13/05/2011

ADRoIT – the latest ADR thinking

Philip N Argy
Chief Executive ArgyStar.com
Mediators, arbitrators, negotiators and strategists

pargy@argystar.com
www.argystar.com

Overview
• • • • • • • • Disputes and the ICT sector High project dissatisfaction Poor communications between users and developers Poor contract formation, management, enforcement Poor change control Poor handling of disputes Disproportionate cost of ICT disputes to business Solution: ADRoIT Principles
© ArgyStar.com 2011

1

com 2011 The Survey • Survey to validate anecdotal evidence of surge in technology disputes and extreme dissatisfaction with litigation. even for the ‘winners’ • 400 good quality responses • Statistically significant results • Many corporate counsel responded © ArgyStar.com 2011 2 .13/05/2011 The Survey • IAMA/ACS/PMI project • What did we do? • How did we do it? • What were the key findings? © ArgyStar.

13/05/2011 The Survey (cont) • Survey in four parts: – Extent of disputes – Knowledge of dispute resolution options – Technology contracts – Respondent demographics © ArgyStar. the main causes were: – 20% failure to meet specification – 15% failure to agree on spec interpretation – 14.5% failed to meet deadline – 11% failed to contain costs © ArgyStar.com 2011 3 . Of those.com 2011 Extent of disputes • 46% of all technology contracts resulted in a dispute.

000 and $500.com 2011 4 .com 2011 Cost of dispute resolution 50% resolved for < $50.000 using ADR processes Litigation costs usually exceeded $500.000 © ArgyStar.000 Some >$100 million 17% litigation 14% mediation 13% arbitration 8% expert determination 8% executive meeting 5% conciliation 3% dispute review board 20% ‘Other’ or ‘Don’t know’! © ArgyStar.13/05/2011 How much was at stake? How resolved? • • • • • • • • • • Most between $50.

cost. process efficiency. confidentiality and relationship preservation © ArgyStar.com 2011 Corporate dispute avoidance procedures • More than 50% have no formal dispute avoidance procedures due to: – Lack of understanding of possible processes – Lack of experience or training – Lawyers assume adversarial/litigation process © ArgyStar. speed.com 2011 5 .13/05/2011 Satisfaction with resolution • Higher satisfaction with less formal dispute resolution techniques • Most ADR processes >70% satisfaction • Litigation <50% satisfaction • ADR satisfaction due to fairness.

com 2011 Dispute Resolution Approaches • ADRoIT principles: – pre-engagement – contract formation – contract administration – dispute stairway to resolution © ArgyStar.13/05/2011 ADR over IT = ADRoIT © ArgyStar.com 2011 6 .

com 2011 ADRoIT contract formation • The business case that went to the Board is the contract deliverable! • Parties must understand risks on each side and craft a contract to allocate risks and responsibilities • Key issue is ensuring that supplier knows EXACTLY what they have to do to deliver the business case • Customer must know EXACTLY how the business case maps to their stated requirements © ArgyStar.13/05/2011 ADRoIT pre-engagement • Why are we doing this project? • What’s the business case • Sensitivity analysis: – What if 10% over time? 25%? – What if 10% over budget? 25%? • Identify and manage risks of business case not being delivered/realised © ArgyStar.com 2011 7 .

or an independent chairman must ensure issues are fully ventilated and contract departures reported and actioned • Recognise/intercept disputes at incipient stage – save direct and indirect costs later © ArgyStar. maximise relationship preservation • Focus remains on achieving the business case • Re-imbue participants with original rationale for engaging with each other © ArgyStar.com 2011 8 .13/05/2011 ADRoIT contract administration • Change control processes critical to avoid moving targets • Steering committee members must not be too close.com 2011 ADRoIT dispute handling regime • Designed to minimise cost.

13/05/2011 ADRoIT Dispute Resolution • Escalation regime – – – – Senior management discussion Mediation Arbitration Litigation • Expert determination • Neutral evaluation © ArgyStar.com 2011 Graph courtesy Howard Elliott .com 2011 ADRoIT competency stages ROI/Margin © ArgyStar.Telemetrics 9 .

com 2011 Graph courtesy Howard Elliott .Telemetrics 10 .13/05/2011 ADRoIT Competency Value Proposition ORGANISATIONAL COMPETENCY COST of RESOLUTION © ArgyStar.

Sign up to vote on this title
UsefulNot useful