Achieving a gold standard of collaborative contracting in construction

Mosey called for an overhaul of public frameworks and suggested there was a need for more positive framework contracting models – a ‘gold standard’, based on sound commercial strategy, a sustainable pipeline of work and fair procedures to drive performance improvements.

Legal advisers and the construction industry should now start thinking about how to move to this new gold standard of framework contracting, aiming to deliver consistently high project outcomes. The best and most successful frameworks include a number of key features, all of which encourage collaborative decision-making and behaviours from the outset of the project.

Aligned incentivisation

If all stakeholders in a project have a common purpose and interest to achieve the same outcomes, and their contractual incentives and rewards are aligned, the gold standard is more likely to be achieved.

This type of working can already be seen, for example in National Highway’s Collaborative Planning System, which involves parties working together to improve productivity, time and cost. The system uses lean principles to support National Highway’s three imperatives – safety, customer service and delivering the road investment strategy. The lean principles provide a basis that enables these priorities to be achieved.

Clear outcome-focused goals should be agreed at the start of a collaborative framework programme, with the aim of achieving whole-life value. These objectives should not only look at cost and time, but also areas such as sustainability, social value and safety. A shared focus on outcomes, rather than scope, will unlock innovation and drive continuous improvement.

Equally, positive incentivisation can support a collaborative framework approach. Negative incentivisation such as deductions, liquidated damages and uncapped liabilities, can undermine the collaborative achievement of best-for-project outcomes and lead to defensive and combative behaviour.

When collaboration is effective, overly onerous contractual terms may be unnecessary, as a successful enterprise is jointly incentivised by repeat delivery of best for project outcomes to drive performance.

Collaborative behaviour

Well-structured and balanced contract terms, combined with the right behaviour and culture, can help achieve collaborative contracting. Clear contract management processes support contemporaneous decision making and risk management, which, together with good collaborative governance, can ensure effective collaboration at all levels of the project.