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PREPARATfONJ PRESENTATION AND NEGOTIATION OF CONSTRUCTION CLAIMS

BY

NORMAN MURURU

SA (B Econ), LLB (Hons), Dip Hsg, FIQSK, FAAK, FCIArb

1.0 DEFINITIONS

The word 'claim' is defined as "an essetiion af a right, a demand far somethint; as due .... ". In constructions contracts, the word is used to refer to demands by Contractors for additional money which arise other than under the ordinary contract provisions for payment. The demand is additional to the principal entitlements, which is the

contract price agreed between him and the Employer. In the rare

instance when no changes or variations at all occur in a contract, the Contractor is expected to carry out and complete the contract works as specified, designed and billed in return for the agreed price. In such an event, there will be no claims for additional payment However, due to the nature of construction contracts, such a happening would indeed be a rare one.

In general, building and engineering construction projects will present numerous instances which force a change or a variation in an aspect or to a component of the works. This may arise from a change of mind of the Employer or the Consultants, or as a result of changes in site conditions, unforeseen adverse physical conditions, artificial obstructions and other imponderables, errors in design and documentation etc. If in the process of complying with instructions or in overcoming these hurdles a contractor incurs expense or loss which is not covered in the contract price, he may be entitled to a claim for additional payment.

PREPARATION; PRESENTATION AND NEGOTIATION OF CONSTRUCTION CLAIMS c'ro

DEFINITiONS C'TD

To many Employers and even to some Consultants, the word claim carries pejorative overtones. They associate it either with sharp practice on the part of a Contractor or downright cheating or fraud:

TlYing to make some money where none is properly due. Such mistrust is reciprocated by the contractor having to pitch his claims at a higher level than they deserve on the premise that uncooperative Employers and partial consultants will resist the claims vigorously whatever their merits, so if you aim high you might get something more than if you aimed low. The result of this is that

claim settlement has become a very dispute loaded aspect of

construction contracts, generating considerable business for lawyers; claims consultants, arbitrators and technical experts in arbitration and in litigation.

2.0 CLAiMS SITUA nONS

There are basically two categories of claims. Those that arise under the contract and whose remedy is provided therein and those which arise from a breach of a term of the contract and whose remedy is not provided in the contract. The first category is properly called contractual claims. The second is generally referred to as excontractual or extra-contractual claims meaning that even though they might arise from operations of the contract, their remedy is to be souqht outside it. In legal parlance, they are generally referred to as "common law" claims.

Let us first of all examine the sources of purely contractual claims. The situations which give rise to these claims are generally identical in both building and engineering contracts.

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CLAIMS SITUATIONS C'TD

They include:

2.1 Claims arising from the adjustment of errors or discrepancies in drawings, specifications and bills of quantities.

2.2 Expenses arising from provision of samples, testing and opening up covered works for inspection provided that the tests and inspections are positive (in favour of Contractor) and are not otherwise provided for. Ditto for searching for causes of defects when not attributable to the Contractor.

2.3 Expenses arising from overcoming unforeseen adverse

physical conditions and obstructions.

2.4 Borehole, geotechnical and other exploratory excavations, if not provided for in the contract.

2.5 Expenses arising from making good damage occasioned by excepted risks (following a catastrophe which is not covered by insurance or is carried by the Employer)

2.6 Expenses arising from Architect's or Engineer's instructions to vary the works.

2.7 Expenses incurred by the Contractor arising from delays in receiving possession of site.

2.8 Expenses arising from suspension of the works or postponement of part of the works either ordered by the Architect or Engineer or lawfully implemented by the Contractor.

2.9 Adjustment of provisional work following remeasurement.

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CLAIMS SITUATIONS CfTD

2:10 Losses and expenses arising from a disturbance of the regular progress of the works by the named causes (prolongation and disruption claims)

2.11 Losses and expenses which the Contractor incurs following a lawful determination of contract by himself.

2.12 Losses and expenses incurred by the Employer in completing the works following a lawfu! determination of the contract.

