Industry Interviews: Commercial & Legal Risk Management
“Attempt to comply with contractual notice periods from the commencement of the project because …”
Name: Philip Miles
Length of Time in industry: 30 years.
- Chartered QS, Lawyer – NSW, Registered Adjudicator – Queensland.
- Commercial lead on various EPC power projects throughout Asia, Middle East and North America.
- Preparation, negotiation and settlement of delay and disruption claims for civil engineering projects throughout Australia
What I’ve Learned:
- When reviewing contract documents to identify risk, pay attention to the areas that can sometimes be glossed over in a normal Risk Review. For example, the contract definitions or parts of the specification. All too often there are significant obligations hidden away that only surface after the contract has been awarded. Practical Completion in terms of the Contract might mean in order to avoid LDs the Contractor must also hand over all QA documentation including as-built drawings, and not have the traditional luxury of a long tail after the Project has finished in which you can organise the paperwork.
- Attempt to comply with contractual notice periods from the commencement of the Project. Organisations usually try to maintain a good relationship by not issuing Notices to avoid antagonising the other party. Notices can be crafted in such a way that preserve entitlement without seeming inflammatory. Remember, the contract specifically sets out your Rights as well as your Obligations – it is more difficult to recover rights once notice periods expire.
- Whilst taking time to explain to the project delivery team some of the key contractual risks at commencement is a good idea, it is essential that this is followed up constantly over the life of the project. Sample letters and detailed flowcharts presented at the start of a project are quickly forgotten if not put into practice over time. This leads to enhanced learning for the organisation as a whole.
- Learn from your mistakes. Hold an honest post-mortem and learn from the errors before key team members leave to go onto other projects. Companies have a habit of dismissing problem projects as just a “difficult job” but repeating the same mistakes. Having an independent facilitator also helps to reduce blind spots and flush out what should be addressed without fear or favour and removes the idea of a witch hunt.
- Devote time and effort into the Construction Schedule, making sure that it is correct from day one, and updated regularly. At the end of the job the schedule is a critical piece of information that drives entitlement to claim relief, and defence against delay damages.
- When negotiating always keep in mind what motivates the other side, rather than principally focussing on what is your best outcome. Understanding their goals and objectives will allow you to develop a bargaining position that has a much better chance of negotiating a successful outcome.
- Construction timeframes are always tight. Time lost at commencement can rarely be recovered later, and if the theory “that most work happens towards the end of the job” is true, there is even more incentive to not lose early time.
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