Mark Macaulay welcomes the shift to collaboration from the UK construction industry’s traditional adversarial relationships. However, some standard form contracts have some way to go before they can be regarded as truly collaborative.

The evolution of collaborative contracting in the UK construction industry represents a significant shift from traditional adversarial relationships to a more integrated and co-operative approach. This transition has been influenced by various reports, contractual frameworks and industry initiatives that have recognised the benefits of collaboration in delivering successful construction projects.

One of the earliest and most influential reports advocating change was the Egan Report, Rethinking Construction, published in 1998. Authored by Sir John Egan, the report highlighted the inefficiencies of the UK construction industry and recommended a focus on customer satisfaction, integrated processes and a commitment to quality and people. The report’s call for a more collaborative approach laid the groundwork for subsequent developments in contracting practices.

More recently, the Government Construction Playbook, published in December 2020, which sets out key policies and guidance for the procurement and delivery of public sector construction projects, emphasises the importance of early supplier engagement, long-term relationships and collaborative approaches to improve the performance and sustainability of public construction projects. The Playbook advocates for commercial models that incentivise collaboration, innovation and improved performance, including shared risk and reward mechanisms.

Evolution of collaboration in standard form contracts

The New Engineering Contract (NEC), first published in 1993 and now in its fourth edition, has been the trailblazer in the UK for collaborative contracting and was designed with collaboration at its core. The NEC contract suite introduces mechanisms such as an “early warning” system and risk register, encouraging parties to communicate and resolve issues proactively by promoting transparency and a collective responsibility for risk management.

NEC contracts also contain options for key performance indicators (encouraging collaboration by aligning the objectives of the various parties with the overall success of the project) and multi-party collaboration (to support collaborative working across the supply chain). The NEC’s collaborative ethos has led to its adoption in landmark projects such as the London 2012 Olympics and Crossrail.

The Joint Contracts Tribunal (JCT) contracts have been slower to embrace collaborative contracting, being criticised by some commentators for maintaining an inherent potential for adversarial relations due to its roots in the lump-sum, design-bid-build model. The JCT has made efforts to incorporate elements of collaboration, such as the partnering charter in the JCT Constructing Excellence Contract. It has also embodied a greater collaborative ethos in its latest suite of contracts by introducing a requirement to work with other project team members in a co-operative and collaborative manner, in good faith, and in a spirit of trust and respect.

However, JCT contracts have some way to go to become truly collaborative, and parties seeking to engage in collaborative contracting while using these contracts will need to supplement their terms with additional bespoke clauses or separate collaboration agreements to create the necessary collaborative framework.

One such separate collaboration agreement is the Framework Alliance Contract (FAC-1). Introduced in 2016, FAC-1 is a standard form that supports the establishment of multi-party alliances. It has been designed to be compatible with various procurement and contractual arrangements. It acts as an overarching agreement that can be used to integrate multiple contracts and parties involved in a project or series of projects.

It provides a structure for parties to work together towards shared goals, manage risks and opportunities collectively, and implement systems for early warning and problem-solving. By using FAC-1 alongside other contracts, parties can create a multi-party alliance that aligns the objectives of separate contracts and promotes a collaborative approach to project delivery.

Integrating collaborative teams

In order to address Egan’s concerns, the construction industry has also developed “deeper”, more integrated, forms of collaborative contracting than those proposed in the industry standard forms. Integrated Project Delivery (IPD) is a project delivery method that emphasises collaboration and integration amongst stakeholders from the earliest stages of a project.

It is designed to align the interests, objectives and practices of all team members to optimise project results, increase value to the owner, reduce waste and maximise efficiency through all project phases. Whilst still evolving as a delivery method, IPD is typically characterised by a multi-party contract, shared risks and rewards based on project outcomes, joint project control and decision-making, a focus on project efficiency and innovation, early involvement of key participants, and use of collaborative tools and Building Information Modelling.

Alliancing is a form of collaborative contracting that has been used to deliver complex, large-scale infrastructure projects in the UK where the potential for disputes is high and the need for integrated teamwork is critical. It involves the formation of an alliance between the client (project owner), contractors, and sometimes designers and key suppliers. All parties commit to working together as one integrated team, aligning their interests and sharing the risks and rewards of the project. Alliancing agreements often include mechanisms for continuous improvement and innovation, with the aim of delivering better value and outcomes over the life of the project.

Notable examples include the Northern Line Extension (extending the London Underground’s Northern Line to Battersea) and the Anglian Water @One Alliance (to design and construct water and wastewater infrastructure), which have shown that alliancing can lead to improved efficiency, innovation and project outcomes.

Another integrated collaborative approach gaining traction in the UK is Project 13. Developed by industry, this is not a contract form but a delivery model which is aimed at improving the way infrastructure is delivered and managed. Project 13 focuses on creating an enterprise that brings together an integrated team (the owner, investors, integrator, advisers and suppliers) to deliver the project, rather than relying on traditional contractual arrangements. The model encourages a flat, networked structure that supports knowledge sharing and collective problem-solving across the enterprise with decisions being made with a long-term perspective on value, considering the whole life cost and benefits of the infrastructure, rather than just the initial capital cost.

Whilst Project 13 shares some similarities with alliancing, such as an emphasis on collaboration, shared objectives and long-term value, it is not a form of alliancing per se.

Project 13, on the other hand, is more of a cultural and operational shift in the way projects are conceived and delivered.

Conclusions

The evolution of collaborative contracting in the UK construction industry is a response to the need for more efficient, cost-effective and high-quality project delivery.

Collaborative contracting has been successfully used in a variety of projects across the UK. The London 2012 Olympics is a prime example, where the NEC contract facilitated collaboration between the Olympic Delivery Authority and its supply chain, resulting in the project being delivered on time and within budget. Similarly, Crossrail, one of Europe’s largest infrastructure projects, has utilised NEC contracts to manage its complex network of stakeholders and work packages.

The success of these projects has demonstrated the value of collaborative contracting and encouraged the industry to continue exploring and adopting these practices. However, it is important to note that collaboration requires a cultural shift and a willingness to embrace new ways of working. It is not simply a matter of changing contract forms – for this approach to flourish, it requires developing trust, open communication and a commitment to common objectives.

This article was first published in Construction Law on 5 August 2024.