Rohit Kapoor
Walt Disney was right in saying ‘Everyone needs deadlines.” Our own experience tells us Time limits are easy to fix but hard to be adhered to. Most organizations do not like to admit it, but the ‘sign and forget’ attitude is commonplace with all types of contracts. Once a contract has been negotiated and approved, a paper copy is typically signed and archived either in filing cabinets or in off-site storage. In some cases details of key clauses, commitments and obligations are provided to the relevant personnel throughout the business in a timely fashion, but this is an exception rather than a practice requisite. It is the experience; lots of attention gets paid to the processes leading up to the signing of a contract. Those processes get attention because they produce the first statement of how much money/utility will be earned in a contract. Without contract Legal management to ensure that those earnings are realized, it’s likely that the settled amounts will differ greatly from the actual. It has been observed that Government and industry focus their time, attention and key resources on soliciting, proposing, negotiating, and forming the contract—simply said, getting the deal. While project management and earned value management have received significant focus and attention in recent years for the value-added capabilities they can provide, few organizations have paid much needed attention to Pre-post award – contract management (Legal) and closeout activities, which are equally vital for a successful contract.
Intense legal scrutiny is required at the time of preparation of Detailed Project Report ( DPR) particularly in the context of delayed execution and change in specifications- both these elements are virtually in-evitable in Mega projects. As per the report of Construction Industry Arbitration Council, working under the aegis of Planning Commission of India, crores of Rupees are locked up in commercial disputes in construction sector alone. The system of “Pre & Post award -Contract Legal Management / Contract lifecycle Legal Management” that can certainly improve exposure to financial and legal risks is missing. And as a consequence thereof, a striking feature of large Infrastructure projects in country has been the abnormal delays and consequent increase in cost and time over-runs. Timely dispute resolution of disputes and differences can lead to cost efficient and scheduled completion of projects.
Now, with multitier dispute resolution mechanism in FIDIC and other form of European contract documents executed in Jammu and Kashmir State, resolution of disputes in time can be a real possibility. Dispute Adjudication Board (DAB) /Dispute Resolution Board (DRB) is a forum of dispute resolution (Pre Arbitral process stage) when both parties to contract are working together. One particular feature of the FIDIC form of contract is that obtaining a decision from a DAB is generally a pre-condition to a party being entitled to commence arbitration.The objective and emphasis is to highlight availability of management tools to prevent or minimize at least, adverse consequences arising of Time and Cost overruns. After all how long a tax payer will stand quite and a mere spectator to avoidable huge cost escalation and compensation events in infrastructure projects !
(The author who is an advocate is a member of Indian Council of Arbitration)
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