Construction and Engineering Mediation

Disputes in the build out of complex projects are driven by economics. At its most fundamental a contractor needs to make a profit or at least cover its costs. An employer needs to build out its concept asset at least possible cost to ensure the planned return on investment. The two agendas often conflict where unforeseen circumstances require changes to design and execution involving both time and cost consequences. Many disputes are caused by immature design or a failure to implement a design freeze early. Misalignment between budgets and progress payments can equally affect a project as can imprecise contract terms giving rise to differences in interpretation. Whatever the cause both parties are best served by working together to resolve issues as they arise.

The reasons giving rise to conflict in construction and engineering contracts are manifold and arise out of complex factual and technical matrices different in each case. By the time your dispute reaches arbitration or the door of the court, substantial resources sounding in costs approaching millions of dollars will have been invested in construction claims consultants, technical experts, and lawyers not to mention the invisible cost of internal resources which could otherwise be deployed in profitable enterprise. The arbitration or court process will produce a winner and a loser having decided issues obvious over many years in a matter of weeks. Squeezing 3 to 5 years of construction history into a 2 week hearing requires an extreme form of natural selection necessarily producing an edited version of events which may or may not be compelling.

There is another way. Mediation is said to produce a win-win with both parties resolving their competing agendas in a way which allows then to return to the business of making commercial returns from their business without the distraction of litigating history. I prefer to think of the solution as being more an acceptable lose-lose where each party is content to compromise within its comfort zone to produce a settlement freeing both parties from the chains of litigation.

As corporate counsel confronted by many expensive disputes over a 40 year career I have often asked the following question when making main board presentations on complex disputes. Explaining to members of the board that this dispute will cost at least a couple of million dollars in the current year with the cost is likely to increase steeply towards the trial of the issues unless a settlement can be reached. “Do you want me to give this money to the lawyers or can I use these resources to find an acceptable settlement?”. Mediation attempts to resolve a dispute in a similar way. It is based on collaborative working.