Construction contract FIDIC 2017 notice of claim

How Education and Training Avoids Disputes

I don’t usually have much to say about education and training or attempt to promote our Claims Class courses through our blogs. But, this month I am going to make an exception and for good reason. Recent reports demonstrate that education and training will avoid time-consuming and costly construction disputes.

HKA’s report, Claims and Dispute Causation – a Global Market Sector Analysis and ARCADIS’s Global Construction Disputes Report 2019 are both pretty scathing. Both point to a lack level of knowledge exhibit when it comes down to contractual matters and claims.

Between them, HKA and ARCADIS cite the following as major causes of disputes:

  1. Contract requirements were poorly drafted.
  2. Errors or omission in the contract documents.
  3. Contract management and/or administration failure.
  4. Failure to serve appropriate notice under the contract.
  5. Parties failing to understand and/or comply with its contractual obligations.
  6. Claims were spurious, overinflated, opportunistic and/or unsubstantiated.
  7. Level of skill and/or experience.

ARCADIS say that the average dispute value globally in 2018 was around US$20M and the average length was 17 months. Dr. Nael Bunni advised at the FIDIC conference that the cost of arbitration is between $150,000 and $200,000 per day. So if an average arbitration lasts 10 days, we are looking at a cost of  $1.5M to $2M to resolve the dispute. The Dispute Review Board Foundation calculate that this may be 10-15% of project value. It doesn’t take a genius to work out that if a project ends up in dispute, any profit margins will be eaten up by the dispute itself.

If we revisit the 7 major causes of disputes listed above, we can see that none of these relate to design, engineering or construction problems. All seven relate to poor contract management and administration. In fact, ACADIS’ report says that “Owners/Contractor/Subcontractors’ failure to understand and/or comply with contractual obligations became the top cause of construction disputes for 2018”.

So, what can companies and individuals do to fix this problem?

Well, I would suggest that addressing the last item on the list i.e. “Level of skill and/or experience” would fix all the other problems.

How can we ensure then, that companies and individuals increase their levels of skill and experience? Well, that’s where investing a small amount of money in staff education and training will pay dividends. It doesn’t take long for increased skills and experience to lead to increased efficiency. This in turn will show up on the bottom line of a project. Individuals who can demonstrate to a company that they have a high level of skill and experience are assets. Individuals will command more senior positions and higher salaries than those without such skills.

Now for the Claims Class promotion that I promised earlier. If you are looking for training for yourself or your team, there are a number of ways we can support you:

  • delivering education and training to companies and individuals:
  • training on the FIDIC forms of contract, claims, contract management and contract administration:
  • training through in-house training workshops, public workshops and self-study e-courses;
  • deliver courses that are created, presented and tutored by experts, not only in their specialist fields, but in training and education;
  • have courses to suit all levels at prices to suit all pockets and budgets;

We have trained hundreds of satisfied construction professionals. If you want to become one of them, take a look at our e-courses or in-house training options or get in touch today to find out more about our personalised courses.