Panel Members PMCA Engagement Friday 23 rd August 2019

1. Panel Members PMCA Engagement Friday 23rd August 2019 D I S P U T E S Jolanta Skawinski, FIEA, CPEng. Bob Baird, AM Directorate of Program Assurance

2. Panel Members PMCA Engagement TODAYS PRESENTATION: CFI Disputes – causes and trends - recent increase in number of disputes - Designers, Contractors, Inspections, PMCA, CFI staff Alternative Dispute Resolution Process expert determination independent expert executive negotiation mediation arbitration Lessons Learnt and if we do nothing PMCA - roles and responsibilities Programing Time Bars

3. Panel Members PMCA Engagement DISPUTES - engineering, contractual, mixed Design issues: • poor quality design, incomplete design documentation • design based on wrong assumptions (geotechnical investigations) • lack of quality control/senior design engineer’s supervision • change of staff from senior to junior half way through the design • compliance issues at the design stage • Design Certification – issues Construction: • lack of Construction Program • poor workmanship/ quality issues • adversarial approach • compliance issues at the construction stage • poor construction management • Inspection Certification - issues Inspections: • inadequate inspections by designers, PMCA, builders - during construction PMCA: • poor contract management (PMCA) - MALADMINISTRATION CFI: • lack of continuity of involvement in the project • CFI staff emotional attitude vs contractual approach

4. Panel Members PMCA Engagement Alternative Dispute Resolution (ADR) Process - Section 15 in the Construction Contracts (HC, MCC) - Section 12 in the Consultancy Contracts (PMCA, DSC)

5. Panel Members PMCA Engagement DIRECTION ISSUED BY PMCA - EXPERT DETERMINATION REQUIRED 1. PMCA issues direction to the builder 2. There are two options for builder: accept the direction and perform the task or say - this direction constitutes variation 3. PMCA’s response could be: “yes, this direction constitutes a variation” and issues a VPR or a VO or “no, this direction doesn’t constitute a variation”, perform the task 4. Builder issues “Notice of Dispute” 5. EXPERT DETERMINATION – agreed or not

6. Panel Members PMCA Engagement INDEPENDENT EXPERT • Expert’s appointment -described in Contract Particulars (Tender stage, Contract Particulars): • agree on Expert at contract award stage, or • Expert to be nominated by the President of ResolutionInstitute (several options will be nominated) • Two parties need to agree with the proposed Expert

7. Panel Members PMCA Engagement DIRECTION NOT ISSUED BY PMCA - EXPERT DETERMINATION NOT REQUIRED • Notice of Dispute issued - DPA needs to be notified Note: before Dispute goes to Arbitration, it has to go to Executive Negotiations first Model Litigant • EXECUTIVE NEGOTIATIONS – preparation process

8. Panel Members PMCA Engagement PREPARATIONS FOR EXECUTIVE NEGOTIATIONS - PROCESS • Forensic Analysis - evidence based; “impartial person” - DPA • We need to establish Defence’s position in a dispute – is it a strong or a weak position? Do we have a chance to win or will we lose? • To do this we need to : • Engage with the project staff (we rely on accuracy of your information such as reports, minutes, correspondence, design documentation including drawings, specifications, design reports and also expert advice, directions, VPR, VO, EOT, LD, AD and your memory) • Conduct detailed analysis (white boards, common ground) – visibility, transparency, chronology, logic, analytical and constructive approach, reasons for failure • More information/investigations are required • Professional advisers Reports/ involvement may be required • More investigation meetings may also be required • In the end – we want to assist/help project staff to come to the correct conclusion/decision in resolving the issues – exclude emotions • Final strategy agreed (also supports preparation of Brief for DGCFI) • (project staff, legal advice, PMCA). Possible outcomes: • Commonwealth position in dispute established(is it a strong or a weak position? Do we have a chance to win or will we lose? , if not

