Data Center
Dispute Resolution

With uncertainty reigning in markets around
the world and data center projects more complicated than
ever before, disputes are taking longer to resolve
which can have far reaching consequences
Why Use The Electrical Group for Your Data Center Dispute Resolution?

It is commonly known in the industry that a substantial percentage of disputes are settled before they become formalised. In the unlikely case a dispute is to materialise formally, both parties involved could see themselves in a situation where differing views and interests could prolong
the dispute. Setting aside the different drivers and motives of both parties involved, it is generally agreed that a speedy settlement of any dispute is
desired.

These are the reasons why;

  • To use current and available people and documents, which are directly relevant;
  • to maintain cash flow within the supply chain;
  • to maintain party relationships;
  • to keep the respective delivery teams focused on delivering the project; and
  • to avoid a cumulative effect of minor issues being aggregated into large disputes.

These reasons are largely selfevident, and it is aspirational to suggest that all disputes can or need to be settled quickly. Even so, we must continue to embrace the many initiatives that are being deployed by data center professionals, lawyers and the judiciary across the globe, and do all we can to facilitate the settlement of such disputes. This means that effective dispute avoidance mechanisms need to be actively deployed as early as
possible within a project, and involvement of the right expertise and support at the right time is critical.

What defines a dispute?

We define a ‘dispute’ as a situation where two parties typically differ in the assertion of a contractual right, resulting in a decision being given under the contract, which in turn becomes a formal dispute.

The value of a dispute is the additional entitlement to that included in the contract, for the additional work or event which is being claimed. The length of a dispute is the period between when it becomes formalised under the contract, and the time of settlement or the conclusion of the hearing.

Dispute causes – poor contract administration most common

Below are the most comon causes of dispute we have encountered;

  1. Failure to properly administer the contract
  2. Poorly drafted or incomplete and unsubstantiated claims
  3. Errors and/or omissions in the contract document
  4. Incomplete design information or employer requirements (for Design and Build)
  5. Employer/contractor/subcontractor failing to understand and/or comply with its contractual obligations

Incomplete design information is considered to be linked generally to the poor quality of design information, and a proportionate increase globally in the use of design and construct forms of contract. The implementation of EPC forms of contract have been particularly problematic in data center projects.

Data Center Dispute Resolution – The Facts

The average dispute value is US$46m.

The average dispute length has increased to 15.5 months.

The most common cause is still the failure to properly administer the contract.

1 in 4 Joint Venture’s still end up in dispute

Resolving disputes – let’s talk

Method of Alternative Dispute Resolution

Here are the routes to resolution;

  1. Party to party negotiation
  2. Mediation
  3. Arbitration

The most important activities in helping to avoid a dispute were considered the following;

  • Proper contract administration
  • Fair and appropriate risk and balances in contract
  • Accurate contract documents

In addition to these, one feature that was also discussed within the key inputs to avoiding a dispute was the role (and perhaps return) of the need for a truly independent certifier.

The Electrical Groups’ Contract Solutions teams help data center clients avoid, mitigate and resolve disputes. The team is based around the globe and encompasses one of the industry’s largest pool of procurement, contract, risk management and also quantum, delay, project management,
engineering defects and building surveying experts.

The team provides procurement, contract and dispute avoidance and management strategies, management expertise as well as dispute resolution and expert witness services. This is delivered through a blend of technical expertise, commercialism, sector insight and the use of live project data, combined with a multidisciplined and professional focus.

Data Center Programme Management Case Studies

The Electrical Group Data Centre Programme Management provides our clients with comprehensive technical advice to the highest professional standards, founded on innovation and sustainability.

Below you will find a selection of recent case studies

Data Center Case Study 3
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