Construction Journal February-March 2013

February-March 2013
rics.org/journals
Construction Journal
Conflict avoidance and dispute resolution

communication skills in ADR NSW security of payment international arbitrations
mediation survey adjudication law update hot tubbing dispute boards
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Contents
Construction Journal February-March 2013
Predictability Time Construction
5
6
7
8
80%
Rise to the challenge
60%
Global claims have always divided opinion, says

Jennie Gillies, which is why the judgement in Walter
Lilly v Mackay provides some welcome clarification
The road to resolution

Dispute resolution in the Gulf has many challenges,
explains Richard Harding, but progress is being made
Did you know?

Paid by results
Nicholas Gould and James Mullen consider the
impact of recent court rulings on an adjudicators
right to recover fees, ad hoc agreements and set-off
12
Decision time
Penny Harper gives an overview of the process of

hot tubbing and provides tips on how experts
can best prepare to give their evidence
Some people are unwilling to use Dispute Boards,

says Martin Burns, but wouldnt you rather have a
dispute identified and resolved quickly?
Learning from experience

Andrew Agapiou and Bryan Clark summarise the
findings from a study of Scottish contractors
and subcontractors views on mediation
Predictability Cost Construction
40%
20%
Client
Satisfaction Product
Weight of evidence
Concurrent evidence
Safety
Specialist quantity surveyors have a crucial role to

play in the governments integrated project delivery
ambitions, says David Bucknall
10
13
100%
Employee
Satisfaction
24
14
Client
Satisfaction Service
Construction Process Mains Water Use
Border lines
Construction Process International arbitration
is common when resolving
Construction Waste
cross-border disputes, says Kevin Joyce, but
practices can differ between jurisdictions
16
Negotiation essentials
17
Chain reaction
18
Investing in the future
21
Common ground
22
Material gains
24
Made to measure
Olive du Preez and Professor Basie Verster

summarise the findings of their research paper
Communication skills in ADR: Theory adding value
Michael C Brand and Philip Davenport outline

the changes brought about by Australias
Building and Construction Industry Security
of Payment Amendment Act 2010
Richard Graham considers why infrastructure is

important to the UK and how institutions such as
RICS and its professional members should respond
by developing services to support its delivery
Martin Russell-Croucher gives an overview of

recent project activities at the CEEC
Construction is under increasing pressure to

understand its carbon footprint. Piotr Berebecki and
Sean Lockie show how this can be done through the
assessment of Londons Farringdon Station project
In her second article on performance measurement,

Vicky Hutchinson provides some practical advice on
how to develop a system that, if used properly, will
lead to continuous business improvement
Editor: Les Pickford T +44 (0)20 7695 1632 lpickford@rics.org Editorial Advisory Group: Craig Abraham (Evolution5), Gerard Clohessy (EC Harris),
Christopher Green (Capita Symonds), Vytas Macenas (Faithful+Gould), Anne McCann (West Quarter Consulting), Andrew McSmythurs (Sweett Group),
Alan Muse (RICS), David Reynolds, Justin Sullivan (Adair Associates) Editorial and production manager: Toni Gill Sub-editor: Gill Rastall
Advertising: Lucie Inns T +44 (0)20 7871 2906 lucie@sundaypublishing.com Printed by: Page Bros Published by: The Royal Institution of Chartered
Surveyors, Parliament Square, London SW1P 3AD T +44 (0)870 333 1600 www.rics.org ISSN: 1750-1025 (Print) 1759-3360 (Online)
While every reasonable effort has been made to ensure the accuracy of all content in the journal, RICS will have no responsibility for any errors or omissions in the content. The views
expressed in the journal are not necessarily those of RICS. RICS cannot accept any liability for any loss or damage suffered by any person as a result of the content and the opinions
expressed in the journal, or by any person acting or refraining to act as a result of the material included in the journal. All rights in the journal, including full copyright or publishing right,
content and design, are owned by RICS, except where otherwise described. Any dispute arising out of the journal is subject to the law and jurisdiction of England and Wales. Crown
copyright material is reproduced under the Open Government Licence v1.0 for public sector information: www.nationalarchives.gov.uk/doc/open-government-licence
FromRise
theto Chairman
the challenge
The skills of specialist quantity surveyors have a crucial role to play in the
governments integrated project delivery ambitions, says David Bucknall
Our clients
and industry
consultants
now have an
exceptional
range of
non-adversarial
forms of
contract to
work with
have always admired contract dispute quantity

surveyors. Their combination of a forensic
knowledge of the construction process, an
understanding of complex forms of contract and
their dedication to sorting out complex disputes
is a source of wonder to me.
During my career, I have observed the growth
in the role and influence of this specialist quantity
surveyor and it is good to see that they now sit
alongside lawyers with their focus on quality and
professionalism in this important market niche.
I have been impressed by the number of these
quantity surveyors who have adapted their skills to
be relevant for dispute avoidance and alternative
dispute resolution.
This edition of the Construction Journal gives
a great insight into the increasingly influential role
played by these expert quantity surveyors. I am sure
that its theme of conflict avoidance and dispute
resolution with articles ranging from adjudication
cases and hot tubbing to international arbitrations
and communication skills will provide useful
reading. The word avoidance is obviously the crucial
one here.
Increasing integration
But what is the future position of these dispute
specialists at a time when the coalition government
is demanding integrated project delivery (IPD) as a
key part of achieving its More for Less agenda,
which aims at a 20% real cost reduction in the
provision of government-built assets? And what
is RICS doing to help its members be part of the
solution to this enormous challenge?
Well, greater adoption of IPD is crucial to the
strategy of the Quantity Surveying and Construction
Professional Group Board. The well-received New
Rules of Measurement Volumes 1 and 2 and various
Black Book guidance notes are important aspects
of the IPD agenda.
Furthermore, we are urging chartered quantity
surveyors to incorporate collaborative tools such as
project bank accounts, pain/gain share mechanisms
and integrated project insurance into their core
service offerings.
We are also taking the lead, in conjunction with
our university partners, on building information
modelling (BIM). We plan to equip quantity
surveyors with the skills to enable them to quickly
fulfil the current market gap by becoming the natural
first choice to be the BIM Facilitator/Manager on
projects, large and small. It is against this backdrop
that the specialist dispute quantity surveyor
February-March 2013
has a vital role in the development and wider

implementation of IPD.
Back in the 1980s, the construction industry
created the following statistic: Construction
contributed to 10% of GDP but 80% of disputes
handled by the Official Referee.
In the latter part of last century and the early part
of this, specialist quantity surveyors have played
a leading and strategic role in drafting the new
suites of integrated/collaborative forms of contract
that have taken the industry away from the above
shocking situation. As a result, our clients and
industry consultants now have an exceptional range
of non-adversarial forms of contract to work with.
I believe that the construction sector will change
custom and practice more in the next five to
10 years than in the past 40. IPD is both a fine
aspiration and a very tough option but it is critical
to achieving our clients demands. The specialist
quantity surveyors unique combination of skills and
knowledge is vital to ensuring that IPD achieves the
intended results.
Quantity surveyors have a vital part to play in
achieving the sectors biggest challenge that
of lower whole life outturn costs and sustainable
improved margins right across the sector. Are we
up for it?
PS...
As this is my first column of the year, please allow
me to highlight three special memories of 2012:
the delivery of the London 2012 Olympic Games
construction programme the most successful
in recent memory that embraced and showcased
most, if not all, IPD principles
the contribution to the industry of Paul Morrell
as Chief Construction Adviser to both the
governments More for Less agenda and the
general advancement of the industry. Paul has
been a superb ambassador for our profession
my personal thanks to all members of the
Quantity Surveying and Construction PG Board
and our excellent RICS headquarters colleagues.
David Bucknall is Chairman of the Quantity Surveying

and Construction Professional Group Board
qsandc.professionalgroup@rics.org
The New Rules of Measurement and Black
Book guidance notes are available from
www.rics.org/guidance
Dispute resolution Global claims
Weight of evidence
Global claims have always divided opinion, says Jennie Gillies, which is why last years judgement in
Walter Lilly v Mackay provides some welcome clarification to all parties in construction contracts
The ability to
present a claim
globally does
not mean that
evidential proof
is unnecessary
here a contractual party brings a

claim for additional payment, it bears
the burden of proving its entitlement.
Conventional wisdom says this should be done by
identifying a relevant event and demonstrating how
that caused specific loss or additional expense.
On occasions, however, a claiming party might
be unable or unwilling to attribute specific losses
to events and instead advances a composite claim
presented as the difference between the contract
sum and the expenditure actually incurred often
referred to as a global claim.
Employers, contractors and professionals views
regarding whether global claims should be allowed
are polarised; the decision in Walter Lilly & Co Ltd v
(1) Mackay; and (2) DMW Developments Ltd [2012]
EWHC 1773 (TCC) provides welcome clarification
for those involved in the presentation, quantification
and assessment of claims.
The claimant contractor (WLC) was engaged
under a JCT 1998 contract to build three residential
properties following land acquisition by DMW (a
vehicle formed by three owners who each intended
to occupy the properties subsequently built). Mr
Mackay was the owner of plot C. Initially for the
construction of all three plots for a contract sum
of 15.4m (to be completed by January 2006), the
contract was subsequently varied to provide for the
three units to be built under separate contracts.
The judge described the project as a disaster
waiting to happen; it fell into significant delay and
relationships broke down irretrievably. Practical
completion was achieved in July 2008. WLC issued
proceedings in relation to plot C seeking:
extensions of time until July 2008
loss and expense comprising 1.43m
preliminaries, prolongation and thickening costs,
700,000 subcontractor delay/disruption and
280,000 overhead and profit.
The preliminaries, prolongation and thickening
costs claim was divided chronologically, with
WLC providing:
an explanation of the causes of delay/disruption
and the deployment of additional resources.
a spreadsheet analysis of time allocation for staff
and resources.
The defendants, however, argued that this was an
irrecoverable global claim. The court held that WLC
was entitled to an extension of time. Furthermore, it
held that, as presented, the claim was not global
and WLC had established a link between the events
identified and resources expended. Akenhead J
summarised relevant authorities thus:
a claimant bears the burden of proving that they

have incurred delay or disruption related loss and
expense. The burden of proof does not transfer to
the paying party
there is no set way to prove a claim. Save
where a contractual clause prohibits the
presentation of claims on a global basis, there
are no restrictions to the way a claim for delay or
disruption related loss and expense is presented.
If a global claim is chosen, it is not necessary to
show that it is impossible to establish cause and
effect conventionally
where another event or factor (relied on by
the defendant) has or may have caused or
contributed to the total or global loss suffered,
the overall claim will not be rejected outright; an
appropriate amount should be deducted to reflect
the portion of the global claim that is not proven
such an assessment will be fact sensitive.

