That's the spirit

NBS has released its 2018 NBS National Construction Contracts and Law Survey, which offers serious food for thought and raises some awkward questions. Its introduction highlights the challenges created by Brexit, the Grenfell Tower disaster and major contractor insolvencies, and against this backdrop still tries to strike a positive note. NBS reminds us that “a well-structured legal and contractual framework is a necessary pre-condition of the creation of buildings that meet the needs of clients”, but many of its detailed findings suggest only small steps forward since its last report in 2015.

For example, respondents to the NBS survey say that disputes keep increasing, albeit at a slower rate than in 2015 and with two-thirds of respondents involved in no disputes at all over the last year. The top five reasons reported for disputes are extensions of time, valuation of final account, valuation of variations, defective work, and loss and expense. Yet most of these are not reasons for disputes but references to the contract mechanisms being called into question. NBS concludes, rather bleakly, that disputes “are a part of doing business in the UK construction sector”.

On possible ways forward, the NBS commentary cuts through the hyperbole publishers often use and exposes some fundamental anomalies in our thinking about procurement and contracts. It proposes that “legally explicit” collaborative working, combined with a better understanding of BIM and other technologies, offer a legal framework for the future. However, the report also illustrates why we are still a long way from achieving these goals.

We should think harder about how we can use procurement, contracts and technology to create more effective project teams rather than just adopting the latest labels

Partnering and alliancing are shown to be most frequently used by only 3% of respondents, in contrast to 46% of respondents mostly using traditional procurement and 41% mostly using design and build. The language of the report is unhelpful in so far as “traditional” and “design and build” describe only the allocation of design and construction responsibilities, and this same allocation has to be made when embarking on partnering and alliancing.

That said, the first anomaly arises from the whopping 63% who report that they used a contract that “included an ethos of mutual trust and co-operation”. How does that square with everyone except the 3% who treated these words as a basis for partnering or alliancing? Presumably for the others the words were only symbolic, and the report rightly questions “whether an ethos is sufficiently robust to maintain collaboration”. As a basic measure, we might assume that the 38% who consider disputes are still increasing and the 49% who think they are staying the same will not agree that just a collaborative gloss is sufficient.

NBS recognises the risk of collaboration “falling over at the first hurdle if that collaboration is not described in contracts”, and the need to ask: “Who is responsible for what and when, and with whom do they collaborate?” This broad recommendation leads us to three important underlying questions, namely: how BIM can clarify who is responsible for what, how early contractor involvement (ECI) can help the team to start collaborating early, and how integrated contracts can show who collaborates with whom.

As to the first point, NBS reports that BIM is gaining ground, with 21% of respondents saying it is fully integrated in their contracts (up from 14% in 2015) and a further 40% saying it is “referenced in their contracts”. However, these statistics invite us to ask whether the 40% are just nodding in the direction of BIM technology rather than working out how to make it part of an integrated approach to procurement. BIM needs contractual clarity to achieve the NBS proposal that it “is collaboratively created and developed, and evolves through the design, build (and maintain) lifecycle”.

Secondly, although the NBS report offers no statistics on ECI, this two-stage contractual system is likely to languish among the procurement models described as “relatively niche”, given the reported dominance of single-stage tendering at 82%. One of the NBS commentaries suggests that “we need to focus on the building of trust” and, despite a wealth of case study evidence, it seems that clients and advisers are not still using ECI to build trust through a team working together for a significant period prior to construction.

Thirdly, we should reflect on why bespoke consultant appointments are used by 37% of respondents but bespoke construction contracts are” used by only 5%. The drafters of bespoke contracts are often tempted to be one-sided rather than collaborative: otherwise why would they not use the matching standard forms readily available? 

Statistics never tell the whole story. For example, the reported drop in the use of NEC to 14% does not reflect its clear dominance in significant parts of the market. Likewise, the modest take-up of PPC2000 at 3%, matching exactly the NBS statistics for partnering and alliancing, is a significant increase on the 1% reported in 2015. However, the underlying insights provided by the NBS report should make us think harder about how we can use procurement, contracts and technology to create more effective project teams rather than just adopting the latest labels.