Over the next seven years, can the construction industry finally ditch its adversarial reputation and embrace the ideals of the Olympic movement?
In the euphoria of an Olympic victory, the construction industry has a once-in-a-generation opportunity to create a potent symbol of British success, of the best the industry can offer, and of the future. So as the champagne bubbles subside, here are a few legal thoughts for the marathon ahead:
Olympic ideals A glance at the worst excesses of claims-driven contracts tells us how far the industry must strive to attain something like the ideal of Olympic competition. Can this series of flagship projects sweep away old attitudes? Will we embrace partnering, framework arrangements and the lessons learned from PPP to achieve projects where all are rewarded? Contract mechanisms with emphasis on identifying risks and early warning, the timely addressing of issues as they arise, gain (and, if necessary, pain) sharing should be allowed to triumph.
Competition rules Beware of the complex public procurement rules and avoid anti-competitive practices. Tendering may need to be open for all. Lessons need to be learned from the adverse press and disputes arising in connection with Portcullis House and the Millennium Dome, when British suppliers were preferred.
Cost The provisional cost of the Greece games was set at £740m. When the Olympic flame went out this had risen to £8bn. So a clear message: price projects with care and put in place adequate cost control measures.
Incentives, not penalties How could liquidated damages for failure to construct an operational main stadium for the opening ceremony ever truly be calculated? And, even if this were possible, should a main contractor bear this risk? Developers should look for success from day one, with clear objectives and clear incentives for their contractors and designers. Main contractors should share these incentives with their supply chain. Retaining skilled labour will also be key. Should incentives extend to individual level?
Government response Central government will need to cast a critical eye over the red tape pervading the industry, without affecting health and safety and quality of construction. Appointing a “project champion” to deliver the project and steer through the corridors of power is a must. Employers may also choose to adopt this approach to see their own projects succeed.
How could liquidated damages for failure to construct an operational main stadium for the opening ceremony ever truly be calculated?
Maximise opportunities The International Olympic Committee protects the intellectual property in the Olympic rings with fervour. Contractors, subcontractors and designers seeking to publicise their involvement in Olympic projects will be well advised to check they do not expose themselves to claims for infringement. Designers’ own images will need to be protected. Terms of appointment need to be considered so design rights are protected and benefits exploited. Why shouldn’t a designer benefit from wider income streams if its building is on the souvenir T-shirt?
Contract contenders From the panoply of standard form contracts, the NEC Third Edition suite of contracts will likely emerge as the leading contender for Olympic projects. Its proactive approach and range of payment options gives an appropriate framework of key terms and the flexibility to adapt to individual projects. However, the Be collaborative contract, the JCT Major Projects Form and even the revised JCT contracts may also be contenders. Trailing in their wake are most of the standard form professional appointments published by the consultants’ representative bodies.
Achievable schemes Setting achievable goals in terms of time, quality and money will be the key to delivering Olympic projects and, in practical terms, of obtaining project or traditional construction insurances. More frequent milestones for project progress than usually seen should be set to identify potential problems and take action early. Contract forms, allowing for stage payments, sectional completion and encouraging open and effective project communication will surely succeed where more inflexible forms stumble. Projects must be bankable both during their development and their intended lifetime.
Stay on track and finally, if things do begin to go horribly wrong, it will not be in any party’s interest to see disputes fester. As well as avoiding adversarial terms of contract, consider terms that facilitate speedy and effective dispute resolution. Take advantage of dispute escalation procedures. Consider immediate on-site adjudication on larger schemes. Do not rule out mediation as a first, consensual, option to keep all on track.
Helen Garthwaite is a construction partner at law firm Taylor Wessing, firstname.lastname@example.org