Trust exercise

Earlier this year, I helped to launch the new Collaborative Contract – produced by the Joint Contracts Tribunal and Constructing Excellence – at the House of Commons.

I was glad to hear recently from Don Ward of Constructing Excellence that the new contract had created plenty of interest. Since many building projects are still carried out under JCT80, it was good to hear of this strong response. The New Engineering Contract and PPC2000 have also had growing take-up. My company, Willmott Dixon, uses the NEC and PPC2000 quite frequently.

The main strength of the new JCT/CE Contract is that it is highly readable. It is brief, in plain English and perfectly practical. That is certainly not true of all contracts. Unless you are a real anorak, I cannot recommend DOM2 for bedtime reading. What is more, many contractors or subcontractors never actually sign a specific contract at all. The employer simply refers in a letter to a contract, usually with a list of amendments, tilting the balance of the contract away from itself and passing it to someone else.

The JCT/CE contract is based on trust and fairness. Clause 2.1 gets straight to the point. “The over-riding principle” – the actual words – is collaboration. The “purchaser” and the “supplier” – again, the specific terms – have the “intention to work together with each other and with all other project participants in a co-operative and collaborative manner in good faith and in the spirit of mutual trust and respect”.

Clause 2.9 makes it clear that that is to be the background to any subsequent dispute, with the adjudicator or the court taking into account whether the parties have adhered to the “overriding principle” of clause 2.1.

A year or so after I finished Constructing the Team (my report on the government/ industry review of the procurement and contractual arrangements in the construction industry), I spoke at a seminar organised by London solicitors. After the meeting had ended, a lawyer from another firm came up to me with a puzzled frown, saying he was really concerned about the proposal in my report for a contract based on trust and fairness. Well, the JCT now has one, embodying best practice, and that whole approach of collaboration has been frequently endorsed by the National Audit Office.

A lawyer came up to me to say he was really concerned about my proposal for a contract based on trust and fairness

A third reason to welcome this contract is because it is client-driven: it was specifically requested by the Local Government Association. When my report appeared 13 years ago, there was much local government suspicion about my proposals, though there was also strong support from some local authorities such as Hertfordshire council.

Nowadays, a growing number of local authorities, registered social landlords and arm’s length management organisations have moved towards framework agreements and collaborative approaches. Such fair practice has also been urged on all public sector client organisations, including central government, by the Office of Government Commerce, which has advocated collaboration, supply-chain management, effective management of risk – which is dealt with extensively in the JCT/CE contract – and incentivisation through gain share and, if necessary, pain share. The contract is also entirely suitable for private clients, and a growing number are increasingly requiring partnering and integrated teams.

Another helpful feature of the contract is that it is not just for employer and main contractor but for main contractors and first-line specialist contractors, or indeed specialist contractors and their own subcontractors. That avoids the need for bespoke subcontracts.

There is also an optional project team agreement, which reinforces the message of an integrated team, with all the participants committed to the whole project, not just their part in it, as is so often the case when teams are not at all integrated.

Indeed, on many non-partnering sites, some of the specialist contractors may not know who the client, or even the main contractor, actually is, let alone feel brought into the project as equally valued team players.

About 10 years ago, I was asked if I thought a partnering contract was necessary. I replied that real partnering was almost a state of mind. If the participants were being driven by the contract, they were not partnering. But I added that partnering contracts would be drawn up and increasingly used. I wish the JCT/CE contract well, and I hope it is widely taken up in years to come.