Traditional contracts used within construction perpetuate the adversarial nature of the industry, but collaborative contracts are becoming far more common and are bringing a multitude of benefits with them – this guest article from the team at NEC Contracts explains more…
Collaborative contracts versus traditional
The construction sector has long relied upon strict and legally enforced contract terms that from the outset, ring fence each organisation and establish a territorial approach to inevitable changes and risks that occur. Ultimately, the project suffers, and someone bears the brunt of the cost implications and disputes.
Alternatively, collaborative contracts promote and facilitate an approach that will improve project procurement, management and delivery. Solutions such as NEC Contracts, written in easy-to-understand terms and developed by project practitioners, will ensure a fair allocation of risk and responsibility to leave no one party exposed. The contracts facilitate good project management through the inclusion of management processes within the conditions of contract and mechanisms to ensure transparency and information sharing between parties.
A key point of difference are the incorporation of ‘compensation events.’ These provide clearly defined processes for the parties to work together to evaluate any implications of changes to the amount and costs of a contractor’s work, due to scope changes, unforeseen circumstances or external factors.
Driving early engagement
Another crucial advantage of these contractual mechanisms is the ability to instigate the early engagement of contractors. As an industry we are all well-aware of the benefits this can translate into such as feasibility analysis, the opportunity to add value through design improvements and to reduce costs.
It is advisable to look for contracts that will provide an optional clause to create a single contract of two stages. The first, parties work together to develop and agree the scope, programme and prices and stage two is the construction phase. This is also where you can stand to make the biggest impact when it comes to sustainability.
Succeed in sustainability
Given the focus on what is best for the project, shared responsibility and goal-orientated mechanisms, collaborative contracts also excel when it comes to helping project teams to deliver on climate change and biodiversity targets.
Sustainability-focused optional clauses can be added to the contract to allow clients to define their environmental requirements and provide a framework for contractors to detail the strategy for achieving those targets. This allows for far greater confidence within the supply chain when the ‘how’ is defined and part of the contract. In fact, this can lead to instances where project partners become more willing to push further to exceed original targets.
Conclusion
A collaborative contract’s power to transform projects lies in the fact that it’s a living, flexible document, with the option to tailor it to specific project needs, with modular structures and optional clauses. They can help to deliver a range of benefits because they set the ‘rules’ and foundations for a better approach to procurement, project management and delivery.
Consequently, this means earlier engagement, fewer disputes, maintaining project timescales and working together to achieve common goals that will ultimately benefit the construction project and those that deliver them. In fact, NEC Contracts are now mandated by the UK government.
