Essential learning: Collaborative Construction Procurement and Contracting (CCPC) – ADC

The construction industry persists with silo working. And clients continue to use unfair risk transfer contractual provisions to protect their own commercial interest at any cost. No wonder projects so often end in dispute. Professor David Mosey CBE, from Centre of Construction Law at King’s College London, best sums up the industry’s traditional approach to initiating and executing construction projects as “always preparing for battle”.

It’s a far cry from the recommendations in the private sector and public sector Construction Playbooks which set out very clearly a range of  procurement and contracting reforms that have been proven to work over many decades and that are now essential in order to pull the industry out of its downward spiral.

These recommendations call for culture change, more co-operation between teams and better and more timely supply chain engagement, all wrapped around an ecosystem that can create common processes and capture learning from exemplar projects and programmes of work. They recognise that there are ways to reconcile the differing commercial interests of team members and that the planning and delivery of projects is – and will always remain – a team endeavour.

As Professor Mosey explains: “Collaborative construction procurement should provide the timely build-up and exchange of accurate data between the team members in order to integrate their work, align their objectives and create improved outcomes.” The information exchanged through existing predominant procurement practices is clouded in uncertainty due to ambiguities surrounding single-stage lowest bid selection. Tenderers are expected to put a fixed price against a set of incomplete information and then to bear the cost and risk of any unknown and potential eventualities which may not be apparent during their tendering. Client organisations further protect their position with bilateral bespoke contracts transferring unknown and unquantified risk responsibilities and liabilities onto the successful bidder.

This unknown information could have been made known through the client’s articulation of clear intentions, and a collaborative procurement process could have facilitated adequate time to identify and engage the right contributors at the appropriate time to help develop the design for more accurate pricing and better management of risks. Vaguely prepared information, lowest price bid (often single stage) selection and unfair risk transfer can neither deliver better, faster, greener end results nor deliver safer buildings. This approach relies on disputes and litigation as the only available means of making up the low consultant fees and contractors’ low profit margins.

The tendering and selection process ­– its timing and duration; the type and level of completed information bidders are asked to price; and the type of relationship on offer – play a crucial part in instigating the behavioural groundwork that seals the fate of any project or programme of work. A fair and transparent process ­– incorporating balanced cost and quality assessment criteria drawn from clarity of intention and information linked to an ecosystem that both promotes and practices collaboration ­– invites a move towards the creation and implementation of common processes which can be adopted by the project team.

Facilitating project planning (pre-construction activities in particular) and effective preparation and delivery relies on the team coming together in a working environment where information can be developed and defined collectively, with clarity around the time, cost and quality of the contribution of every member of the team. Collaborative ecosystems necessitate contractual mechanisms that formalise the relationships, and establish common processes, necessary to bring team members together to engage and innovate. Such cohesion necessitates direct contractual links – a multi-party structure – to support collective agreement and planning around the production and management of information.

Contracts play a key role in so far as they should:

• Set out rights, responsibilities and procedures
• Identify, assign and transfer risk
• Act as a planning tool so that there are fewer surprises and dilemmas during construction.

Many current procurement models, construction contracts and professional appointments only satisfy the first two requirements. The current mindset of “always preparing for battle” leads to a lack of trust between bilateral contractual parties where one party can clearly be seen to protect its legal and financial position at the expense of another. For a contract to act as a planning tool, it needs to:

• Be put in place at the outset of project inception and early design
• Be a multi-party, as opposed to bilateral, contractual enabler where the timely build-up of project team’s expertise can provide opportunities to collectively develop, cultivate and compile detailed information, inviting and encouraging innovation
• Set up and agree collective processes to ensure more accurate and appropriate information is drawn from contributors, including the supply chain where necessary
• Bring the wider team together early enough to optimise solutions and invite innovations, improving time, cost and quality during design development and the delivery and subsequent operation of a built asset.

A shared focus and incentive on outcomes, with common and collaboration information systems and effective risk management, are key successful common denominators in the numerous exemplars of successful completed projects and programmes of work.