星空传媒

In July, Roger Knowles of Knowles Management Services released a new contract for partnering in the public sector, which he wrote with Mike Mills and in collaboration with Federation of Property Societies.

CM asked a range of stakeholders to have a look at it because partnering contracts don鈥檛 come along every day (the last was the PPC 2000 form two years ago and its subcontract last year).

The contract, called Perform21, is actually a suite of 10 contracts to match what a local authority needs doing. They include:

• Term Maintenance Measure and Value;
• Term Maintenance Target Cost with Cost Reimbursable;
• Authority Design Lump Sum, or with Target Cost with Cost Reimbursable;
• Contractor Design Lump Sum, or with Target Cost with Cost Reimbursable;
• Subcontract Lump Sum, or with Target Cost with Cost Reimbursable.

There are three supporting documents as well:

• Partnering Agreement
• Schedule of Costs
• Fluctuation Rules

It has been stripped of legal jargon to make it accessible to all members of the project team. Almost everyone praised its brevity and simplicity. As Gordon Harley of cladding specialist Charles Henshaw pointed out, there is not a 鈥榯herein鈥�, 鈥榳hereas鈥� or 鈥榥otwithstanding鈥� in sight. But simple equals brief, and this made some nervous that too much could be left to interpretation and therefore litigation.

One of the other unique attributes of this contract is that it does not prescribe working procedures within the contract itself. It allows the users to develop their own.

Mostly, the reviewers welcomed Knowles鈥� offering but dwelled on what bothered them. On one hand what else would you expect from people who get paid to inspect contracts? On the other, their concerns may point to the fact that 鈥減artnering鈥� and 鈥渃ontract鈥� may just be mutually exclusive concepts. As Mike Day, says: 鈥淧artnering is about a culture, best value and continuous improvement. To try and capture that ethos in a building contract may be like looking for Atlantis.鈥�

Here you鈥檒l read a representative sample of their comments. For a fuller version visit www.construction-manager.co.uk. For further information, please contact Peter Gracia, author of the PSPC Guidance Notes at peter.gracia@jrknowles.com, or 08707 530 600.

What does a client think?

The term maintenance options were the simplest and easiest to understand. A new build scheme, however, could require the use of three of the options and the Schedule of Costs and Fluctuation Rules in addition to the over-arching partnering agreement. Each option requires various appendices and schedules to be completed it could all get confusing. Also, there was no sequential approach to the structure of this option, which is a feature I like about the PPC 2000.

I would have liked to see the elements of the partnering agreement integrated with the various options to reflect the culture of partnering throughout the construction process rather than it being drafted as a stand-alone document.

I felt that Perform21 was also weak on detail, with no reference to risk registers and dispute resolution ladders.

What do independents think?

The Partnering Agreement is a simple skeleton full of good intentions (hurrah!) ...But it needs other documents to make it work such as a Partnering Charter, Decision Making Process and a Procedures Document. (Boo!)

PSPC allows information to be passed by email (hurrah!) ...But this means that if anyone is sick, on vacation or away from his computer the information will simply sit there unnoticed. (Boo!)

The contractor鈥檚 design input can be to a standard of 鈥楻easonable Skill & Care鈥� or to 鈥楩itness for Purpose鈥� (hurrah!) 鈥�But this means that the contractor may have a greater design responsibility than would an architect. (Boo!)

In the Target Cost Options with a Pain/Gain share, the contractor is not allowed to include costs of inefficient labour or those resulting from his own acts defaults or omissions (hurrah!) 鈥�But this means that if he is not 100% perfect (and who is?) he will have to give away these costs in any Gain sharing. (Boo!)

Didn鈥檛 they miss something? asks David Bentley, lead advisor, Construction and Property Services, Networks and Forums Division, Institute of Public Finance

It will be interesting to see how the Knowles route map relates to the government鈥檚 own Gateway review methodology for the procurement process. On first sight both seem flexible enough to work together, but do we really need two approaches? It probably would have been better if Perform21 was written to reflect the Gateway stages, but maybe in time it will be developed to do so.

