Marc Preston, Dip Adj MRICS MCIOB and CEO at Vertice Development Management and New Foundation Counselling, discusses collaboration in construction which requires trust, good faith, and practical measures like risk management, fair payments, and wellbeing, not just contractual intent or meaningless words.

Collaboration in modern construction contracts
The new 2024 editions of the JCT have moved the option to adopt collaborative working practices into a fundamental obligation. Article 3 of the JCT in full says:
“The parties shall work with each other and with other project team members in a cooperative manner in good faith and in a spirit of trust and respect. To that end each shall support collaborative behaviours and address behaviour which is not collaborative.”

This adjustment in obligation of the parities recognises that culture needs to evolve, it supports the guidance in the Government’s Construction Paybook1 and its private sector equivalent2 and quite frankly is common sense. Other standard and template contracts are following suit, the newly launched FIS Standard Conditions [for contracting] simply require that “The Buyer and Supplier will work together in a spirit of trust and co-operation”. The NEC3 contract talks of “mutual trust and co-operation”.

Arguably, none of these variations on a theme require the parties to do anything other than follow everything that the contract requires in a trustful, collaborative manner. If the parties get on well together, this should not be at the expense of blindly following what the contract says. Adhering to the contract terms should aid the understanding and awareness of the needs of the parties, which should naturally support the “mutual trust and cooperation” process. But it does stand as a helpful reminder that behaviours are fundamental to fulfilling our duties set down in the competence requirements now enshrined in the Building Regulations.

The dictionary definitions of collaboration and co-operation are strikingly similar, being the process of two or more people working together to create or achieve the same thing. So, to a degree these are interchangeable terms.

Deeper definitions distinguish between the terms. Co-operation is when individuals work together to achieve a common benefit, but with a limited level of interaction and shared ownership, while collaboration involves a more intensive, mutually engaged process where participants share responsibilities, ideas, and work to jointly create a new outcome.

Key differences include the level of trust, sharing of work, and the nature of the outcome, where co-operation can be a connective process of mutual support, whereas collaboration is a collective process aimed at a shared creation.

The Courts have examined what these terms mean In Costain Limited v Tarmac Holdings Limited [2017] EWHC 319 (TCC) the judge provided some useful guidance on the concept of mutual trust and cooperation.

Reference was made to the Australian case of Automasters Australia PTY Ltd v Bruness PTY Ltd [2002] WASC 286, which says:
1. What is good faith will depend on the circumstances of the case and the context of the whole contract.
2. Good faith obligations do not require parties to put aside self-interests; they do not make the parties fiduciary.
3. Normal reasonable business behaviour is permitted but the court will consider whether a party has acted reasonably or unconscionably or capriciously and may have to consider motive.
4. The duty is one ‘to have regard to the legitimate interests of both the parties in the enjoyment of the fruits of the contract as delineated by its terms’.

The Judgement included the observation that whilst the parties can maintain their legitimate commercial interests, they must behave so that their words and deeds are honest, fair and reasonable, and not attempts to improperly exploit’ the other party. In the Court of Appeal case of Re Compound Photonics Group Ltd [2022] EWCA Civ 137,the committee summarised the case as authority for the proposition that a clause requiring parties to act in good faith gives rise to: a core duty to act honestly and not in bad faith; and (subject to context) the prohibition of conduct that reasonable and honest people would regard as commercially unacceptable, but not necessarily dishonest.

Not withstanding the consideration of the Courts there is a degree of subjectivity as to what “acting in a spirit of mutual trust and co-operation (and therefore collaboratively) is. This can simply be the act of being truthful, not deceitful, responding as quick as possible to challenges, rather than trying to get away with things.”

Legal perspectives and practical implementation
All the above has no meaning whatsoever and is potentially unhelpful unless the parties adopt tangible and meaningful processes to give life beyond the theory. It is essential that pragmatic collaborative processes are introduced into the project cycle at the earliest possible time. Team selection should be skewed strongly in favour of those parties showing an understanding of and existing collaborative culture in their day-to-day working practices. Guidance can be found both construction playbooks and also in BS 11000, the first standard for collaborative working.

The BS 11000 provides an eight-stage structured model for collaboration designed to add value and therefore profit in the construction process. Some of the playbook and BS recommendations are geared to framework and longer term / repeat business arrangements. As we know a significant amount of work is of a one-off nature, but the key recommendations and guidance can still
be incorporated in the working practices in one off project scenarios.

In the longer-term arrangements, there is a focus of creating a cycle of continuing improvement through developing and using KPI’s However there is nothing to prevent an individual firm from developing their own KPI’s for use in external promotional literature and also for creating efficiencies and profit enhancement for the benefit of employees and shareholders.

For most specialists’, collaboration, for all practical purposes, starts with the agreement of mutually acceptable beneficial contracting arrangement. Key to this is the fair allocation of risks such that no party takes responsibility for aspects outside their gift to manage. Connected to this is the agreement to implement a live risk management process. This requires team identification of risk, management plans for all risks, allocated to a person able to deliver the risk mitigation. The process must be regularly reviewed and lessons learned recorded for future use.

Central also to collaboration are payment friendly terms. Consideration should be given to the use of Project Bank Accounts. All levels of the supply chain should also be considered in the payment process. Poor payment practices are one of the more frequently cited causes of poor mental health by people working below tier 1 contractors in the supply chain. Upside / downside incentivisation schemes can be explored but these can be difficult to administer.

Building collaborative teams and resolving disputes
Collaborative environments can be created through team building events. Creating a no fear, no blame culture (central to the success of bazball in modern day cricket). This can be achieved through active consultation with individuals in the team delivering work at the coal face. Focus on mental health and well-being, backed by improved welfare provision will also promote the collaborative environment as everyone feels valued and incentivised to contribute to the team effort. Another central component of collaborative contracting is the facility for rapid dispute resolution.

The Finishes and Interiors Sector (FIS) has become the first trade association in the UK to be awarded ‘gold status’ by the Conflict Avoidance Coalition (CAC), a group working to change how disputes are managed in construction and engineering. A formal system for escalating disputes is important to avoid roadblocks in the collaboration journey. The RICS first established the Conflict Avoidance Process (CAP) to: encourage “a fast, cost-effective, and collaborative way to resolve issues early. It focuses on preserving relationships, keeping parties in control, and
providing impartial guidance without the commitment or cost of formal proceedings.”

To find out more visit: www.rics.org/disputeresolution-service/conflict-avoidance/ conflict-avoidance-process

If the Main Contractor has not taken the initiative, there is nothing preventing the specialist from including some or all of these requirements in the tender proposals and contract terms.

Regardless of a stated intention to collaborate, simply understanding what this means is not sufficient to achieve the desired goals. Insight into the necessary behaviours is also important, as past models of practice may need to be broken.

If you do the same thing in the same old way, you will get the same result. Change has to occur through a mix of different approaches but only by introducing practical measures to create a collaborative team will the real benefit be felt.

Source
1. The Construction playbook Government Guidance on sourcing and contracting public works projects and programmes Cabinet office 2022
2. Trust and Productivity, The private sector construction playbook 2022