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Dispute Avoidance Panels (DAP)

Industry Guidance Note

Published on behalf of the

National Commercial Directors’ Forum

21st November 2016

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Dispute Avoidance Panel – Guidance Note

Version 1(Nov16)

1. Foreword 3

2. Context 4

3. Guidance Note 5

4. The Role of the DAP 6

5. The Role of IP HQ 7

6. Process for Constituting the DAP 8

7. Terms of Reference 10

Appendix A – DAP Pilot Panel Members

Appendix B – Template DAP Review Report

Appendix C – Terms of Appointment of DAP Member (used for the Pilot phase)

Appendix D – Pre-Read Pack

Appendix E – Working Group Members / Quad of Aims

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1.1 The challenges associated with the commercial management of rail works are often amplified by the

need to manage and resolve commercial claims. Whilst there are financial consequences of such

claims, it is important to acknowledge the potential stress to relationships and the negative impact on

client and stakeholder perceptions of commercial stewardship and effective supplier management.

1.2 Accordingly, our premise is that the avoidance of disputes is as important as their resolution.

1.3 The Dispute Avoidance Panel (DAP) Working Group was created under the auspices of the National

Commercial Directors' Forum (CDF) to develop a practical dispute avoidance process and to pilot that

concept to test its effectiveness.

1.4 The pilot was acknowledged as a success by the members of the National CDF and the release of

this Guidance Note formally recognises this and is the method of promulgation across the sector.

1.5 This is the National CDF’s second Guidance Note published to industry and is the culmination of

working group members and National CDF delegates’ collective thinking. It represents a joint view

from industry as to good practice and is endorsed with a view to being employed where appropriate

by National CDF member organisations as shown below.

“At its heart, DAP is about being on ‘fire watch’, looking for smouldering embers of

dispute in the dry grass and putting them out before the fire can begin”.

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2.1 In 2011, the National CDF set out to be the crucible for driving industry change, with an aspiration to

improve the commercial dynamics in rail and make collaboration the norm. A key facet of our

collaboration has been the joint identification of areas for improvement and the establishment of

working groups to recommend and deploy guidance that will deliver tangible improvements.

2.2 Now in its 5th year, the work of the National CDF continues with over 70 delegates in regular

attendance, all of whom are directly involved one of the following working groups:

Working Group Objective

WG1:

Workbank Visibility

Develop integrated pipelines between Network Rail (NR), Tier 1

suppliers & pending/awarded frameworks to support Tier 1 & 2

workload visibility and improve business planning.

WG2:

Making Collaboration Work

To create progressive, consistent and enduring relationships and

illustrate the impact of collaboration on the delivery of our CP5

portfolio.

WG3

Setting New Standards:

Improve contract administration and develop a suite of industry

guidance to raise standards and drive consistency in commercial

practice across the industry.

WG4:

Improving Claims

Management

Reduce the potential for claims/disputes through the promulgation

of Dispute Avoidance Panels (DAP) and develop industry guidance

to improve practitioners’ approach and bring greater consistency to

demonstrating/assessing entitlement.

WG5:

Turning Commitments into

BAU

Ensuring that CDF commitments to driving industry change become

established across the industry, with a specific focus on the

adoption of the Fair Payment Charter (FPC), the Rail Sustainability

Charter (RSC), Rail Method of Measurement (RMM) and National

Performance Metrics (NPM).

WG6:

Tomorrow’s Talent Today

(TTT’s)

Involvement of commercial practitioners from across the rail

industry to research industry issues, contribute to CDF initiatives,

validate and provide open and honest feedback to the CDF on the

impact of agreed outputs.

2.3 Each of the above working groups have an established quad of aims and a defined list of CDF

members, who have committed to active participation throughout the year to develop, syndicate and if

ratified, deploy outputs to industry.

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3.1 This Guidance Note is intended to raise awareness amongst commercial practitioners in Network Rail

and its supply chain and inform and provide practical guidance to those managing complex or

collaborative projects in the instruction, creation and contribution of a Dispute Avoidance Panel

(DAP).

