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28 February 2014
Partnering in the UK construction industry is not a new concept. Early focus in the offshore engineering industry received a boost from various industry bodies and thinktanks, of which the National Economic Development Council's 'Partnering: Contracting Without Conflict' report, and the reports of Sir Michael Latham and Sir John Eagan, were pivotal. Latham's 1994 report 'Constructing the Team' stated that construction was 30 per cent more expensive than it needed to be. He gave a cautious welcome to partnering and proposed wide, sweeping changes, many of which have since become law.
In 1998, Eagan's report 'Rethinking Construction' advocated partnering and recommended the integration of the design and construction process and the incorporation of supply chain management techniques. Already many serial buyers of construction look to their partnering contractors to build up 'supply chains' of key subcontractors and suppliers. Many others are talking about abandoning adversarial approaches to contracting and adopting new approaches based on teamwork and long-term relationships.
While many players are looking to establish repeat business relationships with their clients, general enthusiasm is tempered by the inherent uncertainty in the concept of partnering. Some of the more esoteric concepts, whereby parties act in "a spirit of trust, fairness openness and mutual collaboration", as stated in 'Project Partnering Contract (PPC) 2000', also require clarity of practice.
Given the overall drivers for change in the construction industry, it is unlikely that partnering will fall out of fashion. But while the expression 'partnering' is not new, the lack of consensus on the concept has spawned various attempts to define partnering structures and forms of partnering contract.
Partnering arrangements may suit both one-off clients and serial clients with repeat business. They demand an approach that anticipates companies working together for a period of time to realise the upsides of partnering cost savings, improvements in safety and quality standards and swifter market response.
So at what stage are the conditions of contract? Notwithstanding the increased usage of partnering in the UK, no exact form of partnering has been identified and standard form partnering agreements for general use have lagged behind practice.
While traditional Joint Contracts Tribunal (JCT) or Institute of Civil Engineering forms of contract can be used as a basis for partnering, they are not generally regarded as being partnering-friendly. The Engineering and Construction Contract (formerly known as the New Engineering Contract) has been flagged as well suited to partnering and the partnering option has been issued for use with it. New integrated forms of contract for consultants and contractors have been issued by GC/Works, and the Association of Consulting Architects has issued a standard form of contract for project partnering, known as PPC 2000.
It is early days for these modern forms of contract that are designed with a different objective in mind, namely to serve as a management tool to assist the successful running of projects. By nature, they tend to be less robust than traditional contracts when allocating responsibility for problems. A useful health warning was made by the Court of Appeal in Birse Construction v St David. The court held that the standard industry JCT form should be interpreted by reference to the spirit of a "partnering charter" even though it was stated not to be legally binding. Mixing standard forms with a partnering charter is likely to lead to confusion and disappointments.
Following the lead of Government policy, influential reports and the drive for a better way to do business, the main winners to date may be the public sector and major repeat business clients, but those who cannot operate in a partnering environment run the risk of being left behind. While the signs are that people wish increasingly to join the brave new world, partnering is neither a soft option nor a panacea. The partnering ticket requires a change of attitude, commitment on all sides to make it work and trust and openness.