly the programme should clearly indicate any use of time risk allowance or contingency some some contracts they do expressly request that some others they don't. Contingency might be whether it might be planned breakdowns in might be late delivery of Longley items is very important too even if your contract does not require you to clearly identify TRA it is very advisable that you do so because you take control the contractor does that takes control of the float takes control of the contingencies.
The next three bullet points which should identify the use of overtime additional shifts should be able to produce resource profiles for the major activities you need to indicate key resources this three bullet points refer to resource management very useful to half we do link look into this when we come to delae analysis to determine extension of time but it's more essential when it comes to its more essential when it comes to disruption analysis.
Constraints that violate network launching should not be used, capital and bold. For those that are familiar with programming when we plan works we can either use logic links or we can use constraints it's OK to use both but when it comes to constraints we have the so-called hard constraints and soft constraints. Hard constraint is when you tell the programme that this activity must finish by that date these constraints they violate the network logic. Basically they violate the criticality they produce fabricated critical paths so they don't give you the correct indication where you critical parties and that will not assist you where you're where you're in a live project and definitely is something that we look into the very first thing that we look into a still a delay analysts (33:37)
so do not use hard constraints should be some supplemented with align of balance schedules or time locations time location diagrams are very useful when it comes to linear project channelling highways roads but also useful for buildings I have found because they show you how your resources flow from level to level. I say shoot sometimes contracts request these additional information sometimes they don't but we have we find them useful
Slide 10 34:19
The programme must capital and bold must comply with contract and project an funder requirements. At my mse degree I learned that contract is the key contract is the key. So read your contract read your time related provisions team read your programme related provisions before you start. The penalty made bullet point is the single bullet point I talked about earlier and it's about how to record progress when it comes to delay analysis there are three things that the minimum so is lots of things we need but the absolute minimum information we need is when an activity started when activity finished or we need the programme the percentage complete values for those activities in order to analyse the progress of those activities in in the life of the project and in order to to see where the dillett was so absolute minimum actual start actual finish percentage complete values when you come to update your programmes.
last bullet point very useful accompany the programme with the planning narrative basically set out your workings in preparing the programme your assumptions your sequencing your methodology curing times your resources. set all that information out in a narrative and I Co that narrative with the programme
Slide 11 37:12
Thank you very much
Bill 37:50
thank Y very much Maria that's fantastic and I think that if anybody ever wanted a found to guide you just written it there how to go about programme managing as a construction solicitor as a number of people on no I I can't begin to pretend because I'm just not intelligent enough as engineers are how programming works but you've set out everything all the steps that need to be followed will come back to you with questions at the end but I would just drive home some of your final points. Engagement with subcontractors and contractors engaging in design procurement construction. It's about collaboration comply with contract projects under requirement these are things I bang on about all the time it's about parties getting together collaborating the beginning of having an argument having a discussion about what actually is going to be required because you've made the point where if people don't do that how accurate and relevant can a programme be and when these things are done in some sort of mystical distant tower Rome actually being engaged with the partners think that's only a problem I do I've got some belting questions I know some of the people Patrick you put a question in such other will deal will deal with those at the end so Will go to Karen then will come back so that everybody can be on and will have so general questions so Karen here
Karen 39:39
thank you Maria that was great thank you very much indeed. First of Bill thanks for inviting me to join you and speak this morning I looked at the people I always enjoy looking at all the people that come on these webinars and see who's there and one of the things I noticed immediately this morning is that we have at least one from Turkey and I thought it it's good to say really that our best wishes and our hearts are with the people of Turkey and Syria at the moment certainly following that absolutely appalling earthquake that they have there.
