7.6  The links between collaboration and contracts

Collaborative charters and other general declarations create only shared aspirations among team members. Without contractual collaborative systems that are designed to improve safety, quality and value, the parties can easily decide not to honour a general collaborative declaration, and this failure only increases cynicism and mistrust in the construction industry.

For collaborative construction procurement to improve safety depends on dutyholders and other team members making clear to each other what it is they will do together that they would not do alone. A collaborative contract reaches beyond a general sense of joint purpose and states in detail how team members will integrate their roles and responsibilities in a way that delivers safe and good quality outcomes compatible with their different roles and viewpoints.

A successful team relies on constructive ideas and challenges from many contributors. A collaborative approach by one organisation will have little effect unless new contractual links are built up with other organisations who are willing to adopt the same approach. ISO 44001 recommends 'a formal foundation for joint working, including contractual frameworks or agreements, roles, responsibilities and ethical principles', and proposes that:

■  'Contract terms shall be reviewed to determine clarity of purpose, encourage appropriate behaviour and identify the potential impacts on or conflict with the aims of collaborative working

■  All performance requirements and measurement methods should be mutually agreed to ensure clarity

■  Risk and reward models, issue management, exit strategy, knowledge transfer and sustainability should be considered when developing an agreement'.

In reviewing the collaborative features of construction contracts, it is helpful to consider the following recommendations of Sir Michael Latham in his 1994 report 'Constructing the Team':

■  A specific duty for all parties to deal fairly with each other, and with their subcontractors, specialists and suppliers, in an atmosphere of mutual cooperation'

■  'Clearly defined work stages, including milestones or other forms of activity schedule'

■  'Integration of the work of designers and specialists'

■  A 'specific and formal partnering agreement' that is 'not limited to a particular project' Partnering arrangements that 'include mutually agreed and measurable targets for productivity improvements'

■  'Shared financial motivation' and 'incentives for exceptional performance'

■  'Taking all possible steps to avoid conflict on site'.

The decision to use a JCT2016, NEC4 or PPC2000 contract form, or to create a bespoke appointment or development agreement, is not the only step necessary to establish a successful and interlocking suite of collaborative appointments. When drafting or reviewing the contracts intended to govern the appointment of a Principal Designer, a Principal Contractor and all other consultants, contractors and supply chain members engaged on an in-scope project, the parties should also examine how these contracts address the recommendations of Sir Michael Latham.

In addition, team members should assess whether the contracts at all levels of the supply chain set out in detail the steps by which they align the differing commercial interests of team members by means of:

■  Shared objectives, success measures, targets, and incentives

■  Consensus-based decision-making

■  Systems for team members to build up, share and manage their design, time, cost, and operational information as the basis for agreeing optimum solutions

■  Agreed activities by team members that are designed to improve value

■  Clear timeframes and deadlines for team members' agreed activities and for other team members' responses and approvals

■  Systems for joint management of risks and the agreed avoidance or resolution of disputes.

Consultant appointments, construction contracts and sub-contracts do not support collaborative procurement if they are seen as unfair by any of the parties, if they treat different team members inconsistently or if they do not describe clear collaborative processes. Contracts awarded to subcontractors and suppliers should be consistent with contracts awarded to tier 1 contractors.

The 2012 Procurement/Lean Client Task Force report recommended that only collaborative forms of contract should be used for Government Trial Projects, and identified the JCT Constructing Excellence Contract, NEC3 and PPC2000 for this purpose. They also recommended that these standard from contracts should have an 'absolute minimum of amendments, with no changes to risk allocation or payment terms except where they are improved', and that 'effort should be taken to avoid the use of liquidated damages, retentions, parent company guarantees and performance bonds.'

The 2018 Construction Leadership Council report 'Procuring for Value' stated that 'In the last ten years, the industry has improved the way projects and programmes of work are procured and delivered, particularly in the public and regulated sector, with adoption of partnering contracts such as NEC3 and PPC2000.This is continuing to develop with the issue of NEC4 and the TAC-1 Term Alliance Contract and FAC-1 Framework Alliance Contract'.

The role of residents as stakeholders in a housing project can be spelled out in the contract terms. For example, PPC2000 requires the team members to 'work together and individually in accordance with the Partnering Documents to establish the maximum involvement in the Project..by those Interested Parties listed in the Project Partnering Agreement.'

An inclusive approach to collaborative procurement can also be enhanced by involving residents and other stakeholders in liaison groups and facilitated workshops.