The Be Collaborative contract has been drafted from the understanding that the chances of delivering successful projects can be greatly enhanced if some basic principles are followed and if a contractual arrangement supports, rather than undermines, those principles.
For example, if the people involved on a project work together as a team, they are likely to be more successful than if they work as self-interested individuals. If construction work is to proceed efficiently so that cost and time savings and predictability can be achieved, it needs to be properly planned – this involves not simply the client and its design team but also the contractor and key specialist subcontractor.
Similarly, if unpleasant surprises are to be avoided, the potential risks affecting a project need to be identified and managed. And if poor performance is to be nipped in the bud, regular performance monitoring is important – especially where a succession of projects are contemplated between the parties.
Collaboration is vital to the success of construction projects and we have made this an overriding principle. In doing so, we do not believe this makes the contract "vague and subjective", as Nick suggests.
Look at the civil procedural rules with their overriding objective of dealing with cases "justly". If the judges can administer their own rules of procedure subject to such a concept, we see no reason why they should have difficulty administering the terms of a contract subject to a similar principle. Remember, too, the first instance view of His Honour Judge Humphrey Lloyd in Birse vs St David, that even a partnering Charter, though not legally binding, could still be taken into account by a court when exercising its discretionary powers under the particular contract.
Traditionally, construction contracts have concentrated on a set allocation of risks between the parties usually on the basis of a "one size fits all" approach. The traditional role of lawyers has been to play around with this allocation of risks, usually by transferring more risks to the contractor or the subcontractors. What this approach fails to address is what the risks are for the particular project and who is best placed to manage them. The result of lawyers' traditional meddling is that many risks are passed by the client to the main contractor and from main contractor to levels in the supply chain that cannot deal with the consequences of that risk. And all the while, nobody is managing them.
What is more, when the worst happens, rarely does the client avoid the fall-out – it may get liquidated damages for a delay it will be lucky to be fully compensated for the aggravation of putting other plans on hold, goading its contractor to complete and then sorting out the claims that follow.
In contrast, the Be Contract allows the parties to consider what the risks to the project are (risk analysis and risk management are mandatory) and to allocate them to the parties best able to manage them. This requires the parties to consider what the potential risks to the project are and then what the financial and time consequences might be if things go wrong. The completion of the "risk allocation schedule" requires that risks allocated wholly or partially to the contractor be included in its target cost or lump-sum price (the former is recommended). This focuses both parties' attention. Since the client cannot usually afford to pass all risk to the contractor and then pay for them, a compromise has to be worked out: risks need to be removed or reduced (by insurance and investigation) and risks that remain need to be carefully managed because if they don't occur, or if they occur but their consequences are less than calculated, both parties stand to share in the savings.
Put simply, the industry would benefit from a contract that encourages an approach that is likely to lead to more successful construction projects.
Martin Howe is a partner in the construction department of Bevan Ashford and joint author of the Be Collaborative contract.