Secondly I was listening to Maria and she spoke about the contractor with many programmes now I'm talking about risks um programmes many programmes all saying if things for different parties to the contract. That carries a serious risk but its veracity the contractors veracity will easily be attacked in any dispute and you know from the start of any dispute will be dealing with disclosure and really the tribunal will easily spot if the contractor that prepare has many programmes one for each party that's involved easily spot that the party might be very unreliable with their evidence so anybody thinking that that's a plan I would suggest they rethink it I'm Phil just before I cancel through knowing your risk you spoke about 30 years you said ladies what's important sub 30 years well from a personal point of view I can say this as a woman I reserve the right stop counting my years of practise at 30 years and I did do so a few years ago now so that's the significance of 30 years at least from my personal perspective
I too like to begin at the beginning So what is a risk what is risk? Its an event or circumstances that if it all they occur will impact on the project objectives and what are those projects objectives the key project objectives, well you saw Maria triangle time money quality in manifest in all kinds of different ways but they are the three key objectives and none of them is a stand alone objectives they are all closely connected as we heard from Maria as she said
what is the cause of risk? Quite frankly it's just uncertainty it's a non-quantifiable substantially unquantifiable events or circumstances and they are avoided or minimised by effective project engineering planning procurement and management throughout the contracts risks don't go away you plan for them but they are ongoing they never settled and obviously the greater the complexity of a project that the bigger the value of the project the longer could the contract period, the greater the risks that have to be planned and managed I would add to that also disputes, the risk of dispute views is always ongoing. The effective dispute avoidance and dispute resolutions mechanisms in a project aki to minimise ING the risk of disputes all of these risks they all need to be managed and the starting point for management is always the writing of the contract.
Slide 3 44:20
I won't dwell on this because we don't have a huge amount of time. (44:25) The Holy Grail of risk allocation it doesn't really matter which form you look at all the commentators will say I will say is achieving a fair and balanced allocation of risk which is really easy to say and really difficult to achieve because the sarum balance allocation risk means something different to everybody that considers the proposition but the effect of inappropriate risk allocation it is a risk of failure and a failure to achieve one of the key project suggests objectives price quality and on time and we've just looked at how much goes into dealing just with the single issue of time. (45:05)
and when you think about putting a price together and when you think about specification and the quality of the works you can see that there is a massive amount that goes into working out risks on the project the more balanced risk allocation between the parties the greater the project of prospect success that's just a truism
Slide 4 45:37
what are the effective considerations when allocating risks? These are the criteria that are usually cited to underpin how parties manage and allocate risks and they just set out on this slide and again truthfully but true for other forms of contract. Insurance plays a big part you know is it available is it available economically and that will impact how risk is at allocated.
There is always the question of who will benefit most from the control of the risk benefit economically or maybe in other ways if the risk materialised who will stand the loss at least in the first instance these are issues that will give indicators as to where the risks should be allocated. Now another risk I want to talk to about when considering effective considerations which I haven't particularly identified.
Slide 5 46:53
FIDIC proposes risk should be allocated on a fair and equitable basis and this is for reflected in the various contract forms which child up from briefly in a moment but the risks have to be allocated so that they are managed effectively and they are able allocated to the party best able to control them. But we all know for example next look at the pandemic concern clear out and me there are risks that arise which can't be managed by either party alone and then you have to consider how should they be managed. One of the most significant risks and certainly is a dispute resolution practitioner one of the most significant risk that I see that he's badly managed or not managed at all in construction projects is that looking at FIDIC you have the general conditions you have the particular conditions and what happens very often is particular conditions are written in without either any or any sufficient attention to pre-existing allocations of risk within the general conditions and that results in a situation where then the allocation of risk becomes confused it becomes ambiguous and it's disrupted.
