CHAPTER 4 RESULTS AND DISCUSSION
4.2. Qualitative Data from the Focus Group Discussions
The focus group discussions iterated the importance of this research from the perspective of industry practitioners. Additionally, the findings from the focus group assisted the design of the questionnaire survey which was used to gather further industry insight from a wider set of infrastructure PPP practitioners. This section presents a summary of the profiles of the participants in the focus group discussion in addition to their views on the DR practices currently used in infrastructure PPPs, DR-related issues, causes and escalators of dispute, and recommended DR practice for infrastructure PPPs.
Although the target number of focus group participants was 10, 12 individuals were recruited to ensure that the focus group had sufficient participants in the event that some recruited individuals became unavailable at the time of the focus group discussions. This was in line with the 10 – 25% recommendation made for over-recruitment by Rabiee (2004). However, to recruit
the 12 individuals, 38 infrastructure PPP practitioners in Australia were contacted through their contact details that were publicly available on the websites of their organisations or LinkedIn.
4.2.1. Profile of participants in the focus group discussion
The focus group discussions were attended by nine individuals – three academics and six industry practitioners. This not only fit within the recommended number of participants as explained in Section 3.6.1 of this thesis but was also ensured adequate representation of the targeted contributors to this research project. Basic information on the focus group participants is presented in Table 4.1.
Table 4.1: Basic information on the focus group participants Participant Industry / Sector Relevant experience
FG1 Academia • PPP research
• Construction management and project management background
FG2 Academia • PPP research
• Construction management and project management background
FG3 Barrister/civil engineer, DRBF
Legal and engineering:
building construction disputes, ADR (arbitration, mediation, DRBs, DABs, etc)
• Arbitrator on a PPP project
• Expert determination in a hospital PPP
• Legal counsel for dispute between contractor and sub- contractor
• Transaction advisor for a major PPP project in Australia
FG4 Practicing solicitor, practitioner of DAB, DRBF
Legal
• Legal advisory to equity on multiple infrastructure PPP projects in Australia
• Advisor to the project co. (SPV) from bid stage through to O&M in a hospital PPP
• Part of DAB on several infrastructure PPP projects in Australia
FG5 Legal Legal advisory to PPP contractors and subcontractors for about 15 years on disputes arising on infrastructure PPP projects.
FG6 Legal – front end legal practitioner
• Practised on several infrastructure PPPs including the very first PPP under Partnerships Victoria
Participant Industry / Sector Relevant experience
• Mostly acted for project co. (SPV) for both economic and social PPPs – most have had a level of dispute involved
• Acted for financier on major transport PPP in NSW FG7 Engineering, training &
education on infrastructure PPP projects
Steering committee member of the WAPPP
• Engineering and project management consultant on PPP projects
• CP3P trainer (foundations, execution, preparation) for government officials in various continents
• Been involved in the after financial close of PPPs
FG8 Academia PPP dispute resolution research
FG9 Engineering and PPP research • PPP dispute resolution research
• Preparation and engineering delivery of PPP projects
Most of the focus group participants had a wealth of experience in infrastructure PPPs spanning different stages of project formulation, pre-contract negotiation and financial closure, design and construction as well as operation and maintenance. There was a good representation of academics, legal, engineering and project management practitioners. The main insights drawn from the focus group discussions are discussed in subsequent sub-sections.
4.2.2. Current DR practice in infrastructure PPPs
FG7 highlighted that one of the reasons infrastructure PPPs are becoming less popular is because of the inflexible contracts despite the long-term nature of the projects. This was backed by FG4, FG5 and FG6 who emphasised need for more flexibility in infrastructure PPPs especially in relation to risk that is associated with unforeseen events. FG5 elaborated that the current rigid price contracts require contractors to accurately predict what will happen in 20 – 30 years and commented that this is not only impossible but also fuels many disputes that are experienced in infrastructure PPPs.
Additionally, there was consensus among all the focus group participants that DR planning for infrastructure PPPs is inadequate at project level, and when a dispute arises during the course of project execution. This was in part attributed to the little attention paid to DR clauses and
processes at contracting stage. FG7 and FG3 highlighted that at the time of bidding for an infrastructure PPP project, most bidders are preoccupied with ensuring that they win the project, secure equity, and risks are transferred appropriately, among others.
