A declaration of war

Prime contracting is about to take over the UK. Defence Estates, the Ministry of Defence's property arm, is committed to using the procurement process on its projects across the country and at any moment NHS Estates is due to set its Procure 21 in motion (general election permitting). Prime contracting will become a major force as these two clients alone spend billions on construction every year.

The idea behind the process is to provide a single point of contact for the client, with the prime contractor taking responsibility for running and managing a supply chain of designers and trade contractors. But part of the thrust is cultural, and the introduction of prime contracting can therefore be seen as an attempt to change the adversarial nature of construction and introduce collaboration and trust.

In order to reduce conflict in the industry, it is important to have a proper and positive dispute resolution process in place. It is therefore interesting to note the different ways in which Defence Estates and NHS Estates have approached this matter in their standard contracts.

The Defence Estates prime contract has already come in for some criticism, because it has strayed from its original partnering intentions. So how does it weigh up when it comes to dispute resolution? Well, Defence Estates has decided to go for the full monty. Its model prime contract contains nine pages of close-typed text, which, although not rocket science, does need a bit of concentration to understand.

There is a final dispute resolution process that might appeal to Defence Estates – a tactical nuclear missile strike

The contract states that the parties have an obligation to use their best endeavours to resolve disputes in good faith. So far so good. This sounds like partnering. However, it goes on. Any continuing disputes will be resolved by a dispute resolution board. It comes into operation only after one party has defined the dispute in writing to the other and the parties have tried and failed to reach a settlement. The board is made up of three people, one nominated by each of the parties with the consent of the other. Both parties jointly nominate the third. Then the critical point: if the parties cannot agree on the third member of the board, Defence Estates nominates. Is this in the true spirit of partnering? You decide.

God forbid that the parties fail to settle amicably, because if they do there follows a bewildering array of options. The dispute resolution board considers the dispute and the options available to it and orders which resolution method should be adopted. These include consensual options – mediation and conciliation – and non-consensual options – expert determination and arbitration. The contract states that the dispute resolution board must strive to order consensual methods. Another critical point – there is no room for adjudication. Is this partnering? Again, you decide.

I have two suggestions for Defence Estates. First, if it must have a complex dispute resolution process, take a leaf out of the book of those who wrote the Engineering and Construction Contract and put in a flow chart mapping the dispute resolution process. It would make the words much clearer. Second, think hard about whether NHS Estates has got it right in the Procure 21 contract. Its dispute resolution clauses run to 20 lines. It calls for negotiation between senior executives, possible mediation and then adjudication. That's it! Arguably this will do a better job of dispute reduction.