We need to rewrite our definitions of a good contract; CONSTRUCTING EXCELLENCE.
Earlier this year, the Construction Leadership Council (CLC) called for an outcome-based, transparent and efficient industry in its Procuring for Value report. The report outlined how the industry needs to change to improve productivity, end user satisfaction and safeguard those in the industry, providing recommendations on how Government, clients and the industry can develop a brand-new approach to procurement.
Bringing construction productivity up to the national average would deliver an extra PS15bn of value each year. We need to get clients away from just accepting the lowest bids regardless of quality and the report suggests ways of doing that. It recommends the development of an industry-wide definition of value taking into account more than just capital cost.
It advocates new forms of contracts that reduce the role of lawyers. What tends to happen is that most companies hand over the responsibility of administration of contracts to legal advisors with an enormous focus on the theoretical transfer of risk downwards, rather than the placement of risk.
Failure to fully understand obligations under the contract, coupled with commercial pressures exerted to ignore the contract (payment terms being the best example of this), can create a very uncertain landscape.
The lack of contractual recognition of the whole-life value and the failure to incorporate whole-life risks mean that there is a growing view that current industry forms of contract will not meet future requirements.
We need to investigate how contractual forms can become digitally enabled and cloud-based to introduce transparency and whole-life project focus.
Ann Bentley of the Construction Leadership Council calls for "every rung of the supply chain to take responsibility and understand their impact on the industry and the larger financial picture that is at play". Catriona Lingwood is chief executive of Constructing Excellence in the North East