Recently I was invited to give a talk about the role of contracts within partnering relationships. The talk was for Connaught, a plc involved in housing refurbishment and maintenance. Many people in the audience were clients of the firm – local authorities and housing associations.
My basic message was that partnering is driven by relationships and not by contracts. While this may be a truism, there is often little investment devoted to maintaining relationships. A case in point was St David vs Birse (2001) where the parties started off on the right foot but ended up in litigation. They had gone through all the teambuilding workshops but when the going got tough, the relationship between the parties was not strong enough to overcome their problems. These arose from delays by Birse for which St David was seeking liquidated damages. Birse had argued (unsuccessfully) that a contract in the form of JCT98 had not been agreed and therefore St David was not entitled to liquidated damages.
The will to partner must permeate the organisation. Connaught seems to have achieved this. As a result it has a partnering forward order book of more than £500m and 50 partnering arrangements.
Another factor that is important to partnering (rather than contracts) is procurement. Does the planning and design phase involve specialists and manufacturers? Again, I was struck by the fact that Connaught has a team of specialists and suppliers that is kept together on a number of projects.
Communication is also critical. Research carried out by the Building Research Establishment at the end of the 1970s concluded that defects were primarily caused by poor communication often involving late and inadequate information. In all probability this is still true today. But at the Connaught seminar, I learned that time and money was spent in bringing tenants into the loop, inviting them to help iron out problems.
Now I come to contracts. I am not proposing to debate whether we should have one form of contract rather than another for partnering. Having said that, contracts should add something to the process. Most important of all, they should exactly define the roles and responsibilities of each member of the team.
Each member of the team must be sure of what the other team members are up to. This was my fundamental message at the Connaught seminar. This does mean, however, that members have to get together to understand the common goals that must take primacy over individual vested interests.
The other issue where contracts can make a contribution to partnering is in relation to risk. I am appalled when I see the use of onerous contracts within partnering arrangements. In May's edition of Construction Manager, Peter Garcia of James R Knowles wrote of a partnering project where the client was unaware that the main contractor was demanding retentions from 48 package contractors despite a "no retention" clause in the main contract. Contracts should not set the risk profile in stone until the team has a chance to consider risk management.
For successful partnering there have to be certain prerequisites. One of these is that the whole organisation is committed to the partnering ethic. But there are others. In particular, there is payment. Sir Michael Latham once published a report entitled Trust and Money. Wouldn't it be comforting for all team members if they were able to draw down their cash from the same pot or bank account. This would, more than anything else, cement the relationships between the parties.
Rudi Klein is a barrister and chief executive of the Specialist Engineering Contractors Group