Engineering Administration Introduction A NZ property developer “PROFIT” proposed to develop an office building in Beijing, The Republic of China. This requires the use of FIDIC Conditions of Contracts for Construction (i. e. the 1999 Red Book) which is different in the dispute resolution mechanisms compare to the local NZS 3910:2003 Conditions of Contract. Objective The first objective of this report is to compare the difference in the dispute resolution mechanisms between the 1999 Red Book and the NZS 3910:2003 Conditions of Contract.
The second objective is to give critical comments to the dispute resolution mechanisms in these 2 standards.
Tables and flow charts Discussion There are many differences in the dispute resolution mechanisms between the 1999 Red Book and the NZS 3910:2003 Condition of Contracts. Figure 1 and Figure 2 shows the flow of structure for dispute in both 1999 Red Book and NZS 3910:2003. The figures show that the general flow path between the two acts is similar. For both acts, the engineer that is responsible for the contract is always the first person (party) to be referred to.
If the engineer cannot solve the dispute, both acts recommend a method of dispute resolution (by a neutral third party) before referring to arbitration. Arbitration is the last method of dispute resolution that can be used for both acts, the decision from arbitration is call an award and binding and enforceable to both the clients and the contractors. There are 5 major differences between 1999 Red Book and NZS 3910:2003. The differences are listed on table 1. The first difference is the difference in engineer’s position and engineer’s response.
In the 1999 Red Book, the engineer is an employee of the client.
The response of the engineer can be regard as the response of the client to the contractor (Cl 20. 1). In the NZS 3910:2003, the engineer is a third neutral party responsible for the contract. The decision of the engineer is final and binding on when both the client and the contractor are satisfied. There is also another small difference that the engineer can do while making engineer’s review between the two acts. It can make a connection with an agreed expert to make recommendations to assist to resolve the dispute with the consent of the client and the contractor.
This is similar to adjudication, but with the involvement of the engineer. The second difference is the difference in obligation of the engineer to give it decision to the dispute. In 1999 Red Book, the engineer must give it response to the contractor within 42 days after receiving the claim to obey the law. In the NZS3910:2003, the engineer is expect to give a response to the dispute in 20 working days. However, the engineer may choose to not give any decision within the time limit which is not against the law.
In this case, the client and the contractor could refer to other adjudication process to resolve the dispute. The third difference is the difference in the recommended method of dispute resolution to take before referring to arbitration. The 1999 Red Book recommend to referred to dispute adjudication board. The NZS3910:2003 recommend to referring to a mediator. The dispute adjudication board is panel of experienced and expertised reviewer which is organised before the construction begins and meets at the job site periodically.
There, the reviewer in the dispute adjudication board is familiar with the job procedure and progress. The mediator is an independent neutral third party which acts as the case manager and the facilitator of the dispute. The mediator does not have to be expertise and it does not have previous relationship with the contract before the mediation undertaken. The fourth difference is that in there is an extra obligated process which is required to be undertaken in the 1999 Red Book but not in the NZS 3910:2003.
Clause 20. 5 in the 1999 Red Book indicates that before commencement of arbitration, both parties shall attempt to settle the dispute amicable. In the NZS 3910:2003 There is no similar regulations. The fifth difference is the difference between the restriction dates for all the steps in the dispute resolution procedure in figure 1 and figure 2. The 1999 Red Book has specified clearly the restriction time. The NZS3910:2003 use working days and sometimes months in it regulations.
For example, the restriction on the submission date for contractors’ claim is within 28 days in 1999 Red Book after he became or should have become aware of the event;the restriction date of the same situation in NZS 3910:2003 is 1 month. Obviously, the clear number of days used in the 1999 Red Book is more formal and precise than the use of month in the NZS 3910:2003. In some other step, the NZS 3910:2003 sometimes use working days. For example, the engineer review shall give a formal decision within 20 working days (clause 13. 2. 4). The use of working days is