微密圈

Traditionally, construction project contracts are signed, sealed and filed away, only to be dusted off and used to support or refute an argument when disputes occur. For clients and supply chains, disputes might seem inevitable when delivering multimillion-pound projects, critical infrastructure and complex buildings in an uncertain construction environment. As well as unexpected events during construction, political, economic and environmental factors can also present unforeseen challenges.

Collaborative contracts versus traditional

However, instead of the traditionally one-sided contract terms, which from the outset pitch individual parties against one another, collaborative contracts can establish and promote effective project management designed to leave no one party exposed. This is achieved through contractual mechanisms that champion shared goals, risk and responsibility.

There are many differences between a collaborative and traditional contract 鈥� not least in the type of language used. Collaborative contracts are intended to be used by the parties operating the contract and need to be written in such a way that they can be clearly understood by the users.

Collaborative contracts facilitate good project management through the inclusion of management processes within the conditions of contract 

Finally, we all acknowledge that collaboration, early engagement and effective communication make life better for everyone involved in construction. As such, collaborative contracts facilitate good project management through the inclusion of management processes within the conditions of contract.

A living document for the project lifecycle

A collaborative contract鈥檚 power to transform projects lies in the fact that it is a living, flexible document, with the option to tailor it to specific project needs, with modular structures and optional clauses. These include different pricing options for sharing risk between the parties, including the use of target cost contracts, as well as options to allow specific risks like inflation and changes in law to be addressed.

The contracts can operate at a programme or contract level through collaborative framework agreements such as FAC-1 or the NEC4 Framework Contract or as separate delivery contracts. It is also key that these collaborative principles are used across the supply chain so that all those involved in the construction process share the benefits from collaboration. The adoption of a consistent suite of contracts, such as NEC4, for all key members of the supply chain allows this happen.

Collaborative contracts are also inherently designed to deal efficiently and quickly with the unforeseen risks and events that are all too familiar in construction, no matter what size or scale of project, to ensure minimum impact on the overall cost and programme timeline, while still delivering the required quality outputs. For example, NEC4 contracts contain an early warning event process requiring the parties to notify each other as soon as possible of any risks they become aware of, and to work together to mitigate their impact.

It is early identification, notification of potential risk, programme and change control and the clarity of roles as well as the procedures that make collaborative contracts so fundamentally different

These contracts also clearly separate and identify roles and actions under the contract and contain procedures for active project management. Key to this is the requirement for an up-to-date and detailed programme that provides an accurate and honest record of what has been done and what is now intended to be done, covering the work of all parties involved.

>>Also read: Why it鈥檚 important to use everyday language in contract documents

>>Also read: Why the Supreme Court ruling on women-only spaces and services matters for construction employers

The emphasis is very much on transparency. It is the concepts of early identification, notification of potential risk, programme and change control and the clarity of roles as well as the procedures that makes collaborative contracts so fundamentally different from traditional options.

Of course, even when a collaborative approach is adopted, differences of opinion may arise. This is why proactive and consensual dispute resolution processes are cornerstones of collaborative contracts, such as the use of structured negotiation or dispute avoidance boards.

Driving change through incentivisation

Collaborative contracts have the potential to incentivise behaviours that will meet the client鈥檚 requirements and improve project outcomes for all those involved.

For example, the NEC forms of contract contain options for the inclusion of key performance indicators, which can be used to create commercial incentives for the parties to outperform their obligations. These can be used on a contract- or programme-wide basis, driving multiparty collaboration or targeting specific issues such as climate change, nature or social value.

Get equipped

There is huge potential for collaborative contracts to help transform the way we approach construction projects. However, they do require a different methodology to work effectively and so training is crucial to success, especially for those new to collaborative contracting or seeking to deepen their understanding. From introductory sessions and specific contract training right through to accredited programmes 鈥� trusted providers will be able to support you throughout your journey.

Conclusion

Outdated contracts are cited as a key contributor to contractor firm collapses, something that collaborative contracts look to avoid 鈥� mitigating the far-reaching consequences for a project鈥檚 entire supply chain. The construction industry has to continue to modernise and a less adversarial approach to contract delivery is a key component of this.

Indeed, the NEC forms of contract, which are based on collaborative contracting principles, are now recommended by the UK government and are also being widely and successfully used globally, including in South Africa, Hong Kong, Australia, New Zealand and Peru 鈥� and the first international language translation versions of NEC4 contracts, guides and training have recently been launched in Spanish.

To find out more visit .

Peter Higgins is chairman of the NEC4 contract board at NEC Contracts