Many disputes in the tunnelling sector arise from site and ground conditions not anticipated by project teams at the time of tender submission. This can be due to many reasons, including contractual ambiguities that lead to different interpretations between the parties, or simply not having a good understanding of the conditions of the contract.

In the less competitive environment of a few decades ago, disputes were fewer. Today, contractors would not be able to secure many projects by assuming and planning for worst-case scenarios.

Estimates are created with future costs in mind with some calculated optimism, and count on a fair reimbursement if unforeseen circumstances come to light.

At first, this looks a straightforward deal, but what is (or is not) considered ‘unforeseen’ is the root of most disputes.

This is especially common in the field of tunnelling, where the exact nature of the ground is never fully known at the time of contract.

The Dispute Resolution Process (DRP) consists of various individual processes designed to resolve disputes that arise out of these situations. These methods, in a nutshell, are intended as a faster and less costly substitute to the litigation and court system.

In most cases, disagreements involve a difference of opinion as to the payment or compensation required under the contract, or the time required to complete the job. These ‘disagreements’ are generally referred to as ‘claims’. A ‘notice of claim’ needs to be submitted as soon as possible after the occurrence of the disputed circumstance.

The tangible activities and events in the DRP range from informal meetings of the parties (as normally happens during project administration) to fully structured hearings in the presence and chairmanship of an outside neutral party (assuming earlier processes to resolve the dispute were not successful). Some of the typical stages of a DRP include:

  • Negotiation as a process where parties in a dispute reach a settlement between themselves, and
  • When negotiations are reached through discussions made between the parties or their representatives without involving neutral third parties.

Mediation is the process in which a neutral third party assists in reaching a solution. This third party is called the mediator who facilitates communication between the two parties. The mediator manages the communication process between the parties fairly, honestly and impartially. Their job is not to take sides, nor give legal advice, nor provide counselling. Also, they do not act as judges or arbitrators.

Arbitration refers to the process where the decision is made by a neutral third party. The arbitrator hears the case as presented by the parties in dispute and makes a decision or award in the same way a judge would. Awards are generally final and binding. An award may be filed in court and enforced as if it were an actual court judgment.

Projects can reduce the possibility of disputes arising by:

  • Significant upfront planning before the start of work;
  • Through thorough understanding of the contract;
  • Negotiating clauses that might be considered murky or potentially problematic;
  • Diligence in pre-construction investigations, including drafts of estimates and schedules;
  • Preparing schedules that are realistic and executable, and
  • Planning for delays and disruptions. Consider these quick tips to efficiently resolve disputes:
  • Successful negotiation requires preparation;
  • Make sure that the appropriate decision-makers are in the room;
  • Nobody wins a negotiation by steamrolling the opposition;
  • Disputes are won by jointly seeing the wisdom of a fair resolution;
  • Tunnel construction disputes often present an array of sub-issues;
  • Seek agreement on the framework for discussions;
  • Learn from the process – no two negotiations are precisely the same, and parties can also learn about the needs and capabilities of their organisation, and
  • The DRP can be a tiresome process, so stay positive.