Construction Experts and Dispute Resolution Post-COVID

What does the construction industry look like as the world emerges from the COVID-19 pandemic? How has ADR been changed?

This month we hear from Anne Connolly, senior managing director at Ankura, who draws upon two and a half decades of practice to illustrate how the construction expert industry continues to develop. From the enduring causes of disputes in the construction sector to the knock-on effects of the COVID-19 pandemic and the greater technological uptake it prompted, she explores the new state of dispute resolution in global construction.

How has the construction expert market changed since you first started practising?

The construction expert market has grown significantly since I first started practising as a consultant in the UK in 2006.

At that time, the pool of construction experts that I was aware of was relatively small. Even when I moved to Australia in 2011 to a large international consultancy there was not much in the way of competition. During my seven years there, I saw significant growth in the expert market. Today, you will find just about every major construction consultancy, as well as some of the large financial services organisations, offering expert services in Australia.

One benefit of the increased competition is a better understanding of what a good expert looks like and an improvement in the range of expert services available. The obvious downside to this is a corresponding increase in so-called experts offering services at low rates to appeal to potential clients.

The one thing that has not changed significantly is diversity amongst construction expert witnesses (gender, age, and ethnicity). While I value and appreciate the business acumen of my male colleagues, it would be a welcome change to see more women experts. When I first started I knew of very few female experts and even less experts from different ethnic backgrounds. There has been slight growth over the years but, disappointingly, very little.

Asia, like the UK, has a mature expert market and during my time here since 2018 I have also seen change. With the advent of private equity investment in construction consultancies, there has been a scramble by the main players for the top talent and a renewed emphasis on the need to “grow your own” from within existing teams.

What, in your experience, are the most common disputes that arise on construction projects? What do you see as the role of an expert in the dispute resolution process?

The causes of construction disputes can vary depending on procurement methods, the type of project, the location of the project, the parties and sometimes the individuals involved.

With the advent of private equity investment in construction consultancies, there has been a scramble by the main players for the top talent.

In my experience, the issues most parties involved in construction projects fight over are the same. These are, in simple terms: delay, disruption, the valuation or existence of variations, payment (or lack thereof), design (timing and quality) and scope gaps. These issues manifest in many different forms on construction projects and, when disputes arise, establishing the facts or the most likely scenario so that liability and loss or damage can be demonstrated and apportioned is a minefield.

It is not a revelation to say that records on construction projects generally fall short of what is needed by way of evidence in a formal construction dispute. This is where construction experts can be vital. Even in cases where the records are good, experts are often needed to piece the puzzle together so that the issues can be readily understood by the legal teams and explained to the dispute resolver (typically the judge, the adjudicator, the arbitrator, the tribunal, the dispute resolution board, etc.). This is often the situation on large complex projects that are typically managed by highly sophisticated parties.

In this regard the expert’s role is twofold: on the one hand the expert bridges the gap between the parties to the dispute, the legal teams, and the judge and, on the other hand, the expert fills the gap – where an opinion is needed because there is either a lack of factual evidence available or the factual evidence is so voluminous and complex that specific expertise is needed to disentangle it and establish what really happened, how much it cost and who is (or is most likely) to blame.

In your experience of being involved in disputes across three different continents, do the most commonly occurring project disputes vary between the UK, Asia, and Australia? If so, why do you think this is?

The cause of disputes can vary but the manifestation of the cause is, in my experience, the same. One of the differences between the continents that is most apparent, from my involvement in various dispute resolution procedures in each one, is how disputes are managed, before and after formal proceedings commence.

I think a contributing factor to this is the use of standard and bespoke forms of contract on each continent. In Australia, for example, heavily amended Australian standard forms are commonplace on large-scale projects; bespoke contracts from major multinational corporations are also common. In my view this can influence how projects are administered and, therefore, how disputes (anticipated or crystallised) are managed. In the UK and Asia, it is my experience that more consideration is given to a wider range of tried and tested regional and international standard forms requiring fewer bespoke amendments, resulting in more familiar territory for the parties.

From an expert’s perspective, the jurisprudence in each continent in relation to expert evidence is another contributing factor.

What types of disputes are you seeing as a result of problems arising from the pandemic and do you think we have seen the full impact yet of these issues?

In answer to the second point first, I think we are yet to see the full impact the pandemic has had on the construction industry. I am quite surprised by this because from the disputes we have seen it is obviously fertile ground, even in jurisdictions where reasonably robust COVID-related legislation was introduced (in Singapore, for example).

The types of disputes we are seeing relate to claims for delay, disruption and acceleration. Interestingly, more recently I have seen arguments against such claims concerning one party’s management of its resources in relation to quarantine requirements and the involvement of unvaccinated labour and personnel.

What trends are you currently seeing in construction arbitration? Are these trends here to stay?

The obvious trend is virtual hearings or remote/virtual cross-examination of witnesses. One positive from the pandemic is that we are all much more used to operating in virtual or remote circumstances; our environments are set-up to deal with this, or can be easily adjusted to suit. I think this is a trend that is very much here to stay.

Since the pandemic I have been involved in hearings that took place remotely and in person. One of those hearings was for a multi-million-dollar dispute on one of the world’s largest chemical complexes, involving several experts from different parts of the world. The Tribunal’s and parties’ preference was for the hearing to be conducted in person. Whilst remote or virtual hearings may be manageable for small to medium sized matters, the preference for large complex disputes remains in-person hearings and, in my view, for good reason.

I do not think virtual hearings or evidence will replace in-person hearings and, if I am honest, it would sadden me to think that they could. In my view what this new trend does is modernise the process and provide the parties and the Tribunal flexibility to maximise efficiency and cost effectiveness where possible and appropriate.

 

Anne Connolly, Senior Managing Director

Ankara Consulting (APAC) Pte Ltd

460 Alexandra Rd, #22-05, mTower 119963

Tel: +65 62769 9050

E: anne.connolly@ankura.com

 

Anne Connolly is a chartered quantity surveyor with 25 years’ worth of international construction industry experience. She has been appointed as an independent quantum expert on over 30 occasions and given evidence under cross examination in both arbitration and litigation. Her sector knowledge ranges from commercial building, major infrastructure, mining and power projects (including renewables) to oil and gas projects.

Ankura is a global consulting firm providing services in construction disputes and advisory, data and technology, forensic accounting, financial investigations and turnaround and restructuring.

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