How to address common causes of disputes in road and rail projects globally

At a recent webinar we hosted – the first in a series we have organised over the coming weeks and months to explore global road and rail issues – we looked at the lessons businesses can learn from the common causes of disputes in road and rail projects globally.

Examples of typical causes of disputes on major construction projects include late performance, poor contract management, poor contract drafting, and the suspension or termination of contracts. In relation to road and rail projects specifically, there are a few other common identified causes of disputes. These include:

• the Covid-19 pandemic. The cause of disputes is not necessarily the pandemic itself but more the measures implemented by governments to control the spread of the virus and the impacts that these measures are having. For example, a common issue is delays and loss of productivity to the supply of materials and restrictions around labour arising as a result of these measures. A major issue seen is difficulties in demonstrating causation, i.e. the actual impact on costs and programme.
• differing site conditions or unforeseen ground conditions. Extensive linear projects such as road and rail projects are by their nature very susceptible to the risk of unforeseen ground conditions.
• another common area of dispute centres around approvals from authorities, obtaining permits and access issues. Road and rail projects are relatively unique in terms of traversing existing brownfield and greenfield areas over such extensive areas. The planning for these projects can be a battleground as land needs to be procured and expropriated for the permanent route and appropriate planning requirements met.

These are but a few examples of common causes of disputes. The size and complexity of rail and roads projects means there can be many other causes of disputes –  some common to all major construction projects, and some more particular to rail and road projects.

The risk of disputes arising can be minimised. Actions parties to projects can take in this regard include:

• clearly and fairly allocating risk with appropriate contract models to drive collaborative behaviours;
• making sure these risks are actively and carefully managed during construction – i.e. early warnings, risk registers, timely and properly notified claims, and;
• maintaining proper records.

The next event in our road and rail series takes place on 8 September 2021 and will look at changing contracting models in road and rail projects. Registration for the event is now open.