It appears that the construction industry, at least in the UK, is looking at effective ways to make construction projects, and the contractual relationships between the key players in any such project, more collaborative, and less confrontational.
An initiative called Project 13, has recently been launched by the UK’s Institution of Civil Engineers (ICE), which the ICE has characterised as “an industry-led response to infrastructure delivery models that fail not just clients and their suppliers, but also the operators and users of our infrastructure systems and networks”[1].
The Project 13 information site, referring to this initiative, adds that:
“It seeks to develop a new business model – based on an enterprise, not on traditional transactional arrangements – to boost certainty and productivity in delivery, improve whole life outcomes in operation and support a more sustainable, innovative, highly skilled industry”[2].
In summary, Project 13 advocates that the originator of a project follow a stepped process as a preliminary stage, leading up to the negotiation of contract terms. At the outset, the parties decide what would or should comprise ‘value for money’ for the project in question, looking at both capital costs, as well as predicted or estimated costs for the duration of the project[3].
Thereafter, the key project ‘partners’ are or should be selected, and the selection process and criteria should be consistent with the need to obtain ‘value for money’, as above. In short, it is not enough (in fact, it is often misguided) to simply award the project to the lowest bidder, because the lowest bidder need not be the ideal party to ensure ‘value for money’.
Having selected the right project partners, the next requirement is to ensure that the particular project risk profile matches and enhances the various kinds of reward mechanism, and incentive, proposed under the project.
Finally, in order to ensure that the commercial needs of a particular project, the ‘value for money’ aspect, are satisfied, the contractual documentation negotiated between the project partners must be fully consistent with those commercial needs.
Much of this makes perfect sense, on reflection, and the proposals of Project 13 appear to be entirely common sensical. It will be interesting to see how Project 13’s advocated way forward for infrastructure projects works in practise.
This post is for information purposes only. It is not intended to constitute legal advice. For legal advice on this subject matter, please contact the author.
[1] See the website for Project 13, at http://www.project13.info
[2] Ibid
[3] The term used by Project 13 is “performance baseline”
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