Collaboration, what does this mean?
The Oxford English Dictionary gives us two definitions, ‘united labour, co-operation: esp. in literary, artistic, or scientific work’ and ‘traitorous cooperation with the enemy’.
In a world where Covid-19 restrictions have impacted every individual in the UK, how can we collaborate by implementing co-operation into our business but avoid this being perceived as traitorous co-operation with the enemy?
In May 2020, Government issued a guidance note encouraging parties to contracts to act responsibly and fairly, support the response to Covid-19 and protect jobs and the economy. From this, organisations and individuals alike questioned – how does this affect my business practices? In theory, I’m sure we would all like to think we act responsibly and fairly in our business, but in reality, is this always the case?
In the construction industry for instance, the contract tendering system encourages contractors to submit the cheapest bid in order to secure the work. This inevitably leads to some aspects being overlooked or under quoted, disputes arising, and further costs being accumulated in order to resolve these disputes. But as those who work in the industry know, this is nothing new! Construction disputes are commonplace, often predictable, and are frequently relationship destroying. In public projects, they can cost the UK taxpayer considerable money which could be better spent elsewhere.
So, how can we avoid this?
One way would be to scrap the cost focused tendering system and enable contractors throughout the whole industry to submit bids which were realistic, achievable, and free of predictable disputes and for contract holders to accept the best bid on its merits not the bottom line. But let’s be honest, this is aspirational and while it may eventually become routine in the industry, it’s not going to happen soon.
What else can be done?
All construction contracts have adjudication available to them as a recourse to settle a dispute. Having been established over 20 years ago, this is now another inevitability for most construction contracts and a process which many will agree works, but does it? Adjudication can only work when a dispute has fully crystalised and by that point relationships have already started to disintegrate, works may have stopped, and parties have entered the adversarial arena. Even when a decision has been issued it is highly likely one party will have ‘lost’ and the relationship between the two parties will never be the same again. Would a more collaborative approach earlier in the process have worked better?
The RICS Conflict Avoidance Process (CAP) is designed to help parties work together to identify, manage, and resolve conflicts (or potential conflicts) openly and honestly, at an early stage. Parties to a contract agree to alert each other to a problem as it begins to materialise and use CAP as a method to avoid the problem getting worse and ending up being channelled towards formal confrontational procedures such as adjudication, arbitration, or litigation. This can significantly reduces costs as fees are not accumulated to the same scale, while relationships and reputations are preserved and works continue.
How does it work?
The process involves the nomination of an impartial CAP professional who is highly experienced and knowledgeable in the subject matter which is at the heart of the disagreement between the parties. The CAP professional will be chosen from a pool of professionals the parties have all agreed upon. The role of the CAP professional is to inquire into the disputed issues and provide a report with recommendations on how they can be resolved. These recommendations can be implemented (on agreement from both parties), used in further negotiations or set aside (if the parties so choose). CAP does not affect the right to adjudication, arbitration, or litigation, as if after the CAP is complete and the parties still can’t find a solution, then parties are free to explore a binding option for the dispute to be resolved.
To set up a CAP costs the parties nothing and they only pay for the process when it is used, it just takes a clause in the contract. The CAP professional’s fees are agreed with the parties beforehand. This enables the parties to understand and retain control of the costs during the Conflict Avoidance Process.
However, for this process to work, it needs employers and contractors to take a leap and try something new. In this new world where the everyday practices of every individual have been turned upside down and shaken up, can we try a little collaboration, co-operation, and teamwork to support each other? If we don’t, will the industry survive?
Sounds simple right? Why wouldn’t you at least try it?
For further information or to talk to someone further, please contact drs@rics.org or visit the website.
