Risk and Reward Review

Our Client was a Specialist Contractor involved in a complex project.

Our Client believed that it was entitled to over £1m in a claim comprising Change, Prolongation and Disruption. The project had been prolonged by 18 months and during this period it had been required to predict outcomes as part of annual forecasting in its Company Accounts.

As part of its Accounts auditing process, its Accountants were pushing for a clear explanation of what the likely recovery would be in this matter, when these sums would be received and the potential costs associated with recovering the alleged debt. Furthermore, our Client was also being pressured by its Parent Company to conclude matters as soon as possible.

After discussions, Ramskill Martin was instructed to carry out a joint Risk and Reward Review (“RRR”)/Commercially Focussed Delay Analysis (“CFDA”). The aim of this task was to provide a report for the Parent Company and Auditors which set out:

1. Strengths and Weaknesses of our Client’s position.
2. An analysis of the outcomes (best, worst and realistic).
3. Set out a strategy to resolve this.
4. A detailed overview of issues related to Delay/Disruption.
5. An estimate of fees/costs associated with the suggested strategy.

To ensure that our Client maintained control of the process and fees, a timeline was devised which included a number of break points where Ramskill Martin and the Client would look at the current outputs and ensure continuation of the process was efficient and worthwhile.

The initial RRR/CFDA was completed in 5 weeks for a fee of £35,000.00. The key findings were:

1. Whilst a number of contractual risks existed, the broad basis of the case was favourable (as there were many more strengths than weaknesses).
2. The overall potential claim actually ranged from £1.6m to £2.3m with a worst case of over £1.1m (a sum greater than our Client thought was “best” case originally).
3. The projected potential fees were, in total, £110,000.00 divided into a strategy that expended fees as follows:

• Step 1: Edit RRR and Submit - £10,000.00
• Step 2: Prepare a Position Statement - £25,000.00
• Step 3: Declaratory Adjudication on a Single Point - £15,000.00
• Step 4: Adjudication (All Issues) - £60,000.00

Following a meeting with the Parent Company, Ramskill Martin commenced the suggested strategy.

Following submission of the edited RRR/CFDA, and presentation of the Position Statement, a meeting was arranged with our Client’s Employer. After a series of 3 meetings (each looking at a distinct issue), an offer to settle was presented.

Ramskill Martin, on behalf of its Client, entered into some further negotiations and eventually concluded this dispute:

1. Our Client received £1.7m.
2. Fees incurred were £77,000.00.
3. Overall Duration was 19 weeks comprising:

• RRR/CFDA - 5 weeks.
• Editing RRR - 1 week.
• Position Statement - 3 weeks.
• Negotiation - 4 weeks.

This highlights one of Ramskill Martin’s key ethos’ to give clients full visibility of potential costs at an early stage but devise an approach that allows the Parties multiple opportunities to negotiate a settlement. Our aim is always to build long-term relationships with all our clients rather than trying to maximise fees on a single opportunity.