Vehicle for change

"PPC2000 won't work"? (23 February, pages 58-59). Of course it will. Where has Dominic Helps been for the past two-and-a-half years? Has he not noticed the demand for radical change sweeping through construction? PPC2000 is a vehicle for that change, and has been endorsed by both the Movement for Innovation and the Construction Industry Council. It describes the project-partnering process in language that non-lawyers can understand and put into practice. By integrating the team and process in a single document, PPC2000 creates a level playing-field that clarifies exactly what each party does and when they should do it – without gaps, duplication or wishful thinking.

A 1999 Housing Forum survey reported the widely held industry belief that the merger of partnering agreements with building contracts would benefit the partnering process. By avoiding the parallel agendas that can result from having two different sets of procedures, it achieves greater clarity.

Amazingly, Helps suggests that to combine these rules and procedures "results in muddled thinking". In fact, the opposite is true. To avoid an integrated partnering contract is to avoid a commitment to partnering itself, to risk confusion as to which procedures take precedence and to risk wrecking carefully constructed partnering relationships at the first sign of trouble.

The Construction Industry Council's partnering taskforce – made up of leading architects, engineers, surveyors and contractors – set out its template for a new form of project partnering contract in its Guide to Project Team Partnering, launched by construction minister Nick Raynsford last June. All its recommendations are reflected directly in PPC2000. In the face of this level of support, combined with the extensive trialling of PPC2000 on real projects before its launch, some of the supposed criticisms look a bit thin.

For example, to allege that PPC2000 is suitable only for "the public sector and housing associations" implies that the needs of those sectors differ somehow from those of the rest of the industry. They do not. PPC2000 is already being used on more than £600m-worth of projects by teams that include many housing associations and local authorities as well as clients such as British Aerospace and private developers.

Helps suggests that PPC2000 is a "minefield of uncertainty", and gives as examples its references to trust, fairness and dedication to common goals. These are exactly the values recommended for a modern construction contract by Sir Michael Latham back in 1994.

In PPC2000, they fit with the related duties of reasonableness, to warn of problems and to use an open-book system of pricing. All are ways to ensure that team members keep in sight the needs of the project as well as their own self-interest. Either the partnering team agrees to abide by these ways of working or it does not. To keep it outside the contract only encourages the parties to give up as soon as they hit a problem and to revert to a more divisive contractual agenda.

To allege that PPC2000 is suitable only for “the public sector and housing associations” implies that the needs of those sectors differ somehow from those of the rest of the industry. They do not

The requirement that instructions should be issued "without prejudicing the collaborative spirit of the partnering relationships" (a personal suggestion of Latham) underlines the fact that a collaborative approach will usually allow the parties to agree on a course of action without the constructor being directed as to what it should do. To support this, PPC2000 includes new mechanisms such as a detailed partnering timetable of key activities, so that each team member knows in advance what it is meant to do and when.

Helps also takes issue with the multi-party concept of PPC2000 because of the mutual duties of care that it creates. Has he not noticed the vast piles of collateral warranties surrounding traditional construction contracts? For the parties to work effectively as a team, they should contract as a team – and the early take-up of PPC2000 suggests that the industry agrees.

As to the suggestion that PPC2000 "dumps substantial risk on contractors" by a "guaranteed maximum price approach", this is nonsense. PPC2000, by engaging the constructor early as a full team member, allows a structured risk management approach with scope to change the treatment of risk, at any time before the start on site. PPC2000 encourages the partnering team to attack "risk contingencies", but after ring-fencing the constructor's profit and overheads and with the opportunity for all parties to examine what each risk might actually cost and how it can be treated differently. If it is not possible to fully eliminate or manage a risk, an agreed contingency can still maintain the constructor's "room for manoeuvre".

Meanwhile, team incentives under PPC2000 include payment for constructor's services before start on site, shared savings, shared added value, links between payment and achievement of key performance indicators, prospects for strategic alliancing and a role in the operation of the built facility.

These are the real commercial issues in project partnering, and they require contractual clarity in order to underpin new team commitments and rewards.