Frameworks and Alliances – Typical Pitfalls and New Solutions
An industry roundtable addressing how to create collaborative relationships – and the improved value associated with them – within a framework environment. Led by Professor David Mosey PhD, Director of King’s College London Centre of Construction Law and Dispute Resolution, hosted by ResoLex on 6th October 2016.
This Roundtable is part of the RADAR knowledge community created by ResoLex and the topic is set against the background of a year of pan-industry consultation and publication by King’s College and the Association of Consultant Architects of “FAC-1”, a new framework alliance contract designed to address the promotion of collaboration at a strategic level.
An engaging presentation on FAC-1 as the workflow of a framework with the benefits of an alliance highlighted the fundamental question of “Why if you want collaboration would you use an adversarial contract?”. From this examples abounded of where frameworks go wrong culminating in the hypothesis of “Can alliancing rely on good faith?”
In answer to the questions of “Why do we need a framework alliance contract?” And “Why is FAC-1 significant?” it emerged that good frameworks and good alliances leave a gap in the market for a new standard form of multiparty contract linking stakeholders and supply chain to the client as alliance members managed by an alliance manager. An essential of a framework alliance is that of making the parts into a greater whole so that what you do together improves the value. A major component is new ways of engaging the supply chain.
The exemplar Surrey County Council Project Horizon was quoted as a pilot for testing much of the thinking behind the contract.
Key factors are the addressing of sustainability, governance, early warning and alternative dispute resolution options.
The philosophy behind the new contract is given in the RADAR Talk video http://www.resolex.com/radar-talk-a-new-contract-for-collaboration/
FAC-1 is not a project contract and is the result of collective endeavour. It works across cultures on the basis that empowering away from client and project manager to a group increases collaboration and increases motivation.
Can collaborative working be defined? Is it a set of values? Is the measure of collaboration in the machinery of good faith? Can good faith be evidenced?
A good early warning system is essential. There can be an undermining of contracts and workshops if contracts encourage silos.
Frameworks and alliances are strategic. Collaboration comes from shared objectives and shared successes. There needs to be continually renewed commitments by the parties to each other as equals without master/ servant relationships. Collaboration comes through agreement of activities with specific activities, tasks and rewards engendering collaborative values.
If collaboration is the answer – what is the question? In adapting collaborative working and shared objectives creative thought must not be destroyed. Government must be by consensus with flexibility being a key component. A guidance document is being prepared to help parties achieve this outcome.
What does working collaboratively mean? As an umbrella framework the contract envisages pragmatism. Achieving collaboration is far more than buying a copy of the contract which creates the framework. The objective is to keep collaboration simple. The answer to the question “Can it be defined?” is “Yes!” There needs to be consistency so that the framework drives the delivery contracts below.
As an alliance based contract options are included such as integrated project insurance.
There is a strong belief in the effectiveness of the core group in heading off difficulties. There is still the potential for dispute. To deal with this there are options for the roles of an indelent advisor, a dispute board and conflict avoidance panel. It has to be remembered that from the construction industry’s 20-year experience, compulsory adjudication is not ADR. Compulsory adjudication is a harsh remedial process.
Use of the contract is currently being led by the Football Association and Futures Housing Association.
Some are asking how “bespokeable” the contract is. In answer, the question has to be asked “Why would you want to keep rewriting a standard form of contract that has had so much expertise and consultation poured it into it?”
Also in answer to the question of what happens if there is no unanimous decision of the core group the fall-back is that of the best project decision/ most successful conclusion. Instances abound of core groups doing the right thing which is the cradle of collaborative working.
There is value of a third party referral such as a dispute board or conflict avoidance panel. It is incumbent on users of the contract to craft their own corporate governance to keep them away from adjudication or arbitration.
Attendees to the Roundtable are invited to continue the discussion on the LinkedIn RADAR group.