By Dr Samer Skaik
The call usually comes about eighteen months in.
Someone from an implementing agency, often a project manager who has inherited the file from a predecessor, explains that things have gone badly wrong. The ground turned out differently from the investigation report. The utility diversions never happened. The contractor has submitted a claim with a number in it large enough that it has now been seen by people several floors above the project office. And somewhere in the conversation comes the question I have learned to brace for: we think the contract requires us to have a dispute board — how quickly can one be set up?
The honest answer is that it can be set up quite quickly. The less comfortable answer is that whatever gets set up now will do maybe a third of the job it could have done if it had been set up seventeen months earlier.
I want to write about that gap, because I do not think it is caused by incompetence. I have worked with a lot of public sector project teams and they are, on the whole, careful people operating under conditions that would break most private sector managers. The gap exists because the most valuable month on a large infrastructure contract is also the month in which absolutely nothing appears to be urgent.
The quiet month
Think about what the start of a major works contract actually feels like from inside a ministry or a state utility.
The award has been made. There is a certain amount of relief in the building, because the procurement took eleven months and survived two complaints. The contractor is mobilising. The advance payment guarantee is being checked. The supervision consultant is still assembling its team. Land is being cleared, or more likely is not being cleared and somebody is writing letters about it.
Everyone is busy. Nobody is under pressure. And this is precisely the window in which the contract expects you to build the mechanism that will keep the project out of arbitration.
Most works contracts financed by the World Bank, the Asian Development Bank and the other development banks now sit on the 2017 FIDIC Red Book, which has been embedded in the Bank’s standard procurement documents for works since 2019. That contract requires the parties to jointly appoint a standing panel — the Dispute Avoidance/Adjudication Board — within 28 days of the contractor receiving the letter of acceptance, unless the contract data says otherwise.
Twenty-eight days from award. Not 28 days from the first argument.
I have come to think that the drafting is trying to tell us something, and that the word doing the work is the first one. Avoidance. Under the 2017 form, both parties can jointly go to the board for informal assistance on a disagreement long before it becomes a dispute. The board visits site periodically, reads the reports, sits in the room, and builds up an understanding of the project as it happens. Adjudication is the backstop. A board that runs a five-year project without ever issuing a formal decision has not been a waste of money. It has done exactly what it was there to do.
That only works if it was there from the beginning. A panel that arrives in month eighteen is briefed by two sides who have already spent a year constructing their positions. It cannot prevent anything. It can only decide.
Why it slips
Over the years I have heard most of the reasons, and I have some sympathy with all of them.
The first is emotional rather than administrative, and I think it is the most powerful one. Setting up a dispute mechanism at the very start of a project feels like predicting failure. It sits badly with the mood of an award. More than one official has told me, in almost these words, that it would look as though they did not trust the contractor they had just selected. That instinct is wrong, but it is entirely human and it delays things.
The second is that nobody owns the task. Procurement has closed its file and moved to the next tender. The supervision consultant has not fully mobilised. The project manager is chasing insurances, the performance security and the advance payment. The appointment falls into the space between two departments and stays there.
The third is money, and it is more of an obstacle than people expect. The board’s remuneration is shared equally by the parties. If nobody put the employer’s half into the project budget, the whole thing stops while finance works out what the retainer is, whether daily fees are eligible expenditure, and who signs. That question takes three days to answer if asked in week one and three months if asked in week four.
The fourth is that appointing three individuals jointly with your contractor, agreeing their fees, and signing a separate agreement with each of them is not a small administrative act in a government. It may need legal clearance and a no-objection. Twenty-eight days is not generous when a file needs five signatures. In one occasion, for instance, it took the parties almost five months for finalising DAAB agreement from the date I was approached to serve as a sole DAAB Member.
And the fifth, which people are usually too polite to say directly, is that they have never done it before and do not know who to approach. They are also wary of putting forward a name they might have to defend to an auditor two years later. I understand that completely, and I think our profession has been poor at making the process legible to the people who actually have to run it.
What it costs
None of this is abstract.
If the parties cannot agree in time, the contract has a safety net: an appointing entity, often the President of FIDIC or a person nominated by the President, steps in and makes the appointment. That system works. But notice what has happened. The employer has just handed over its influence on who will sit in judgment on a contract it has to live with for the next four years. That is a real loss, and it was avoidable.