2.13 Compensation for price increases due to changes- in labour and material rates and prices (fluctuations)

2.14 Recovery of losses and expenses arising from changes in rates of exchange and currency restrictions.

2.15 Adjustments arising from the expenditure of Prime' Cost and Provisional Sums.

2.16 Expenses incurred by the Contractor in remedying defects which are not his responsibility.

, j~

2.17 Expenses arising from the provision of work, services and

attendance to other contractors, not oth€rwise provided for.

2.18 Miscellaneous expenses arising from correction of setting out errors, disposal of fossils, payment of fees and licenses to statutory and other services undertakers, etc.

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3.0 COMMON LAW CLAIMS

These claims are generally founded on implied terms. Examples are; a contract which requires valuation and certification to be undertaken within X days may have no provision for a remedy for a breach of the term. Following the common law rule that "there shall be no injury without a remedy': a remedy is implied for that breach.

The usual remedy in such a case will be the recovery of finance charges which the Contractor will incur during the period between

. .

the dates when valuation of certification should have been carried

'N •

out and when they are actually done.

Another example refers to late possession of site. It is generally accepted that construction contracts contain an implied term to the effect that the Employer will not hinder or prevent the Contractor from carrying out his obligations in accordance with the terms of contract. So, if the site for the works is not give to the Contractor in accordance with the contract, breach of this implied term is committed by the Employer. If there is an express remedy for the breach, that will be the remedy to be applied. Where none is specified, a remedy wi!! still be available under the common law principles which authorize recovery of ~amages incurred provided they can be demonstrated convincingly.

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COMMON LAW CLAIMS C'TD

Claims which may arise from incomplete or misleading documentation discussed earlier today will generally fal! under the common law category either under contract or tort. An essential

difference between contractual claims and common law claims is

that the Architect/Engineer is empowered by the contract to deal with the former but not the latter. For common law claims, the Employer and the Contractor have to agree failing which the Contractor may claim them in arbitration or litigation where all the legal remedies are available .

. _

4.0 NOTIFICATION OF CLAIMS

Without reading any contract conditions, a prudent businessman will want to notify his partner in contract of any circumstances, actual or potential, which may impact on completion time or contract cost. The reason for this is fairly obvious. The affected party has entered into contract on fixed terms, to complete the assignment in 'X' weeks for a payment of Kshs.'Y'. Anything happening to alter either or both of these two contract conditions amounts to a variation of contract requiring the taking of appropriate steps to regularize or contain the situation. In addition, the Employer has committed Kshs.'Y' to the project. If more funds will be required, he needs to he informed as early as possible so that he may make appropriate arrangements. Late notification, if at all admissible, might involve long delays in payment as the Employer looks for the extra funds required. This should be sufficient reason for the Contractor to convey his intentions to claim as early as possible.

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PREPARATION, PRESENTATION AND NEGOTIATION OF CONSTRUCTiON CLAIMS C'IO NOTIFICA nON OF CLAIMS C'TD

Early notification is necessary for another reason. The Contract Administrator (Engineer/Architect) also needs to know what is happening or likely to happen so that he can prepare himself to investigate the validity of the claims and their monetary value at the time. If the budget is inelastic, he may also consider at the time what changes or modifications are required to the project to accommodate the claims without a material change in overall costs.

In my view, an experienced constructor who operates in a businesslike manner will be ahve to these requirements even before he studies the contract conditions to find out what they provide. In

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to have such or similar provisions.

And indeed, all the standard conditions of contract used In both building and engineering construction projects have taken care of the situation.

They all lay down strict conditions which have to be followed by a contractor to assert and establish his right to additional payment. The overriding conditions are that the claimant must give written notice of the occurrence as soon as that situation arises, the occurrence must arise from a "named event': the Contractor must substantiate his claim and the Contract Administrator must form the opinion that the "named events" have caused the loss and or expense claimed. If those requirements are answered in the positive, the Administrator is [eft with the task of ascertaining the proper amount payable.

Let us now examine specific contract conditions to see how they deal with the matter.