The ability to present a claim globally does not

mean that evidential proof is unnecessary; parties
must ensure that document management systems
are geared towards proving or disproving claims
whether advanced globally or conventionally.
Evidence for global claims should focus on:
the adequacy of the original tender; would
the contractor have achieved a net return or
was it so lean that the loss would have always
occurred irrespective of the events identified? For
contractors, this means improving the internal
paper trail at tender; for counterparties, it means
demanding to see that information (commercially
redacted if necessary) at an early stage and
before disputes reach the courts
did other matters cause the contractor to suffer
expense? If so, to what extent?
However, global claims remain risky; Walter Lilly
does not mark any great sea change. The judge
said that there were added evidential difficulties for
claimants and that tribunals might be more sceptical
of a global cost claim pursued in preference to an
available actual cost claim. This demonstrates that
the decision does not signal a willingness to accept
any lesser quality of evidence. After all, WLCs claim
was accepted because it was not a global claim.
Jennie Gillies is a Barrister at 4 Pump Court

jgillies@4pumpcourt.com
Related competencies include: M006, T064,
T074
February-March 2013
Dispute resolution Middle East
The road to resolution

Dispute resolution in the Gulf has many challenges, explains Richard Harding, but slow progress is being made
Courts of the
Gulf are not
well suited
to dealing
with disputes
arising out of
substantial
construction
projects
probably
the greatest
obstacle is
language
isputes in construction projects are almost

inevitable and the industry has led the
way in trying to find cost-effective means
of resolving them. In the UK, parties have the
benefit of adjudication and the Technology and
Construction Court. But elsewhere, the road to
resolution can be longer and more difficult.
In the Gulf, formal dispute resolution is still
relatively rare because it is seen as incompatible
with a future working relationship an important
consideration in small countries and small markets.
As a result, most disputes are settled by negotiation
in a meeting, or majlis.
It would not be unfair to say that the legal
systems in Gulf countries have lagged behind their
commercial development. This is not unusual in
England it was not until the Judicature Acts of the
1870s that the courts caught up with the industrial
revolution that had begun 100 years earlier. Those
used to the ways of Europe, Australasia and the
USA will therefore find a very different dispute
resolution landscape in the Middle East.
Language issue
The courts of the Gulf are not well suited to
dealing with disputes arising out of substantial
construction projects. Probably the greatest
obstacle is language. Major construction projects
are run in English and the courts in Arabic, and
translation on the scale that would be required
is unrealistic. A further problem is that there are
no specialist construction judges, and few with
experience of commercial cases. As a result, such
matters are routinely referred to experts, who end
up deciding the case.
There have been efforts to improve the courts,
most notably by the creation of the Dubai
International Financial Centre and the Qatar
Financial Centre, both of which rely on experienced
senior judges from England and similar jurisdictions
to offer a service similar to the Commercial Court
in London. However, there are questions about
these judges construction experience and, more
importantly, how the jurisdiction of these courts may
be limited by geography and/or agreement.
Given this background, it is perhaps unsurprising
that almost every construction contract in the
Gulf contains an arbitration clause, with English
as the language of the arbitration. The parties can
choose their own experienced tribunal, and the
result cannot be appealed. In practice, arbitration
in the Gulf is very Anglo-centric, with a large
proportion of the lawyers, counsel, arbitrators and
experts coming from the UK.
Most Gulf countries have their own arbitration
centre the UAE has three but only the Dubai
February-March 2013
International Arbitration Centre has a substantial

number of cases. Regrettably, the competence
of many of these centres is questionable, and
so arbitration under the rules of the International
Chamber of Commerce is popular in the region.
Enforcement of arbitral awards can be a
concern, given the lack of experience of arbitration
in the courts and the lack of clarity as to the legal
requirements. However, now that the UAE is a
signatory to the New York Convention and the
requirements of the courts are becoming more
widely known, it is rare for the enforcement of
awards from properly conducted proceedings
to be refused.
Judicial education
There is no UK-style statutory adjudication in the
Gulf, and it does not appear that there are currently
any plans to introduce it. To do so would require
not only legislation making adjudication mandatory
but education for the judges to ensure that proper
decisions, and only those, were enforced. Dispute
Adjudication Boards, pursuant to contracts, are
often used in the region, but it remains difficult to
enforce disputed decisions.
Mediation is promoted widely in the Gulf, but
it is rarely successful for two main reasons. First,
there is little incentive for defendants to settle
because few claimants go to arbitration or court
and so the paying party is rarely concerned that
if they do not settle then it will cost them more in
future. Secondly, the necessary decision-maker is
unlikely to attend. Corporate structures in the region
tend to be risk averse, with only those at the top
taking major decisions, and they are unlikely to be
willing to give up their time for a meeting.
Although the road to resolution for construction
disputes in the Gulf can be rough, it is usually
successfully travelled. It just requires more effort
and perseverance than in the UK.
Richard Harding QC is a Barrister and Arbitrator and

specialises in construction disputes arising in the
Middle East. He is the founding Chairman of the
Society of Construction Law (Gulf)
rharding@keatingchambers.com
Related competencies include: M006, T064
Did you know?
In
brief
New look Construction Journal

From April 2013, the Construction Journal will
have a completely new design. Together with
all the other journals in the RICS technical suite,
the Construction Journal has been redesigned
to make the content more accessible and the
look more contemporary and professional.
The journal will still have all the same technical
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content with articles on the latest developments,

best practice and RICS guidance together with
advice and opinion from professionals in RICS
and the wider industry.
This conference will address

the need for collaborative working by
developing building information modelling
(BIM) across the supply chain and through
pre-construction, construction and postconstruction phases. Delegates will be
able to assess the role of technology and
the intelligent use of information that BIM
encourages. A core theme address the
need for educational systems to support
individual development to Level 3 use (fully
interoperable BIM).
Attending will also allow delegates to:
assess the benefits of early facilities
management and end-user engagement
hear experts offering advice on developing
BIM across the supply chain
understand how to get your team ready
for BIM take-up
take part in the BIM Demonstration Zone
and gain a snapshot of the different
stages of BIM implementation.
VAT No 584940013
Affordable
CPD
Prices
start from
15
Essential
for your small
business
Across all sectors and types of

firm there is increasing pressure on
individuals to increase their performance and
organisations to maximise staff potential.
As part of its commitment to small
businesses, RICS has produced a
specialist catalogue of affordable continuing
professional development including a
range of low-cost seminars, e-learning and
interactive web classes.
For example, there is a series of 240
seminars on subjects such as building
information modelling, New Rules of
Measurement and the RICS QS and
Construction Black Book standards.
The one-hour events cost 30+VAT.
2013

www.rics.org/bimconference
The research papers from

COBRA 2012 have been
published covering quantity
surveying and construction,
project management, building
surveying, building control and
dispute resolution.
The COBRA papers
are available from
www.rics.org/cobra
The NHBC Foundation

has published The use of
recycled and secondary
materials in residential
constructions describing
how to source, specify and
use secondary and recycled
materials, plus Overheating
in Homes Literature
Review and Overheating in
Homes Gap Analysis and
Recommendations.
www.nhbcfoundation.org
rics.org/affordablecpd

www.rics.org/cpdseries and
www.rics.org/affordablecpd
Sign up for RICS Forums

Working with the 17 Professional Groups,
there are also five Forums, open to both
RICS members and non-members. These
specialist interest groups can quickly
address the needs of an emerging market,
and provide a focal point and network for all
those involved in these areas. Membership
to all RICS Forums is free and you can
join more than one. The Forums currently
available are:
Infrastructure
Insurance
Dilapidations

Telecoms
Building
Conservation.

www.rics.org/forums
The RICS Health & Safety

Working Group has published
its survey results looking into
the awareness, commitment
and implementation of health
and safety regimes.
The report is available
from ow.ly/eME43
The Institute for Sustainability

has published Building
Opportunities for Business:
Low Carbon Domestic Retrofit
Guides on the emerging low
carbon building and retrofit
construction market.
http://ow.ly/fS1io
February-March 2013
Dispute resolution Adjudication
Paid by results
Nicholas Gould and James Mullen consider the impact on parties to construction contracts of recent
court rulings concerning an adjudicators right to recover fees, ad hoc agreements and set-off
n Clark Electrical Ltd v JMD Developments (UK)

Ltd [2012] EWHC 2627 (TCC), the court was
asked to determine whether an adjudicator
had jurisdiction by way of an ad hoc adjudication
agreement between the parties. The adjudicators
terms of appointment had included a provision
that both parties pay a 6,000 appointment fee as
security. Following his appointment, JMD sent an
email to the adjudicator stating that:
it was unfamiliar with the adjudication
protocols, it was unrepresented and therefore
requested guidance on the procedures and
its responsibility
it had not received the adjudication notice
or supporting documentation from CEL and
therefore requested an extension of time
it requested the adjudicators proposals for
moving forward.
The court
considered that
a breach of the
rules of natural
justice by the
adjudicator
constituted
a default or
misconduct
A few days later, JMD paid the appointment fee

and then instructed a consultancy firm to act on
its behalf. A dispute subsequently arose, with
both parties focusing on whether the adjudicator
had statutory jurisdiction. JMD argued that the
works were not construction operations and were
excluded under Section 105 of the Housing Grants,
Construction and Regeneration Act 1996 (HGCRA).
The adjudicator had issued a non-binding
decision on his jurisdiction, concluding that he
did not have statutory jurisdiction. Instead, he
unilaterally decided that he had jurisdiction by way
of an ad hoc adjudication agreement between
the parties, the terms of which were contained in
his appointment that had been accepted by the
parties conduct when it paid the appointment fee.
JMD promptly withdrew from the process and the
adjudicator issued an award in CELs favour.
At the enforcement hearing, CEL argued that
JMD had submitted to the adjudicators jurisdiction
in the full sense and relied on JMDs email and
its payment of the appointment fee. JMD argued
that payment of the appointment fee did not
demonstrate an ad hoc agreement to abide by
the adjudicators decision in the full sense; a
party can still be liable for an adjudicators
fee where there is a legitimate challenge to
the jurisdiction. As to the email, it was simply
a request for guidance on the adjudication
procedure and a request for more time to deal
with matters where it had not yet received the
relevant documents. The judge accepted JMDs
argument, concluding that the adjudicators
decision on jurisdiction based on an ad hoc
agreement was plainly not right. It was held that
the adjudicators award was unenforceable.
February-March 2013
Fees
This leads to the question of whether an adjudicator
is entitled to their fees where they have produced
an unenforceable award. This is the issue that was
considered recently by the Court of Appeal in the
important case of PC Harrington Contractors Ltd v
Systech International Ltd [2012] EWHC Civ 1371.
A dispute between a subcontractor and its own
subcontractor was referred to adjudication. It was
later held that the decision was unenforceable on
the grounds that the adjudicator had breached the
rules of natural justice. Systech, the adjudicators
employer, commenced proceedings against PCH
to recover the adjudicators outstanding fees.
The Court of Appeal overturned the High Court
decision and held that the adjudicator was not
entitled to the fees. It considered the terms of
the contract and the provisions of the Scheme
for Construction Contracts (England and Wales)
Regulations 1998, and determined that the parties
bargain with the adjudicator was for an enforceable
decision. It also concluded that paragraphs 8,
9 and 11 of the Scheme clearly showed that
Parliament had not intended for an adjudicator
to be paid in cases where they did not perform
all of their obligations (including making an
enforceable decision).
In particular, paragraph 11(2) provides that
an adjudicator is not entitled to payment if their
appointment is revoked as a result of default or
misconduct. The court considered that a breach
of the rules of natural justice by the adjudicator
constituted a default or misconduct and that it
was a serious failure to conduct the adjudication
in a lawful manner.
The Court of Appeal also looked at policy
considerations behind adjudication, concluding that
the statutory provisions reflected a Parliamentary
intention to provide a Scheme for a rough and
ready temporary resolution of construction industry
disputes. This is why the courts will enforce
decisions that are shown to be wrong on the facts
or in law. An erroneous decision was nevertheless
an enforceable decision within the meaning of
HGCRA and the Scheme.
However, a decision that was unenforceable
through lack of jurisdiction or breach of the rules
of natural justice was quite another matter. The
Court of Appeal said its judgement should not
have any great ramifications: adjudicators can
simply incorporate into their terms of engagement
a provision covering the payment of fees and
expenses if a decision is not delivered or is
unenforceable. Whether the court is correct
remains to be seen.
Set-off
In July 2012, two judgements considered the
issue of set-off. The first was Squibb Group Ltd v
Vertase FLI Ltd [2012] EWHC 1958 (TCC). Here, the
adjudicator had awarded Squibb, the subcontractor,
an extension of time and 167,500 costs arising
from the delay. He also decided that Vertase had
not served any withholding notice for any crossclaim for liquidated and ascertained damages
(LADs) and so was not entitled to deduct LADs
from the adjudicators award.
Vertase refused to pay the award, instead serving
a withholding notice for 276,000 comprising:
105,000 LADs for the delay for which the
adjudicator had not awarded an extension of time
171,000 for a number of other items that related
to an alleged failure by Squibb to carry out work.
Squibb sought to enforce the award that Vertase
resisted on the basis that it was entitled to serve
and rely on its withholding notice. The judge
determined that Vertase was not able to set-off
its LAD claim against the adjudicators award. The
general rule is that the right to make such set-off is
generally excluded; anything else would be contrary
to HGCRA. However, there are two exceptions to
the general rule:
where there is a contractual right to set-off
where the nature of the adjudicators decision
amounts to a declaration as to the proper
operation of the contract.
The court decided that the situation did not fall within
the exceptions to the general rule. In addition, the
items had not been advanced during the adjudication.
Vertase was not prevented from claiming the items in
a separate adjudication, but it should not prevent the
payment of the adjudicators award.
Two days later, the court issued its judgement in
Beck Interiors Ltd v Classic Decorative Finishing Ltd
[2012] EWHC 1956 (TCC), which again considered
the issue of set-off. At adjudication, Beck had been
awarded 36,000 plus VAT. CDF, the subcontractor,
refused to pay, arguing that it had a cross-claim
arising out of a contract between the parties for
a project in Dublin. The judge applied the same
principles as in Squibb.
The starting point is that the court will rarely allow
an unsuccessful party to set-off other separate
claims against the adjudication award. Considering
the two exceptions to the general rule, the judge
concluded that:
there was no express contractual right to set-off
the adjudicator had clearly ordered immediate
payment.
In no sense was his award a declaration as

