Interview with Refki El-Mujtahed, Senior Legal Counsel, Besix Group

Our study shows that time and cost in construction projects have the highest risk of causing conflict points and disputes. To what extent does this match your experiences?

It's natural that extra delays and extra cost will arise. Given the models that we run in the GCC region, which are predominantly lump sum type arrangements, there's always a resistance against time and cost, because the employer wants to stick as close to their budgets as possible. And I think post-pandemic, which is a very important consideration, we are having conversations with the developer companies, because there is no benchmark against which we can realistically set or anticipate increases in cost, or anticipate delays in production, delivery or installation. It's inevitable that employers will have a more mature outlook on new projects negotiations moving forward and have to be open to a formula regarding increases in cost. Employers also need to be more open to the fair assessment of justifiable delay that is caused either because of lack of design by the engineer and/or the architect, or just due to the sheer complexity of the engineering that's undertaken. 

The study demonstrates that there are increased efforts to engage internal legal/contract management or external counsel at the start of projects to identify risk. Is this a trend that you have noticed?

In the timeframes we have with tendering, it's physically impossible for us to do the level of due diligence that's expected in order for us to get a very accurate understanding of the project. The reality is it only happens when we start on site, when we start doing the works. So yes, there is a concerted effort where contractors work hand-in-hand with their in-house counsel, our contracts team, our technical and tendering teams. Because there are elements that are not just purely contractual, there are elements that are highly technical, and therefore needs to be considered collectively and articulated in a certain way.

Almost all our respondents recognise that there is room for improvement in how risks are managed during the course of a project. Notably, keeping better records is the factor that needs most improvement. Is this a trend that you are seeing too?

Records, records, records, is our mantra. Not just the actual records, but the method in which those records are logged and trailed. The organisation of records is just as important as having the records. When you consider a project runs for three to five years, and they are gigantic projects, then the amount of paperwork you're talking about is unfathomable. And if you don't have it organised on a month by month rolling basis, you can forget it when you get to the end of the project and try to figure out what the records were at the beginning. 
We're actually beta testing quite a lot of new technology where, for example, one of our engineers on site can take a picture of a particular scope of work that's been damaged, by say a subcontractor or something along similar lines, and it can immediately be allocated back to our project environment. So the more your environment is closed, the more efficient it is in producing the necessary reports or necessary trail of information that we require.

Our respondents are increasingly looking to resolve conflict points separately rather than all together at the end of a project. Would you agree with this preference?

From my experience in the UK, Dispute Adjudication Boards (DABs) are often set up from the beginning of the project so that they understand the parameters of the project and decisions are made in real time and are overall fair. In this respect, we need maturity on both sides, from the employer and the contractor. I still believe that those kinds of solutions are much better on huge projects than waiting till the end to resolve disputes. That's why I'm in support of DABs, because I think they create better visibility. In this day and age, when we're talking about employers that have auditing compliance, tracking the project budget on an issue-by-issue basis is a lot better than waiting to the end. 

Arbitration appears to be growing in popularity as the preferred form of dispute resolution, while enthusiasm for mediation has dropped. How do you see these preferences evolving?

A lot of the contracts that I've seen recently have multi-tiered dispute resolution. So first the engineer needs to look at it, make their decision, and then senior management meets and discusses it during an amicable settlement phase. And if all else fails, then they give it to an independent third party to assess it. And if that's not accepted, then people can go off to arbitration. I have rarely seen mediation being proposed. And I don't think mediation works personally having experienced it here, because mediation requires a form of subtlety in convincing the parties to see reason. Personally, I am drawn to courts such as the Dubai International Financial Centre (DIFC) courts. I think, it is still a good option if the employer is minded to consider such a venue, because it's faster and cheaper.