Interview with William Zhang

What effect has the COVID-19 pandemic had on the construction industry, particularly in relation contractual tensions and disputes? 

I think the COVID-19 pandemic is really impacting cash flow and this often translates into contractual disputes, claims for additional payments and so on. We're seeing more and more disputes and difficulties, especially for smaller setups. So we do know that sub-contractors are suffering and sometimes you can only do so much as a collaborative partner to avoid matters escalating into contractual disputes and commercial disputes. 

How important has better communication between construction project stakeholders been in light of the difficulties created by the pandemic? 

Yes, we have found ourselves communicating more with sub-contractors, clients and consultants. There are many ways for buyers to explore helping subcontractors, including reinforcing advance payments. Nobody was really prepared for a black swan event like COVID-19. In Singapore, we had an outbreak in the first half of 2020 in the dormitories for construction sector migrant workers, so suddenly the sector as a whole is starved of manpower. So there had to be more dialogue and more checking in with our partners to see how they were doing. 

What kind of pressure has the COVID-19 crisis put on contract management and how have you responded to this in terms of seeking external/additional help, including legal advice? 

We've required assistance on more than just contract management. Governments are rolling out fiscal schemes and safe workplace measures to restart and keep construction businesses going, and it is an evolving situation. So we find it challenging to keep pace with these new measures. Conventional construction is becoming more of a regulated activity. So we also get external legal advice on how this impacts us. I would say that legal spend has definitely increased for regulatory compliance and contractual consultations.

How can the industry improve after COVID-19? 

I think the pandemic has given us a new impetus, because the industry really hasn’t incorporated technology into the construction process. When manpower was suddenly taken away, you really start to look at these issues. What can we do with less people? Can we be a little leaner, as an operation? I think now we have to be more critical about how we design the world in which we work. 

Basically, we're looking at how we're doing the work and whether we can find better ways to secure productivity, and technology can definitely help there. For example, using technology to track people’s movements and use it as a substitute for paper records, a contactless kind of technology.

What is your view on addressing points of contract tension or dispute during the course of a project, or dealing with them towards or at the end? 

I think it is an accurate observation that in the past, pre-COVID-19, disputes tended to get shifted to the conclusion of a contract. We now see a change, as I said, having more dialogue and more conversations amongst the stakeholders early. I guess it's a natural response to the pandemic, because for clients, they want to make sure their contractors are able to deliver on the projects with safety, quality and timeliness. 

And we want our sub-contractors to do the same and survive this situation. So we do check in on each other. The challenges are shared burdens, and I would say it is about bringing people closer. 

What is your view on seeking legal advice during the course of a project to prevent conflict points that might lead to a large dispute or disputes at the end of the contract? 

By and large, I think disputes are always going to be there. They do build up. I have noticed that usually there's a breakdown in the relationship, in terms of the people involved in the project. Then you'll find that you have to bring in some external legal advisers and expert consultants to try to deal with the problem. In my own personal experience, I prefer it if the sub-contractors involve legal advisers, because the legal professionals can offer an objective and balanced view to a dispute. That leads to constructive dialogue on relevant issues rather than parties being entrenched in subjective one-sided positions. It will promote conflict resolution. 

What is your preferred means of dispute resolution? 

I think arbitration is the preferred way of resolving major disputes. Mediation is appropriate only in certain circumstances. You need the parties to be flexible enough to think about compromising for mediation to work, but for major disputes I think mediation has limited use. There's also adjudication, that’s always there. It’s a fast-track process, but it’s a kind of rough and ready justice and usually not satisfactory.

What is your view on arbitration as a form of dispute resolution? 

I think it's getting more popular. I think Singapore saw a record number of cases in arbitrations here last year and that's not surprising at all. I think there's a concern about ongoing costs, but I think that you're still paying for value, especially if you have a pool of very experienced arbitrators like we have here in Singapore. With good rules, consistent application of the rule of law and legal principles, I think it is still the preferred dispute resolution method. 

I do see efforts by institutions like SIAC to keep updating their rules. Even in a pandemic, you can see all the major institutions like ICC and SIAC, they update their rules for virtual hearings. I think Seoul has a protocol for fully virtual hearings. I would measure how responsive arbitration institutions are to its users, by how often it updates its rules. I think SIAC is leading in that with the most recent changes to allow the review of emergency arbitration awards.