to how the contract should be interpreted.
As to CDFs rights to equitable set-off, case
law stresses that this will only be permitted
where the cross-claim is so closely connected
with the claim that it would be manifestly unjust to
allow the claim without taking into account
the cross-claim. However, in this instance there
was no connection between Becks claim and
CDFs cross-claim other than the existence of
two contracts between the same two parties.
They were different contracts, concerned with
entirely different works, in two separate countries
(and therefore two separate jurisdictions).
Accordingly, the judge rejected CDFs arguments
of set-off and enforced the decision.
It seems that it is very difficult to set off amounts
against an adjudicators decision; so the rubric is
pay up. However, a successful challenge to an
adjudicators jurisdiction will not only avoid paying
any amount in the decision but will also avoid the
need to pay the adjudicator.
The court will

rarely allow an
unsuccessful
party to set-off
other separate
claims against
the adjudication
award
Nicholas Gould is a Partner at law firm Fenwick

Elliott and a Visiting Senior Lecturer at Kings
College London
ngould@fenwickelliott.com
James Mullen is an Assistant Solicitor with
Fenwick Elliott
jmullen@fenwickelliott.com
February-March 2013
Dispute resolution Hot tubbing
Concurrent evidence
Penny Harper gives an overview of the process of hot tubbing, provides tips on how expert witnesses
can best prepare to give their evidence and summarises the findings of a pilot project in Manchester
n expert witness is selected because of

their expertise and experience in a particular
field. However, an expert must also have the
necessary knowledge, skills and confidence to write
reports and give evidence effectively. The process
of being cross-examined is a daunting enough
experience, but experts now have the possibility
of being hot tubbed as well.
A description is set out in Lord Justice Jacksons
Review of Civil Litigation Costs Preliminary Report:
Hot tub. The practice has been developed in
Australia of hearing evidence concurrently from the
experts in any particular discipline At trial, experts
in the same discipline are sworn in at the same
time and the judge chairs a discussion between
the experts. The pre-trial document recording the
matters upon which the experts disagree serves as
the agenda Counsel join in the discussion. They
can put questions to the experts, as and when
permitted by the judge. In addition, the experts can
put questions to each other.
Experts can ask questions or comment on

each others positions freely and without
the constraints of cross-examination
Hot tubbing explained
When might it take place?
it is widely used in arbitrations both internationally
and in the UK
it can be used with the consent of the parties or
judge in court hearings
pilots are being run in Manchester and
Birmingham (see panel)
it is not currently incorporated as a procedure in
the Civil Procedure Rules, but may be in future
there is guidance on the process available in the
Technology and Construction Court.
What are its features?
the decision-maker can identify all of the key
disagreements and get to the root of the issues
more quickly and efficiently by putting questions
direct to the expert
the experts can be asked to identify and explain
their position on the principal issues. This may
include commenting on the shortcomings of the
opposing experts position
the experts can explain complex issues without
the constraints of counsels questions
the experts can ask questions or comment
on each others positions, including what has
10
February-March 2013
been said or left unsaid, freely and without the

constraints of cross-examination
experts can take part in a constructive discussion,
and answer and ask questions at the same time
direct discussions may be more effective in
helping to identify areas of agreement and
disagreement, together with the strengths and
weaknesses of each position
simultaneous peer scrutiny avoids or reduces
the risk of misleading answers, because any
inaccuracies can be picked up immediately by
another expert, rather than through notes passed
to counsel
experts may be more likely to make concessions
and reach a greater degree of agreement on
common issues in the hot tub than through
cross-examination, because there may be a more
open and frank discussion
if there is confusion or uncertainty, the
decision-maker(s) can ask questions straight
away to clarify the issue
experts, advocates and the decision-maker
are all on the same page at the same time in
considering a particular issue, and are able to
deal with questions as they arise and address
any gaps in evidence
to make the most of the hot tub, the tribunal
needs to fully understand what the contentious
areas are and know what it wants to ask
the experts
the expert witness must be fully prepared for
the hot tubbing process, which requires a range
of skills in addition to those of giving expert
evidence in conventional examination in chief and
cross-examination
hot tubbing may be particularly useful in relation
to experts dealing with quantum
hot tubbing may present a challenge if there are
two experts versus one, such as where there are
two defendants.
Giving evidence
What skills do experts need? They must be able to:
present the evidence
answer questions
ask questions of the other expert
advance supporting evidence in their report
and other supporting documentation.
It is vital that experts give evidence without being
drawn outside the circle of facts. They must also
remain objective, remembering that their duty is
to the court, and not advocate or exaggerate their
evidence during cross-examination or while in the
hot tub. However, they must be able to present the
Dispute resolution Hot tubbing
reasoning behind their opinion and demonstrate the

evidence that supports it. They must present their
evidence in a logical structure, and help the decisionmaker by making it easy to follow and understand.
Case preparation
The starting point for case preparation is
undoubtedly the experts report, which is followed
by the expert witness discussion. While the content
of the discussion is privileged, the signed joint
statement is not. The reasoning behind the areas of
agreement and disagreement between experts is set
out in the joint statement, and this is the basis for
cross-examination and the hot tubbing discussions.
Experts should consider the following when writing
their report and preparing to give evidence.
What are the issues?
The witness must be able to identify and advance
the main issue(s) in the evidence.
What are the facts?
It is essential to be familiar with the facts in the
case contained in the documents, records, witness
statements and, when giving evidence, the experts
report. The facts are the supporting evidence. It
is vital to be able to demonstrate the supporting
evidence and the reasoning behind an expert opinion.
What are the opinions?
Expert witnesses must explain the range of possible
opinions and the reason for their own opinion based
on the facts. The expert must demonstrate a clear
and logical analysis of the evidence.
What are the key points to get across in the
evidence?
an analysis of the strengths and weaknesses in
the expert witness evidence
identify and advance the evidence/facts that
support and justify the expert opinion and make
effective use of that evidence
consider possible lines of questioning under crossexamination by counsel or by the decision-maker
or the other expert(s) in the hot tub to help in
dealing with attacks on evidence and advancing
the strengths underlying the experts own position
consider possible questions to put to the other
expert in the hot tub avoiding the temptation to
become an advocate; the approach should be
that of a forensic examiner trying to understand
in an open and fair way the why, what, where,
when, who and how of the other experts opinion
and analysis and questions should challenge and
probe any shortcomings.
Hot tubbing pilot

Manchester Technology and Construction Court
Preliminary observations include:
the main benefits are in the efficiency of the process and the
ease with which evidence can be given and differences of
views examined
it encourages representatives, experts and the judge to
focus on the issues prior to the trial and clearly identify areas
of disagreement
time at the trial is saved and the judges job in evaluating
disagreements is made easier by dealing with each one
before moving on to the next
there seems to be significant benefits as a procedure for
enhancing the quality of judicial decision-making
counsel seems to think that the process is less rigorous,
while the experts, the judiciary and solicitors seem to be
divided
opinions are divided as to whether it leads to greater
objectivity than sequential expert evidence
it is difficult to draw any preliminary conclusions about the
impact on costs (there is information on only three cases).
Preliminary conclusions include:
the evidence suggests that there are time and quality
benefits from using the procedure
there is no evidence of significant disadvantages from the
point of view of the judiciary, counsel, solicitors or experts
a larger evidence base is needed so use of the procedure in
different kinds of cases can be evaluated and a wider range
of experience relating to rigour and costs analysed
in the light of the positive evaluations of those involved,
and the number of cases in which parties agreed to adopt
the approach but settled prior to trial, it would seem
appropriate that in the implementation of the Jackson Report
recommendations the use of concurrent evidence should
be included in the Part 35 Practice Direction as an optional
procedure that can be adopted if the judge so directs.
This is an updated version of an article that first

appeared in the ICE Construction Law Quarterly
Penny Harper is a Solicitor and a Director at
Legal Experience Training
pharper.legalexperience@rosscraig.com
February-March 2013
11
Dispute resolution Dispute boards
Decision time
Some people are unwilling to use Dispute Boards because of the extra costs involved, says
Martin Burns, but wouldnt you rather have a dispute identified and resolved quickly?
itigation, arbitration, adjudication and

mediation have one thing in common. They
are brought into play only after disputes have
crystallised, and probably only when parties have
fallen out, positions have become entrenched and
a lot of money has been spent on lawyers and
claims consultants.
Would it not be a good idea to have a system
that avoided disputes in the first place? This
would surely save money, ensure that projects
are delivered on time and on budget and help to
maintain relationships (something adversarial dispute
resolution rarely does).
Dispute Boards (DBs) are such a system.
Although they are generally associated with
major infrastructure projects, DBs come in
various forms and can be used on a range of
construction projects. They are not exactly a new
phenomenon. They originated in the USA in the
1960s the first mention being a Joint Consulting
Board established for the Boundary Dam project
in Washington. The idea was to have people
imbedded throughout the life of the project to make
quick decisions the moment any conflict arose. This
remains the essential purpose of DBs today.
Global use
In the 1970s, six major US tunnel projects used
DBs, including the massive 2.7km Eisenhower
Tunnel in Colorado. Between 1986 and 1994,
the number grew to 349 US projects and from 1988
to 2002 the approach covered over $79.4bn of
major civil works contracts, with 97.9% of disputes
settled without litigation. In recent years, the use
of DBs has spread across the globe they are
widely used in Africa and Asia and have even been
employed in the UK, most notably on London 2012
Olympic projects.
DBs can comprise just one person or three, five
or even seven members. Many types exist and they
are often tailored to suit individual projects. The
precise procedure will usually be governed by the
contract, but it is usually a requirement for members
to make regular site visits and review documentation
and reports as the project progresses. A typical DB
may consist of a chartered surveyor, an engineer
and an architect.
As a Standing Dispute Board, they will meet
regularly and walk the project to spot problems
early and come together to quickly resolve issues
between the employer/contractor and the main
contractor/subcontractors. This will usually be
through a mix of different procedures including
conciliation, review and recommendation or
ultimately adjudication.
12
RICS Dispute Register