3.2 It is also intended to assist potential DAP members in effectively discharging their duties as a DAP

member.

3.3 The DAP process is flexible and is designed to engage the parties in a collaborative effort to avoid

disputes. It is not intended that DAP members offer advice, resolve disputes or mediate areas of

difference between the parties.

3.4 Provided this ethos is maintained, the parties and DAP members are invited to refine or modify the

approach and provide feedback on this guidance where improvements are evident that enhance the

approach to avoiding disputes. Such feedback should be sent to Network Rail’s Head of Claims &

Contract Compliance, Infrastructure Projects.

3.5 It is recommended that any appointed DAP member be fully conversant with this guidance and the

templates within and be in a position to confirm their adherence to the provisions, methodology and

outputs described.

3.6 In addition, any proposed regime on fees and payments will be benchmarked against the fees

confirmed during the DAP pilot phase.

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4.1 The principle objective of the DAP is to identify and report observations on possible sources and

warning signs of potential disputes through the review of live project reports, programmes and

commercial data as well as the assessment of current behaviours and practices via interviews with

key practitioners and stakeholders. The DAP Review Report will allow early management intervention

to avoid or minimise the potential exposure of all parties to contractual disputes and to safeguard

reputations. In addition it will:

Promote open and honest communication between all stakeholders.

Encourage dialogue and timely action where necessary to avoid or minimise matters

escalating into formal dispute resolution procedures such as adjudication, arbitration or

litigation.

Demonstrate genuine willingness by NR and its Suppliers to prevent the need, wherever

possible, to embark on drawn out and potentially divisive and expensive dispute resolution

processes.

Support and foster collaborative relationships which underpin the supply chains

performance.

4.2 A DAP will normally consist of no less than two and no more than four members consisting experts

from the legal, quantum, planning/construction and behavioural professions. Additional technical

expertise can be provided if necessary.

4.3 Each DAP member must be able to demonstrate a very good understanding of the process.

4.4 DAP members must be impartial, as between all the parties, and must also be seen to be

independent of them. Those appointed must have due regard to their professional bodies guidance

on Conflicts of Interest.

4.5 The role of a DAP member is to communicate with all the relevant parties and to gather and review

information in order to provide observations via the DAP Review Report as to the propensity for

disagreement and dispute.

4.6 However, the DAP is NOT constituted to give advice, mediate or decide upon a dispute;

rather it is expected to offer its observations to all parties on potential areas of dispute upon which

they will consider and act accordingly.

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5.1 The Head of Claims and Contract Compliance will administer the list of approved DAP members, and

ensure that each person on the list:

Is up to date on law and practice relating to his/her sphere of professional practice.

Fully understands the DAP process and what the parties expect from it.

Maintains his/her independence and advises the Head of Claims and Contract Compliance

of any involvement arising that may give rise to a conflict of interest or lack of availability to

undertake DAP related work.

5.2 The Head of Claims and Contract Compliance will respond to applications and proposed projects

from IP’s Regional Commercial Directors and refer individual members for appointments to DAPs

after undertaking checks to ensure the experts referred are;

Appropriately qualified to deal with the particular project.

Free from conflicts of interest and are seen to be independent.

Available as and when needed by the parties and are able to undertake the role within the

timescales required by the parties.

Appropriately monitored on their performance and routinely undergo quality monitoring

checks.

Up-to-date in their specialist areas of expertise and undertake appropriate CPD.

Subject to independent complaints handling procedures.

5.3 The Head of Claims and Contract Compliance will seek feedback for all parties on the performance of

the DAPs, and the members involved, and provide a report to IP’s Commercial Projects Director bi-

annually highlighting such performance and setting out any key lessons learned.

5.4 Feedback on the guidance note, the process and expressions of interest to participate in a DAP

review should be sent to Network Rail’s Head of Claims & Contract Compliance, Infrastructure

Projects (See Appendix A).