The other area that has possibly been overlooked is any mention of the National Procurement Strategy published by the Office of the Deputy Prime Minister last October. Again I would have liked to see reference to this document in particular how Perform21 can help in attaining the targets/milestones and key priorities contained within. Knowles informs me that it is going to rectify this by adding web links to the Procurement Strategy site.

What do the subcontractors think?

The Terms and Conditions are clear and appear equitable. However I鈥檓 disappointed that clause 17 includes the option of cash retention. Surely a retention bond would be more appropriate amongst 鈥榩artners鈥�, especially as the duration of the Defects Liability Period is to be negotiated. Also, I鈥檓 sure that the PI Insurers will be uncomfortable about the express 鈥榝itness for purpose鈥� option in clause 5.1.2.

In the Target Cost form, admissible costs are listed together with a lump sum 鈥楽ubcontractor鈥檚 Fee鈥� which represents the overheads and profit element. This form allows for the admissible costs to be varied but the Subcontractor鈥檚 Fee is fixed. The prospect of increasing costs but a diminishing margin will focus the mind of the subbie who seeks a variation order every time the wind changes but may seem a bit harsh if your contract is varied at the Employer鈥檚 behest.

So will this new contract make subcontractors any more comfortable with partnering? I think so. It expressly allows for reimbursement of their pre-award involvement (if only at cost) and it seeks to make all members 鈥榚qual partners鈥�. However, I do fear that setting aside the traditional hierarchies will, for some members of the team, ultimately prove more difficult.

Easier on time, says Terry Bancroft, commercial manager, Birchdale Glass

Subcontractors are generally interested in two areas in any contract: payment and completion. In Perform21 some things concern me.

For one, while there is a link to The Scheme for Construction Contracts in so far as adjudication is concerned, strangely, this does not seem to be the case regarding payment. For another, the main recourse in the case of late payment appears to be suspension of work. If the job is already finished, this is not much use. Finally, late payment interest can be added at 5% over base rate, which is 3% less than that provided by the Late Payment of Commercial Debts Act. This could cause confusion.

On the plus side, it seems kinder to specialists like us who rely on manufacturers delivering on time. Specialist subcontractors tied into specialist suppliers will welcome this in relation to applying for extensions of time. For the average subcontractor the PSPC will give value through clarity, by savings on legal and other professional fees.

What do the main contractors think?

The terms and conditions are very short but this is achieved by removing all detail of the procedures required to give effect to the conditions. The parties are left to agree these between themselves. This is intended to allow flexibility but experience has taught us that leaving the parties to prepare and agree such particulars often results in discrepancies with the other contract documents. It could be helpful to include more detail here.

With simple drafting, clarity can sometimes be lost. For example, where the contractor is involved in design it is unclear whether he can rely on any design provided to him by the authority, or must check and take responsibility for any such authority furnished design. The contract is also silent on who is responsible for co-ordination and integration of the contractor鈥檚 design with the remainder of the design for the works. These matters are included in other forms of contract because they are a common source of problems. Relying on the parties to 鈥榩artner鈥� their way through such problems is desirable in theory but not as straightforward as it sounds.

As part of the contract documentation there is a Partnering Agreement and Partnering Charter. However, it is unclear what the contractual effect of these documents is: can the parties recover damages if a partner fails to work with the others to achieve all the aims and objectives set out in the Partnering Charter? It would also appear that some partners are treated less favourably than others. For instance, a consultant can recover profit when involved in prestart activities but a contractor cannot.

Risky for us, says Steve Leakey, head of Preconstruction, Higgins Construction

The contracts do not offer procedures for situations where one party鈥檚 actions are to be challenged by another. The authority of the contract administrator seems absolute unless you wish to adjudicate or arbitrate.

The extension of time and additional costs provisions are greatly simplified with the majority of risk now lying with the contractor. Provisions do exist for amending the completion dates for matters outside the control of the contractor, but with no payment for the additional costs that they may incur.

Although a cost-reimbursable contract, it refers to 鈥榝air and reasonable rates and prices鈥� and not cost which means the contract administrator could, in theory, pay you what he considers to be fair regardless of the actual cost incurred.

Since the contract is marketed as a partnering contract it would have been nice to see more regarding the management and ownership of risk with provisions for a risk register as the contract generally puts all undefined risks onto the contractor which will inevitably increase the price for the works.