As with other forms of alternative dispute resolution, there are questions about
the credibility of the neutrals and the process for choosing them. With this in
mind, RICS Dispute Resolution Service (DRS) has recently established a register
of DB members, which is underpinned by high-quality training, assessment and
performance monitoring. DRS is developing a strategic campaign to promote DBs
and the register to global markets, particularly where major projects are planned.
The DB is generally empowered to examine all
disputes and to make recommendations if it is
constituted as a Dispute Review Board or all
decisions if it is constituted as a Dispute
Adjudication Board. The parties can choose whether
recommendations or decisions made by their DB
are advisory or contractually binding, pending further
determination by a court or arbitral tribunal.
Cost v value
It is perhaps understandable that some people will
be reluctant to use DBs because they represent
an additional project cost. But their role in ensuring
delivery of projects on time and on budget is a
real advantage because they can resolve issues
quickly before they are allowed to escalate they can
actually reduce costs.
Other advantages of DBs are:
the resolution of differences is confidential
the parties can agree their own particular
procedure and structure in advance and any
changes to it during the course of the project
the existence of the board can keep parties
focused on ensuring the contract proceeds
smoothly by avoiding disputes
the process is consensual and the parties have a
stake in preserving relationships
regular site visits and communication with
stakeholders build a holistic working knowledge
of the project so if a dispute arises the board will
have a better understanding than a tribunal that
is only appointed after a dispute has arisen.
Martin Burns is the Director of the RICS

Dispute Resolution Service
mburns@rics.org.uk
February-March 2013
For more information about Dispute Boards and

the RICS Dispute Register, email Raj Sohal at
rsohal@rics.org or visit www.rics.org/drs
As a Standing
Dispute Board,
members will
meet regularly
and walk the
project to
spot problems
early and come
together to
quickly resolve
issues
Dispute resolution Mediation
Learning from experience

Andrew Agapiou and Bryan Clark summarise the findings emerging from a small RICS
Trust-funded study of Scottish contractors and subcontractors views on mediation
he principal aim of this Scottish study

was to explore construction participants
awareness, attitudes and experiences relative
to mediation. In compiling the report, we collected
questionnaire responses from 63 small- and
medium-sized construction firms in September and
October 2011, a response rate of around 18%. All
were main or subcontracting firms, were members
of the Scottish Building Federation and had a
turnover between 1.5m-200m+. Nine follow-up
interviews were conducted.
Knowledge levels
Some 80% of survey respondents professed
awareness of mediation. However, given decades
of publicity, the finding that one in five respondents
had apparently not heard of the process is a little
surprising. We might also speculate that some
who did not respond to the survey may be unaware
of mediation.
Those who knew about mediation had gathered
information from a wide variety of sources including
the media, professional bodies, lawyers, colleagues
and mediation organisations. Interviewees generally
espoused a sophisticated appraisal of its use borne
out through experience, but often lamented the lack
of such appreciation among their colleagues.
Mediation experience
Most respondents (around two thirds) had no direct
experience of mediation. We tracked 37 cases
in which mediation had taken place the most
common type related to changes to the scope of
work and payment. Where mediations did occur, the
parties generally considered them successful 24
settled, with another five partially settling.
Parties also seemed generally satisfied with
mediation, in terms of speed, cost, the mediator
and outcomes produced. Interviewees generally
regaled positive tales of their mediation exposure
and were especially keen to emphasise its
role in providing a fruitful environment in which
meaningful communication with opponents, problem
solving and creative, harmonious solutions to
disagreements could be reached.
For those survey respondents who had declined
offers to use mediation, reasons cited included
the costs, the strength of their legal case, the view
that negotiation could settle the matter and fear
that the opponent would not mediate in good faith.
Interviewees echoed such concerns, pointing to the
suspicion with which mediation is regarded in many
construction sectors and the jaundiced perception
of the process held by lawyers, whose advice rarely
seemed to be in favour of this type of recourse.
Attitudes on mediation
Most survey respondents favoured the notion of
institutions promoting mediation to give it public
backing. Some 76% agreed that judges should
refer more cases to mediation and a similar number
agreed that rendering mediation a mandatory first
step in court litigation procedures was an attractive
proposition. Interviewees were generally more
cautious about mandatory referral, arguing from a
practical perspective that it simply would not work,
and also from the principle that the court is a public
service and should be available to all.
Regarding other, more long-standing means
of resolving construction disputes, the survey
revealed mixed responses. It is particularly
notable that statutory adjudication did not fare
well with respondents, with only 25% viewing it
as an appropriate forum for resolving construction
disputes. This view was echoed by our interviewees.
Concerns voiced included those over adjudicator
quality, high costs, its adversarial nature and
the potential for abuse by unscrupulous parties.
Survey respondents and interviewees did note,
however, that adjudications default position and
the favourable view of lawyers created a barrier to
mediations uptake in the industry.
In terms of other barriers, respondents saw both
a lack of awareness of mediation and a negative
perception of the process in the construction
industry and legal circles as relevant.
Mediation visibility
Our research suggests that, at the industry user
level, mediation may remain largely unnoticed and
its potential unrealised. Take up is modest and
sophisticated awareness of the process scant. It
seems that when parties do try mediation, they
generally enjoy it and often settle their cases.
Crossing the Rubicon is the hard part, however.
Much more needs to be done to sell mediation
to the client base. In this sense, there is a key
role for professional bodies such as RICS to play
in disseminating the mediation messages to their
members. This could perhaps be best achieved
through case studies of industry players who
have tried mediation conveying their own positive
experiences in the process, speaking the same
language as potential users.
Andrew Agapiou is a Senior Lecturer in the
Report November 2012
RICS Research
Construction clients and mediation:
a follow-up study of attitudes
and experience
rics.org/research
At the industry
user level,
mediation may
remain largely
unnoticed and
its potential
unrealised
Further information
The fully referenced research paper
Construction clients and mediation:
a follow-up study of attitudes and
experience is available from
www.rics.org/research
Architecture School and Bryan Clark is a Professor

in the Law School at the University of Strathclyde
andrew.agapiou@strath.ac.uk
Related competencies
include: M006, T064
bryan.clark@strath.ac.uk
February-March 2013
13
Dispute resolution International arbitration
Border lines
International arbitration is common when resolving cross-border disputes, says Kevin
Joyce, but getting it right is important as practices can differ between jurisdictions
P
The seat will
determine the
procedural rules
that govern
the arbitration
and issues
such as
privilege and
disclosure, rules
of evidence
and limitation
periods
arties in international contracting can

sometimes get into difficulties because
what is considered normal practice in one
jurisdiction may be very different in another.
Unfortunately, dispute resolution clauses (usually
found at the end of a contract) do not always get
the attention they deserve before the contract is
signed. This is often explained away as parties not
wanting to dwell on negative issues when they are
at a positive stage in the project, but it can lead
to an unnecessarily slow and expensive dispute
resolution process if things go wrong.
International arbitration is a system of formal
dispute resolution by one or more impartial persons,
known as arbitrators, for the final and binding
determination of a dispute. It is conducted all over
the world against very different legal and cultural
backgrounds and can provide for the quick,
practical and economical settlement of cross-border
disputes. It is also usually a private and confidential
process, but this depends on the jurisdiction in
which the arbitration is conducted.
If you intend to include international arbitration as
an option for dispute resolution in your contract, you
need to consider the following areas at the outset.
Where is the seat of the arbitration?
This will determine the procedural rules that govern
the arbitration and issues such as privilege and
disclosure, rules of evidence and limitation periods.
If the seat is Paris, for example, aspects such as
privilege and disclosure will be governed by civil law
principles and may be different from the position in a
common law jurisdiction, such as England. The seat
of the arbitration will also determine issues such as
any mandatory processes, the extent to which the
arbitration agreement excludes jurisdiction of the
national courts, whether the tribunals decision can
be appealed and, if so, what timescales will apply.
If you are contracting with a state or state body,
you may need to consider whether a defence on the
grounds of sovereign immunity is likely to be raised.
If this happens, the tribunals ability to consider the
defence will be determined in accordance with the
law of the seat. With a state, you should ensure
that the arbitration clause stipulates a seat where
the law follows a restrictive approach on sovereign
immunity, e.g. London or Geneva as opposed to the
Peoples Republic of China.
Enforcement
You should consider where a party might be
attempting to enforce an award (which may be a
different location from the seat) if it is successful in
the arbitration in a particular jurisdiction. The ability
14
February-March 2013
to enforce the
award may
depend not only
on compliance
with all applicable local
procedural laws but also
on the support the national courts
give to the arbitral process and whether the
seat is in a country that is party to an international
convention, such as the New York Convention.
This Convention commits the courts of signatory
states (see ow.ly/fsMLQ) to enforcing awards
made by tribunals in other signatory states and has
underpinned the growth of international arbitration
in the past 40 years. However, the relationship
between the courts and arbitration is continuing
to develop and, even in jurisdictions that are party
to the Convention, effective court support for
arbitration cannot be guaranteed.
Substantive law of the contract
The law of the contract (as opposed to the
procedural law applicable in a particular seat) is also
important because it governs the subject and merits
of the dispute. This should be considered very
carefully because it may have a significant impact
on issues such as penalties, notices and interest.
Despite the freedom to choose the substantive
law that will apply to their dispute, parties cannot
always contract out of the rules that apply at the
seat. Any applicable institutional rules governing
the dispute can only amend or replace the nonmandatory provisions of the procedural law at the
seat. They may, therefore, affect the merits of the
dispute (e.g. by application of anti-corruption or
competition rules) and can influence the procedural
rules (e.g. in terms of enforcement).
Institutional or ad hoc procedure
Parties should consider whether they want their
arbitration to be administered and supervised by
a recognised arbitral institution or whether they
want an ad hoc procedure. If you use an ad hoc
procedure, you can still use a set of institutional
rules or agree your own rules and procedures.
An arbitral institution (such as the International
Chamber of Commerce, the London Court
of International Arbitration and the Singapore
International Arbitration Centre) can help with the
selection and replacement of arbitrators, organising
hearings and handling communications between the
parties and the arbitrators although this comes
with a fee. Under ad hoc arbitration, the parties can
create their own rules, but this requires cooperation
and cost savings can disappear if this is lacking.
Dispute resolution International arbitration
Validity under national law and treaties

