Embracing a modern contract – progression since Latham?

Sir Michael Latham and Sir John Egan in their reports “Constructing the Team”, “Rethinking Construction” and “Accelerating Change” identified substantial changes in the culture and structure of UK construction being required. These also included changes in the relationships between companies. The choice and form of contract can play a significant role in the governance of such relationships. Sir Michael Latham suggested that contract writing bodies could amend existing standard forms to meet some of the concerns further urging the industry to embrace a Modern Contract. The forms of contract, and the changes to them over time, can influence culture change. This paper compares and contrasts the principal provisions of the contracts published by the Joint Contracts Tribunal (“JCT”), Institution of Civil Engineers (“ICE”) and the New Engineering Contract (“NEC”) against Sir Michael Latham’s 13 requirements for a Modern Contract. Where relevant, subcontract and consultant forms are also considered within the contractual matrix. The JCT and ICE forms of contract were found to have retained the principle features more conducive to promoting an adversarial relationship as opposed to the modern requirements for a collaborative and trusting relationship. Some attempts have been made by the JCT and ICE to promote collaborative working and to incorporate the features of a Modern Contract but this relies heavily on overarching documents which, in the main, are non binding on the parties and simply exhort collaborative behaviour. The single, most notable, exception to this was the JCT Constructing Excellence Contract. On the other hand. the NEC family of contracts were found to have embraced virtually all the requirements for a Modern Contract in an integrated way and, could be argued, were the most conducive to assisting with implementation of the various drivers for change

Towards the reduction of construction insolvency: examining the "supporting statement" requirement in New South Wales

Introduced as a measure to improve security of payment, the requirement that a head contractor provide proof that it has paid its subcontractors as a condition precedent to its own entitlement to be paid by the principal has for some time been a common provision in Australian standard form construction contracts. Recognising that allegations of some head contractors swearing false statutory declarations in relation to their contractual proof of payment obligations have been longstanding, the New South Wales Parliament has recently enacted a statutory requirement for head contractors to provide proof of payment in the building and construction industry. By examining the statutory provisions, and analysing their likely implications, this article investigates whether the proof of payment requirements are likely to have more “bite” than their contractual cousins and therefore be more effective at improving security of payment and reducing insolvencies in the building and construction industry

Evaluating social value in the UK construction industry

A comparative study of contracts tendered in England, Wales and Scotland was conducted to determine the impact of the Public Services (Social Value) Act 2012 (‘the Act’) on public sector construction contracts. This paper builds on the literature review paper already published by the authors, which set out to define what social value means in the context of public sector works in the UK and under the Act, by assessing the impact on public sector procurement in the UK. A broad method of measurement for social value in public sector construction contracts is developed before reviewing published contracts (tendered and awarded) on the Official Journal of the European Union website. The study has found that the Act has had little impact on England, where social value was already being considered; however, there has been a significant increase in attempts to incorporate social value associated with construction projects in both Wales and Scotland

Defining social value in the UK construction industry

This paper evaluates the rationale behind the UK Public Services (Social Value) Act to postulate a definition of ‘social value’ and its application to construction and enable authorities to implement it. A comprehensive literature review has been undertaken and publications on existing methods of measurement have been reviewed and discussed to provide a comprehensive summary. The literature review revealed that communities could benefit from a series of direct and indirect impacts on individual people as well as the social efficacy of the whole community as a result of implementing the Act. The intention of the Act is to provide additional social benefits that provide added value, not in the monetary sense of the word but as a broader impact to the local area. However, these types of contract conditions benefit local contractors, which conflicts with the EU’s single market legislation

Cost benefit analysis approach to global claims

Purpose – The purpose of this paper is to examine relevant case law governing the failure and/or success of global or rolled-up claims, where it is said to be impractical or impossible to demonstrate the links between certain causes of action and the monetary value to be attached to each. The paper proposes a theoretical framework to improve a claimant’s prospects of success in advancing a global claim, not only in circumstances where it may be impractical or impossible to provide a breakdown but also where a cost benefit analysis concludes it is reasonable to do so. Design/methodology/approach – The paper uses traditional doctrinal legal methodology to evaluate judicial statements on the merits of global claims from a number of jurisdictions. The paper also draws on key authorities from the realms of health and safety and professional negligence. Findings – The cases demonstrate attempts by the court to recognise the problems faced by claimants at the end of a construction contract where their total costs exceed the agreed contract price. The comparative success or failure of a global claim depends on the judicial approach to a number of factors including: impossibility, impracticability, conduct of the claimant and defendant, balance between excessive particularity and basic information, the keeping of records, the costs of claim preparation and apportionment. There remains a significant risk of failure of a global claim but the risk can be reduced significantly provided the claimant conducts a defensible cost benefit analysis of the approach taken. Practical implications – A global claim can be used more often provided the rationale behind its presentation forms a logical basis. The cost of litigating complex construction contracts can be reduced significantly if global claims can become the norm rather than the exception, provided the claimant conducts a cost benefit analysis and the court concludes the analysis is reasonable and defensible. Originality/value – Traditional legal theory relies upon the proposition that the claimant must prove that to which he believes he is entitled to such an extent that the defendant’s right to know the case it has to meet is satisfied. This paper adds value to the theory by proposing a radical strategy whereby a reasonable claimant can assist the court in finding a factual and logical basis for awarding the whole of a global claim and, where appropriate, by deduction in addition to the principle of apportionment, less than the whole

