Construction and Contract News 2019

We are looking ahead to 2020 and back on the past year. What has changed and what should we be looking out for in the world of construction contract and claims? We take a look in this round-up of construction and contract news from around the world…

FIDIC Construction Contracts

It’s been a busy year for the ubiquitous standard construction contract. In February the organisation signed an agreement with the World Bank to allow the use of FIDIC on all major projects funded by them. A similar agreement in July saw a partnership formed with the Caribbean Development Bank. A few days later came a Memorandum of Understanding with Chinese contractors.

It looks almost certain that if you’re working on a project with any of these organisations, the FIDIC form will appear. The form also released their ‘emerald’ edition this year, focussing on tunnelling work. This move suggests that even more projects will likely see the standard form implemented.

Disputes

There have, as always, been some high-profile disputes in the news.

Africa

In South Africa, the well-documented dispute on the late-running Medupi power station came to an end last week. Contractor, Hitachi agreeing to a $4.6Bn settlement.

India

In India, vast sums of money are cited in disputes on infrastructure projects with an average delay period of 36 months. Though information on the resolution of disputes in India is limited, we do not doubt that these large sums will lead to large disputes.

Europe

In March last year, the parties on the OL3 Nuclear power station in Finland announced they would end their long-running dispute. They aimed to complete by May this year. However, according to TVO, the operator, power will not arrive until July 2020. This means the project will arrive eleven years late. If it arrives at all. This project has been the subject of long-running disputes involving many lawyers, consultants and advocates. Dispute costs are now well into the billions.

In the UK the Crossrail debacle has continued. The operator, TfL removed the signs saying ‘coming in 2018’ at the start of the year and announced recently the likely completion date would be 2021. The disputes on this project appear have been kept behind closed doors, likely to be a result of the use of the conflict avoidance panel, or ‘CAP’.  However, it seems inevitable that much time and effort will be expended in assessing and demonstrating entitlement. Even with such an innovative solution to dispute management, lost time and cost are unavoidable.

Both these cases highlight the clear need for good contract management procedures and a strong negotiating position when it comes to the management and handling of claims. As both the recent Arcadis and HKA reports highlight – key causes of disputes and failures to resolve them are poorly drafted and inflated claims. Understanding how to present a successful claim can reduce the time and money taken to resolve it.

Looking Ahead

With some economic uncertainty, and increasing concerns over climate change, will the construction landscape change at all? Certainly, the increased use of technology has led to significant changes in the drafting of major contract forms such as the JCT and NEC. Both now include references to the use of BIM and computer-led modelling.

The solicitors at the law firm, Fenwick Elliott have written about how sustainability is addressed in construction contracts. However, they note that much of the language is aspirational, rather than enforceable.

Historically, disputes increase during times of economic change. There has also been much talk of an increase in disputes in the Gulf region. Should a rise in disputes occur, ensuring your knowledge and understanding of them is current will be critical to success.

New Courses

Here at Claims Class, we’ve spent some time developing a completely new suite of courses for you – ‘The Perfect Claim’. Poorly drafted, or inadequately expressed claims are consistently cited as a cause for costly disputes.  This new suite of training will ensure you avoid such problems. Find out more about the courses here.

Whatever happens in 2020, we look forward to keeping you updated with the latest news and knowledge on the subjects of contracts, claims and dispute resolution. We’ll keep you up to date on the very latest developments to avoid unnecessary cost and risk. We wish you every success and prosperity in the coming year and thank you for your support in the past year.