Unravelling Risk: Reforming the design, construct & litigate cycle
Consult Australia’s Unravelling Risk explores the underlying reasons for disputation in Australia’s construction industry, especially as it impacts design, advisory and engineering consulting businesses.
It is for strategic leaders across government and the constructions industry who want a productive industry underpinned by a collaborative culture where model client behaviours are the norm.
The report reflects Consult Australia's focus and depth of experience over 70 years on critical contracting and risk issues.
With projects growing more complex over time, the knotty issue of risk has become more important, but with no improvement in our management of risk. This is seen most starkly in design and construct contracting, which often results in a design, construct and litigate cycle. Consult Australia proposes five reform threads to unravel the current situation, all underpinned by collaboration and transparency.
Every party has a role and Consult Australia is asking our industry colleagues and government stakeholders to all work together to unravel risk.
Consult Australia proposes five reform threads to unravel the current situation, all underpinned by collaboration and transparency: scoping for success, valuing variations, transparent timing, refining the rules and resolution over disputation.
Both industry and government stakeholders are encouraged to consider which reform thread would be most useful in the circumstances to alleviate disputation in the market on their projects.
Change in scope is a leading cause of claims. Collaboration and transparency between parties at the earliest stages of a project and program scoping could deal with a significant volume of unnecessary claims.
Claims for ‘design error’ are often linked to changes between the tender and final design phases. Variations should be about achieving the best outcome for the project. An early warning approach to issues would assist all.
Claims for delay are frequent, with strict liability in contracts working against a collaborative approach to resolve issues to get the project ‘back on track’. Therefore transparent timing would assist all parties to work together.
Unreasonable claims can be limited by refining the misleading or deceptive conduct provisions of the Australian Consumer Law and amending the civil liability laws in ACT, NSW, NT, SA, Tas, Vic and WA to explicitly prohibit contracting out of proportionate liability.
Resolution of issues rather than disputation is best for project, relationship and business outcomes. There are a number of ways resolution can be prioritised over disputation, including the use of dispute boards.