No argument

With five years to go before the 2012 Olympics, it’s not only top athletes who are limbering up. The UK construction industry is also readying itself for the challenge of creating a world-class Olympic Village. And the stakes are high for an industry whose track record in building large-scale sports venues has not always impressed – the Wembley Stadium project being the obvious example.

Wisely, the Olympic Delivery Authority is aiming to avoid the costly lessons learnt at the Athens Olympics, where, with weeks to go, construction projects were still unfinished. One of its recent decisions, namely the addition of ‘dispute boards’ at the outset to all contracts that are issued in connection with the games, is one extremely positive move.

The construction industry should welcome this choice and recognise that, through the boards, it has been given a further opportunity to get its house in order before starting on projects.

Cost-effective?

The aim of the dispute boards is to solve disagreements before they become an expensive and complex headache of claim and counter-claim, and to provide an on-site framework for resolving disputes in a more informal and effective manner than would be the case in court or another lengthier form of mediation.

The aim of the dispute boards is to solve disagreements before they become a complex headache of claim and counter-claim

However, if the boards are to function successfully, there are some key points to note about how they must behave. Firstly, it must be the parties themselves who decide who should sit on the board. In addition to this, all members of the board must be familiar with the project from the outset and keep themselves constantly updated as to developments on site, via regular site meetings and notes contributed by the various parties involved. Also requiring careful consideration is whether the parties decide their board will, when asked to intervene, merely give a recommendation, which is not binding. This approach relies on a large degree of trust between the parties and members of the board. Alternatively, it may be preferable to authorise a board to give a decision that will be binding on the parties until a judge or arbitrator overturns it.

Strong views

In the testosterone-fuelled environment of the construction industry, the proposal by one party to appoint an outside mediator (eg dispute board), instead of aggressively pursuing the matter in court, could be interpreted by some as a sign of weakness. However, the guidance issued by the Department for Constitutional Affairs should dispel such myths. This states in no uncertain terms that, “The courts take the view that litigation should be a last resort and that claims should not be issued prematurely when a settlement is still actively being explored.”

If a construction company goes to court without trying to resolve the dispute in some other way, the court is likely to be unkind when it comes to issues such as costs. Which should be deterrent enough to any construction company. Of course, there is nothing to prevent an outside mediator being appointed after a dispute has arisen and when no dispute board has been set up. But the disadvantage of this is that it could easily incur costly time delays during a crucial stage of a build.

In an industry where the old adage that “’Jaw jaw’ is better than ‘war war’” has not always been appreciated, the risk of not using dispute boards should convince even the most cynical of stakeholders that “jaw jaw” is not a sign of weakness.