Does One C.A.P. Fit All?
On Monday 29th January 2018 the Conflict Avoidance Pledge was finally launched at the Institution of Mechanical Engineers (due to a technical malfunction at the originally planned venue at the Institution of Civil Engineers).
“The Conflict Avoidance Pledge is as follows:
We believe in collaborative working and the use of early intervention techniques throughout the supply chain, to try to resolve differences of opinion before they escalate into disputes.
We recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of identifying, controlling and managing potential conflict, whilst preventing the need for formal, adversarial dispute resolution procedures. We commit our resources to embedding these into our projects:
- We commit to working proactively to avoid conflict and to facilitate early resolution of potential disputes.
- We commit to developing our capability in the early identification of potential disputes and in the use of conflict avoidance measures. We will promote the value of collaborative working to prevent issues developing into disputes.
- We commit to work with our industry partners to identify, promote and utilise conflict avoidance mechanisms.”
The event Chaired by Rudi Klein with a keynote speech delivered by Mike Brown of Transport for London extorted the benefits of the innovative process created by the Pledge; namely, the Conflict Avoidance Panel (CAP).
Representatives of Network Rail discussed their case study examples and the costs per CAP were stated as being circa £12,000.00; but we were not informed of the total value of these disputes.
The benefits extolled were the proactive, collaborative nature of the CAP process; the use of shared feedback and the ownership of the CAP process by the participants to achieve an agreeable resolution; as well as the use of industry experts.
My question is how we can translate these benefits into the Small Medium Enterprises (SME) sector?
I will discuss this from the perspective of SME’s involvement and from the perspective of Local Authorities who procure SME’s. The hardest hurdle was mooted to be the change required in the behavioural and emotional culture of the industry as a whole.
The Pledge is considered to be a mind-set and a CAP is not the precursor to Alternative Dispute Resolution (ADR) or litigation.
“The policy is voluntary and self-assessed.”
Therefore, it requires all Pledges’ to accept at the outset of any project that they will submit to the process and outcomes in order to obtain a quicker and independent resolution.
Note that this is a non-binding resolution and not a binding decision. The resolution is entirely for the participants to accept or decline. However, it is assumed that the process is intended to provide an acceptable resolution to all participants.
If a resolution cannot be found, then the process may also be able to assist with identifying the most reasonable route to resolution via a form of ADR for the participants to consider. However, as noted above this process is not a precursor to ADR or litigation, so any resolutions or documentation would, I assume, not be allowed to be used in an ADR forum or Court. If this is the position, then this would further enhance the premise regarding the change required in the cultural mind-set of the industry as mentioned above.
SMEs and Local Authorities (LAs) that procure SMEs will therefore need to address whether or not this process is something they will require for their procurements. If adopted by the LAs then the SMEs would have to submit to the process in order to ensure they are provided with opportunities to tender.
The set-up of CAPs could be considered similar in type to a Dispute Review Board (DRB); wherein recommendations are provided by a Panel in respect of disputes. Recommendations may be voluntarily fulfilled by the participants but they are not required to do so under the ICC Dispute Board Rules (Article 4.4).
The CAPs, however, are completely different in function. DRB’s have a basis in contract; either by adopting the standard dispute resolution clause position under FIDIC and NEC4 or from the use of bespoke contract clauses incorporating the ICC Dispute Board or RICS Dispute Resolution Service provisions, for example). CAPs are voluntarily adopted by an organisation or participant as part of their core values and are not contract specific.
“CAPs are project focussed and not contract focussed”.
DRBs may be established from the appointment of the Panel once the building contract has been signed or they may be established by a Party way after the works are on site and they are not necessarily engaged early enough in the project. The Pledge is accepted from the outset and therefore the CAPs would be arranged from the beginning and will always be the accepted forum for proactive conflict collaboration.
The case of Peterborough City Council v Enterprise Managed Services Ltd  EWHC 3193 (TCC) is noted here in that this established that a DRB process may not always be strictly followed due to the availability of arbitration or litigation clauses within contracts. CAPs would always have to be used in the first instance and would not be intended as a precursor to ADR or litigation.
CAPs could therefore provide certainty of process and cost in the first instance. Once the above process is understood and accepted then the mind-set of the industry will change accordingly; as this process can provide cheaper and quicker project solutions, which are not comparable to contract borne ADR or litigation.
I believe that CAPs could be used by SMEs on their projects. Whether or not the values of a particular SME dispute will allow an SME to accept the costs and be able to utilise the CAPs will need to be assessed and reviewed as this Pledge and the CAPs process develops in order to find an appropriate level whereby the CAPs will be of financial and practical importance.
The costs of CAPs are to be shared equally by all participants.
A concern here is how Main Contractors or Consultants will offset these costs and pass these down their supply chains, such as they do with Bonds and Insurance, etc.
LA’s may be able to utilise the Pledge and CAPs as part of their Selection Questionnaire (SQ) Process. However, this suggestion may be considered unreasonably restrictive and breach current EU legislation concerning competition within the procurement process. A different suggestion would be a Procurement Policy Note (PPN) that establishes that all LA’s allow for the Provisional Sum of say £12,000.00 into their feasibility Works costs so that the process and CAP members will be taken into consideration from the earliest project stages.
In order to gain popularity and confidence in the use of CAP members, further considerations are:
The levels of qualifications required to be a CAP member –
- Will there be a minimum standard? I.e. professional qualifications i.e. RIBA, RICS, Solicitor, Barrister, Judge, etc.
- Will there be a formal CAP qualification?
Independence of the CAP member –
- Will there be made available a list of previous appointments so that participants can assess the impartiality of the process?
Experience of the CAP member –
Transparency of the CAP member –
- How will the CAP members communicate to participants?
- How will the CAP members provide resolutions?
- How will the fees of CAP members be calculated, assessed and monitored?
- How will the selection of CAP members be decided by the appointing body?
Locality/proximity of the CAP member –
- How will the proximity of CAP members be determined in respect of the project and participants?
- How will the service be accessed? I.e. facetime, skype, video conferences, emails, meetings?
Competency of CAP member –
- How will the competency of CAP members be assessed and monitored?
- Will there be a set of Key Performance Indicators (KPI’s)?
- Will references or testimonials be made available?
- Who will manage the process of verifying the competency and adequacy of CAP members’ services?
It is an exciting and promising launch that promotes outwards thinking in the industry to assist with the delivery of projects collaboratively.
All views expressed in this article are those of the author Charlie Hobson and do not represent the opinions or policies of Playle & Partners LLP, RICS, The Conflict Avoidance Pledge or any person(s) or entity whatsoever. Playle & Partners LLP are proud supporters of the Conflict Avoidance Pledge.