If the CAP fits…

With the impact of delays and material shortages beginning to bite, the importance of conflict-free contracts and smooth cashflow has never been more important, as our expert explains

In previous editions of CABLEtalk, you’ll recall that I’ve written about the importance of both project bank accounts (PBAs) and the Conflict Avoidance Process (CAP), and I’d like to update you on both.

Let’s deal with the latter first, and I’m delighted to see that good progress is being made in getting an increasing number of small and medium-sized enterprises (SMEs) to sign up to the Conflict Avoidance Pledge.

Operated by the Royal Institution of Chartered Surveyors (RICS), this initiative commits your business to a collaborative way of working by ensuring early intervention in potential disputes, whether about payment or technical matters.

Used either up the line with an employer or down the line with a supply chain, it’s also a great way to market your business and say: “We’re into collaboration, not confrontation.”

As Chair of the Scottish CAP Working Group, I’ve been very encouraged by those who are signing the pledge and we’re now seeing excellent teamwork from the construction organisations who use it and equally excellent feedback on the results.

So far, it’s clear that the industry fully supports an early intervention process to avoid expense disputes, but what we need is more awareness and commitment to help implement one of the most important industry developments in years.

But don’t just take my word for it – check out the testimonials from respected industry figures on this page and you’ll see why so many recommend it as a positive move for our sector.

Project bank accounts

PBAs are hugely welcome and ensure far faster payments and we’ll hopefully see them being used much more on public-private sector projects in the next 12 months.

The Construction Industry Coronavirus (CICV) Forum, in which SELECT plays a leading part, has recently set up a dedicated sub-group to help develop knowledge of the process, draw up case studies and generally share essential guidance.

If you’d like to learn more, the Forum has even added a dedicated section on its website to help SMEs understand the process better. Check it out at www.cicvforum.co.uk/useful-links

Cashflow and contracts

The proper use of PBAs and CAP can help smooth the path for businesses and maintain that all-important industry lifeline – cashflow.

Sadly, we’re currently experiencing an increasing number of cashflow issues in Scotland. The reasons are many – the ongoing effects of the pandemic and lockdown, low productivity during restart, material price rises and supply issues.

Throw in the issue of payment applications being cut back and payment periods being extended and it’s vital to have an absolute focus on your cashflow.

So don’t forget: Always make sure you have a payment schedule in your contract and stick to it, submit fully detailed applications for payment, and engage with employer or the contractor so you get no surprises when a payment certificate arrives by email.

And most important of all – ensure parties use CAP at all times to encourage collaboration, not confrontation.

“CAP provides an opportunity for disputants to keep control of their disagreements and be involved in finding a satisfactory and cost-efficient solution. That makes it a very important option. CAP does require behaviour changes across the board but, if adopted, should reduce conflict in the long run.” Janey Milligan, Managing Director, Construction Dispute Resolution

“CAP has the opportunity to avoid disputes going down the formal resolution procedure route, that will most likely be expensive and time-consuming. More important, however, is that parties signing the pledge at the outset demonstrate that they are going into contract with the intention of avoiding disputes. Successful contracting relies on strong relationships, which rarely recover once a dispute is handed over to adjudication. CAP keeps everyone talking, preserves relationships and will lead to improved contracting behaviours and outcomes.” David MacDonald, National Hub Programme Director, Scottish Futures Trust

“It’s vital that CAP is promoted along the supply chain so the whole project delivery team is focused on conflict avoidance. This has to be the future of dispute resolution given that other forms of resolving disputes – including adjudication – have become prohibitively expensive. I urge all firms to sign the pledge.” Rudi Klein, Klein Legal and SELECT consultant

“The introduction of CAP could act as a catalyst for behavioural change within the industry. Providing a means to challenge actions or decisions at an early stage could change the way parties behave and pave the way towards making the construction industry a more collaborative and integrated place to work. The amount of effort and time involved in disputes is enormous and CAP has the potential to address the issues causing the dispute early and find a resolution before time, energy and money are wasted, not to mention the impact disputes can have on the relationship between the parties involved.” Ian Honeyman, Commercial Director, Scottish Building Federation