FM Leisure Centre – Dispute Resolution

A Local Authority (named removed due to NDA) had commissioned a world-class architectural design of its brand new Leisure Centre. Although the initial construction process was a success, it wasn’t until the contractors were close to handing over the Leisure Centre that issues started to arise. The seven areas of concern involved:

  1. Pool Algae
  2. Operation and Maintenance Manuals
  3. Discharge of Planning Consent
  4. Glazing Defects
  5. Brise Soleil
  6. Roof Leaks
  7. Internal Leaks.

The Local Authority had raised concerns but the contractors were not taking responsibility for the issues and their arguments were a mixture of 1) poor design, 2) maintenance company faults and 3) client faults.

The Authority had no choice but to raise formal legal disputes but after months of stalemate, the legal advice was found to be useful but lacking enough operational expertise to make any progress. While individual parties involved in the dispute were undertaking different activities well, there was no cohesion between parties which was preventing an accelerated resolution. Lack of real joined-up working is often a key hurdle to resolving issues quickly, so we proposed that an ‘integrated team’ be formed to assure a rapid conclusion to the remediation.

The Authority needed assurance that dispute resolution and remediation plans would achieve certainty of four key principles:

  1. The Leisure Centre was fit for purpose at the original time of the design
  2. All appropriate remediation works would be completed and align with the design
  3. No material issues were likely to manifest themselves within a reasonable timeframe
  4. Where appropriate, the contractors/insurers were accountable for the remediation costs, external and internal professional support costs and any realistic and fair loss of Leisure Centre revenue over the period until a fit-for-purpose Leisure Facility was delivered.

How BPG deployed expert resources to support the successful delivery

Our evidence-based approach delivered a fast resolution of the dispute. We independently, objectively and forensically reviewed the evidence of the key issues and established the financial impact. We reviewed the strategic aspects of the current contractual position and provided on-going strategic advice to help gain clarity over what contractual enablers were available to accelerate the remediation process ensuring it was aligned to the ‘expert responsibilities’ of the contractor.

We conducted interviews with council staff to understand perceptions of key issues, and with the appointed lawyers to understand what had been done both contractually and informally to determine fitness for purpose and escalate the issues for remediation. From our review, we were able to clarify traction to date and which party was responsible for each issue. We then planned the approach to resolution, agreed it with internal stakeholders, facilitated agreement with the contractor(s) and supported mobilisation of the resolution through to completion and sign off. Throughout the process we provided ‘critical friend’ support to ask the right questions of contractors and lawyers, including preparation and attendance at all appropriate pre, active and post-meetings.

Before resorting to mediation, we always negotiate and agree resolution/improvement plans internally and then address the issues with the contractor/supplier. During this process, we clarify the outcomes to be achieved, engage in genuine collaborative working aligned to contract terms, and engage in constructive negotiation clarifying roles and responsibilities (particularly supplier ‘Expert Responsibilities’) to support a resolution to the issues and the agreement of the resolution/improvement plan. The plan is then implemented and managed as a project using performance metrics and success criteria as measures. If the contractor/supplier continues to fail to meet the required performance levels, we then begin the mediation and disputes resolution process.

What BPG Delivered

Key elements of our activities and outputs included:

  • Integrated team approach to ensure all parties (council, contractors, lawyers and ourselves) were ‘acting as one’ in accelerating the implementation of both the remediation strategy and remediation plan.
  • Stakeholder Relationship Management – to ensure ongoing buy-in and support for genuine progress through clear, targeted and regular communications and engagement.
  • Remediation Strategy agreed by all parties based on the four key principles. This detailed the primary strategy to accelerate the resolution, key objectives, timescales, resources, accountabilities for delivery, the contractual enablers, contractual disablers, relationship charter to maintain remediation momentum at the same time as any formal escalation required along with a recognition process for positive supplier behaviour and not-so-positive supplier behaviour.
  • Clear articulation of roles and responsibilities for all parties, ensuring ‘Expert Responsibilities’ for fitness for purpose remained with the contractor.
  • Remediation Plan (with input and agreement from all parties) detailing all activities required to accelerate a resolution to deliver a fit-for-purpose Leisure Centre.
  • High-level view of the financial remedies available, and the degree to which financial leverage from the issues could be used in the negotiation of the costs of remediation with the contractor along with the reclaim of external professional service costs.

Integrated Team

Central to the success of our approach was our Integrated Team approach. We established a relationship charter agreeing on collaborative working for the outcomes and objectives to be achieved. All parties signed it and then the contracts, delivery and resourcing schedules were aligned to it. In our 20+ years’ experience, no supplier has yet stated they don’t want to work in collaborative partnership. Yet contract terms and statements of work often work against any reasonable collaborative operational approach in the practical sense. Getting suppliers to first sign up to a collaborative working relationship charter and then aligning the contract terms and schedules to the relationship charter, helps to encourage the supplier’s legal team to contract for a much closer working relationship.

We implemented an improved, regular stakeholder management and communications approach to achieve cohesive traction between the council, contractors and lawyers and to support the implementation of an integrated team working approach for remediation. Clear regular engagement was central to maintaining support and buy in from all parties. This ensured the project wasn’t derailed by a lack of clarity regarding progress and ongoing accountability which could have been manipulated by opposition parties.

Benefits of BPG Support

Our mobilisation and implementation of the Remediation Strategy and Remediation Plan delivered value to both the council and the contractor, delivering the following outcomes:

  • Clarified ambiguities over remediation scope, costs, roles and responsibilities
  • Accelerated process to quickly resolve matters to the benefit of both parties
  • Significant cost savings resulting from the accelerated process​
  • Delivery of a fit-for-purpose Leisure Facility
  • Ensured reputations remained intact. Our approach is independent and impartial, working to protect all reputations.
  • Lessons learned to prevent potential misalignments in future relationships of this nature.