Disputes resolved, costs compiled and apportioned to the value of the project.

1 This paper discusses issues in managing the final stages of a Project. Publicinfrastructure projects are complex, costly and conceived to improve the flow of traffic (be they pedestrian, vehicular, marine, aerial, utilities and other), linking several other modes of traffic flow with an expected completion date. Final stages leading to project completion assumes all design work has essentially been done, construction about 90% complete, and portions of the project are being put into operation. With the project close to being complete, the risks of future scope increase, mitigation requirements, and technical issues are reduced and there is a high level of certainty on the remaining cost and time. A project may have had noteworthy technological accomplishments that serve to guide future construction as well as being sensitive to the needs and desires of the local communities. The risks of engineering design and construction, fast-track delivery, unforeseen ground conditions, existing utilities, and other factors that increase costs and delay schedules are addressed through additional planning and design, site analysis, and cost and schedule contingencies during the currency of the project. Typically a project manager coordinates and manages all project activities by both representing and advising the owner who retains the authority to make actual decisions, but the project manager has substantial control over design and construction. The long-standing approach of adversarial contracting has evolved into modern contracting practices that include explicit consideration of risk allocation; partnering; emphasis on safety and value engineering; alternative dispute resolution. Settling changes and claims on the project constitute a significant effort. The term claim includes all change requests submitted by contractors, including those that are resolved and not contested and matters that have not yet been agreed to and could be disputed. Long-term savings created by timely resolution of claims will outweigh the short-term expense of possibly adding additional staff. Due to the confidential nature of Agreements, the settlement as a percentage of the contractors original claimed costs is unavailable. Nowadays contingency funds are budgeted for claims and changes in construction contracts. The 2 Project Management Institute has extensive information on contingency development and management; in general, the process begins with a risk analysis to develop issues that will enable the quantification of a project-contingency allowance. As the project moves through planning, preliminary and detailed design, and construction, the contingency percentages are refined because more is known about the project. Industry practices recognize that contingency funds might be required for such things as omitted items because of factors such as lack of definition, abnormal conditions, underestimated quantities, changes in regulations, and environmental requirements. A risk analysis is typically used to quantify each of these types of items. The contingency funds are not to be viewed as an opportunity to finance enhancements or add scope to the project but rather, to be used prudently perhaps reducing the total project cost. Construction is a service industry and as lawyers know it, construction is about the conversion of moveable to immoveable property. As is the case with all service industries cost control (Cost controllers on site however as better known as people that get the variations to the contract agreed.) relies on a resource-loaded work-breakdown schedule. The contract is divided into specific tasks with required resources and schedule milestones, and detailed information on

1 To determine whether the project-management and contract-administration practices and procedures in place are adequate for completing the project in a timely and cost-effective manner with a view to the end of the project and its transition to a fully operational system. The usual controversies that surrounded a projects justification, funding, cost, schedule, or management will not be addressed. 2 PMI (Project Management Institute) 2000. Guide to the Project Management Body of Knowledge. Project Management Institute, Inc. Newtown Square, PA.

specific tasks can be pinpointed or aggregated. As contract modifications are implemented, additional tasks may be added to the schedule and the work-breakdown structure. Schedule control is maintained by monitoring work-in-progress and planning future tasks. Contractors develop detailed schedules for the Works that are aggregated into the overall project schedule, and milestones are set for individual contracts and the project as a whole. Usually, scheduling plagues a project with slipping milestones and the concomitant Extension of Time 3 claims. Wider use of incentives (also known as an ingenious way of penalizing late completion) tied to task completion could improve schedule control. The focus of the management over the remaining life of the project is in the completion of all construction according to the scope, realistic schedule, existing budget and cost-effective resolution of all claims. Alternative dispute resolution (ADR) is an effective alternative to litigation that wears down disputing parties and is generally a loose-loose situation. ADR often resolves claims at a fraction of the costs, the delays, and the unnecessary aggravations of litigation and does so in a private, confidential setting. Mediation is where the parties voluntarily agree to submit their dispute to a mutually acceptable neutral mediator. The mediator then engages in a non-binding, consensual, and confidential process of facilitating communication, thereby enabling the parties to reach a settlement. The 4 settlement rate is in the region of 80% A popular misconception is that mediation resolves disputes. More precisely however, mediation purges disputes, it is about giving up rights under the contract in exchange for commercial expedience. In some jurisdictions, mediation is mandatory. In Hong Kong the Construction List Practice Direction issued by the Court of First Instance, requires parties to consider mediation before a hearing is listed. Rules of Court in Singapore require all parties to civil cases to attend Court Dispute Resolution sessions and PreTrial Conferences, with a view to settling disputes without going to trial. Matters raised pursuant to these sessions are confidential and cannot be used by either party should the matter proceed for trial. Arbitration is a private adjudication process performed by a trained professional. Typically contracts have enforceable clauses choosing arbitration as the method for resolving disputes. The arbitrator is selected by the parties or by an appointing body such as the Institution of Surveyors. The reference is not bound by the rules of evidence of any jurisdiction and the 5 grounds for challenge are limited . An arbitrator has powers of dispensing with oral hearings, capping costs, ordering limited discovery as well as awarding compound interest, which a Court in the U.S.A. may not. The Hong Kong Arbitration Ordinance is widely recognized as one of the most advanced arbitration statutes in the world and Hong Kong handles the one of the worlds largest number of 6 cases in which neither party is local . Dispute Resolution Boards, and related processes such as Single Neutrals or mini-DRB' s offer one of the most promising ways to eliminate the waste that disputes and claims generate. The 3 Most jurisdictions do not allow penalty clause in contracts, they only allow damages for late completion. These damages can be actual damages or liquidated damages, which are simply an estimate of the damages. If the estimate is not a reasonable estimate, based on the knowledge of damages at the time, the courts may throw out the liquidated damages clause as a penalty clause. 4 Of the more than 1000 matters referred to the Singapore Mediation Center for mediation, more than 90% were settled in one working day. Of the disputants who participated in, and provided feedback on, the mediations conducted at the SMC, 84% reported costs savings, 88% reported time savings and 94% would recommend the process to other persons in the same conflict situation. http://www.mediation.com.sg/mediation_faq.htm 5 Unless the award is so obviously wrong that the only inference that can be drawn is that the arbitrator misdirected himself in coming to a decision, an award cannot be set aside. 6 http://www.tdctrade.com/main/si/sparbi.htm Of the approximately 300 arbitrations conducted in Hong Kong in 2002 under the patronage of the Hong Kong International Arbitration Center, 190 were construction related.