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5.0 JBC - CONDiTIONS OF CONTRACT FOR BUILDING WORKS

The principal" clauses which deal with claims for additional payment are clause 30 on variations and clause 37 on loss and expense.

They prescribe that:

5.0.1 Written notification of the occurrence is necessary

5.0.2 The occurrence must fall within a "named event"

5.0.3 The application must be made within a reasonable time of the haooenlno of the event

, . ....

5.0.4 Direct loss and or expense has been caused to the Contractor thereby.

5.0.5 This loss and or expense is not reimbursable under any other provision in the contract.

From this, it will be seen that quite elaborate machinery has been set up to detect the occurrence of claims early and deal with them as they occur. Due to the pervasive nature of claims, the Contract Administrator is put on guard to beware of possibilities of double payment. If the effects of the occurrence can be accommodated in a change of rate, for example, then no further loss or expense falls to be ascertained.

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JBC -' CONDITIONS OF CONTRACT FOR BUILDING WORKS GJTD

5.1 Under the 1999 JBC conditions, the Contractor is required to "mak§ a claim" supported by detailed particulars. This is unlike the pre 1999 conditions where a Contractor was only required to make a "written application" stating that he has incurred direct loss and expense.

The current conditions operate from the standpoint that since it is the Contractor who is in charge of the construction, he is in the best position to know and to report on the specifics of any occurrence which puts him to additional expense, hence the requirement of a fully worked out claim.

5.2 When should claims be submitted? The Architect and the Employer need to know early that claims will arise.

The conditions specify therefore, that notice of intention to claim should be given 30 days after the occurrence and actual claims made not more than 30 days thereafter. It is necessary that actual claims be submitted as soon as possible for the reason that the Employer is not only interested in knowing that costs will rise. He is even more anxious to know by how much, so that he may arrange his finances accordingly.

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JBC - CONDITIONS OF CONTRACT FOR BUILDING WORKS C'TD

5.3 To compete with each other more effectively, construction firms are becoming more and more business minded. They are hiring technical and managerial staff who are conversant with construction contracts. In the result, more and more of them submit properly documented claims whether the contract demands it or not. They are fully aware that as businessmen,

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it is their claim and it is them who must prepare and support it with all available data and not just leave it to the whims of the Architect, Engineer and Quantity Surveyor. Such contractors will be motivated by commercial pressures to prepare and present their claims early even when conditions of contract do to lay deadlines. An early presentation should result in an early evaluation leading to early payment. It follows from this that a Contractor who is dilatory in the preparation and presentation of claims will suffer a delay in its evaluation and eventual payment.

So, the message to Contractors is: Notify early, prepare and present early to comply with the contract and to ensure early evaluation and payment.

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PREPARATION, PRESENTATION AND NEGOTIATION OF CONSTRUCTION CLAIMS e'TD

JBC - CONDiTIONS OF CONTRACT FOR BUILDING WORKS C'TD

5.4 When is payment for an admitted claim to be made?

According to this form (JBC)

"Any amount from time to time so assessed shall be added to the contract sum and if an interim certiticete is issued after the date of assessment any such amount shall be added to the amount which would otherwise be stated as due in such a cettiticeie"

This simply means that any admitted and evaluat~d claims have, the effect of increasing the contract sum to the extent of the assessment. Also, that the assessed amount is to be paid in the subsequent payment certificate. Contractors who habitually postpone the presentation of claims until practical completion (where this is permissible) do themselves grievous harm. They deliberately deny themselves funds which they would otherwise have at the appropriate time and in the process cash flow suffers. In addition, they lose the opportunity to reduce their overdraft at the bank or invest the funds arising from an early payment of claims. To repeat; claim early assessment, certification and payment.

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6.0 FiDIC & ICE CONDITIONS

FIDIC & ICE 6 provide for variations under identical clauses. Clause 51, ordering of variations, and Clause 52, valuation of variations. Claims are under different clauses. ICE 6 deals with claims under

Clause 52(4) while F!DIC 4 devotes a separate clause to claims; Clause 53. FlOre have recently produced a completely new set of conditions (1999) and ICE also updated their forms in the same year (ICE 7)

For our purposes today, we will refer only to FIOIC 4 and ICE 6.

