Partnering with confidence

The Association of Consultant Architects has published the first standard form of contract for project partnering, called PPC 2000. Other contract drafting bodies, some of which are considering whether to prepare their own partnering contract, need not bother. PPC 2000 is going to be hard to better.

It uses clear language and has a logical structure with cross-referencing between clauses kept to a minimum. PPC 2000's language is not likely to give the courts the problems of interpretation that JCT 98 and its ancestors have given them.

The fundamental difference between PPC 2000 and other standard forms of contract is that it is multi-party. This means it is agreed and signed by the client, members of the design team, the contractor and, where appropriate, specialist subcontractors.

The contract

The contract introduces a pre-condition that before work starts on site all members sign a commencement agreement. This declares that there is a developed, integrated design, supply and construction process, which can be delivered on time for the agreed maximum price.

The contract provides for project incentives that encourage shared savings or added value. This means the commercial interests of each team member become linked to the common good of the project. So team members are required to operate an "early warning system" flagging up problems and suggesting remedies.

Another novel feature is the core group, which is made up of key team individuals. The group acts as an advisory body, whose duties include deciding the course of action when one of the team has instituted the early warning system. This group is required to meet regularly and advise the client on development of the design, project timetable and appointment of specialist subcontractors. It investigates potential cost savings against the agreed maximum price and potential added value.

The allocation of risk within the contract is carried out by the partnering team. The team is required to work through risk management exercises and to manage the risk by either eliminating it, insuring it or apportioning it to one or more members of the team most able to manage the risk.

Team members are required to operate an “early warning system”, flagging up problems and suggesting remedies

Any contract has the potential for disputes to arise. But PPC 2000 is drafted so that disputes are resolved before parties become polarised. The contract provides for a partnering adviser, whose role includes assisting in the resolution of problems and disputes. There is also a group of individuals drawn from the partnering team who form the "problem solving hierarchy" or trouble-shooters. Their purpose is to express views on and propose solutions to disputes as they arise. If the trouble-shooting group cannot solve the problem, then the dispute is referred to the core group. The whole process is expected to take a few weeks at most.

If it fails, there is still ADR or adjudication.

PPC 2000 provides a good framework for procuring projects. There is no reason why any project that could be procured on a traditional JCT form of contract or a design and build contract cannot also be procured by means of partnering using PPC 2000.

It is, however, a contractual framework that relies on a number of other documents, which are referred to throughout the contract conditions.

If the contract is to function smoothly, the partnering adviser must take care in drafting these documents and, in particular, the timetable, project brief, price framework and key performance indicators, all of which must be agreed before the partnering agreement is entered into.

Some of these documents, such as the project timetable, project proposals and price framework, are developed by the partnering team during the project. Other documents, such as the commencement agreement, are agreed by the partnering team after the partnering agreement has been entered into. It is important that all the documents produced by the partnering team complement each other and reflect the intent of PPC 2000.

Projects do get built using standard forms of contract, but more by attrition than team effort. Why? Because the standard forms encourage the employer, the professional team and contractor to adopt a blame culture where they are more interested in protecting their own financial interests than actually solving problems and getting the building built.