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6.1 Following a request from a project/programme leadership team to instigate the DAP process, Network

Rail’s Head of Claims and Contract Compliance will recommend a DAP consisting of no less than two

and no more than four members drawn (in the first instance) from the DAP Membership Pool.

Additional technical/specialist members can be included if requested/deemed necessary by the

project/programme management team.

6.2 A Lead Member will be chosen by the DAP members to act as coordinator and lead subsequent

engagement. See Appendix A for a copy of the Membership Pool utilised for the pilot phase.

6.3 In constituting the DAP, the Head of Claims and Contract Compliance will undertake the relevant

checks as set out in paragraph 5.2, also ensuring that no member of the DAP Membership Pool is

committed to more than four separate DAPs at any one time.

6.4 The project/programme leadership team (parties to the Contract) will be advised of the DAP members

and will be provided with a copy of each member’s resume for approval, such approval should not be

unreasonably withheld.

6.5 Once approved, the project/programme leadership team (parties to the Contract) will appoint each

DAP member in accordance with its appropriate corporate procurement rules and processes.

Recommended/benchmark rates for each of the DAP Pilot members have been established through

the DAP pilot process and the Head of Claims and Contract Compliance will advise the parties as

necessary.

6.6 The cost of the DAP should be shared equally by the parties to the Contract and the cost shall be

borne as part of the parties’ ongoing management costs of the project/programme.

6.7 Once appointed, the Lead Member will agree the timetable with the parties for each project review

which will include a site visits (if necessary), timely issue of project information, copies of the contract

and relevant contract, reports and generally act as the primary point of contact between the DAP and

the parties to the Contract.

6.8 Supporting documentation should be issued by the project to the DAP members no later than 3 days

before the agreed review date and should be copies of existing management/progress reports,

information and briefing material. No specifically developed or adhoc reports should be requested by

the DAP team.

6.9 Every endeavour should be made to ensure the consistency of the DAP members throughout the

entire programme of reviews.

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Version 1(Nov16)

Process Map of Primary Actions

Select

appropriate

members to form

DAP

Receive report from

project, review &

identi fy lessons

learned

Request the

establ ishment

of a DAP

Approve selected

DAP members

Agree terms (no.

of vis i ts , rates ,

etc) & Instruct the

DAP members

Agree a timetable, provide a l l

pre-reading in adance of any

DAP vis i t & make a l l relevant

arrangements for project team

avai labi l i ty on vis i t

Receive report from

DAP, share i t with Head

of Cla ims & Contract

Compl iance, review

observations &

cons ider actions to

address matters ra ised

Make payment to

DAP members as

necessary

DAP members

to select a

lead member

Attend vis i ts & issue

report on observations

for submiss ion to

project (within 5 days of

vis i t)

Key

Head of Claims & Contract Compliance

Project / Alliance

DAP

To be repeated in accordance with the agreed frequency of DAP visits

1 2 3 4 5 6 7 8 9

7.1 The DAP should act with complete independence and impartiality to all contracting parties and its findings/observations will be confidential. The DAP Review Report will be observations will be issued to the project/programme leadership team (the parties to the Contract) and Network Rail’s Head of Claims & Contract Compliance.

7.2 The primary aim of the DAP Review Report is to provide the contracting parties with observations of

areas of concern which if not addressed, may lead to the crystallisation of a dispute.

7.3 Except for providing the services set out in this document, the DAP (or its individual members) has no

authority to provide the contracting parties with advice, mediate or decide on an issue or dispute. Please

refer to Appendix C for a copy of the instructions provided for the pilot phase.

7.4 Except for its participation in the DAP’s activities set out in this document, no party to the Contract shall

solicit advice or consultation from the DAP (or its individual members) on matters dealing with the Works.

7.5 Once authorised to act, an agreed review timetable will be agreed between the parties and the DAP members. The following timescales are set out below for guidance.

a) In general it is anticipated that the DAP’s will undertake a review of the project at least once every 4 periods.

b) Each review (including issue of the DAP report) should not exceed 1 day (including travelling time) and should consist of a site visit (if necessary) and an opportunity to meet and discuss issues with key members of the project’s contracting parties (both NR and the supplier’s teams). All observations shall be provided within the DAP Review Report.

c) The DAP report should be issued to all project stakeholders within 5 days of the site visit.

