2006 ADR Survey in the Australian ICT Industry

Executive Summary

In 2004-05 period, total revenue in Australia from the production of Information and Communication Technology (ICT) goods and services was $54.4 billion. From 2002-03 the ICT GDP accounted for 4.6% of Australia’s total GDP. In 2003- 04 the combined capital expenditure on ICT by Australian governments exceeded $3 billion.

In 2006 the Institute of Arbitrators & Mediators Australia (IAMA), the Australian Computer Society (ACS) and the Project Management Institute (PMI) carried out a survey of disputes within the ICT Industry in Australia.

A number of key findings emerged from the survey:

  • Almost half of the 1200 contracts resulted in some sort of dispute.
  • The disputes ranged in value from $50,000 to $500,000 and above.
  • Where Alternative Dispute Resolutions (ADR) was used the dominant reasons for satisfaction included fairness of the result, process effectiveness, cost and speed.
  • The majority of respondents did not have formal dispute avoidance procedures in place.
  • The majority of the industry is not trained in dispute resolution techniques.
  • There was a strong level of interest in ADR training.
  • The high incidence of disputes and the limited approaches to resolving these disputes is of great concern.

    Many of the disputes include government and government agencies as parties and result in both public and private sector initiatives exceeding original budgets, in some cases by tens of millions of dollars. Disputes are a common occurrence and accepted part in all forms of commerce. Elimination of disputes is not economically feasible. Management of the cost of dispute resolution is the most sensible way to reduce the economic impact of disputes and improve GDP. Currently, the most common form of dispute resolution, litigation, is also the most expensive. This additional cost ultimately burdens businesses and consumers; driving up the cost of services, reducing GDP and increasing inflationary pressure. Most ITC disputes involve advanced technology issues. Disputes that are highly subject matter based are not easily addressed through litigation. ADR provides the economy with a significantly more cost effective solution to dispute resolution.

    The use of ADR trained, subject matter experts, such as arbitrators, mediators and expert referees has been shown to result in significantly lower resolution costs and deliver significantly higher satisfaction with the resolution process. However, the low adoption of ADR in the Australian ICT Industry, imposes an unnecessary, significant burden on the judiciary, courts and legal system; resulting in high costs to business and consumers. The Survey found that the low rate of adoption of ADR was due to a lack of education and awareness both by the parties to contracts as well as their legal advisers. There is a significant opportunity for the industry, Government and business to reduce the overall cost of ICT in Australia. This opportunity, if executed well, will provide significant benefits to the economy through the more cost effective use of technology. However, this opportunity requires a joint effort between government, businesses, the ICT industry and the legal profession.

    Government, as the major consumer of technology in Australia, must take a leadership position in demanding that all ICT contracts include relevant and workable dispute resolution clauses, and, when the need arises ensuring that these clauses are performed to minimise the time and cost impact of resolving disputes. Business too, must ensure that appropriate dispute resolution clauses are included in technology contracts.

    Of key importance is the education of the ICT industry about the importance of alternative dispute resolution methods and how these techniques can be implemented. Similarly, the legal profession, especially those advising the vendors and consumers of technology, need to be educated about the benefits and implementation of alternative dispute resolution.

    IAMA, ACS and PMI must take leading roles in these areas through the provision of professional development and education programmes designed to increase the proficiency of their member’s ADR techniques.

    (C)Copyright IAMA, ACS and PMI. All rights reserved. Reproduction strictly prohibited.