FIDIC in the 2017 forms as five golden principles two of them relate directly to the impact of alterations caused by the particular conditions of the second golden principle that FIDIC has says that the particular conditions must be drafted clearly and unambiguously Assad says the particular conditions must not change the balance of risk and reward allocation provided for in the general conditions and this is one of those common problems that I see when looking at fidic contracts that that have been substantially amended but with the introduction of particular conditions changes to general conditions should be limited always limited to those that are strictly necessary for the particular features of the site and the project. There was never going to be a one-size-fits-all so there will never be a case when there are no particular conditions but the changes need to be limited to those specific and required for the project and you also have to consider also wherever the project is in the world the impact of the applicable law there will be particular conditions quite often that have to address that. Changes to the general conditions should not change and especially this should not undermine fair and balanced character of the fidic contract
Fidic, I know, pairs its hair out when it sees some of the bespoke contracts that are really signed up in its name they look nothing like a fit contract the balance of risk within them is completely destroyed off. So after any cut changes to a fidic contract and FIDIC prayer always is that the contract should still look like a fidic contract and that essential fairness and balance of risk should remain now we all knows dispute practitioners at that very very often does not happen and it's a real issue
Changes to time limits in the general conditions imposed by a particular conditions, they need to be very carefully managed especially if the breach of a limit introduces a time bar and prevents the claim. Those limits need to remain reasonable and in every case where you amend the general conditions by the particular conditions, the priority of the provisions needs to be clearly stated and even though it might be assumed it is better to be restated than assumed because if it isn't then some confusion can results and that is a recipe for disputes
Cases to the extent of FedEx it's are reported since most of them are dealt with in arbitration but the case is on this with examples of the consequences of inappropriate vague or conflicting amendments to the general conditions through the use of particular conditions
Slide 6 52:47
really just for notes nothing to add here. I said generally the forms pre allocate responsibilities for insuring against certain risks and the recovery of loss from insurers. I mean that's the clauses are what they say on the tin in that respect and where that's not possible then they identify the party that's going to be responsible for bearing the loss
Slide 7 53:16
looking at the books I again this doesn't take a lot of time to dwell you can see that the books allocate the risks differently in the red book the employer designs the contractor builds and the risk substantially rests with the employer unless of course there altered through particular conditions with the yellow book the value of the yellow book is that the contractor both designs and constructs to pet specification so you have a single point of focus for design risks and sometimes choose construction that involves an element of design but with yellow book you know they're designing to a specification and it's all sitting with the contractor but the employer still carries other risks when you look at the silver book you're looking at a turnkey contract and we see in the silver book and a major shift of risk to the contract are what I've seen in very many bespoke silver book like on tracks is a very very serious shift of risk from the employer to the contractor almost all of the risk and I will also see very awesome is where there is an economic strength within the employer or the owner they don't just shift the risk they reduced the reward so there's no balance between risk and reward in some of these bespoke contracts that is setting with the silver book that's the most common problem when it comes to dispute avoidance and dispute resolution you are looking at a situation where there is a huge risk and little rewards sensible risk allocation is therefore vital to successful projects
Slide 8 55:15
just particular risks and I haven't time to spend a great deal of time on this particular risks that arise with the fidic forms of contract I think the biggest single risk is ground conditions red and yellow books the contractor may recover time and money for unforeseen physical conditions now there's always a massive argument around what constitutes unforeseen physical conditions and he has to bear in mind the site data clause and the obligations to interpret the site data and this impacts on what will or won't be considered as unforeseen site conditions (56:02)
you also have a problem when you have this resolution where you find that what constitutes unforeseen brown conditions will mean different things to different people the silver book of course ground conditions unforeseeable difficulties in ground conditions are at contractors risks close for 10 in the silver book it provides this strictly the contractors responsibility to verify all the site data but when you look at ground conditions and I just mentioned that it will mean different people different things to different tribunal u need to look at the leading English cases of abra scum and also PBS and best generation and you see in those cases examples of risks which eventuate it in cause really major problems major litigation and there was a subjective valuation in both of those cases of what constituted unforeseen ground conditions.
exceptional events force mezut yeah there's been a lot of talk about this recently in the 2017 forms its claws 18 it's broadly the same provision and it carries the same right across all three siddique forms these are events which are out with the control of the party then it has to be one of the party could reasonably have provided for by entering into the contract and having arisen it was something that the party could not reasonably avoided or overcome and it can't be substantially attributable to the other party to come within the force majure provisions. The kinds events giving rise to that are the same in almost all forms of contracts they are war terrorism's riots strike counting munitions on the on the site it they include natural catastrophes like earthquakes, tsunami's, hurricanes and the like. They did not include a pandemic but the red and yellow booked out with a pandemic in clause 8.5 and broadly speaking it that was the entitlements for the delays caused by epidemics and also by government actions and of course there were many government actions around the world during a pandemic. In the silver book there is nothing available to cover that kind of rest risk but it or in all the books in clause 8.6 delays caused by authorities gave entitlement to in extensions of time, delays caused by authorities which explaining clause 8.6 becomes an event for which the extension of time can be claimed under 8.5 b. So There were real issues and risks around the pandemic. FIDIC very helpfully I think one of the best things they did was promptly when the pandemic occured was to issue a note explain blaming how the impacts of the pandemic could be managed under its forms.
