Disputes in Infrastructure & How You Can Manage Them

DISPUTES in the infrastructure sector can occur for a variety of reasons including:

Project uncertainty
Unrealistic expectations
Project complexity
Process problems
Incomplete documentation
Stakeholder disagreements
Poor communication
People management issues
Opportunistic and vexatious behaviour.

No one sets out to become embroiled in a dispute, but over the course of an infrastructure project lifecycle a dispute is where many of us will end up.

Instead of focusing on how to avoid infrastructure disputes (sometimes, you just can’t), we will instead centre this article around ways in which you can manage them if they do arise.

Balance Advisory are experts in offering sophisticated offsite infrastructure advice and part of our suite of services is the capacity to assist in negotiation, risk mitigation and dispute resolution. We have a proven track record of representing parties in substantial and highly-complex disputes across Australia and beyond.

Dispute resolution refers to the processes by which disputes are brought to an end via:

negotiated outcome – where parties agree to resolve the dispute between themselves
mediated outcome – where parties use the services of an independent mediator to help them arrive at their own agreement, or
arbitrated or adjudicated outcome – whereby an independent arbitrator or court determines how the dispute is to be resolved and makes a binding decision or order to this effect.

The method for resolution we outline today will take into account all of the above.

At Balance Advisory, our best practice model in dispute resolution includes ensuring parties reach a fast, fair, confidential and transparent resolution process.

Resolving disputes in a timely manner is key, as their existence raise many potential costs of the monetary and non-monetary variety, including:

Legal fees
Productivity loss
Relationship loss and
Reputation damage

Over time in this area of dispute resolution specialty, Balance Advisory has learned a lot about the dispute resolution landscape and we’d love to share our 5 Top Tips for Managing Infrastructure disputes with you.

Define the dispute

This might sound like a no-brainer, but you’d be surprised how often parties get a fair way down the road in dispute territory before both truly understand the crux of the dispute.

Best practice dispute resolution requires both parties to understand every detail of the dispute. Ask yourself:

How and when did the dispute arise?
What grounds are the dispute built on?
Which stakeholders does the dispute involve?
What legal or regulatory laws or standards does the dispute involve?
What are the short-term effects of the dispute?
What are the long-term ramifications of the dispute?

It is useful to ask yourself all of these questions and jot down the answers.

Are there any of these questions you can’t answer?

Make sure you seek immediate clarification.

As a party to the dispute it is your responsibility to ensure you gather as much information as possible to ensure you have a clear understanding of the dispute.

It is possible you may need to engage a negotiator to assist you to do this, even in the early stages.

Unfortunately, things are most hostile as a dispute is getting off the ground as often at this point the communication between parties has completely broken down.

The more information you have about all sides of the conflict, the better placed you will be to ensure its speedy resolution.

Brainstorm Solutions

As you pick apart the parameters of a particular dispute the possible solutions to this issue may present themselves to you immediately.
Sometimes, the solution to a dispute is clear from the outset.

If this is the case, list possible solutions and how they could be implemented to ensure a speedy dispute resolution.

Sometimes, disputes are nothing more than a misunderstanding, and one party is often happy to negotiate in a manner that ensures the speedy resolution of the issue and the immediate return to status quo.

Unfortunately, things are not always this simple.

A professional dispute resolution specialist can assist you to consider possible solutions to the dispute problem if there is nothing obvious at the outset, or if the obvious solutions are inappropriate.

Finding the right solution to a dispute will minimise the impact of the dispute on all parties, taking the requirements of each stakeholder into careful consideration and ensuring a transparent procedure for resolution.

Finding solutions will require you to look beyond the incident that caused the dispute initially.
The source of the conflict might be a minor issue that has been allowed to fester and ultimately led to a visible and disruptive result.

Be sure not to enter into expedited solution procedures if they’re not in the best interest of your company or stakeholders.

While it’s uncomfortable to be embroiled in dispute, it is important you protect your personal and business interests at all stages of the resolution process.

Initial Negotiation

Once you have a good handle on the dispute specifics and have brainstormed some solutions to solve this problem, it is time to begin negotiations.

This will usually involve meeting with or writing to the other party to communicate your intention to begin resolving the dispute.

If you have not asked for help from a third party, this is the time when that will become an obvious necessity.
The first step in initial negotiation is to get each parties viewpoint, in writing, and then to request possible solutions, in writing.

Step 1 and 2 here will have prepared you to complete your side of this requirement swiftly and comprehensively , but pay attention to verbal and nonverbal nuances if you are meeting with the other parties at this stage.

The aim of initial negotiation is to stop fighting and start cooperating, even if you do not know what type of agreement or solution you will be reaching yet.

Initial negotiation is for steering the discussion away from what is wrong to what could be done to fix it.

Mediation

This can be a lengthy and complicated stage.
After initial negotiation with the other party you should have a very good understanding of what their issue is and how they see it fit to be fixed.
This may include many meetings in which both parties listen to the other side’s most acceptable course of action and point out the merits of their solution ideas.

Be sure to consider things from both perspectives, but not at the expense of your own business priorities or safety.

There will usually be the need for greater cooperation and collaboration at this stage and tempers can often flare as this scenario unfolds.
Be prepared for a bit a of a “fight”, but be certain to remain fair and professional always.

It is possible this phase will also require formal mediation and the inclusion of legal representatives – possibly even court appearances.
Be sure you surround yourself with assistance from the correct professionals – this isn’t something you can tackle alone.

Agreement

This is when we all shake hands and accept one of the alternatives presented in Step 4.

The goal is to reach a negotiated agreement that both parties have had to give a little to settle upon.

Usually, the agreement phase will include plenty of written contracts and clauses for you to sign, again, ensure all of these have been professionally vetted, always.

Be sure in the Agreement phase to pay close attention to specified timeframes as certain offers made by parties will only be valid for a certain period of time.

If you feel this timeframe is not sufficient, ask for more time via the correct channels. At times, another stage of mediation is offered required here as paperwork is shuffled around and the finer details of agreements are knuckled down.
Ensure the Agreement you reach assists to prevent future conflicts from arising in this space.
Adding a clause about future conflicts can be a really simple, yet effective, way to ensure you do not become involved in similar disputes with this stakeholder in the future.

There is the need for more cost-effective and time-efficient resolutions of infrastructure disputes, and the only way these can be ensured is if they are facilitated by experts.

Disputes that are not handled professionally grow in severity and become more costly every day. These disputes can be very damaging to project outcomes and the reputation of you and your business.

With professional dispute resolution you can tackle conflict while it is still small and manage your cost risk from the outset.

Correctly handling disputes requires parties to mitigate risks and ensure the bankability of their projects by working together fairly and professionally at all steps in the process.

Disputes in Infrastructure & How You Can Manage Them

Define the dispute

Brainstorm Solutions

Initial Negotiation

Mediation

Agreement

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