Guest Editorial

Introduction

Both Latham (1994) in the United Kingdom and Tang (2001) in Hong Kong highlight two major factors in the construction industry that have led to significant inefficiencies, those factors being project procurement and disputes. Earlier studies have shown that similar problems have been recognized worldwide, and that the less developed or developing countries are worst hit (Aniekwu and Okpala, 1987; Ofori, 1991). Procurement includes international construction business ventures and other worldwide economic cooperation and technology transfer activities that are now taking place within the general area of ‘globalization’ (Bon and Crosthwaite, 2001). International construction projects invariably involve multinational participants from different political, legal, economic and cultural backgrounds. Such an international mixture necessarily brings with it issues of different legal jurisdictions, which will be fertile ground for disputes, and will generate additional difficulties in the management of an international construction project (Chan, 2002).

A procurement system for managing the design and construction of a project is implemented through a contractual arrangement to meet the objectives of a specific project. The interests of the parties and management procedures of a project are defined by the contractual arrangements entered into by the parties. Although some studies have suggested that contractual arrangements do not have a significant effect on the project's overall performance (NEDO, 1987; Walker, 1994), it must be acknowledged that the contract terms will have a profound impact on the management of a project. The full significance of contractual arrangements may be masked by the management of a project. One of the major tasks of construction management is to deal with conflicts arising in the course of project performance. To improve construction efficiency, critical studies are needed to investigate the effect of legal issues and of contract arrangements for managing conflicts arising during construction project performance.

It follows that due consideration of construction law issues is necessary in order to implement a chosen procurement route and management strategy under a construction project. Construction practitioners need to have an adequate knowledge of different disciplines of law including statutory control of building works, safety requirements, professional liability of practitioners, contract principles for different procurement strategies and contractual claims and defences. In addition, as disputes remain a frequent occurrence in construction projects, a detailed knowledge of the legal and procedural aspects of arbitration and alternative dispute resolution (ADR) is indispensable for project mangers who are involved in resolving disputes. To generate wider interest in these topics, the Special Issue of this journal focuses on this area of construction law and management. The topics for research in this area are numerous and include the following:

•	new forms of contract for major infrastructure works;
•	procurement issues of strategy level;
•	issues of different legislative domains in international contracts;
•	financial impact of different contract configurations;
•	dispute resolution in international contracts;
•	study of the impact of statutory adjudication schemes;
•	regulatory control of building works;
•	professional liability, warranties and insurance;
•	payment to subcontractors and bonds;
•	relational contracts (e.g. partnering/alliancing), etc.

The papers in this Special Issue

The call for papers for this Special Issue produced over 35 papers for consideration by the guest editors and/or for formal peer review. The review process concluded that 16 of the papers were suitable for publication under the special theme. While the papers presented cover a seemingly broad canvas, the topics are in fact all related to the principal activities of the guest editors in the fields of dispute resolution and, antecedent to that, what might be termed dispute suppression through an appreciation of the true nature of construction contracts and other instruments by which construction work is procured and managed. Thus, the papers break down into four convenient groups which can be summarized as: procurement issues (Ive and Chang; Gruneberg et al.; Donohoe and Brooks; Buckingham), performance and interpretation (Dagenais; Boukendour; Rameezdeen and Rajapakse), payment and dispute resolution (Twyford; Ward et al.; Uher and Brand; Gaitskell; Nissen) and performance and liabilities (Ndekugri et al.; Wang et al.; Craig and Barnes; Shiers et al.). The published papers come from different countries/regions, including Australia, Canada (Québec), China, Sri Lanka and the United Kingdom (UK). They cover a range of the issues likely to be encountered in international construction projects. We shall introduce and comment on the papers in these four groups.

The first group heading, ‘Procurement’, demands a proper appreciation not simply of risks and opportunities under a particular contract system, but of the balance between different characteristics of that contract system which, as Ive and Chang point out, gives rise to necessary inconsistencies. The authors dub the trade‐off between time, vulnerability to changes and non‐performance as the ‘inconsistent trinity’. The paper presents a model for analysis of these elements in terms of transaction costs and project management to allow the alignment of characteristics of the procurement system in question with attributes of the project. At a somewhat less rarefied level, Gruneberg et al. analyse the benefits of performance‐based contracting (PBC) by which contractors are required to take more extensive and longer term risks including fitness for purpose and payment spread over the life of the structure which is also dependent on satisfactory performance. Their statistical survey leads to the conclusion that, despite innovative aspects of PBC, contractors appear reluctant to take on such risks. Donohoe and Brooks examine the management side of procurement in their analysis of Great Eastern Hotel v. John Laing, the first case to come before the English courts concerning the potential liability of a construction manager. While that liability was previously perceived as carrying a low level of risk, the judgment appears to shift the balance of risk significantly in favour of the client and against the construction manager. Finally, in this first section Buckingham presents a review of particular features of contracts utilized in international process plant projects as compared to more standard construction practice and analyses some of the key changes recently introduced into the standard forms. Process plants represent a major economic sector in which contract forms have been relatively successful in keeping the project on course despite major disputes and losses occurring during performance.