6.1_,1 Contractor to send a written notice of intention to claim additional payment within 28 days of the happening of the relevant event and to specify what the event is.

6.1.2 Identify the clause(s} under which the claim(s) are founded.

To note that Clause 53 is only a procedural clause and not an enabling one.

S.1.3 Immediately keep and maintain contemporary records necessary to support the claim, if any made.

6.1.4 Contractor to permit Engineer to inspect the records. Fngineer may, after inspection, instruct the contractor to keep any further records which he (the Engineer) may deem necessary.

6.1.5 Submit to the Engineer within 28 days of notice "an account giving detailed particulars of the amount claimed and the grounds upon which the claim is based".

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FIDIC & ICE CONDITIONS C'TD

6.1.6 If the Contractor fails to comply as above, he stands to lose his entitlement to reimbursement. Alternatively, he will be entitled to however much the Engineer can ascertain form the records maintained by the Contractor at the time of the event.

The above requirements effectively answer the questions concerning the time for making notification and when to submit the claims. In these forms, the onus of notifying, preparing and justifying the claims is placed squarely on the contractor's shoulders.

Th,~ Engil)eer's duty is only one: To assess the claims and recommend payment provided the Contractor has done his work properly, He is not required to either originate or compile information which may be used to make claims. Although his site staff should also keep records, these are of a slightly different nature ana for a different purpose. The Engineer's role is supervisory and not executory. His records win therefore be geared more to measuring performance against the contract requirements rather than recording the finer details of the Contractor's activities. Notwithstanding, these records should corne in handy when checking and assessing the Contractor's claims. Concerning payment, clause 53.5 of FI DIG 4 authorises the Engineer to include the assessed amount in any subsequent certificate either in full or in part depending on whether the claim has been finally assessed and whether the loss is a continuing one.

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7.0 ECC (NEe)

For the sake of completeness, I should say something here about a recent addition to construction contract forms. It is the New Engineering Contract (NEG) issued by the ICE intended to be used in both building and engineering construction projects. The first edition came out in 1993 after 7 years of research, drafting and consultations across the industry. It has in that short span, been revised, the second edition having come out two years later (1995). Even the title has changed. It is now called The Engineering and Construction Contract (ECC). This form of contract is a radical and complete departure from ali the existing standard forms both in

language and philosophy.

In the introduction to the Guidance Notes, the authors state the purpose of the EGG in these words;

en has been developed to meet the current and future need for a form of contract to be used in engineering and construction generally. which is an improvement on existing standard contracts in a number of ways namely;

7.0.1 "Flexibility - it is intended to be used for engineering or construction work containing any or all of the traditional disciplines irrespective of whether the Contractor has a design responsibility or not"

7.0.2 "clarity and simplicity - Although a legal document, ECC is written in ordinary language, easily understood by people whose first language is not English, using only words which are in common use"

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ECC (NEe) C'TD

7.0.3 "Stimulus to good management - Every procedure has been designed so that its implementation should contribute to rather than detract from the effectiveness of management of the work. ECC is intended to provide an up-to-date method for Employers, Designers, Contractors and project managers to work collaboratively and to achieve their objectives more consistently"

7.1 This form deals with claims under what it calls "Compensation Events". These are occurrences in the contract which have an effect .of entitling the Contractor to monetary compensation over and above that which he has contracted to receive or additional time beyond that contracted for.

7.2 Clause 60 lists the "Compensation Events" which qualify for reimbursement or compensation. The list includes traditional events as well as novel ones not expressly recognized in other countries e.g.