DRB is a panel of three experienced, respected and impartial reviewers. The Board is organized before construction begins and meets at the site periodically. DRB members are provided with the contract plans and specifications and become familiar with the project procedures and the participants, and are kept abreast of job progress and developments. The DRB meets with the owner and contractor representatives during regular site visits and encourages the resolution of disputes at the job-site level. When the parties cannot resolve a dispute flowing from the contract 7 8 or the work, it is referred to the DRB . The Board review includes a hearing at which each party explains its position and answers questions from the other party and the DRB. In arriving at a recommendation, the DRB considers the relevant contract documents, correspondence and other documentation, and the particular circumstances of the dispute. The Board' s output consists of a written, non-binding recommendation for resolution of the dispute. The report normally includes an explanation of the Board' s evaluation of the facts and contract provisions and the reasoning that led to its conclusions. Acceptance by the parties is facilitated by their confidence in the DRB, in its members technical expertise, firsthand understanding of the project conditions, and practical judgment as well as the parties opportunity to be heard. While the DRB recommendation for resolution of a dispute is non-binding, the DRB process is most effective if the contract language includes a provision for the admissibility of a DRB recommendation into any subsequent arbitration or legal proceeding. Typically, and often with the recommendation of the 9 designer, the owner decides to provide for a DRB on a project and incorporates the required provisions in the bidding documents. Soon after contract award, each party proposes one member and those two select the third member, the Chair. The appointments of all three 10 members are subject to the approval by both parties. Both parties and the DRB members establish the Board through the execution of a three-party agreement. The parties share the fees and expenses of the DRB members equally. Procrastination in forming the DRB reduces the effectiveness of the entire procedure. Adjudication, unlike arbitration and mediation does not require a consensual approach where the parties agree to take their dispute to any one of those dispute processes. Any party to a construction contract may call for a referee, an Adjudicator. The Adjudicator makes a binding 11 decision on the rights of the parties under the contract and does so within the 28-day time frame. The decision is final unless and until it is overturned, revised or confirmed in Arbitration or in litigation. The process is both adversarial and inquisitorial and the Adjudicator investigates the facts and the law as he sees fit. While strategic thinking maybe said to be a process for synthesizing and disseminating project information on scheduled openings, milestones, staffing levels, transition status, cost and schedule, risk, contingency budgets, project performance data, and any other data that affect the project goals, the bulk of the value in a project comes to fruition in the utility of the facility. Towards this end, public-education element of the start-up process is critical and should be a major focus of the transition team. The message should start early and be repeated often until then the population is slowly absorbing the news and virtually to the point where the public gets tired of hearing it. Needless to say, the message content should be relevant and accurate right from the start. Proper education of the facility users cannot happen with a sudden media blitz 7 Either party can refer a dispute to the DRB. 8 An informal but comprehensive hearing is convened promptly. 9 A total of 22 contracts worth US$10 billion were awarded at the New Hong Kong International Airport and a Dispute Resolution Board of 7 members was established, with panels of 3 members to manage the various disputes. During the 5 years of construction, 16 site visits were made, with 6 issues referred to the Dispute Resolution Board, with 5 Board recommendations being accepted by the Parties and 1 referred to arbitration, which ruled in support of the recommendation of the Dispute Resolution Board. 10 The members are absolved from any personal or professional liability arising from their DRB activities. 11 A successful party must get a court to summarily enforce the Adjudicators decision. Whereas an unsuccessful party while bound by the decision, can challenge the decision in arbitration on the grounds of procedural error, error of fact or law and on bias.

but will need a carefully planned and targeted stream of information executed well ahead of startup.