Construction disputes by their very nature lend themselves to arbitration as opposed to other means of dispute resolution. This is because they often involve international contracting parties and complex disputes over factual issues which require expert consideration (which parties often wish to keep confidential). They also invariably involve large volumes of material and evidence (factual and expert) to make sense of what actually happened on site.
While no project party wants to end up in arbitration, failure to implement systems and processes to effectively capture and store project documentation at the outset can lead to unnecessary delays in the event that proceedings do become necessary.
In construction disputes, a significant amount of legal time (and therefore expense) is often spent simply locating and trying to understand the relevance of key documents due to poor document management practices throughout the project lifecycle. In general, this is compounded by the fact that unresolved disputes are typically referred to arbitration at the end of a project when key project personnel – who often have the best understanding of what happened on site – have moved on to other roles.
Effective document management during project delivery can avoid this issue, as well as:
- reducing the risk of claims being time barred or otherwise invalidated because of non-compliance with contractual notification requirements; and
- dramatically cutting down the legal time involved in preparing and reviewing documents for discovery.
This article provides some practical tips for contractors and suppliers on how information can be stored and managed throughout the project delivery phase in order to ensure that a project, and any dispute resolution, can be completed smoothly.
Capturing information to file or respond to claims in timely manner
Construction projects, particularly in the energy and infrastructure space, can involve remote and extensive sites. Site teams that are performing the work – and are therefore aware of what is going on in a day-to-day sense – are often physically separated from the personnel administering the contract.
This is often the case for many energy and infrastructure projects – for example, in Southeast Asia, where a contractor may have its contract administration team in its head office in Singapore or Bangkok managing its projects throughout the region. Even on more traditional building projects, such as apartment tower complexes, the team administering the contract may be based in – and rarely leave – the site office.
The result of this physical separation is an information disconnect between those who know what the issues on site are and those who have the capacity to progress any claims relating to those issues through contractual dispute resolution mechanisms. Where applicable, this can result in claims becoming time barred and a loss of entitlement to make a claim at a later date.
It can also mean that the information relevant to that potential claim is simply never captured – for example, a photograph is never taken evidencing the issue as it existed at that point in time, and once it is discovered that a claim could be made, that opportunity is lost because work has further progressed.
The key then is to make the transmittal of information from site to those people progressing claims as quick and efficient as possible. This can be done by physically locating the teams together or, where this is impossible, by holding regular meetings or catch-ups to discuss the progress of work and ensure that the project is being delivered in an agile fashion.
Contractors and suppliers may also wish to consider using technology to facilitate this information flow – for example, apps which quickly communicate information or tablet devices which the site team can use to take photos that are automatically geolocated and can be centrally stored for use by the administration team.
It is critical to store information centrally and logically. Without a document storage protocol, those on site will store information haphazardly on personal computer drives, in hard copy notebooks, in the same way in which they stored information on other projects (which may not be the same as others) or not at all.
Folders should be set up on a shared or project-specific drive which separate:
- claim documentation by claim number. This is important as it will save the greatest amount of legal time when drafting pleadings and assessing the merits of various claims;
- photographs by date (where possible, photographs that are taken at the same location at regular intervals of the project should be grouped to show progress over time in specific key areas);
- documentation such as delivery dockets and bills of lading by supplier in date order;
- equipment data that shows the dates on which various equipment was on site and the locations and usage of various equipment (where relevant); and
- daily site diaries of key personnel, which should be scanned and uploaded at the end of each week.
Transitioning information during dispute resolution phase
It may seem counterintuitive, but involving a legal team to help manage the transition of information prior to the end of the project delivery phase can save time and costs in the long run. This is because the legal team can assist in identifying:
- key potential witnesses and the physical location of any information that they hold. This means that personal laptops, external hard drives and hard copy notes can be captured for subsequent witness statements in the arbitration; and
- any obvious gaps in information which can be corrected before those with knowledge of the project leave the site. For example, equipment logs may be able to be obtained from suppliers prior to them being paid at the end of the job, but once they leave the site those records may be lost.
When it comes to construction arbitration, hoping for the best but planning for the worst at the outset of a project will save participants significant time and money when it comes time to participate in the arbitral process. Establishing clear guidelines for document management and information collection is critical to this process and will assist contractors and suppliers in making and evidencing claims in arbitration.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