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ECC (NEe) C'TD

" It is a "Compensetion Event" if:

The Project Manager or the Supervieor does not reply to a communication from the Contractor within the period required by this contract"

and

"The Employer uses part of the works before both completion and the completion date"

and

"The Project Manager or the Supetvisor changes a decision which he has previously communicated to the Contractor'

The procedures for notifying the occurrence of "Compensation Events" is prescribed in Clause 61. The time scale is much

"stricter than in other contracts; perhaps too strict in real life to be followed without any relaxation. For example, if a Contractor: does not notify the occurrence of a "Compensation Event" within 2 weeks of its occurrence, he forfeits his right to do so at a later time.

7.2 Clauses

62

and

63

deal

with

evaluation/assessment/ascertainment of the monetary value and or time involved in the occurrence. This time round the Contractor does not send masses of data and calculations for evaluation by the Contract Administrator.

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ECC (NEe) C'TD

- He sends his claim in the form of a quotation. Again, strict time limits apply. He must do it within 2 weeks. If the compensation event has not yet occurred, the Contractor will send alternative quotations for overcoming the problem. Strict time limits do not only apply to Contractors, they also apply to the Contract Administrator designated in this contract as Project Manager.

The EGC being a universal type of contract, the authors were well aware that professionals other than Engineers may be designated Contrac::.t Administrators, hence the title, Project Manager.

He also must respond within 2 weeks, either accepting the quotation, requesting further or revised quotations or giving notice that he will be making his own assessment which he is empowered to do under Clause 64.

Thereafter, payment is effected In the usual way at the subsequent "assessment date", which date we currently cal! the

"certificate date".

In the short period this contract has been around, it has attracted a lot of interest from various promoters and donors of capital development projects. The World Bank and the European Union in particular, have chosen it as a basis of their engineering contracts. They are using it, with some amendments, in many of their recent projects in the region. Some of you, especially Engineers and engineering contractors, may a!ready have come across it.

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ECC (NEC) C'TO

. For example, in the EI Nino Emergency rehabilitation works which have been carried out in the last 4 or so years in many parts of the country or in the Kenya Wildlife Services (KWS) infrastructure contracts recently undertaken for that corporation.

8.0 FORMAT OF CLAIMS

The first question to deal with here is : How should claims be prepared and presented? At the outset, we must accept that claims preparation is a specialized sub-discipline within the major di~ciplines. of quantity surveying, architecture and engineering. Anyone intending to prepare a proper claim of anything but the most routine problem will need to be equipped properly. The equipment required will include a thorough knowledge of the conditions of contract, basic principles of law, the writing of bills of quantities and specifications. Furthermore, he must have at least some general knowledge of how construction is actually carried out on site and how costs are incurred in a rea! project. Only then wi!! he be in a position to work out and justify the costs which a contractor has incurred and would not have incurred but for the named compensation event; which is eventually what a claim is.

8.1 At paragraph 5.0 above, we have seen the claims "check-list".

A professionally prepared claim will be structured under such or similar headings, indicating how it arose, under what clause it is claimable, the duration of the event, the effects in physical and monetary terms, the quantities and rates applicable etc.

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FORMAT OF CLAIMS C~TD

The conditions of contract do not lay down nay specific format. What they do is prescribe the minimum requirements to give a claim legitimacy and validity. Once that has been satisfied, the claims writer is free to present it in his own way. The claims evaluator cannot penalize or mark down a claim which contains all the relevant ingredients just because it is not written the way he would write it. Time and space do not allow a worked example of a claim, perhaps another time. In passing, I should point out that the claims assessor 'should be at least as knowledgeabie and as experienced as the claims writer to enable him critically analyze the claim, determine its merits and arrive at a fair evaluation.

The complexity and frequency of construction problems has given birth to a new specialist, the construction ?ontracts consultant. Employers and contractors are recommended to

4L "ttY'tt:tt- . ~

consult these speclalists whenever matters go beyond the

competence of their own staff, and when legai issues predominate, an experienced lawyer is an added benefit to the team.

9.0 NEGOTIATION

What is negotiation? It is a process whereby parties in a relationship which has fallen into difficulties attempt to resolve their problems mutually. The relationship which concerns us today is a commercial one, arising from contract.

