The saying “prevention is better than cure” would have held true in many of our recent cases. Adhering to thorough Contract Administration principles is arguably one of the most effective ways in preventing and dealing with construction disputes. How can we use the “back to basics” principles to prevent the “wheels coming off” at a high speed ?”
Northcroft Middle East continues to deliver concise and pragmatic guidance through delivery of its ‘Contract Management – Back to Basics’ workshops. This series of workshops has been developed and provided to ensure our clients effectively maximise their contract administration and project activities, in such a manner, that they preserve their contractual entitlements and minimise their exposure to commercial disputes.
Johann Rothmann offers this month’s Straight from the Horse’s Mouth ‘Back-to-Basics Insight’.
Johann is currently leading Northcroft Middle East’s ‘Post Contract’ division, with more than 25 years of experience in estimating, project controls, contract drafting and negotiation, contract management and an integral driver behind Northcroft’s claim and dispute resolution services, holding a Bachelor of Science degree in Quantity Surveying, a Post Graduate Diploma in Project Management and as well as being a Registered Professional with the South African Council for the Quantity Surveying Profession (PrQS), he also is a member of the Royal Institution of Chartered Surveyors (MRICS),
Having recently provided key support and guidance on a number of locally based disputes in excess of QAR 1.8 bn, it was evident to all, that if both the Contractors and Clients involved “kept their eyes on the ball” it could have prevented situations that “spun out of control” and created a “snowball effect” that had near disastrous consequences for the parties involved.
The saying “prevention is better than cure” would have held true in many of our recent cases. Adhering to systematic Contract Administration* principles is arguably one of the most effective ways in preventing and dealing with construction disputes. How can we use the “back to basics” principles to prevent the “wheels coming off” at a high speed?
(*Note: Contract Administration and Contract Management is interchangeable for the tips shared below)
Our ‘Top 10’ Contract Administration Tips:
1. If you fail to plan you are planning to fail.
Proper planning from conception of the project will aid and assist you to minimise disputes. The application of Project Management principles is probably not the best way to start off with – it’s the only way! Particularly give attention to the following:
• Realistic time planning (Time)
• Design (Quality)
• Detailed cost plans (Money / Cost)
• Risk allocation – appropriate form of contract
2. Lack of planning on your side does not justify a crisis on my side. Lack of cost, time and quality planning will create a crisis, usually for the wrong party.
3. If you pay peanuts you get monkeys. The importance of competent CA’s and continuous professional development of key staff should not be overlooked or viewed as a “nice to have”. You would be well advised to use somebody that has been around the block.
4. The bluntest pencil is better than the sharpest memory / The pen is mightier than the sword. Record keeping is key. Record keeping is key. Have we mentioned that keeping records of everything is key? The defence rest Your Honour.
5. One size fits all? Not quite, in fact the opposite is true for construction projects. Contract and project execution strategy should be unique. Correct selection of the form of contract and risk allocation, to the party that can manage it best, will go a long way to reduce disputes. Onerous risk allocation benefits nobody in the long run.
6. Speak or forever hold your peace – He who asks is a fool for five minutes, he who does not is a fool forever. Just realise the importance and benefits of using the RFI systems. Use it or lose it …
7. Lord Byron’s quote: “Truth is best discovered by powerful statements on both sides of the case”. If you have a valid claim, it is important to provide a well-structured claims document – don’t expect a fair and reasonable Engineer’s determination for a hastily put together claim. GIGO (garbage in garbage out)
8. The only constant in every project is change. Effective change management does not require explanation. If changes happen, discuss, notify, record (!) and manage the process.
9. Cash is King. Payment application process and managing cashflow. Using the quality system and reducing NCR’s can improve your cash flow.
10. Time is money. Delays and disruption cost money … for everybody.