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Can collaborative working contracts fix construction?

Sharing risks and responsibilities across the project’s team

19 September 2019

An integrated team comprising the architect, client, contractors, and subcontractors, all working collaboratively with shared stakes and a mutually beneficial goal: it is hard to imagine a better way for a construction project to proceed.

This, broadly speaking, describes the set-up behind two large UK projects – Dudley College and Derby Silk Mill – that have successfully used Integrated Project Alliancing (IPA, also known as Integrated Project Insurance) as a working method. Governed by a contract, all parties are appointed together to develop the design and deliver the project to a jointly decided target price: this curbs any of the adversarial behavior that might arise over the course of a traditionally procured project.

Participants in both projects have been evangelical in singing the praises of this methodology. However, the principles behind IPA are in many ways nothing new.

"Some twenty years ago the first forms of collaborative contract were published,” explains Katie Saunders, a Partner at construction law consultants Trowers & Hamlins. “PPC 2000 (Project Partnering Contract) was one of the front runners: a multi-party contract for a single construction project. It sought to set up one team, moving away from governance by that two-party relationship and an ‘us and them’ mentality. All parties have relationships with each other and owe each other a duty of care.”

The NEC and the JCT building contracts on offer have also refined their collaborative elements, developing their own alliance forms. One interesting general development that Saunders has noted is that, having established the clear benefits of having an integrated team, alliance forms are increasingly focusing on setting up long term relationships.

"Contracts that link projects together, maintaining a thread of collaboration across them, invariably improves performance across them," Saunders states. There is an obvious motivational factor in members of a project team, or supply chain, wanting to be retained that encourages consistent high quality outcomes.

Contract-based integrated projects tend to be the preserve of large projects.

“Smaller projects still tend to revert to two-party relationships, between a client and architect or client and contractor,” observes Saunders.

In a multi-party contract, the architect, client, contractor, and subcontractors all have a reciprocal duty of care. Integrated Project Alliancing is one such contract model in which parties work together, in a blame-free collaborative culture without fear of litigation.

Often the relationship between these parties has not been properly thought through. The presumption, all too often, is that establishing any collaborative principles, or even clarifying responsibilities or liabilities, is unnecessary in a small, relatively low value project. But these are, Saunders points out, actually where the majority of disputes arise.

There are useful lessons that may be learned from the large IPA projects. Having everyone sitting around the table together, Saunders suggests, seems to happen far less in small projects, to their detriment.

She appreciates that margins are tight, and that architects’ time and fees are frequently being squeezed. The client’s expectations of a speedy programme may not account for much investment of time up front. The silo mentality often sets in right at a project’s beginning.

“There is often a client assumption that the architect will take on speculative work unpaid, very early on in a project,” she says. “An architect may end up carrying out work without any terms of appointment having been agreed, without the question of fees being addressed.”

While she understands that practices may be insecure about losing out on work, it is precisely at moments such as this that architects need to find ways of reminding clients about the value they add. The input of architects that is acknowledged and rewarded in integrated models of procurement deserves to be fought for in smaller projects: architects should, Saunders suggests, point out that an architect is still adding value at an early stage of a project, even if a client does not yet know whether they are going to proceed.

Interestingly, architects have contacted Saunders for advice on alliance contracts from a completely different perspective: that of getting onto frameworks.

"We have talked to architects about using framework alliance contracts to bid as a group," she reveals. This is a multi-party approach that she believes could work.

“You could bid with a number of similar architectural practices across the country and assemble different elements of design expertise in order to get over some of the thresholds, rather than being one SME.”

Katie Saunders will be contributing to the panel discussion A Procurement Model Promoting Collaborative Working? at this year’s Smart Practice: New Ways of Working conference at the RIBA, 66 Portland Place, London, W1B 1AD, on 1 October 2019.

Tickets for RIBA Smart Practice: New Ways of Working are now on sale.

Thanks to Katie Saunders, Partner, Trowers & Hamlins.

Text by Matt Milton. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas

RIBA Core Curriculum Topic: Procurement and contracts.
As part of the flexible RIBA CPD programme, Professional Features count as microlearning. See further information on the updated RIBA CPD Core Curriculum and on fulfilling your CPD requirements as an RIBA Chartered Member.

Posted on 19 September 2019.

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