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PREPARATION, PRESENTATION AND NEGOTIATION OF CONSTRUCTION CLAIMS C'TO NEGOTIATION C'TD

When such parties find themselves in such an impasse and both are desirous of overcoming the problem and carrying on with their transaction, it is recommended that they turn to negotiation.

Negotiation is a first line dispute resolution mechanism. It is a consensual process always available to parties who have mutual interests to preserve and or promote. It is particularly useful when each party has something to gain from the process and when the intervention of an outsider may be

. undesirable or unnecessary. When parties are of equal or comparable bargaining power and the issues are not too unbalanced, negotiation can yield desirable results to both. This is called a "win-win" result. ln general, people fuel more comfortable managing their affairs on their own and oniy call in outsiders to assist if they cannot help it. Confidentiality is maximum and partly involvement is complete. The result is that parties "own" the outcome, which greatly enhances the chances of voluntary compliance. Hence the strongest selling point of negotiation. In addition, being a party to party engagement, it can be as informal as you wish and no particular rules or procedures are necessary. Furthermore, the focus in negotiating is on the commercial, personal or other interests which the parties may have in common rather than the legal or contractual aspects of the transaction.

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NEGOTIATION C'TD

9.-1 Procedures

How is it conducted? Many readers equate negotiation with market haggling and other crude and unprincipled methods of getting a better deal. No so. Such an activity is hardly neqotiation. It is merely bargaining. Serious negotiation is a principled and structured procedure. A successful negotiator needs instruction in the procedure and experience.

9.1.1 Prepare your case thoroughly. In the process of

. preparation spend time to assess the merits, the weak points and the strong points. Special attention is to be paid to points or issues which can go either way·,

9.1.2 Study the case for the other side equally thoroughly, noting the same strong and weak points.

9.1.3 Select your team (if any) carefully. When parties are institutions, it is essential to observe this rule to avoid unsuitable or unqualified people in the team.

9.1.4 Where people other than the principals are involved, establish the authority limits at the outside. If possible, have that limit specified in writing for disclosure to the other side.

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NEGOTIATION C'TO

9.1.5 Demand a declaration of authority limits from the other side.

9.1.6 Determine who possesses the balance of the authority and how and when that authority is to be exercised. Will it, for example, mean yet another round of negotiations?

9.1.7 Agree on agenda. The drawing of an agenda is an important matter. It will dictate what matters get dealt with and in what order and creates focus. Generally, the issues which are basic to the problem have to be tackled first to establish general understandings. Issues which are easier to dispose of first should be next in the agenda followed by issues the resolution of which determines the direction of other issues.

9.1.8 Determine and agree with the other side the general approach to negotiation, do you resolve the problem on an issue to issue basis or do you aim for a global settlement?

9.1.9 Is there going to be a Chairman or a Rapporteur? This

may be necessary when each side is represented by

a team.

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NEGOTIATION C'TD 9.1.10

9.1.11

9.1.12

9.1.13

9.1.14

9.1.15

In the case of teams, determine the order of speaking and who is to deal with which issue etc.

Is there to be a record of the proceedings? Or only a record of understandings and agreement? Who is to take it?

Should negotiations take more than one session, any understandings or agreements reached at the end of each session must be recorded and road back to the parties to confirm that all are at ad idem (of the same mind)

Negotiation is a trade off of concessions by both sides. Those concessions should be offered in clear and unambiguous terms. What you get in return should be in equally clear terms. This way disagreements as to who gives what and who gets what are avoided. When it is not possible or desirable that concessions be offered, negotiations should not be attempted as no useful outcome can be achieved.

When agreement is reached, it should be reduced into writing, in clear and succinct terms in a form wh ich can be easily implemented.

If there is limited authority, the matters within the limit should be separately listed and signed as agreed subject to agreement of the remaining matters.

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NEGOTIATION C'TD 9.1.16

9.1.17

9.1.18

The persons to decide the balance of issues must be identified and times scales agreed within which to complete the task. Even if complete agreement is not achieved, partial agreement should be better than no agreement!