Slide 9 01:00:28
Conclusions. Well their numbers conclusions I put here and I think it's clear but
(1:00:37) It's really critical so value risks associated with the project and its critical do so at the earliest possible time. Parties need to identify possible triggers and allocate the risks likely to impact the project at the outset, maintaining a fair balance I've mentioned more than once and that is really the Holy Grail of risk allocation under contracts. (01:02:02) and as I say it's awesome seeing by miss allocation it's the it's the issue that Britain brings the contract to its knees drafting the contract properly and so that it shows and reflects the agreed risk allocation is really critical
(01:01:21) and in all cases balance the reward with the risks that are assumed. If you're an employer or an owner, don't be tempted to chip away at the reward because if you deprive the contract of the rewards of the contract and the risk will only increase the chance of failure increases with it (01:01:41) tax risk is an inherent part of contracting and development appropriate risk assessment allocation and management is critical to the success or failure of the project if I give you a takeaway
(01:02:01) After all my years of experience the way that I would give you is don't amend general conditions the FIDIC general conditions unless you have good advice. Without advice, and this is particularly so if the contract is drafted in a language which is not one or both of the parties first language, make sure you take appropriate advice. (01:02:33) and of course bill and Maria and are I all here and very willing and happy to provide that advice thank you very much for listening
01:02:49
Thanks very much Karen Absolutely Fabulous it is the right shouldn't just put the just open or cameras sees woman remove slime's lovely pet hated minder everybody I'm glad you raised it Karen PBS investor for poor contract drafting I I still see a lot of very poor contract drafting biking that it's the same as with consultants but I understand you know mistakes and errors happen that poor contract drafting really shouldn't happen because the use of plain English grammar and punctuation and actually checking the stuff that you drafted really shouldn't be beyond the wit of us within the construction industry is a real bugbear of mine that I I think a lot of poor drafting is actually driven a Boise the failure of parties to have you know robust debate about things as at the time when they come to execute contracts because that would normally might spoons actually flush out some of the problems that exist is but because contracts tend to be imposed on parties with ray little discussion and argument and I think that's a shame there I'm going to start with with Maria with some questions I'll come back to Karen.
01:04:29
so these are mine and then I'll come to the ones in the chat. How, and this is if this is unfair Marie then say, but how big in size value do you think approach project needs to be before people should invest in detailed programming?
01:05:02 Maria
Personal opinion, I think respective in value where small or large you need a programme Annie can I just say that in our everyday life each one of us we have our own critical path analysis programme everyday to get to work at 9:00 o'clock or for me to be here at the webinar today at 11:00 o'clock, I had my own personal critical path analysis programme from the time I woke up to the time I joined in here so I think it's irrelevant. You need a programme in order to achieve your target you need a programme to achieve your completion date no matter how small or large
01:06:02
and I I totally agree with that I I think there's an that's very good answer glad said it causing too many people shy away from engaging and OK just following and then I'll come onto Patrick as he has his hand up. (01:06:27) Do you think the external project a programme managers such as yourself should be used more often by clients at the outset of projects, even if it's only to give some initial advice to make sure that that you know you're amazing guidelines that you set out in your notes are followed, I think instances where think why didn't you just go and get a bit of external help to make sure what you doing the set up
)1:07:03 Maria
absolutely yes because I think a lot a lot of the cases that come to us when they end up in the dispute world and its big cause of poor planning its because the programme was there or the programme was there and it was not properly monitored so I think the the programme is the right hand of every single project manager and unfortunately we see cases where this is ignored. Project managers do not take into consideration the programmes do not take advice pro programming expert let's say and that's where things start to go wrong I believe and that's why they tend to come to us after the event after they suffered the deley after they they've gone into dispute with the other side so I think definitely you need to be proactive and you need to have the programme in place and then if you don't have the internal resource? yes go to external resource because I think it will save you a lot of money later on coming to FTI or to bill or to Karen yes
01:08:39
again glad said I think it's true but also think that's true out contract drafting
0:08:54 Patrick Kane
I think it's on based on the first question I think the question can go a little further yes every contract no matter how small requires a programme but there are a wide variety of programmes and that you can use a cheaper programme perhaps or something that doesn't cost anything maybe on a smaller project but when you get to projects that have thousands of activities then you have to go onto a much more sophisticated programme or possibly onto a database which is like Primavera it's not a programme with a database essentially but it's quite expensive and therefore there's a cut off between where you use an inexpensive and a similar programme and where you go onto something more sophisticated I think that that possibly is the dividing line that I would consider.