The agreement usually needs to be in writing.
However, under the United Nations Commission
on International Trade Law UNCITRAL Model
Law (2010), for example, it can be made orally.
This could be a significant risk, so ensure that the
contract specifies the desired procedure expressly
and in writing. You should check local law issues
and that the person signing the agreement has the
authority to enter into it. For example:
in Turkey, it is mandatory that anyone signing an
arbitration agreement on behalf of a Turkish party
must have a special power of attorney
Article 2060 of the French Civil Code prohibits a
French public entity from agreeing to arbitration,
subject to very limited exceptions
under Article 36 of Law No. 6 of 1997 in Dubai,
unless an exemption has been granted by the
Ruler, any arbitration with the Government or a
government department must be conducted in
Dubai (i.e. Dubai must be the seat).
Scope of disputes
The arbitration clause should be wide enough
to encompass all possible disputes and claims,
including damages for breach of contract. The
words disputes relating to or arising in connection
with the contract are wider than disputes arising
under the contract, which may be interpreted as
covering only contractual claims. The contract must
state that there must be clear, unambiguous and
mandatory submission of disputes to arbitration.
A clause that provides, for example, that disputes
may be referred to arbitration may not be effective,
depending on the approach of the local courts.
Confidentiality
Under English law, there is an implied duty of
confidentiality in arbitration, but this is not the case
in some other jurisdictions. If this is important, then
consider including an express obligation to keep
the arbitration and all materials generated for its
purpose confidential. This may not be needed in
all cases because some institutional rules already
provide for confidentiality.
Arbitrator selection and replacement

An arbitral tribunal can have one or three arbitrators
and parties should consider whether the value of
the contract and any potential disputes justifies the
selection of three, which will be more expensive and
may slow the process.
If the parties agree to three, it is usual for each
side to nominate an arbitrator and for those two to
nominate a presiding arbitrator. With an institutional
arbitration, the chosen institution may nominate the
presiding arbitrator.
It is useful to include a default mechanism that will
apply if the parties fail to agree. For example, if they
are to use a sole arbitrator they should consider
adding a provision that if they cannot agree within
a defined timescale a relevant institution or a third
party will appoint the arbitrator.
The main institutional rules provide default
mechanisms for selecting and replacing the
arbitrators. Depending on the rules used, if any,
the parties will have greater or lesser influence in
the selection process.
If it is important that the arbitrator(s) have
particular qualifications or experience, consider
specifying this in the arbitration agreement, although
this may limit the number of potential arbitrators
should a dispute arise.
Language of the arbitration
Thought should be given to the language to be used
in the arbitration. If the documents are in different
languages and the principal witnesses do not speak
the language required by the agreement then the
costs, time and complexity of the process are likely
to increase substantially.
International arbitration is a well-established process
of resolving cross-border disputes and is often
the only practical means for pursuing international
claims on construction contracts.
When implemented effectively, it is an important
part of a business risk management strategy; but
careful thought is needed at the outset of a project
to ensure that the commercial deal struck between
parties is maintained.
February-March 2013
Best practice
Key points include:
choose a seat that is
safe, independent, legally
mature and has effective
court support
consider how and where
the arbitral award can be
enforced
ensure that you have
a valid and binding
arbitration agreement
that covers all possible
disputes and claims
think carefully about the
substantive law of the
contract and the extent
to which it is possible to
contract out of the rules
that apply at the seat.
Kevin Joyce is a Partner with law

firm Pinsent Masons and runs a free
Legal Helpline Service for RICS
members
kevin.joyce@pinsentmasons.com
To use the free Legal
Helpline Service, email
beg@rics.org
Related competencies
include: M006, T064
15
Dispute resolution Communication skills
Negotiation essentials
Olive du Preez and Professor Basie Verster summarise the findings of their research paper Communication
skills in ADR: Theory adding value and discuss how practitioners can improve their expertise through training
ommunication is an essential element in the negotiation

process. However, negotiation training has not always been
an integral part of the education and training of professionals,
who have had to develop these skills and attributes on the job.
Indeed, the curriculums of tertiary institutions place more emphasis
on technical and management sciences rather than the development of
soft skills. The fast and competitive nature of construction lends itself
to reliance on inherent communication skills to aid alternative dispute
resolution (ADR) and research by Povey supports this.
This raises the following questions:
are inherent communication skills sufficient to support effective
negotiations?
is there a need to be familiar with the theoretical aspects of
communication?
The purpose of our study was to identify the essential elements that
may enhance effective communication. These requirements are based
on standard international practice that was sourced from literature and
then applied to the South African construction industry.
A questionnaire was distributed among practising professionals
to determine the levels of their knowledge, skills and attributes in
communication and negotiation, and how they rate the importance
of these to success. According to Boulle & Rycroft and Brown &
Marriott, referring to standard practice of mediation, mediators require
a range of skills and techniques that support the effective application
of communication and negotiation relating to ADR. However, these
skills can be inherent, learned and intuitive; or may be acquired and
developed through education, training and experience. Some consider
communication to be a natural or inherent skill.
Other authors have looked into this area. Richbell confirms that
successful negotiations require effective communication, while Pretorius
Physically
attentive
and mentally
prepared
Clarify
uncertainties
and sum up
the whole
picture
Show concern/
interest and assist
in coming to terms
with emotions
Active
listening
Encourage
parties and
acknowledge
messages
suggests that a thorough understanding of the principles and techniques

of negotiation is considered an advantage to those involved in ADR.
Active listening underlies the communication process in ADR with
the aim of creating a mutual understanding (see Figure 1).
This is supported by psychological elements such as non-verbal
communication and being silent these prepare the parties for the
evaluative part of mediation. Povey indicates that mediators in the
South African construction industry are inclined to unilaterally resolve a
dispute for the parties, which suggests that success rates in mediation
are not related to effective facilitation and communication skills as
reflected in our study.
We used quantitative measures to determine respondents level of
knowledge and skill in the various attributes through self-assessment
questions. We also collected qualitative data and, using a process of
triangulation, verified the findings of the research to record the present
situation in the construction industry.
Respondents generally indicated that they:
applied communication skills in ADR without giving them
much thought
consider the relevant attributes and skills supporting communication
to be important
consider themselves to be knowledgeable and skilled in the
requirements for effective application.
However, the findings of the quantitative and qualitative research
do not correlate. A lack of theoretical knowledge was displayed in
the interviews. Interviewees were generally of the opinion that few
people have the skills to resolve a dispute within minutes of walking
into a room, suggesting that effective communication skills and
supporting attributes are rarely inherent but are developed over time.
The qualitative research indicated that there is a need for increased
emphasis to be placed on the importance of the theoretical knowledge
relating to communication in ADR, which professionals may refer to in
the process of gaining experience on the job.
In conclusion, there is a need for education and training in
communication skills and attributes for the more effective application
of ADR. It is recommended that industry should not be totally reliant
on inherent communication skills but rather that these skills should be
developed though formal training and development programmes.
Further information
A fully referenced version of the Communication skills in ADR: Theory adding
value COBRA research paper can be found at www.rics.org/cobra
Olive du Preez is a Senior Lecturer in the Department of Quantity Surveying

and Construction Management, University of the Free State, South Africa
Nonjudgemental
and no
preoccupation
with response
dupreezorc@ufs.ac.za
Concentrate
and avoid
distractions
by irrelevance
Figure 1 The requirements for active listening (source: adapted from

Moore and Boulle & Rycroft)
16
February-March 2013
Basie Verster is a Professor in the in the Department of Quantity Surveying

and Construction Management, University of the Free State, South Africa
versterj@ufs.ac.za
Related competencies include: M004, SP002
Dispute resolution Security of payment
Chain reaction
Michael C Brand and Philip Davenport outline the changes brought about by Australias Building and
Construction Industry Security of Payment Amendment Act 2010 and the impact on the contractual chain
n September 2010, Australias New South Wales

Government released a discussion paper1 on the
operation of the Building and Construction
Industry Security of Payment Act 1999 (the NSW
Act). It pointed to the apparent difficulties experienced
by claimants (especially subcontractors) in securing
payment from respondents after adjudication.
Subsequently, the Building and Construction
Industry Security of Payment Amendment Act 2010
(the Amendment Act) was passed and became
effective in February 2011. For claimants, this added
appreciably to the scope of the NSW Act and arguably
gives added meaning to phrase security of payment.
This article outlines the problem giving rise to
the Amendment Act, provides a brief analysis of its
operation and addresses the main implications for
the claimant, respondent and respondents principal.
It should be of specific interest in international
jurisdictions where statutory adjudication for
construction has been introduced or is being
contemplated, such as Ireland and Malaysia.
Securing payment
Generally, construction projects are characterised
by a multi-tiered hierarchy of principals, contractors,
subcontractors and suppliers with cascading
payment obligations2 down the contractual chain.
While money flows smoothly, all is well. However,
often one party will stifle the flow of money at the
expense of those downstream. For example, if the
head contractor wants to reduce its overdraft or
pay its creditors or is short of money, there is a
temptation to wrongfully delay or withhold payments
to a party down the chain.
While the adjudication process under the NSW
Act speeds up the passing of money down the
chain, it does not remove the ability of respondents
to use money owed to the claimant while an
adjudication is being determined. This behaviour
is seen to contribute significantly to difficulties
experienced by claimants in securing payment after
adjudication1 and defeats the object of the NSW
Act. The philosophy behind the Amendment Act is
that if the respondents ability to use money received
from their principal on account of the claimants
work is removed, then the incentive to wrongfully
delay or withhold payment is diminished and the
chance of recovery of the adjudicated amount by
the claimant increased.
respondents principal at any time after lodging an

adjudication application while a decision is pending.
It means that the respondents principal must
not pass on monies owed for work carried out or
materials supplied by the respondent. But note:
there are some important qualifications to this (see
Section 26B of the Act).
Failure by a respondents principal to comply with
a PWR renders them jointly and severally liable (with
the respondent) to pay the adjudicated amount to
the extent of any failure by the principal to withhold
the money. This is a form of strict liability. It may
mean that the principal will have to separately
recover from the respondent any money actually
paid by them in excess of the agreed price for the
construction work (or related goods or services) that
is the subject of the PWR.
A Payment Withholding Request means

that the respondents principal must not
pass on monies owed for work carried out
or materials supplied by the respondent
Potential problem
The Amendment Act gives claimants direct influence
over respondents cash flow, albeit within the short
time frame prescribed (i.e. 20 business days).
Nevertheless, the amendments have the potential to
be used by claimants to unfairly coerce settlement
of unmeritorious claims, which may adversely affect
project delivery through a respondents restricted
cash flow. However, claimants attempting to do this
run the risk of losing future work opportunities with
the respondents involved. Therefore, it may be that
market forces will act to curtail any temptation
presented to claimants to leverage the amendments
to unfairly coerce settlements.
Michael C Brand is Director of the Adjudication
Research + Reporting Unit at the University of
New South Wales, Australia
michaelb@fbe.unsw.edu.au
Philip Davenport is an Adjunct Professor at the
University of New South Wales and a Solicitor of the
Payment Withholding Requests

The Amendment Act brings principals into play
in the NSW adjudication process and improves
security of payment. It allows a claimant to serve
a Payment Withholding Request (PWR) on the
Supreme Court of New South Wales, Australia
Related competencies include: T064
February-March 2013
Further information
1
NSW Building and Construction
Industry Security of Payment Act
1999 and Contractors Debts Act
1997, discussion paper, NSW
Department of Services
Technology and Administration,
September 2010
2
oyal commission into the building

R
and construction industry: security
of payment in the building and
construction industry, discussion
paper 12, 2012, Commonwealth
of Australia, Canberra
This article is an adaptation of a

paper published by the authors
in the proceedings of the RICS
COBRA Research Conference 2011
17
Infrastructure
Investing in the future

