Leaders Oman: Avoiding disputes and delays
Could a move away from the ‘lowest-price wins’ model help to minimise disputes and delays in the Sultanate?
During the final discussion of the day, panelists Thomas Miers, senior associate at Curtis, Mallet-Prevost, Colt & Mosle, and Andrew Smith, operational director for special projects at Driver Group, took to the stage to discuss contracts, risk, claim avoidance, and stakeholder alignment. Both agreed that a culture change is needed in Oman.
“Traditionally, contracts within the construction industry have been adversarial in nature,” Miers began. “I think you need a culture of trust and openness. Key stakeholders must be involved from the outset.”
Smith noted that a common source of dispute is “the policy of taking the lowest price all the time, particularly in Oman”. He added: “The problem is that the lowest price very rarely represents the best value. Contractors will price jobs [to win], and then look to recover margins through claims and disputes.”
Both panelists called for “cultural and structural” changes in the way that projects are tendered. Miers and Smith pointed out that collaborative models have proven effective elsewhere.
“Collaborative [methods] have proven that costs can be reduced by an average of 30%,” Smith emphasised. “That’s going to benefit employers in the long term. It’s about getting over this idea that [developers] are paying more than they think they should at the outset.”
Miers said that when risk is shared more equally, all parties benefit. He concluded: “You can have pain- and gain-sharing mechanisms. If project cost targets are met, all stakeholders gain. If they are not, everybody shares the pain. This kind of approach encourages innovation; contractors and subcontractors look for new ways to do things because they’re invested in keeping their costs down.”