7.6 The contracting parties shall furnish the DAP with a copy of relevant project related documents that will constitute the DAP Pre-Read Pack. This pack (see Appendix C) shall include the Contract Documents, progress reports, programmes, applications for payments, variation orders and (by agreement) further documents pertinent to the performance of the Contract. This information should be provided in a timely manner and not later than 3 days before an agreed review date.

7.7 The parties shall coordinate with the DAP the need for site visits and the availability of key project personnel that it may wish to consult with during its review.

7.8 All communications between the contracting parties and the DAP are to be either in writing (copied to the other party) or made in person to the Lead DAP Member. Unless agreed otherwise, the DAP will be empowered to meet with the parties privately or together.

7.9 On completion of each review, the DAP shall issue a DAP Review Report setting out its observations to the contracting parties, as well as to IP’s Head of Claims and Contract Compliance. The DAP members are absolved from any personal or professional liability arising from their DAP activities. For consistency, see Appendix B for a copy of the template review report.

7.10 The written DAP Review Report and associated observations are not binding on the project/programme leadership team. However the observations highlighted in the DAP report will be logged by Network Rail’s Head of Claims & Contract Compliance for future referral to relevant senior stakeholders and governance panels, with a view to tracking progress.

7.11 The DAP shall terminate its regular activities at the completion of the projects or programme or where the project/programme leadership team agree and confirm in writing that the DAP is no longer required or authorised to provide its services.

Legal

1. Tony Bingham – Counsel – 3 Paper Buildings

2. James Bowling – Counsel – 4 Pump Court

3. Rachael O’Hagan – Counsel – 39 Essex Chambers

Commercial

1. Paul Cacchioli – Head of Claims & Contract Compliance – IP Network Rail

([email protected])

2. Angela Austin – MD – Corderoy

Construction/Planning

1. Hugh Porter – Director – Navigant

2. Richard Swan – Director – GT Fairway

Behavioural

1. Ed Sharman – Director – C2E Ltd

2. Arthur Broadberry – Director – C2E Ltd

NB. It is envisaged that additional industry experts will join the DAP Membership Pool either through

direct expressions of interest in light of this guidance note or through the pending Commercial

Services Framework Renewal process planned for 2017.

Inclusion within the DAP Membership Pool will be by agreement and invitation by Network Rail’s

Head of Claims and Contract Compliance, such agreement shall not be unreasonably withheld.

THIS IS THE FLYSHEET WHICH WILL INCLUDE THE DETAILS OF THE CONTRACTING

PARTIES OR ALLIANCE LOGO, ETC

1.0 [signature of lead DAP member]

Project / Programme

Parties to Contract

Date / Location of Review

DAP Team Leader

DAP Team Members

Host(s) [ r names and position of the senior management epresentatives of the parties ]

Executive Summary

[Add headlines from the visit including the key observations, progress from last visit, any feedback (positive or negative)

from the visit, difficulties encountered, any general issues/themes that the parties should be alerted to or input sought

and general observations]

Programme

Commercial

Behavioural

Current Programme Overview

[Commentary should be kept to one page only]

[Add brief commentary on the current programme, progress, details of any delays (notified or anticipated),

EO T ’s aw arded, c urr ent C o mpl eti on D ate(s) including any reason for a change to the contract dates]

Contract

Programme

Commencement

Date

Original

Completion Date

Anticipated

Completion Date

Anticipated

Completion Date

(Previous)

[Add contract ref]

[Add contract

Commencement Date]

[Add contract

Completion Date]

[Current anticipated

Completion Date]

[any date which may

have been previously

advised in this report]

Current Commercial Overview

[Commentary should be kept to one page if possible]

[Add brief commentary on the current figures, change orders and extracting the key messages

from the tables below. Identify any disconnects between the understanding and interpretation of

contractual provision, etc]

