February 28, 2022
Collaborative contracts can be fraught with issues if communications breakdown and finger pointing begins. Regardless of parties’ initial intentions or early project euphoria, if a party determines it is better for them to allocate blame instead of working collaboratively to resolve issues, the project is likely to suffer as parties focus on disputes instead of reaching practical completion. However, contracting parties can adopt a wide variety of measures and systems to ensure any collaborative project can succeed.
Initial Hurdles
Participants in the Australian construction industry may perceive that it is beset by disputes and regardless of what approach is adopted or how well intentioned, disputes cannot be avoided. However, where parties enter a project with this mindset, it can significantly hamper the ability for collaborative principles to effectively operate.
Similarly, parties must understand the function of “no blame, no dispute” provisions, which normally appear within collaborative contracts. These provisions effectively ensure that parties should not, and cannot, litigate matters or disputes, encouraging proactive and innovative issue resolution. By keeping this in mind, it can stop the initial “blame game” when something goes wrong, and keep parties focused on achieving the optimal outcome. However, this significantly departs from the process ordinarily seen within traditional adversarial contracting models, and thus requires parties to buy into the “no blame, no dispute” approach, to prevent the project from being unnecessarily delayed.
Importantly, parties should remember that despite “no blame, no dispute” provisions, there will inevitably be some causes of action that cannot be limited, such as some actions which may arise under Australian Consumer Law. Therefore, despite parties’ best efforts, the potential for litigation will always arise in some context.
Hence, parties must acknowledge the potential for dispute, and create a project culture which is orientated away from engaging in a “blame game” and instead focuses on reaching practical completion.
Key Drivers for Collaboration and Success
A key driver to success can be the development of a collaborative culture between the contracting parties. While the inclusion of cooperative values, obligations and interfaces will provide a contractual requirement for parties to engage in collaborative processes, clauses alone will not create a collaborative culture. This may necessitate additional training with, and advise being provided to each party’s project team, detailing what is expected and required of them.
A collaborative culture will be driven by a variety of interrelated and independent factors. Parties understanding of these factors will be critical to the successful undertaking of a collaborative project.
Generally these factors can be broken down into the following areas:
1. cooperation;
2. the micro project environment;
3. contractual elements;
4. site conditions; and
5. general political and economic considerations.
Key Collaborative Items
Breaking down collaborative factors allows parties to tailor their approach and focus on the items most likely to facilitate a successful project.
As part of the early stages of a collaborative project, parties should identify how they will ensure collaboration across the duration of the project. Through identification of such processes, it can allow entrenched systems to be embedded into project teams operations.
Parties should consider the following items during the early stages of a collaborative contracting engagement:
1. the degree of cooperation between the contracting parties;
2. development of good communication channels between project teams;
3. the degree of cooperation with a party’s project team;
4. appropriate project procurement systems and processes;
5. the level of experience of each contracting party and their associated project teams;
6. any personal friendships or relationships between each contracting party’s project teams;
7. the degree of public enthusiasm for the project;
8. the technological complexity of construction materials and equipment to be used;
9. how fair contractual terms are for all contracting parties;
10. the financial capabilities of all contracting parties;
11. the degree of controllable project risk;
12. how fair the fee and reimbursement structure is;
13. site safety and risk factors; and
14. how political and economic considerations of the project location will impact the parties and the project.
Each of these items will contribute to the collaborative success of a project. While parties should ideally seek to positively work towards each of the items, some circumstances or situations will prevent this from happening.
Importantly, these items can be strongly influenced by project teams. We recommend that project teams receive briefing and training on their collaborative obligations and the steps which they should be taking to ensure success. Doing so can reduce the potential for disputes and issues to arise as the project progresses. LPC Lawyers is available to provide such training to project teams, tailored to the project and contractual requirements.
LPC Lawyers
LPC Lawyers have extensive experience working on collaborative contracting models and projects. Through utilising this experience, our team can provide tailored advice specific to your project. We also have the capabilities to deliver training and ongoing support to projects team to ensure the long-term success of a project.
LPC Lawyers understands the difficulty of adopting new collaborative contracting strategies. Hence, legal assistance can stretch beyond advising and negotiating contract terms, but to assistance in the development of collaborative systems and ongoing support to ensure a project’s success.
If you require assistance with your current or future projects, please contact us.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding y our specific circumstances.
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