HOW TO REDUCE CONFLICTS ON CONSTRUCTION PROJECTS

Transcription

1 How to reduce conflicts on construction projects Slide: 1 / 12 HOW TO REDUCE CONFLICTS ON CONSTRUCTION PROJECTS DR. JUDIT GYULAY Head Of Department Department Of Construction Technology & Management Budapest University Of Technology And Economics

2 How to reduce conflicts on construction projects Slide: 2 / 12 CLAIMS AND LITIGATION / INEVITABLE PART OF CONSTRUCTION PROJECTS / AREAS GENERATE CONFLICTS: ONE SIDED CONTRACT (CLIENT-DRAFTED CONTRACT) PROCUREMENT SYSTEM (PROJECT DELIVERY SYSTEM) DESIGN (INCOMPLETE, INACCURATE, POORLY COORDINATED) SITE CONDITIONS SITE SERVICES E.T.C.

3 How to reduce conflicts on construction projects Slide: 3 / 12 ANALYSIS NOT CLEAR UNDERSTANDING PECULIARITIES OF THAT SPECIFIC PROCUREMENT AND CONTRACTING SYSTEM RESPONSIBLE PARTIES DOES NOT RECOGNIZE OR DOES NOT WANT TO ACCEPT RESPONSIBILITY LACK OF IDENTIFICATION OF OWN INTEREST leads to one-sided contract

4 How to reduce conflicts on construction projects Slide: 4 / 12 AREAS GENERATE CONFLICTS I. ONE-SIDED CONTRACT CLIENT CONFLICT CAN BE AVOIDED BY PROTECTING THE CLIENT FROM ALL POSSIBLE CLAIMS ARCITECT GENERIC SPECIFICATIONS, NO ONE IN CHARGE CONTRACTOR S CLAIM CAUSED BY UNFORESEEN OR CHANGED PROJECT CONDITIONS CHANGES IN THE WORK LATE PROVISION OF DRAWINGS, ACCESS, PERMITS LATE EQUIPMENT OR MATERIALS INADEQUATE DRAWINGS OR SPECIFICATIONS INTERFERENCE IN THE WORK ETC.

5 How to reduce conflicts on construction projects Slide: 5 / 12 SOLUTION SEEMS TO BE SIMPLE ALL PARTIES HAVE TO RECOGNISE THEIR RESPONSIBILITIES THE CONTRACTOR MUST PROVIDE QUALITY WORKMANSHIP THE ARCHITECT MUST PROVIDE A QUALITY DESIGN THE CLIENT MUST PAY REASONABLE PRICE FOR THESE SERVICES NO CONTRACT LANGUAGE WILL PREVENT DISPUTES WHERE THESE RESPONSIBILITIES ARE NOT MET

6 How to reduce conflicts on construction projects Slide: 6 / 12 HOW TO MINIMIZE CONTRUCTION DISPUTES, CLAIMS AND LITIGATION FAIR ALLOCATION OF RISK 1 st TO THE PARTY, WHO HAS DIRECT CONTROL OVER THE PROCESS THAT CREATES RISK, IF ANY 2 nd TO THE PARTY, WHO IS MOST ABLE TO PROTECT AGAINST AN UNEXPECTED LOSS OR CASUALTY, IF ANY 3 rd THE RESPONSILITY OF THE CLIENT INITIATED THE PROJECT, ENJOYS BENEFIT OF THE RESULT

7 How to reduce conflicts on construction projects Slide: 7 / 12 PARTICIPANTS OF CONSTRUCTION PROJECT THE CLIENT SHARES: ACTIVITIES RESPONSIBILITIES RISKS WITH THE PARTNERS TO CHOOSE PROCUREMENT SYSTEM AND CONTRACT FORM SUCCESS OF THE CONSTRUCTION PROJECT DEPENDS ON HIS/HER PROFESSIONAL KNOWLEDGE / THAT OF HIS/HER REPRESENTATIVES /

8 How to reduce conflicts on construction projects Slide: 8 / 12 AREAS GENERATE CONFLICTS II. PROCUREMENT / PROJECT DELIVERY SYSTEM AFFECT SCOPE, TIME, MONEY, RISK ALLOCATION AND TIGHTLY RELATING CONTRACT TRADITIONAL PROCUREMENT SYSTEM: LONG CONSTRUCTION PERIOD CONSECUTIVE ORGANISATION CLEAR CONTRACTING RELATIONS UP-TO-DATE PROJECT DELIVERY SYSTEMS: DESIGN AND BUILD, PACKAGE, TURNKEY CONSTRUCTION MANAGEMENT MANAGEMENT CONTRACTING PROJECT MANAGEMENT

9 How to reduce conflicts on construction projects Slide: 9 / 12 PROCUREMENT SYSTEM Preparation Design Tender Cost Construction TRADITIONAL SYSTEM Preparation Design MODERN MANAGERIAL TYPED SYSTEM Start Tender Cost Construction Start Construction is being started without knowing the construction costs Construction is being started knowing the construction costs

10 How to reduce conflicts on construction projects Slide: 10 / 12 HOW TO REPRESENT CLIENT S INTEREST TRADITIONAL DELIVERY SYSTEM DESIGN AND BUILD, TURNKEY PACKAGE DEAL Client Inspector Supervisor Q.S. Client Inspector Supervisor Designer Contractor Contractor Sub Designer

11 How to reduce conflicts on construction projects Slide: 11 / 12 HOW TO REPRESENT CLIENT S INTEREST CONSTRUCTION MANAGEMENT MANAGEMENT CONTRACTING CM MC Client Inspector Supervisor Client Inspector Supervisor Designer Construction manager Designer Management Contractor Contr Contr. Contr. Contr. Contr. Contr. Contr.

12 How to reduce conflicts on construction projects Slide: 12 / 12 CONCLUSION HOW TO MINIMIZE SOURCES FOR DISPUTES, CLAIMS AND LITIGATION TO CHOOSE APPROPRIATE PROCUREMENT SYSTEM REASONABLE ALLOCATION OF ACTIVITIES, RESPONSIBILITIES AND RISK fi CONTRACT RECOGNIZE RESPONSIBILITIES, ACT IN PARTNERSHIP