And it is not just the showroom looks of this new turbo-charged top-of-the-range form of contract that appeal. At 54 pages, with a closely interlocking set of at least a dozen separate contract documents and a new vocabulary of obligations and duties, this one has brains to go with it. In addition, not only is it the first of its kind as a project partnering contract, it is also the first multiparty project contract of any sort. In fact, in many ways, this contract is a lawyer's dream come true.
There are three ways in which partnering can develop, and PPC2000 is one of them. First, it can operate as a project management tool alongside conventional contractual approaches. The benefit of that set-up is that the partnering techniques and the contract are left to play their different but compatible roles. The contract stays in the desk in case things go wrong, and then it should provide a clear route map for unscrambling the problem that has arisen.
The second alternative would have it that partnering can take the place of conventional contracts in the construction process. Out with the contract and in with the charter – and enough workshops to ensure that whatever happens, the parties remain committed to the project in the true partnering spirit. Such an approach remains, in my view, not only wishful thinking but downright dangerous.
The third alternative, which lies at the heart of PPC2000, is to pull all contractual relationships together into one document through which all parties are bound into the partnering process.
The problem with that approach is that it blurs the essentially different roles of the contract and the partnering process. This results in muddled thinking and a situation where you sacrifice many of the benefits that each element can, when used properly, produce.
The problem is that PPC2000 blurs the roles of the contract and the partnering process. This results in muddled thinking and a situation where you sacrifice many benefits that each can produce
Take the role of the contract for starters. Contracts should be short, simple and written in language that makes their analysis, at least by lawyers, reasonably predictable. By contrast, PPC2000 is a minefield of uncertainty. What are the courts going to make of all these duties of trust fairness, dedication to common goals and other things all for the benefit of the project? Take something as basic as the issue of an instruction by the client representative. He must be sure that the instruction is not only necessary but can also be issued "without prejudicing the collaborative spirit of the partnering relationships". What does he do if the contractor tells him that such an instruction is "demonstrably not in the best interests of the project"? The doctrine of privity of contract lies at the very heart of the existing contractual landscape. Conversely, PPC2000 provides that, with some limited exceptions, each party owes its responsibilities and duties to all the others. This means a web of duties involving the client, the members of the design team, the contractor and the specialists.
This will inevitably create new sources of liability and claims when things go wrong. It is going to be particularly difficult to identify those liabilities and price for them. Is the PPC2000 approach going to appeal to clients, particularly those involved in the private sector? On the other hand, this movement away from the concept of one-stop responsibility might seem attractive as far as contractors are concerned. However, PPC2000 is a strange hybrid that dumps substantial risk on contractors, and that adopts the guaranteed maximum price approach. Contractors should remember the nightmare at Cardiff Millennium Stadium.
They should also be aware of the relatively limited circumstances in which that price can be adjusted under this form. Although the contract does provide for pricing of "risk contingencies", this is subject to review by the partnering team and the approval of the client. Contractors will also find that the supply-chain management approach means that there is considerably less room for flexibility with subcontractors. Similarly, a strict regime of open-book pricing with the need for a business case to be established in all cases is going to give them little room for manoeuvre.
Equally, is the imposed partnering that lies at the heart of PPC2000 really the way to optimise the benefits of this form of project management tool? For my part, I see a parallel here with mediation and conciliation in dispute resolution. It has always seemed to me to be pointless to seek to impose a process that so obviously depends on both parties really wanting to settle their dispute. Similarly, I cannot see that having a contractual framework for partnering, and obligations to back it up, is really going to add anything. On the contrary, it is likely to hinder the partnering process.
Postscript
Dominic Helps is a partner in solicitor Shadbolt & Co.