Towards a modern construction contracts: parallel development in the UK and China

Disputes arise because of the opposition of interests, values or objectives when parties perceive that these are incompatible. In the construction industry, these differences in interests and objectives are illustrated by the multi-parties involvement in the project development process. These inherent potential conflicts are ideal for disputes to flourish and can be caused by poor communication and a lack of trust in the relationship between the parties. Most disputes arise out of the contract. The purpose of contract law is to formalise transactions. Contract planning accommodates this mechanism for dispute resolution and is viewed as a means of ‘gap-filling’ in the neo-classical contract system. The choice and form of contract can play a significant role in the governance of relationships between parties to a contract. Two processes are essential to contract planning, namely, defining goals (along with related costs of their attainment) and communication. It is suggested in the Latham Report of 1994, entitled “Constructing the Team” in the UK, that the construction industry should embrace a “Modern Contract”. The New Engineering Contract (“NEC”) is widely believed to include virtually all the principles of such a contract. This paper sets out the principle ingredients and changes made since Latham 1994 to demonstrate whether or not the NEC is truly compliant. This paper also reviews the parallel progress towards a modern contract in China, comparing such progress being made on the Chinese Model Contract with that of NEC. This paper also briefly identifies that steps are being taken to avoid adversarial standard forms of contract but, perhaps more importantly, touches on a common desire for culture change in the management of construction projects and may result in convergence between China and the UK

The impact of employee experience in uptake of company collaborative tool

Working behaviours are not easily changed, even though technology has been put into place to improve employee productivity and performance. Although construction projects are completed by multidisciplinary teams, human input is a common feature which provides lesson learning beyond the confinement of discipline specific procedures. This research focuses on an SME Civil and Structural engineering consultancy which is in the process of adopting Building Information Modelling (BIM) within the context of the UK government 2016 mandate. This research will explore how organisations can capitalise on user experience to maintain continuity amidst technological and social changes. A qualitative research strategy was adopted, based on an extensive literature review and semi-structured interviews in order to provide a snapshot of the actions undertaken by organisations to profit from employee experience. Reliance on an employee’s ability and experiences can be a bar as it limits an individual’s willingness to adopt different and new ways of working. As such, experience is a double edged sword as past ways of working can act as an inhibitor to the adoption of new practices

Project bank accounts: the second wave of security of payment?

Project bank accounts: the second wave of security of payment

Improving dispute resolution on construction projects in Kuwait

The number of different parties involved in most construction projects can result in a high risk of conflict which, if not dealt with quickly, could develop into disputes that can take years to settle. These disputes add little value to a construction project but increase the cost burden on different parties when taken to arbitration or litigation. Dispute costs are often in addition to the costs of project delay which together influence the hardening of attitudes of the parties. Dispute avoidance or early dispute resolution is desirable for all parties concerned. The nature of the construction business in the State of Kuwait is probably no different to other countries as one of the most litigious industries. However, improved dispute resolution practices within Kuwait, could result in significantly reduced costs and wastage. This paper presents early findings from a literature review, as a part of PhD researching disputes and different dispute resolution strategies. It aims to determine the ability to employ the current alternative dispute resolutions strategies in the State of Kuwait

Barriers to alternative dispute resolution in the construction industry: the Kuwaiti experience

Litigation as a formal way of dispute resolution is time consuming, costly, adversarial and damages, if not destroys, relationships and reputations. There are many alternative forms to litigation and arbitration, also in Kuwait different organisations prepared regulations for different forms of alternative dispute resolution. These forms have been rarely used due to cultural difficulties and to lack of awareness of these forms of dispute resolution. In addition to exploring the advantages of using the alternative dispute resolution forms with construction projects disputes, this paper presents the findings of what alternative dispute resolution strategies are currently been implemented by different organisations in Kuwait. These finding are reinforced by interviews conducted in Kuwait, with workers in the construction industry, to identify the main reasons, in terms of culture and awareness aspects, for not adopting ADR in construction disputes. The barriers to use mediation are found to be, mainly, lack of awareness and another six cultural aspects. However, elimination instruments to the barriers were revealed in this study