FG3 further stated that in most cases, the DR provisions that are found in concession deeds are set by the government entity or their nominated representative, highlighting that those provisions are related to the various subcontracts in the PPP set-up through clauses for handling linked claims or pass-through claims. FG6 added that rarely does any party contest the provisions on the basis of inappropriateness of DR processes because PPP bidding processes in Australia are very competitive and the last thing a bidder wants to be seen doing is pushing back DR clauses. FG3 emphasised that since the government agencies seem to be steering DR provisions, education of these agencies is key so that the lawyers drafting the DR provisions on their behalf do so in a more streamlined way.
Finally, FG3 reported that DR provisions usually vary from project to project. FG3 elaborated that most DR provisions specify a senior executive meeting as the first step of DR. In the event that the dispute cannot be resolved at that level, expert determination is sought. As the expert determination may not be binding, arbitration is undertaken and, in some instances, litigation.
FG6 reported that on some projects, the order of progression of DR processes and respective timelines are not well elaborated in the DR provisions. As such, infrastructure PPP parties sometimes progress to subsequent DR processes before exhausting the previous ones. For instance, on a big tunnel project in Australia where the DR process had progressed to litigation, the parties were sent back to arbitration, but the dispute was eventually resolved by a more collaborative method. While this was a rare twist of turning a dispute that had progressed to an adversarial process to a path of an amicable process, all the focus group participants were inclined to the view that the best way to manage disputes in infrastructure PPPs is to avoid them using processes like dispute avoidance boards (DABs). FG6 gave an example of a mega transport PPP in Melbourne which had 26 unresolved issues that eventually blew up into
disputes when the relationship among the project parties deteriorated. FG6 added that if these issues had been progressively dealt with through a collaborative platform, relationships would have been preserved and some disputes may have been avoided.
4.2.3. Causes and escalators of disputes
FG4, FG5 and FG6 discussed the causes of dispute and agreed that they include: improper and unclear risk allocation, under-pricing of the project, unforeseen conditions/events such as COVID-19, breakdown of commercial relationships, parties taking on too much risk, exposure of the SPV to liabilities that they cannot pass on to either the government or the contractors, failure to resolve issues in a timely manner, and disagreement on the parties responsible for different scopes of work.
While FG4 noted the escalators of disputes as existence of conflicts between on-site representatives of different parties and communication breakdown, FG6 argued that poor relationship between parties and unwillingness to negotiate escalates disputes on infrastructure PPP projects.
These findings matched with various literature sources (Chan et al. 2011; Tang et al. 2013;
Osei-Kyei et al. 2019) on sources, causes and escalators of disputes in infrastructure PPP projects.
4.2.4. Ranking of DR-related issues
As part of the focus group discussions, a ranking of DR-related issues encountered in infrastructure PPP projects was done starting with the most prevalent to the least prevalent. This ranking (Table 4.2) was done collectively by the focus group participants by majority vote. The participants discussed amongst themselves and agreed on the order of ranking of the DR-related issues.
Table 4.2: Focus group ranking of DR-related issues
Ranking DR-related issues
1 Poor collaboration
2 Unclear communication channels
3 Unclear guidelines on who is responsible for oversight of the public partner’s actions 4 Inefficacy of applied conflict management and DR systems / processes
5 Absence of elaborate DR guidelines 6 Absence of monitoring and evaluation
7 Lack of transparency; and government not being transparent on certain issues 8 Exclusion of behaviour of project parties in the DR process
“Poor collaboration” and “unclear communication channels” ranked as the most prevalent DR- related issues while “lack of transparency” and “exclusion of behaviour of project parties in the DR process” were ranked as the least prevalent.
FG6 highlighted Issue #5 (absence of elaborate DR guidelines) as a process issue because current DR practice expects parties to agree on a process to be used for all disputes anticipated during the entire duration of the project, at the beginning of the project. To this, FG5 added that this lack of flexibility around DR options makes effective DR impractical given that not all disputes encountered can be resolved using one single process.
4.2.5. Recommended DR practice for infrastructure PPPs
Dispute boards (DBs) or dispute resolution boards (DRBs) or DABs – as they are commonly known in Australia, were commended by FG3, FG4, FG5, FG6, FG7 and FG8 as one way of avoiding disputes and proactively managing conflicts because they allow parties to jointly discuss matters on a regular basis before they get out of hand.
FG 5 clarified that DABs are gaining popularity in Australia and different parts of the world, but not all infrastructure PPP contracts provide for their application on the projects.