9. Panel Members PMCA Engagement PREPARATIONS FOR EXECUTIVE NEGOTIATIONS - PROCESS • Initial Meeting with DGCFI – provide Draft Brief for DGCFI (at least week before initial meeting) • Second Meeting with DGCFI - provide Final Brief for DGCFI (at the time agreed with DGCFI, at least week before the meeting) • “Get together” approximately hour before Executive Negotiations, Final Brief for DGCFI – “refresh” • Executive Negotiations - Meeting with Industry (commercial decision/agreement)

10. Panel Members PMCA Engagement EXECUTIVE NEGOTIATIONS - MEDIATION - ARBITRATION • Executive Negotiations no1 Professional Advisors/ Experts involvement (hire the expert via legal advisor; legal privilege; potential resolution of disagreements) • Executive Negotiations no2, no3… • Final Executive Negotiation (commercial decision/agreement) • Mediation(optional, not a contractual requirement) • Arbitration

11. Panel Members PMCA Engagement WHAT ARE WE AIMING FOR? Send strong signal to Industry about their contractual obligations: • Designers – “100% design” • PMCA - project and contract management (DON’T TAKE SHORTCUTS) • Contractor – construction management (Project/ Construction Programs) IF WE DO NOTHING? • escalation of claims against the Commonwealth/ huge cost • Public Governance, Performance and Accountability Act 2013 • Attorney General Department – Guidance Note no12 (model litigant)

12. Panel Members PMCA Engagement PMCA – roles and responsibilities 1.Project Management, generally 1.1 The Consultant has project management responsibility for achieving the objectives, budget and program for the Project. These general project management responsibilities include: (c) providing the Commonwealth with all necessary assistance with respect to dispute resolution under the Project Contracts, or otherwise at law as required 1.2 The Consultant must be able to identify issues and immediately advise the Commonwealth's Representative of any matters on which it requires Commonwealth assistance or intervention to achieve the objectives, budget or program of the Project, including advice, recommendations and draft documentation (e.g. notices under the Project Contract) and requests action required and in any event prior to the matter having an adverse effect on the Project.

13. Panel Members PMCA Engagement PROGRAMING 10.2 Programming • The Contractor must: • (a) within 14 days of the Award Date prepare a program of the Contractor's Activities which must contain the details required by the Contract or which the Contract Administrator otherwise reasonably directs; • (b) update the program periodically, at least at intervals of no less than that specified in the Contract Particulars, to take account of: • (i) changes to the program; or • (ii) delays which may have occurred, including any for which the Contractor is granted an extension of time under clause 10.8; • (c) give the Contract Administrator copies of all programs for approval; • (d) ensure that all subcontractors adhere to the program; and • (e) provide all programs in a format compatible with the software specified in the Contract Particulars

14. Panel Members PMCA Engagement PROGRAM MANAGEMENT: Question: How to ensure, that the Contractor’s Program is progressively updated and consequently approved by PMCA from Contract Award till the completion of the project? Proposal: Introduce weekly (instead of monthly) Program approvals and if Programs are not approved by PMCAs, Progress Claims will not be paid by Commonwealth. - Would this work?

15. Panel Members PMCA Engagement TIME BARS • Time Bars aim to ensure that claims for extra money are dealt with promptly throughout the project and not “banked up”. • Contract administration staff who are in any doubt as to whether a claim has been made in accordance with clause 16 of the Conditions of Contract should seek appropriate advice immediately. • The actions of a Contract Administrator or Defence in respect of time bar/notification provisions can affect the standing of a particular provision at law (i.e. through estoppel or waiver). Such action may be as simple as proceeding to consider the merits of the claim notwithstanding non-compliance with time bars. • If by Defence’s or the Contract Administrator’s actions, it could be argued by the Contractor that Defence or the Contract Administrator represented to the Contractor that it was not going to rely upon those provisions, then Defence or the Contract Administrator may not be able to rely on them at a later date. • Contract administration staff must carefully consider their actions upon receipt of a claim.