01:09:55
Karen, coming to you, do you think that people understand the differences between the different fidic contracts and you could apply this to the different NEC contracts or ikem but that's probably too general. More specifically do you think people actually understand that the interlinking import and importance between the particular conditions and the general conditions in fidic
01:10:35 Karen
well I think sometimes people think it's clever to introduce a whole lot of particular conditions I think you can overkill like I said there's never going to be a case where the general conditions how for every eventuality you are going to need to have some tickler conditions to deal with the particular project another ticular site there's always going to be a need for something but the propensity for overkill and the failure to understand that
when you manipulate through the particular conditions you can actually completely ruin the contract before it gets out of the ground quite often people just don't appreciate that they think it's clever to introduce a lot of particular conditions and they think it's clever still if they can do that and keep the rewards to the contractors down and you know it's nonsense it's just a recipe for failure
01:11:38
do you think there are lessons to be learned from other contracts that could be used within fidic and vice versa, I mean we have so many different forms of contract, do you think there's a yeah there are always lessons to be learned between the forms of contract. The most obvious when you look at cidic is if you look at the NEC which the NEC isn't now trying to become a more international form of contract is being used very successfully in different parts of the world civic doesn't really have a sort of public procurement it's mostly used in the Publix so private sector even though it's used I supposed by well now she's not it is used internationally by governments by the World Bank by people like that is not used in places like that UK where we the government says actually you can only really use fidic and having said it's not used I was at a conference hey word is being used in monster big power stations in key or somewhere like that it cause to get in international contractors they didn't want to use the NEC but the point I'm saying is fetick is now trying to go down a root and produce of collaborative contracts which is like the anything it's currently drafting something and out of course it's having regard to any city but actually in my hope is that in producing its own form it will go its own way because although of course you want to have all the good parts of other contract forms there are always problems with those forms and it's important to learn the lessons from them and not just repeat them in your own but they yeah of course they all look at one another doing and they all want to make sure
01:13:46
thank Y Maria again and unfair question but you know these are interesting. D you think programming is an art or a science?
01:14:02 Maria
Programming or delay analysis I can see octavian done his always despised his smile that you requested. When it comes to programming we need to bear in mind that is a tool it's a tool to assist you to programme the works to assist you too and to finish the works within your contractual obligations and it's live it's dynamic is changes through time and science is something specific an is some there is something definite in science but I don't think there is something definite in programming because he's dynamic and is changing and it needs to be adjusted according to you project your conditions your yeah yeah your everyday everyday issues you have two to two face when it comes to delay analysis I am as I preach that is not the dark ark that everybody says I don't think it is be cause when we provide an opinion we based that opinion on facts and on a certain model so it doesn't just come out over the opinion counts out over you know put a finger in the air there is some thinking behind it there are some mathematics behind it there is some modelling behind it yes it is difficult to understand it it is difficult to follow it I agree with that and that's why we are still a experts we tried to present our opinions in a simple way for either the tribunal or even our clients to understand it but I don't think it's a it's blackguard there is thinking behind it there is some please set mathematics behind it an and no it is not a plug art that is what I say regards
01:16:39
I I think it's it's actually his wrestlers don't understand enough current if anyone's got any questions to put them in the Chapel just have a couple more questions as I'm conscious on Karen, do you think that the DAB provisions in fidic and davr pushed enough do you think more could be done?
