Just back from the Society of Construction Law working weekend in Victor Harbor.

The group mug shot looks strangely old fashioned – as if it was taken in the 1970’s. It was taken by Matthew Bell, who said he might in due course photoshop  himself into the photo somehow or the other. I wonder if he will give himself flared trousers and an Afghan coat?

Notwithstanding this impression, the weekend was excellent. This format – of a relatively small group with time to talk of important stuff in our business – is a welcome change from the big “set piece” events.

My own principal contribution was to talk about the Security of Payment Report which we recently completed. I think it is important.  We need a twin track approach to managing disputes:

• Dispute Boards for managing issues at the head contract level of substantial projects, and
• An effective adjudication system for everything below that.

The track record for review boards is remarkably good and, in Australia, perfect so far. In the USA, their reach has been extending downwards, so that they are being successfully applied to projects, not only at the $100m + level, but way down to $10m or so.

There are alternatives of course, but they do not work well:

• At major project level, some government agencies in Australia (and in some other jurisdictions)  say, “We do not have a problem, and do not need Review Boards. We make clear to the market that any contractor who ever challenges our assessment of what is payable under the contract never gets another job from us!” The trouble with this approach, of course, is that the best contractors either refuse to bid at all, or load their tender prices. And the minds of the worst contractors turn to possibilities of corruption. It is significant that, on the world stage, the World Bank now insists on a Review Board for every project.  They have ample experience of all approaches, and have evidently done the numbers of what produces best value for money.
• Below that , some say, “We do not have a problem, and do not need a fair adjudication system. The major players make clear to the market that any contractor or subcontractor who ever challenges their assessment of what is payable under the contract never gets another job from them.” The troubles with with this approach are so numerous that it takes a lengthy report – or a working weekend –  to go through them all

Among those who understand this things, there is pretty good consensus as to how to apply the necessary fixes. But I think it may well take a while before  the testosterone bunnies are edged out of the the driving seat.