For the second group heading, ‘Contract performance and interpretation’, Dagenais examines the concept of good faith as part of a new contract morality recognized under the Civil Code of Quebec and other countries—although, it must be said, not yet the United Kingdom in any of its parts, nor in Hong Kong or Singapore. While the author cites the Latham report as an example of parallel thinking in the UK, the essential question is whether good faith will be recognized as creating any enforceable legal rights, which, in the UK, is currently not the case. Boukendour proposes an entirely different and fundamentally legalistic means of pre‐empting ‘post‐contractual opportunism’ by contractors, by providing the owner with the exclusive remedy of contract switching—to an alternative cost regime aimed at minimizing overspend. While the proposed solution would add drama to the otherwise mundane process of accounting, we think the same result should be achievable by judicious contract drafting having the effect of limiting the contractor's recovery in particular circumstances. The analysis is nevertheless compelling. Finally Rameezdeen and Rajapakse present what is, in the guest editors' experience, a unique method of quantitative analysis of ‘readability’ as a direct measure of what is frequently claimed by contract drafters, namely clarity. The analysis, using the Flesch Reading Ease Score (FRES) is applied comparatively to the NEC and FIDIC forms concluding, perhaps unsurprisingly, that the former score significantly above the latter in comprehensiveness.

Under the third group heading ‘Payment and dispute resolution’ Twyford analyses the consequences and application of the English Court of Appeal Decision in Williams v. Roffey and a parallel decision of the Australian High Court, Walton Stores v. Maher, in each of which the court found means of enforcing an obligation at the limit of what was hitherto regarded as enforceable. Each case concerned the upholding of the reasonable expectation of parties to contracts, which had been denied on strict legal grounds. The cases therefore represent a triumph of common sense over lawyerly loopholes. Next, Ward et al. examine, from the perspective of New South Wales, new provisions for statutory adjudication which are perceived as disadvantaging responding parties. Their research examines the possible benefits from use of model clauses governing delay issues and of other web‐based technology as a means of ensuring effective and efficient administration of projects, thereby overcoming the perceived unfairness of the statutory process. Uher and Brand similarly examine the effects of the equivalent New Zealand legislation, which at one level is more broadly based than the NSW version, applying to all kinds of disputes, while on the other hand being limited in scope to contractors and subcontractors and not to suppliers of goods and services. The comparison is extended further by Gaitskell who examines statutory adjudication on an international basis, including the original UK Act and variants now to be found in Australia, New Zealand, Singapore, Hong Kong and South Africa. The review is placed in the context of alternative means of dispute resolution under construction contracts. Finally, Nissen examines the issue of expert evidence, applicable to all formal methods of dispute resolution, particularly through the courts. The role of the expert has been reviewed critically by the English courts in a number of high profile cases covered in the paper, including the recent Court of Appeal Decision in Meadow v. General Medical Council.

Turning finally to the group heading of ‘Performance and liability’, Ndekugri et al. present a comprehensive review, based on case law and the literature, of the role of the engineer under the UK contracting system and the FIDIC forms of contract in particular. There is some irony in the continuing attempt to refine our understanding of the role of the engineer given the virtual emasculation of the role under English domestic contracts through statutory adjudication, and the frequent abuse of the engineer's role by foreign parties who do not recognize the long‐standing tradition of impartiality still exercised by many engineers worldwide. Yet the engineer continues to perform an important role, not least in contracts that are not subject to statutory adjudication. Wang et al. present an alternative and more positive view of the supervisory role of the engineer as a means of improving project performance in China. Hitherto not recognized as part of the Chinese construction system, project supervision has been introduced through statutory changes over the past decade in line with the FIDIC model. However, as in other countries, imperfect performance by the supervisor has led to the parallel need to establish professional liability insurance in China, which faces the same type of obstacles as are encountered elsewhere. Craig and Barnes examine a different aspect of professional liability: the incidence of personal liability of the employee, whether in contract or tort, typically arising in circumstances where the principal contracting party is unable to satisfy liability. The article is based on the English Court of Appeal Decision in Merrett v. Babb in which an employee surveyor was held liable to a client of the former employing partnership, a decision that finds parallels in several other jurisdictions and that creates a particular requirement for professional indemnity protection. Finally, Shiers et al. present a comprehensive review of the impact of environmental factors on UK construction practice. While the cases remain disparate and not indicative of trends towards significant volumes of litigation, the topic without doubt includes the seeds of significant future developments, the precise direction of which will be dependent on economic, political and many other factors.

This seemingly diverse collection of topics can be seen as a representative slice taken through the construction industry in the first decade of the 21st century, indicating both the current state of development in a number of sophisticated jurisdictions well versed in all the intricacies of construction economics and management on the one hand, and on the other the emergence in less developed jurisdictions of new tools to deal with problems that are in fact remarkably similar to those already well known in the old world. The essential questions for construction, economics and management remain: how to achieve a satisfactory trade‐off between competing objectives; how to manage primary liabilities; how these should be underpinned by a secondary system of protection; and how inevitable disputes can be either avoided or, if unavoidable, managed.