01:17:09 Karen
wow good question really yes I think they are pushed enough in fact I think they might be over pushed in some circumstances but on a major infrastructure project they are really important and really really constructive things to have in the contract because the focus is shifting all the time towards dispute avoidance and if you've got a standing DAAB and you've got people on the ground know about the project and are able to manage risks as they present if there is a sort of inkling about a dispute if there's a attention they can get to grips with it before it develops and that is really important so yes the other thing however with the AA bises you see when you look around the world that they are not used in countries where they hacked like for example the UK England Scotland Ireland we have start trading dictation systems and where there is a right to avail yourself a statutory adjudication which is going to be speedily enforced by the courts the desire to take the AAB option is diminished you see it also in Asia if you could Singapore an you look at Malaysia you see it in the Middle East but I think in the Middle East it's always been for me a question of cost considerations and also a failure really to understand what the AAB is using but I think it is interesting when you see saturated dictation systems present in states you see a much lower taker of the AAB provisions
01:19:00
final question for you Karen talking about some really is there is a sort of one size that all the fix all in terms of risk allocation would you think under fidic
01:19:12Karen
no Never, no I don't think there is as I say you know if there was a one-size-fits-all you wouldn't need to amend the general conditions but there will always be circumstances that will necessitate that you amend the general conditions I'm just can I just say word about you know delay analysis in the dark arts very few lawyers and judges want to get to grips with the complexity of sophisticated delay analysis and my prayer always to delay experts would really be that they'd be like Maria and they explain everything in words of 1 syllable so that they can be easily understood by tribunals and I think that's why people say it's a darker is mostly because we just simply don't understand it and getting to that mine current that you agree with yeah I know it's not a dark heart but it feels like it when you look at a complicated programme
01:20:23
just before we go back to Maria then so disan is asking Karen how to tribunals in your view look at delay analysis
01:20:35 Karen
basically we pray we don't have to wrestle with it that's the first sentence if we do is the contract is very straight forward then we hope that any delay analysis is commensurate with that simplicity and is not overcomplicated if it is very complicated we pray from Maria to come along and explain to us how it works but tribunals when you have a really complicated project and really complicated delay analysis thinking it tribunals really look to the parties and particularly to the delay expert to break him down so that they can understand anan managed the issues and reached the right result because at the end of the day tribunal always wants to reach the right result so don't make it too difficult for them to get there that would be my plea
01:21:32
OK so the last my last question then what will call it a day or call at lunchtime or something depending on where you are and then we got quite a varied audience. Maria, if there's one thing that people take away from your another genuine presentation is fantastic because it really has stepped out an absolute route map post to what people should do and follow but if they would if there was one thing for the audience to take away today from your point of view what would be your the one thing to take away or your piece of advice
01:22:12 Maria
to one of the bullet points of my slides that I would like people to take away is complete logically linked dynamic critical path analysis programmes. It's the problem that we face I gain an again and again. We don't get complete programmes. We don't get dynamic programmes. We don't get critical path analysis programmes. I think it's a problem that the project phase on when there live because you need your critical path to be able to monitor your works efficiently you need to know where is your critical path if I want to accelerate I need to accelerate on activities on the critical path, not on the other paths. so for both monitoring and planning and monitoring the works but especially for delay analysis we need complete logically linked dynamic critical path analysis programmes.
01:23:34
thank you and they are inhabit from directly from earth that's what we should all be doing do sun 22 like okay county will have a quick poppet do sums question then we will call it a day will weigh the delay analysis produced by council alright between that OK do you mean the balance do some between witness and an expert on the one hand
01:24:09 Karen
yeah I think the weight of the tribunal places either on the witness or on the expert really depends on the quality of either or both of them if a party has really competent in house team and that team has monitored project not properly and done all the things that Maria's told them to do and brought together the information which informs the delay analysis then clear the tribunal is going to take place great weight on the flatulence me expert evidence of the in house witness and then if that is supported by really competent delay analysis I mean that's the that's the win win that's where the tribunal is games followed that if there is poor recordkeeping if there is more factual evidence and then the best expert isn't going to win you the case they might save you from yourself a little bit but really if you can't win it on the facts then you're going to lose
01:25:21
no you haven't see facts facts facts records records and you need those for everything and thank you again to Maria and to Karen the brilliant presentations that you always so interesting it's it's incredibly helpful Maria yours was set out so beautifully even I I understood it mentioned to Julian who put in the chat for this raining in Grand Cayman well you know I'm sorry that she look outside my window I hope you all enjoyed it the next one is on Thursday the 16th of March be top tips on infrastructure projects over people enjoyed it again please do e-mail me if you have any questions or issues I'm always looking for more people for speakers and subjects that will be fantastic an if you can mention that you've had a very interesting morning on LinkedIn or be great particularly please do bigger Maria and Karen on LinkedIn at that I'd be very grateful but anybody who could mention just how fantastic they've been as speakers at she will thank you very much have a great rest of the day and you know we've only got one more day till the weekend so take care of and I'll see you all again very soon.
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