Key Commercial Data

Contract Sum:-

Completion Date:-

Current AFC (Project or NR View)

Contractors AFC (If different from Project / NR View):-

COWD:-

Value & No. of Unagreed Change Orders:-

Value & No. of Claims:-

Current Overview


[Add brief commentary on the behaviours of the team and their well being]

General Comments


[Add brief comments in respect of the visit which you wish to be brought to the attention of

the project but does not necessarily fall into the other categories]

1

2

3

4

5

Summary of Observations

Ref Observations (raised during this visit) Date Advised Status [date observation

raised]

[date observation

raised]

Aged Open Observations (from previous visits) Date Advise

raised]

[date observation

raised]

[date observation

raised]

[critical], [essential],

[recommended]


Status

[critical], [essential], [recommended]


[recommended]

[critical], [essential], [recommended]

Summary of Closed Observations

Ref Observations Date Advised Date Closed

1 [date observation

raised]

[date observation

closed – as evidenced

to DAP]

2 [date observation

raised]

[date observation


to DAP]

3 [date observation

raised]

[date observation


to DAP]

Key Critical:- In the opinion of the DAP members, there is a high propensity for such

issues to result in a dispute.

Essential:- In the opinion of the DAP members, there is a medium propensity for such


Recommended:- In the opinion of the DAP members, there is a low propensity for such


List of Current Project Documentation

1 Period Report

2 Alliance contract / Framework / Charters

3 Master Contract Programme (+ Tier 2 subcontractors)

4 Minutes of Progress Meeting

5 Application for Payment, previous certificate & Target Cost Report

6 Change Control Log

7 Risk Register

7 Design Development Report

8 Recent / relevant audit report (if project leadership deemed appropriate)

Note:-

1. The information listed above is to be the current version at the date of the visit.

Appointment of DAP Member

Further to our previous discussions, we hereby confirm our instruction for you to participate in our Dispute Avoidance Panel pilot. For the purpose of this pilot, your time commitment will be limited to 8 hours for each visit instructed at an agreed rate of £xxx, which will be payable in due course by the project. Please submit your invoice via IP’s Head of Claims and Contract Compliance. As discussed, through the reading of the pre-read pack and other project documents together with your discussions with and assessment of the behaviours of the project members, you are to identify and report observations of possible sources (or warning signs) of potential disputes. For clarity, you are not instructed to give advice, mediate or decide upon any dispute. For consistency and simplicity, please refer to the template observations report provided for guidance and which should be submitted to IP’s Head of Claims and Contract Compliance within 14 days of your visit.

Note:- The above is a copy of the instructions provided to the DAP members on their appointment. This has

been provided to act as guidance and is to be amended as necessary.

List of Current Project Documentation

1 Latest Period Report

2 Alliance contract / Framework / Charters & Organisation Chart

3 Master Contract Programme (+ Tier 2 subcontractors)

4 Minutes of Progress Meeting

5 Application for Payment, previous certificate & Target Cost Report

6 Change Control Log

7 Risk Register

7 Design Development Report

8 Recent / relevant audit report (if project leadership deemed appropriate)

Table 1 Change Record

Date Author Version Description of change

November 2016

DAP Working Group

1

Final Draft issued for comment

Table 2 Defining Allowable Costs & Fee Working Group Members

Name Position Company Working Group Role

Stephen Blakey Commercial Projects Director –

IP

Network Rail Chair

Paul Cacchioli Head of Claims & Contract

Compliance - IP

Network Rail Co-Chair

Tony Bingham Counsel 3 Paper Buildings Active Member

Fraser Gale Commercial Director – Civil

Engineering, Rail & Highways

Carillion Active Member

Jason Hodge Commercial Director - Rail Carillion Active Member

James Quinnell Chief Commercial Officer Colas Rail Active Member

Martin Burton Senior Policy & Assurance

Manager – Legal Services

Network Rail Affiliate Member

Table 3 Quad of Aims