Richard Graham considers why infrastructure is important to the UK and how institutions such as
the RICS and its professional members should respond by developing services to support its delivery
Institutions
such as the
RICS should
act to provide
training and
leadership that
professionals
need as an
effective
response to
change in the
coming decade
ociety will always need efficient and effective

infrastructure to function properly. In the
Victorian era its provision was predominantly
private investment-led and acted as an enabler of
economic growth. However, this infrastructure is
now worn-out and requires modernisation. In fact,
the UK declined from 19th in 2006 for worldwide
overall infrastructure quality1 to 33rd place in 2010,
and now ranks 24th.
Construction contributes directly as a share
of GDP and indirectly through the infrastructure
it creates. However, UK construction output is
predicted to fall by 6.3% in 2012 and 1.4% in
20132. Historically, the UK has invested just 3%
of GDP in infrastructure3 lower than the OECD
average of 3.8% so the predicted doubling in
infrastructure expenditure to 250bn by 2015 is
welcome and necessary to stimulate UK growth.
Infrastructure developments are often strategic
national assets with attributes of collective
ownership, shared use and associated benefits.
They differ from other forms of investment because
of physical, economic, social and political factors.
This causes increased complexity and risk, being
delivered through many different parties often with
non-aligned and competing goals.
Social and economic benefits
Infrastructure use and its benefits differ between
predominantly social projects, e.g. schools and
hospitals and economic projects, e.g. railways,
highways, utilities and telecoms. The latter grouping
contributes directly to growth and economic
benefit is created through greater user efficiency,
connectivity, productivity and increased outputs.
The UK government recognises the long-term
nature of infrastructure demand and the need for
18
February-March 2013
sustained planning and investment. This is both a

response to economic austerity and low national
growth, but also acknowledges the longevity of
the asset renewal programme and the need for
sustained investment to maintain the UKs world
economic standing. But no matter the short-term
economic needs and the signals given, history tells
us that leadership is unlikely to come solely from
government. The private sector has made significant
past contributions and needs to do so again.
With a Treasury remit to provide a stronger focus
on long-term infrastructure priorities and facilitate
significant private sector investment over the longer
term, Infrastructure UK (IUK) has defined a set of
national priorities that span parliaments and requires
cross-party consensus3. It prioritises sectors and
programmes against three criteria:
potential contribution to economic growth,
i.e. investment that enhances productivity and
enables innovation
nationally significant investment that delivers
substantial new, replacement or enhanced quality,
sustainability and capacity of infrastructure
projects that attract or unlock significant private
investment.
IUK also highlights several enabling objectives:
effective governance of programmes, greater
discipline when commissioning, smarter ways to
use competition, and encouraging innovation and
investment in efficiency to reduce construction costs.
It notes specific challenges, too: lack of clarity
and direction, poor outturn management against
quoted budget, over-specification, unnecessary
bespoke solutions, ineffective use of competition
processes and tactical supply chain engagement
that fails to deliver benefits.
Infrastructure
At a social level, infrastructure requires significant

public acceptance for these investments to
succeed. Recent public debates regarding airports,
trams and high-speed rail serve to underline the
importance of these discussions.
Andy Dixons recent Construction Journal article4
highlighted both the UK governments urgency and
the contractors response to changing demands.
But what about the response of institutions such as
the RICS and its professional members?
Supporting a changing client need?
If anyone doubts the importance of professional
institutions role in leading this debate it is worth
considering Niall Fergusons critique of their
significance to long-term national development
and innovation5. He argues that a central pillar of
the rise of modern western civilisation has been
the formation of effective institutions that create
and share knowledge widely to promote innovation
and ownership of ideas. Bodies such as the RICS
should act to provide training and leadership that
professionals need as an effective response to
change in the coming decade. This will allow it to
extend its global reach and combat influences from
beyond our shores.
However, there is need for a change in the focus
of professional services toward the infrastructure
market. It is worth thinking how clients future
requirements differ from past times.
Clients capital investment plans have historically
focused on the built environment and the
professional engineering and cost consultancy
inputs needed to build new facilities. One prime
purpose was to define scope and limit construction
cost. Ownership and operations were historically
separated from construction and large clients
acted through different departments with different
service requirements; for example, in engineering
specification, design, cost and risk management.
Buildings as an asset class also drive different
service requirements. This can be illustrated by
reviewing the differing characteristics shown in Figure
1 and reflecting on the requirements that they drive.
Complex projects
The complexity of infrastructure projects has
increased rapidly in recent years requiring more
systemised approaches toward definition, design,
management and construction. Future informed
clients include asset owners and operators who
wish to integrate long-term operational benefits
through clear asset management, effective
maintenance and renewal. These clients are equally
concerned by longer-term investment outputs and
funding return. This encompasses end consumers,
social impact, a wider class of risks6 and public/
private interfaces.
The consequence for professional services lies
not only within scope and cost but across broader
measures: whole lifecycle, long-term investment

return, consumer and client satisfaction, and
sustainability. Many professional themes emerge that
are each worthy of exploration in their own right:
the role of the informed client
the emerging role of the professional
programme manager
adoption of production engineering methods,
including lean manufacturing techniques
commercial management, notably strategic risk
assessment, in bidding and project reporting
innovation in cost and risk management,
including different procurement models and
stakeholder management that integrate
professional teams and wider parties
technological advancement that drives
management of complexity and increased outputs
funding, finance and investment vehicles,
such as PPP, that encourage long-term stable
investment return
land planning and valuation, i.e. sharing the
investment benefit and disruption compensation
across society to gain better acceptance of
infrastructure change.
A detailed discussion of these subjects is beyond
this articles scope of this article, but below is a
summary of a few key themes.
The
consequence
for professional
services
lies not only
within scope
and cost but
across broader
measures, e.g.
whole lifecycle,
long-term
investment
return and
sustainability
The role of the informed client

This covers informed clients approach and
decisions toward early output definition,
requirements testing, and early optimised contractor
involvement. It embraces clients gaining greater
competency in project management, technical
and commercial skills. The governments concern
over poor public client delivery is demonstrated
through its creation of the Major Projects Leadership
Academy, a joint venture with the University of
Oxfords Sad Business School. This programme
will train 300 senior civil servants over three
years (including all Senior Responsible Owners)
in three areas: major project leadership, technical
understanding of major project delivery, and
commercial capability. One training output is to
Item
Infrastructure
Buildings
Scope
Large scale multi-discipline or turnkey
Multi-discipline or turnkey
Value range
100m-50bn
10m-100m
Complexity
Very high high

change management
many stakeholders
planning and public inquiry
finance and funding
High medium
configuration management
scope
Outputs
System-wide, national or regional
Discrete, local
Development duration
3-10 years
1-3 years
Construction period
Many years
Few years
Ownership and use
User is often not the same as the

promoter or client
Client is often also the user
Figure 1 The different characteristics of infrastructure and building projects
February-March 2013
19
Infrastructure
improve civil servants delivery skills and better

control all planned infrastructure investment.
Informed clients adopt a clear project cycle
process, such as RIBA or Network Rail GRIP
Stages. Generally, the early inception phase is
important to focus the client organisation toward
an understanding of its make and buy decisions.
Such clients establish an appropriate business
planning process and an outline business case
that defines programme benefits. Informed clients
may not hold the management skills in-house and
decide instead to procure a development manager,
delivery partner, programme manager, project
manager, prime contractor or construction manager
and form a position as to how risk may be passed
through collaboration, integration or more traditional
service arrangements.
What the supply chain considers as early
involvement can, in fact, be quite late in a client
decision-making process. Optimised involvement
of the supply chain takes place at a point where
the client has done a self-analysis, supported by
professionals, as to whether it has all the skills to
supply the leadership required itself.
At a configuration stage, the client establishes
its strategic packaging of the programme. This
includes how to manage high-level interfaces at
all key milestones across the project cycle. Whole
life and cost-in-use is important at this early stage
and leads to requirements for asset knowledge
and asset operations. Programmes change over
time and clients should consider how maintenance
is packaged for operation and the delivery team
dynamics of storming, forming and norming prior
to the start of physical delivery; which is often
overlooked in the rush to start on site.
The client should then embark on market
engagement leading to a category plan, works and
services packaging, and the contracting process. This
process takes place to define the interfaces the client
team wishes to manage at a greater level of granularity.
The process described gives rise to a range
of professional skills development and training,
particularly in the area of performance management.
This covers emerging balanced scorecard
methodologies, benchmarking techniques and
collaborative and cultural soft techniques.
Professional programme management
Much of the programme management delivery
thinking for the built environment originates in
lessons learned from other industries, particularly
the car industry, following Latham, Egan and
others. One essential shift was the separation of
management from design. This led (in general
construction) to the rise of project management and
in the relative demise of the architect as manager
and administrator.
Within infrastructure, engineers are trained in
design and management, including commercial
20
management. Nevertheless, due to the complexity

of modern infrastructure schemes, project and
commercial management have become important
specialist functions. However, the power paradigm
of the infrastructure engineer as manager and
administrator has not been dismantled. Programme
managers argue that this leads to a lack of truly
collaborative, management-based, commercial
and business thinking in infrastructure delivery.
There are signs, however, that infrastructure has
begun a management shift with the adoption of the
New Engineering & Construction Contract forms
(NEC3), created by the Institution of Civil Engineers,
which define distinct and separate roles of project
manager, supervisor and designer.
Commercial management
This increasingly embraces the commercial method
described by the publicly adopted NEC3 and
supporting collaborative processes, BS 11000
Collaborative Business Relationships, soft contract
management skills, bid selection, including effective bid
risk management, financial modelling and assessment.
Adoption of production engineering methods
Design and production processes emerge
to manage programme complexity, where
infrastructure adopts learning from other sectors,
notably manufacturing. This covers Total Quality
Management, continuous improvement and lean
techniques, which aims to remove waste from a
defined repeatable process. Knowledge of service
requirements encourages early involvement of
system operators. Current principles and processes
are being applied and enhanced within infrastructure
programmes, such as Londons Crossrail.
Technological advancement
This drives the ability to manage increasing levels of
system complexity and ever greater levels of output
and productivity. Building information modelling, data
mining and analysis, enhanced communication and
media applications are examples that all drive better
information flow management across many parties.
This article has set out a case for change
in professional service requirements within
infrastructure driven by informed clients where the
need to manage system complexity creates new
requirements. In response, professionals ought to
adapt through service development and training to
address these requirements and effectively support
infrastructure clients to achieve greater efficiencies,
significantly improve national infrastructure quality
and enable higher growth. Failure to do so would
leave a painful legacy for future generations.
Richard Graham is Head of Strategic
Development at Balfour Beatty Rail
richard.graham@bbrail.com
February-March 2013
The informed
client process
gives rise to
a range of
professional
skills
development
and training,
particularly in
the area of
performance
management,
e.g. balanced
scorecard
methodologies
Further information
1
World Economic Forum (2012),
Ranking of Overall infrastructure
quality, Table 2.01, http://ow.ly/
fp6xy
2
onstruction Products Association

C
Construction Industry Forecasts,
15 October 2012
M Treasury & Infrastructure UK,

H
National Infrastructure Plan 2011,
http://ow.ly/gbM8N
he Route to Success, A Dixon,

T
RICS Construction Journal,
June-July 2012, www.rics.org/
constructionjournal
ivil and Uncivil Societies,

C
N Ferguson, broadcast 10 July
2012, BBC, www.bbc.co.uk/
programmes/b01jmxsk
arly Warning Systems,

E
R Graham, RICS Construction
Journal, June-July 2011,
www.rics.org/constructionjournal
CEEC
Common ground
Martin Russell-Croucher gives an overview of activities at the European Council of Construction Economists
he CEEC, the European Council of