The worse outcome is when nothing happens at all and the project runs with no board in place. The contract anticipates that too, and in defined circumstances a dispute can go straight to arbitration. For a government employer this is close to the worst available result: an international arbitration, foreign seat, institutional rules, counsel billing in hard currency, running for years, over a technical disagreement that a standing panel could have settled in six weeks for the cost of two site visits. I have watched projects lose their financial logic entirely to this sequence, and the underlying dispute was rarely worth what the process cost.
Then there is the cost nobody records anywhere. Without a board, the informal channel does not exist, so everything escalates through the same narrow pipe. The contractor writes to the engineer. The engineer determines. The contractor gives notice of dissatisfaction. Correspondence stops being communication and starts being evidence. By the time anyone with real authority engages, both sides have spent a year building a case instead of building a road.
What I would actually do in those four weeks
If I were sitting in the project office in week one, this is roughly the order I would work in.
Start with the two things that take longest and are least interesting: name one person, in writing, who owns the appointment, and ask finance on the same day to confirm the budget line and the treatment of retainer, fees and travel. Both of these can sit dormant for a month if nobody pokes them, and both will block everything else.
In the second week, write to the contractor. One clear letter proposing the process if not mandated by the funder — how many members, who nominates whom, how the chair is agreed, what date you are aiming at — removes an astonishing amount of ambiguity. In my experience contractors are rarely the obstacle here. They want the board too, often more than the employer does, and they are usually waiting to see whether the employer will take it seriously.
The third week is for conflicts and availability. Circulate the names for disclosure of any involvement with either party, the financier, the designer, the supervision consultant. Then ask each candidate a question that gets skipped far too often: can you actually attend site at the required intervals, for the whole construction period? A distinguished panel member who is unavailable for four months at a stretch is worth less to your project than an available one, and it is better to discover that now.
The fourth week is signature and calendar. Execute the agreement with each member, and then — while everybody is still cooperative — fix the dates for the first site visit and the first year of meetings. The procedural rules contemplate regular site visits at defined intervals within 90-140 days, and setting that rhythm early is much easier than negotiating it once relations have cooled.
If it slips, keep going. A board appointed in month three is still worth many times more than a board appointed in month eighteen. The deadline matters, but the underlying purpose matters more.
On choosing people
There is a strong pull inside public bodies towards selecting on paper — qualifications, years in practice, the length of the adjudication list. I understand why. Paper is defensible when someone questions the choice later.
But it is not the whole picture, and after enough projects you start to notice what actually separates a board that earns its fee from one that does not. It is availability. It is temperament. It is a willingness to do the genuinely unglamorous parts of the work: reading monthly reports that nobody enjoys reading, asking the uncomfortable question at a site meeting three months before it would have become a claim, and writing in language a project engineer can act on rather than language that impresses other lawyers.
If I were assessing a candidate, I would want to know three things. Will they commit in writing to the visit schedule for the life of the contract? Have they disclosed everything, including the relationships that are immaterial but might look awkward if surfaced later by somebody hostile? And can they write a decision that a permanent secretary can read once and understand, because that is the document that will eventually have to be explained upwards?
I keep a standing page to help the parties promptly inquire about my own availability, disclosures and terms, mostly because it spares an implementing agency a round of preliminary emails before it even knows whether I am a realistic option.
A different way of seeing it
The most useful shift I have seen public employers make is not procedural at all. It is when they stop thinking of the board as a dispute mechanism and start thinking of it as something the project owns.
A standing panel gives a government agency something it almost never has: an independent, informed, current view of what is really happening on its own project, available before anyone has taken a formal position. It gives the project manager backing when a claim is overstated. It also — and this matters more than people admit — gives the project manager a credible way of telling their own institution that the delay is the employer’s fault, which on internationally financed projects it very often is. Land acquisition. Permits. Utility relocation. The things that never appear in the contractor’s risk register because they were never the contractor’s to carry.
None of that is available to a panel that arrives mid-fight. All of it is available for the price of a few site visits a year, decided in a month when nothing seemed to be happening.
That quiet month is not empty. It is the last stretch of the project when both parties still find it easy to agree on something. It is worth spending well.
This post is the first in a series for public sector employers delivering infrastructure under internationally financed contracts. Related reading: Why the World Bank Uses DAABs, Parties’ Strategies for Selecting High-Performance Dispute Boards, and How to Nominate a Dispute Board Member under FIDIC Contracts.