The GC/Works 1 contract has had an overhaul, and is probably now the best in the business, but projects only work when oneness is achieved …
The public sector always used to lag behind the private sector in procurement reform. For evidence of this consider some of the high-profile private sector people who were brought in to help out the Ministry of Defence and the work by the Office of Government Commerce to address cost and time overruns. So, it is interesting to see that to some extent GC/Works 1, the standard public sector construction contract, is leading the way over JCT, its private sector rival.

There has always been a bit of jockeying between the two forms, but an amendment was made to GC/Works a little while ago that has had little if any exposure, but introduces a whole raft of new procurement techniques. The amendment brought in changes to risk management, whole-life costing and value engineering – all of which are woefully absent from the JCT contracts.

Briefly, what GC/Works 1 did was to oblige the contractor to carry out:

  • Risk management The contract requires the submission of a risk register with the tender. This has to be in the form requested by the project manager and it means that the contractor has to carry out some form of risk analysis, produce an action plan including mitigation strategies and consider the financial implications. This register has to be updated and submitted at progress meetings.

  • Whole-life costing The contractor has to produce a whole-life cost analysis reflecting the works and proposing alternatives that would offer benefits.

  • Value engineering The introduction of value engineering appraisals carried out by the contractor throughout the design and construction phases. These are intended to look for savings in whole-life cost and increased functionality.

So, well done GC/Works 1. Addressing these issues is bound to bring great benefits to projects – or is it?

The trouble with projects is that we don't deal with them holistically. We split them into phases. Typically, these are design, procurement, construction and operation, and in doing so we create interfaces that prevent continuity and knowledge transfer and frequently create barriers that prevent the project from functioning properly.

Look at risk management as an example. Any well-run project will want to start the risk management process when a business case is being prepared and continue it right through commissioning and operation. The way that GC/Works 1 has defined the risk management process means there is a danger that the construction stage will be isolated. What happens to the risks that have been identified at business case stage? How is the contractor to know what they are? How is continuity of risk management achieved across the entire project programme?

By all means focus on risk management. Just make sure that knowledge accumulated in preconstruction is transferred to the construction phase. An easy way to do this would be to hand over the risk register to the contractor at the time of tender.

We create interfaces that prevent knowledge transfer and create barriers that prevent the project from functioning

Of course, carry out value-engineering exercises, but ensure that they are used within an overall strategy of value management across the whole project life. After all the best time to maximise value is before the project is designed, and probably before the GC/Works 1 is in place.

Whole-life costing presents the biggest difficulty. Raising its profile is admirable. The problem is that most of the public sector bodies that use GC/Works 1 are structured so that separate people manage their capital and maintenance budgets. Any attempt to adopt a solution that will benefit the project over its whole life will fail without some joined-up thinking about the integration of the capital and revenue budgets.