Construction Economists, held its 66th
General Assembly in Paris in November. As
one of the founding organisations, the RICS has
always had a significant place in the CEEC and
this continues this year with Justin Sullivan, RICS
Quantity Surveying and Construction Professional
Group board member, as General Secretary and the
resumption of the RICS as the secretariat.
The agenda was tightly packed because the
CEEC is both completing and developing a number
of projects of interest to quantity surveying members
on mainland Europe and in the UK.
Code of Measurement
Following a lengthy period of refinement, the revised
CEEC Code of Measurement is now close to
completion and is expected to be launched at the
spring 2013 General Assembly in Brussels.
The original Code was developed 10 years ago
to facilitate comparisons on an elemental basis of
building projects across the EU member states and
provide a simple elemental code for member states
where this does not currently exist. Discussions
between the delegates showed that, while there are
areas of similarity between the different methods
of procurement, there are some fundamental
differences. This particularly concerns professional
fees and taxes where some countries use a
construction management methodology and the
architect or project leader both tenders and manages
the project on an individual work package basis.
Skills and competencies
The CEEC has been developing a set of construction
economist competencies designed to demonstrate
to clients that quantity surveyors and their EU
equivalents are recognised professionals. While
the UK and Ireland have had very comprehensive
support through RICS technical guidance and the
Assessment of Professional Competence, this is not
the case in the rest of Europe.
Cost models
The CEEC is working on a number of cost models
to enable comparison between the different member
states and also track movement against the euro,
which is used as the benchmark currency. These
models will cover offices, apartment blocks and
industrial buildings. Delegates are providing the
cost information for these models, which should be
available soon.
rather gloomy picture. Many countries are hovering

close to or dipping back into recession with very
depressed construction outputs. Only the Swiss
delegate was able to report a healthy construction
sector, with low inflation and high employment.
The revised CEEC Code of Measurement

is now close to completion and is
expected to be launched at the spring
2013 General Assembly in Brussels
Special presentations
Finally, the General Assembly had two presentations
from invited delegates. Francois Asselin, Vice
President of La Fdration Franaise du Btiment,
which hosted the CEEC in its Paris office, presented
information on the federation, which is a hybrid of
the UKs Federation of Master Builders and a trades
union. With 57,000 members and offices across
France, it plays a very influential role in the countrys
construction industry. However, as with most of
Europe, the sector has been hit hard by the financial
crisis with the lowest output for 20 years and no
sign of an uplift in 2013.
In contrast, Mark Russell, President of the
Canadian Institute of Quantity Surveyors, painted
a much more upbeat picture, with a vibrant
construction industry and an expanding membership.
The main issue for quantity surveyors in Canada is
the size of the country. Vancouver Island for example,
is 720km long and equivalent in size to the UK,
France and Ireland but with a population of only three
million. This presents some interesting challenges.
For example, estimating for some of the more remote
areas of Canada might need to include the cost of
shipping all the labour, plant and material by barge or
being able to transport materials only in winter on the
famous ice roads because the roads are impassable
in the summer.
We will report on the CEEC projects in future
editions of the Construction Journal.
Further information
For more details about the CEEC and its activities, visit
www.ceecorg.eu
Martin Russell-Croucher MRICS is RICS
Economic overviews
Delegates reported on the current economic
situation in their member states, which presented a
Director for Sustainability and Special Projects

and secretariat to the CEEC
martin.rc@rics.org
February-March 2013
21
Embodied carbon
Material gains
The construction industry is under increasing pressure to understand its carbon footprint. Piotr Berebecki and
Sean Lockie show how this can be done through the assessment of Londons Farringdon Station redevelopment
etwork Rail owns and operates the UKs rail infrastructure

including the tracks, signals, tunnels, bridges, viaducts, level
crossings and more than 2,500 stations. It also manages 18 of
the busiest railway stations in the UK, catering for more than 3.5 million
journeys per day, and is the countrys largest floor space provider to
small- and medium-sized business enterprises, with more than 7,000
properties and 18m sq ft of space.
Farringdon Station is being transformed into one of Londons most
important transport hubs and by 2018 it will:
be the only station from which passengers can access Thameslink,
Crossrail and London underground services, offering links to four
major airports and international rail links
cater for 200,000 passengers per day and up to 20,000 per hour
have a new ticket hall for Thameslink and Crossrail services and a new
concourse and entrance to the side of the existing station building
be able to handle 240m (12-car) trains
offer access to all platforms for those with luggage or disabilities.
Network Rail is committed to reducing its environmental impact
throughout its portfolio. For stations and major investment
programmes, this means looking for opportunities to reduce waste,
increase renewable energy supply, use more sustainable materials,
minimise water consumption and find greener ways to transport
construction materials to and from site.
As part of this, Atkins/Faithful+Gould provided design and
sustainability advice on the Farringdon project to ensure that Network
Rails sustainability strategy is delivered and was commissioned to
assess the embodied carbon impact. The carbon assessment was
divided into three areas (see Figure 1).
Embodied carbon
The cradle-to-site embodied carbon assessment was largely based on
the factors from the University of Baths Inventory of Carbon and Energy
Embodied carbon
Operational carbon
Materials production:
cradle-to-gate (factory)
Energy demand for lighting,

heating, cooling, auxiliary
equipment
Transport of materials:
gate-to-site (construction site)
(ICE) database. Defras greenhouse gas conversion guidelines have

been followed to establish carbon emissions during transportation.
The final fit-out and furnishing of the station was excluded (other
than tiles and paint) due to limited opportunities to reduce carbon and
difficulties in estimating material quantities. The study focused on key
materials found in the building envelope and services. The primary
elements were foundations, steel, block/brickwork, floors, insulation,
windows and roofing.
The quantities of materials were established based on the design
drawings and bill of quantities prepared by the cost consultant. The
ICE database was then used to calculate embodied carbon associated
with the key materials. Retaining parts of the existing building saved
around 2,800 tonnes carbon dioxide equivalent (tCO2e) and illustrates
the importance of retention when saving embodied carbon. However,
it was decided not to include this saving in the baseline calculations
because the retained building was listed and it had to be preserved
anyway due to local planning requirements.
The baseline totalled 6,479 tCO2e. It was possible to reduce this
by 11%, bringing the emissions down to 5,758 tCO2e. One of the key
ways of reducing embodied carbon of a project was to specify higher
recycled content. The materials specification was mapped against
the Waste Resources Action Programme recycled content toolkit and
potential quick wins identified to improve from standard to good or
best practice. This included terrazzo tiling, concrete blockwork and
paving, and cement replacement materials such as ground granulated
blastfurnace slag and pulverised fuel ash.
Some low embodied carbon alternatives were also identified and
recommended to the design team. These included precast concrete
beams, micro-perforated aluminium panels and tiling, exposed
concrete ceilings, castellated steel beams and flexible plumbing.
A simple to use embodied carbon estimator tool was also developed
that allows the contractor to monitor the construction stage embodied
carbon performance against the design teams specifications.
Lifecycle replacement
carbon
Maintenance activities
Embodied carbon assets being
replaced and demolished
Construction activities on site
Transport of labourers to
construction site
Energy demand for office

equipment
Cleaning activities
Urban infrastructure (e.g. roads,

drains, water)
Energy demand for signage

boards
Administration activities
Energy used by the project team
Energy demands for external

lighting
Transport of labourers
Figure 1 Carbon assessment boundaries
22
February-March 2013
Emissions
included in
the study
Emissions
not included
in the study
Embodied carbon
Operational carbon
Operational carbon emissions were modelled using the IES and iSBEM
compliance tool for Part L. It has been estimated that the buildings
will emit around 85kgCO2e/m2 per year, which totals 235 tCO2e for the
whole project per year or 11,750 tCO2e (assuming a 50-year life cycle).
Life cycle carbon assessment
Over the life of the building certain elements (containing embodied
carbon) will be replaced and, although life cycle carbon assessment
was not part of the original commission, it was conducted as a
theoretical study after the main carbon assessment had been finalised.
The exercise involved comparing the embodied carbon figures with
operational and life cycle replacement carbon emissions. Life cycle
replacement emissions were based on applying the estimated service
lives to the assets already covered in the embodied carbon study. The
energy used to install a given element was also included.
Outcome
Although the life cycle carbon assessment was commissioned relatively
late in the design process, the project teams drive to improve the
sustainability performance of the station has led to some significant
carbon savings by focusing on material selection. We evaluated the
performance of materials against value, cost effectiveness, aesthetic
characteristics and climate change. While embodied carbon was
not considered from the first stages of the project, a considerable
reduction (11%) was achieved through appropriate material selection,
but more could have been achieved if this had been considered earlier.
Another important factor was having the contractor involved in the
design development early so it was able to have an input into the
materials choice considerations, and the final carbon budget.
The life cycle carbon assessment applied on the project has shown
that it is possible to analyse embodied, operational and replacement
impacts of design solutions at the same time. This ensures that
optimal climate change mitigation measures can be considered and
implemented. However, we found that the accuracy of quantifying
carbon reduction/mitigation measures rises in the later stages of the
assessment. A cross-check of results of any similar analysis is therefore
recommended using different methodologies, tools and databases.
Piotr Berebecki and Sean Lockie of Atkins/Faithful+Gould were
Lead Authors of the Methodology to calculate embodied carbon
of materials information paper
piotr.berebecki@fgould.com
sean.lockie@fgould.com
The Methodology to calculate embodied carbon of materials information
paper can be downloaded from www.rics.org/embodiedcarbon
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February-March 2013
23
Performance measurement
Made to measure
In her second article on performance measurement, Vicky Hutchinson provides some practical advice
on how to develop a system that, if used properly, will lead to continuous business improvement
erformance should not be measured for its own sake but

as a tool of continuous improvement. Driving improvement by
using the knowledge within a business provides competitive
advantage and key performance indicators (KPIs) are a tool for
monitoring your effectiveness. There are several considerations when
creating a performance measurement system.
What are the aims of the system?
Common aims are to:
meet client requirements
monitor client relationships
ensure the safety of employees
win work.
For example, a contractor implements a KPI system when working on
a public sector framework whose aim is to deliver best value timely
delivery, cost effective, delivered to specification plus positive outcomes
for the community. This seems simple enough.
But things become complicated when the contractor also has its
own KPIs aiming to measure, say, its financial stability, the financial
performance of projects and the state of the forward order book.
Some companies become unstuck when they run several disjointed
systems or extend their system so it can be many things to many
people. The business aims determine what KPIs are measured, who
collects and processes the data, who reviews it and who actions it. If
the system is trying to meet two or three different aims, it is likely to
include more KPIs, involve more people and take longer to establish.
So plan for the time and resources required. Maybe aim to meet the
most pressing need, plan a phased implementation, or plan a holistic
approach that may take longer to achieve.
Some companies become

unstuck when they run several
disjointed systems or extend
their system so it can be
many things to many people
Which measures should be used?
If a client demands particular KPIs then you may have little influence
over these. Commercial clients have drivers aiming to maximise
income-generating priorities, e.g. lettable space. Public sector clients
tend to favour benchmark KPIs and are usually driven by economy
and cost-effectiveness, but they may also want to monitor the local
benefits of their investment, e.g. employment. Social housing and utility
providers usually have their own tried-and-tested measures. Assuming
the measures have not been dictated by the client, or you are choosing
others for your business, where do you start?
The Constructing Excellence construction KPIs1 are a good
place. With around 40 measures covering time, cost, quality, and
24
February-March 2013
environmental and social performance with standard definitions and