Always explore the fallback position, more so when negotiations approach a stalemate. The realization of the expenses and time involved in the Best Alternative to No Agreement (BATNA) might act as a spur to some solution of the problems before you. BA TNA works as a "reality check"

How about payment? Do not forget to agree on payment mode and dates. If property has to change hands, it must be clearly identified and the manner and place of exchange determined in the final agreement.

9.2 The role of the design team

From the above brief outline it can be surmised that structured negotiation is a serious business and those who take part in it must know their job. When teamwork is required, each member will be allocated his role. For example, matters within the domain of the Architect will be addressed by him.

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NEGOTlATION C'TO

Taking the overall goal of settlement into perspective, he should be in the best position to determine what concessions to demand from the other side. The same goes for other members of the team. The Employer's role overrides the design team's since he has to agree to whatever is proposed. They cannot bind him without his consent. And so does the Contractor's. The deliberations of the design team, even when Contractor's staff participate, will not bind him until he personally

. consents.

The real attraction of negotiation is the opportunity to participate directly in designing a desirable outcome of your mutual problems. Unfortunately, it has an obverse side to it. Being informal and consensual, it relies wholly on the goodwill of the parties, both in its operation as well as in fulfilling the ensuing agreement. There is no force of law behind it. Even if all other participants are unanimous on a solution, and either or both parties do not accept it, the dispute wi!! remain unresolved. If a party reneges on his promise, the whole deal falls through. However, depending on how the settlement is worded, it may be interpreted as a supplementary agreement capable of enforcement by a court of law by way of suit to enforce the performance of a contract.

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10.0 MEDIATION/CONCILIATION

When negotiations fail, the next available option is mediation or conciliation. The option is also available when for various reasons, negotiation is not suitable or preferred. It may be that parties are too entrenched in their positions or they lack the skills to conduct proper negotiations or acrimony or bad blood prevents face to face interactions. In such circumstances, a neutral outsider may be the saviour. The neutral third party comes in as a facilitator. Being not part of the problem, he should be impartial, disinterested and neutral. In his position, he will be able to analyse the case for both

sides without the passion and the bias of the parties and advise on

the strengths and weaknesses of each case.

Looked at this way, it becomes immediately apparent that Mediation/Conciliation is nothing more than assisted negotiation. It therefore follows that a good Mediator/Conciliator will first and foremost be a good negotiator. He will be skilled in the procedures and techniques of negotiation and the same processes we have described above will apply in mediation in the same way they apply to negotiation. So what does a Mediator do? His overall duty is to facilitate a settlement or resolution of disputes. He does this by assisting to separate emotions from facts and wishes from reality. He acts as a filter to improve communication between the parties. He will thoroughly study the case for the parties and correlate the facts. Thereafter, he will draw the attention of each party to the strong and the weak points. On the basis of his perception of the strength or weakness of each case, he may prompt parties to propose offers, concessions etc.

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MEDIATION/CONCILIATION C'TD

He should always remind the parties the perceived advantages of settlement and the consequences of failure to agree (BATNA). These include protracted proceedings either in arbitration or in litigation in the courts and the time and costs involved. Are parties prepared to take such a route? He must ask them, ("reality check").

There are basically two types of mediation, facilitative and evaluative. In the first, the mediator serves essentially as a 90- between. He is not permitted to offer advice or express his views on the merits of the dispute.

In the second, he is permitted to suggest ways of resolving the dispute and may even propose or recommend what he feels would be a fair and just solution.

Whatever he does, he will not decide for the parties. He may

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suggest, propose or recommend but nothing more. At the end of it

all, the actual decision is for the parties to take. Like in negotiation, the strength of the mediated settlement is in the mutual commitment of the parties to honour it. A breach of the commitment by either will scuttle the result. Again, like in a negotiated settlement, a mediated settlement, depending on the wording, may be read as a supplementary agreement capable of enforcement by the court of law. At the very least, it avoids the druggery of having to start all over again in the courts proving your case. Starting with the mediated agreement, arguments for or against will be very focused and of necessity not that wide ranging, producing a saving in time and money.

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