methods of measurement, they have two main advantages:
each is standardised and widely accepted
there is a dataset of projects and companies against which to
compare your performance.
The benchmark score means that you can measure your performance
compared to x% of the industry, which is great for tenders where you
want to demonstrate you are a high-performing company. Being able
to say: Were performing better than 90% of the instruction industry
is pretty powerful.
The Constructing Excellence KPIs enable you to start quickly,
assuming you have the data available. If you know your original tender
and outturn prices, anticipated and actual programme lengths and a
client satisfaction score then you can benchmark project performance
very quickly. But if you need to debate whether you should also be
measuring waste, water consumption, defects, etc, then it will take
time to agree and collate the data.
Unfortunately, many are end-of-project measures, so the results take
time to generate and are not responsive enough to drive improvement
during a contract. But if continuous improvement is your goal and you
have the time, then designing bespoke KPIs will be more effective. The
key to success is creating definitions that are clear and not open to
interpretation.
Common examples of how people try to play with the calculations
are on two benchmark KPIs (which supposedly have standard definitions
and methods of measurement). The Time Predictability KPI is:
Actual construction time Anticipated construction time
Anticipated construction time
x100
The Cost Predictability KPI follows the same format. But people
realise that they can improve the score by suggesting, for example,
that the effects of client changes should be excluded from the actual
programme duration. Everyone wants to make project performance
look as good as possible so if it was delayed for reasons beyond
anyones control, such as the weather, or if it overran because the
client raised some variations, then surely it is reasonable to exclude
those things?
This illustrates how even the most clearly defined measure can be
questioned. So create a method of measurement that will be simply
and consistently applied a combination of benchmark and bespoke
KPIs will help to deliver the best of both worlds.
Who should be involved?
Someone should be responsible for designing and managing the
performance improvement process, e.g. a Performance Manager, and
it helps to have a high-profile champion with enough clout to ensure
that everyone knows that this is important.
Then, for every KPI determine what data should be collected, e.g.
original tender price, estimated completion date, waste transfer notes,
mileage to site, etc. The system will involve more people because the
data resides in many places so it should be clear who collects which
data, when and what should they do with it.
Predictability Time Construction
100%
80%
Safety
60%
Predictability Cost Construction
40%
What will happen to the data?

Defining who reviews the reports and when, and
who ensures that improvement actions occur is
20%
critical. The obvious answer is to use a management
Client
meeting. A typical report may include KPI scores,
Employee
Satisfaction Satisfaction
Product
benchmark scores, some qualitative data (perhaps
providing context) and comments explaining any high
or lows (e.g. unforeseen ground conditions).
It is important that reports show good/poor
performance, exceptional circumstances and
improvement actions. Comments to interpret
the data are helpful. For example, the Kier KPI
Client
Management report reads: Kier Constructions
Satisfaction Construction Process northern operations continue to return excellent
Service
Mains Water Use
results for Waste diverted from landfill but possibly
at the expense of the Cost of waste.
This is another pinch-point for the in-house
Construction Process Construction Waste
system. For example, a companys project KPI
data show its sites consistently produce lots
A combination of benchmark and bespoke KPIs should provide a balanced approach to measurement
of waste; clearly, a waste minimisation drive is
required. However, with smaller amounts of data
Some data may only need to be collected at project completion (e.g.
or with inconsistent performance, it is unclear whether it is a result of
outturn price) or just once a year (e.g. for the Respect for People KPI).
the company or other conditions. Without an intimate knowledge of
This is fine for monitoring general business performance or to include
projects, there is a tough call to make.
benchmarks in bids, but if the data needs careful monitoring (e.g.
The Performance Manager is critical in this process. Someone must
energy consumption) this will probably need more frequent capturing.
be responsible for possessing, accessing or investigating all of the
To really drive improvement, it is helpful to have some more responsive
in-depth knowledge that allows performance to be properly measured
measures, e.g. monitoring the time predictability of planned activities
and understood.
completed may help turnaround a current project, rather than looking
Finally, everyone involved in data collection and processing must
back on completed projects.
get feedback because it is demoralising if there is no indication that
Collection forms may be needed if the data does not exist or it may
anything has happened following their efforts. Everyone should also
just need accessing and reformatting. Usually, the data is collated by
receive feedback on performance improvement, such as good news
one person and they, or someone else, reports it. The key lesson is
stories in a newsletter.
that some training and awareness-raising is required. Those involved
So how do other people use a performance measurement system?
with the data collection/processing need to clearly understand their role
See the panels below and overleaf where a contractor, a framework
and colleagues need to understand this and be accommodating.
manager and a consultant explain their approaches.
Kier
Kier has around 40 internal KPIs on which it collects data monthly
and reports quarterly, under the headings of Contract, Financial,
Personnel, Safety, Environmental and Client Satisfaction. The
data goes to management and board meetings with background
information to clarify the results.
The 11 operating centres of the Construction Division are
benchmarked on three Project Completion KPIs Project
completions in original contract, Project completions in extensions
and Project completions beyond extensions. Six client satisfaction
measures (Considerate constructor; Client satisfaction (product);
Client satisfaction (service); Perception of Kier; Defects review;
Customer satisfaction response rate) and three safety measures
(Overall accident incident rate; Management failure; Safe and
unsafe acts conversations) are given high priority reflecting their
importance to the business. Kier is also proactive in measuring
the performance of the supply chain for each project.
Business improvement is driven through several mechanisms.

Lessons learned are collected during the project close-out meeting
and, where there is repeat work for a client, they are fed through
to the follow-on teams. For framework contracts, Kier collects data
more frequently than required to track progress. KPI scores are
used to inform supply chain selection and where the supply chain
falls below par on safety, Kier operates a Yellow and Red card
system where the supply chain partner is precluded until it can
prove that remedial measures have been taken.
Phil Vickers, Regional Commercial Manager, says: First, identify
what you want and what you want from it. Keep the KPIs down to
a manageable number and make sure they are focused on what
you want to achieve. Secondly, present the results in a user-friendly
and visual way. Numbers dont always excite people and theyre
hard to communicate, so use graphs and target people with
information that appeals to their interests.
February-March 2013
25
Turner & Townsend

Many see KPIs as a distraction
and an extra cost so the
champion needs to communicate
their importance to winning work,
meeting the clients needs or
improving the business
NW Construction Hub
This regional framework is open to public sector organisations
for construction works (and engineering and professional
services). It has used its previous framework experience to
establish a procurement vehicle and performance measurement
system comprising 14 KPIs, including seven Constructing
Excellence KPIs (items marked with *). They are:
1. Carbon per 100,000 project value
2. Contractor satisfaction*
3. Local labour
4. Supply chain satisfaction
5. Client satisfaction (product)*
6. Client satisfaction (service)*
7. Fair payment (main contractor)
8. Predictability cost construction (excluding client changes)*
9. Predictability time construction (excluding client changes)*
10. Predictability time design (excluding client changes)*
11. Apprenticeship weeks per 100,000 project value
12. Waste diverted from landfill (tonnes) per 100,000 project
value (new build non-housing projects)
13. Waste diverted from landfill (tonnes) per 100,000 project
value (refurb non-housing projects)
14. Waste from site (volume) per 100,000 project value*.
Contractors collect performance data that is reported by the
KPI Manager. Because the team is frank about its experience,
there are many useful lessons for others looking to measure
their own performance.
Some contractors have not mastered data collection and
some clients are slow to contribute their scores. Nonetheless,
the team is supporting all partners in its aim to compare
contractors and wants them to take the initiative by using
performance reports for continuous improvement.
Stephen Ives, KPI Manager, says: Some contractors are
doing great work. But on non-benchmark KPI, their scores
dont look so good because there is no meaningful data
against which to benchmark their performance. This makes
it hard to sell the framework because potential clients dont
understand the scores.
They take them at face value and it looks like contractors
and the framework are under-performing on elements such as
apprentice weeks. Were working with contractors to review
non-standard measures to see whether we can better capture
and communicate their performance.
26
February-March 2013
Turner & Townsend has developed a performance measurement

model to allow an organisation to measure its performance and
enable a consistent industry-wide comparison. In the current
economic climate, where delivering demonstrable value for
money is an imperative, using the model is a key enabler to
achieving this. It is now being used by infrastructure procurers
and operators during the delivery of major capital programmes,
particularly in rail, water and air. A successful approach should:
develop measures covering areas of key organisational value,
these should align to a programmes objectives and may
cover Commercial, Quality, Health and safety, Environment,
and Social responsibility
set clear performance targets against these measures
defining best practice
monitor and act on performance against the targets an
independent team collating data and undertaking regular
reviews of a project, supply chain or management team will
add significant value
review feedback from the assessment with the participants
to give a clear understanding of the basis of assessment
and subsequent improvement actions it is also possible to
compare performance against a peer group and share best
practice in a structured way.
Chris Jones MRICS, Director, says: Identify the key
performance indicators for your success what do you want to
measure? Then establish a transparent framework and get buyin to the results. Its very important that the outputs are used
as part of a constructive management approach. The goal is to
improve performance, not criticise. You want the results to be
accepted as part of the development of a collaborative, highperforming, mutually beneficial relationship.
Staying on track
While a performance measurement system can be straightforward to
establish, it can easily be derailed. When the possibilities start spiralling
out of control, refer back to the original clear aims and ensure that you
fulfil them first. Many see KPIs as a distraction and an extra cost so the
champion needs to communicate their importance to winning work,
meeting the clients needs or improving the business.
The doubters will be proven right if you collect data but do nothing
with it. This is a trap that many businesses fall in to. Ensure that
someone drives the process reviews the data, acts on it and
measures again. After all, performance measurement is not the end
game; business improvement provides competitive advantage and
KPIs are the tool for gauging whether you are on track to achieve this.
Further information
1
The Constructing Excellence construction KPIs can be found at
www.ccinw.com/kpizone
Dr Vicky Hutchinson is a Principal Consultant at Room4 Consulting
vicky.hutchinson@room4consulting.co.uk
The measure of you, page 12, Construction Journal, NovemberDecember 2012, www.rics.org/constructionjournal
Related competencies include: T065
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e training@rics.org
The material was covered in a logical manner, providing a sense of

clarity on key issues of Contract Administration. I would recommend
this training event to anyone who wishes to improve their knowledge
of this subject area.
Cillian Daly, May 2012
rics.org/training
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Construction Journal February-March 2013

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Construction Journal February-March 2013

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February-March 2013

Conflict avoidance and dispute resolution

Getting the Lowdown...

completion sound testing of new

The RD Handbook can be ordered in

Next doors kids:

Predictability Time Construction

Rise to the challenge

Global claims have always divided opinion, says

The road to resolution

Did you know?

Penny Harper gives an overview of the process of

Some people are unwilling to use Dispute Boards,

Learning from experience

Predictability Cost Construction

Specialist quantity surveyors have a crucial role to

Construction Process Mains Water Use

Investing in the future

Olive du Preez and Professor Basie Verster

Michael C Brand and Philip Davenport outline

Richard Graham considers why infrastructure is

Martin Russell-Croucher gives an overview of

Construction is under increasing pressure to

In her second article on performance measurement,

have always admired contract dispute quantity

has a vital role in the development and wider

David Bucknall is Chairman of the Quantity Surveying

Dispute resolution Global claims

here a contractual party brings a

a claimant bears the burden of proving that they

The ability to present a claim globally does not

Jennie Gillies is a Barrister at 4 Pump Court

Dispute resolution Middle East

The road to resolution

isputes in construction projects are almost

International Arbitration Centre has a substantial

Richard Harding QC is a Barrister and Arbitrator and

Related competencies include: M006, T064

Did you know?

New look Construction Journal

RICS & APM Project Leadership

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