08 September 2020

The situation that the construction industry is confronted with today would have been beyond anyone’s perception or comprehension at the start of 2020. The industry is now struggling to manage the uncertainties and anxieties of sailing through unchartered waters, yet, the advocates of more collaborative approaches to procurement and risk management may already hold the answer to what the new normal should look like. We can use guidance from pre-pandemic recommendations such as the Construction Leadership Council (CLC) 2018 report ‘Procuring for Value’ in order to improve the relationships among supply chain members, linked to compelling evidence from exemplar case studies and proposals from high-performing clients and their teams.

The CLC has published a Roadmap to Recovery post-COVID-19, setting out 3 phase delivery plan – Restart, Reset, Reinvent - over a period of two years. What is fundamental, both in terms of the recognition and subsequent realisation of the three “R’s”, is the availability of alternative solutions and structures that have been prescribed repeatedly yet largely rejected in favour of less efficient traditional models. The remedies that may lead us out of a claims-based culture and its counterproductive digressions have been staring us in the face all along.

Construction projects rely on the coordinated efforts of a diverse network of people, products, services and works and a vast number of interconnected delivery and payment processes. These interlocking relationships and processes are contractually orientated, with all organisations duty-bound to protect their own interests in the first instance. Hence, the tendency to default to procurement models where risk is pushed down the supply chain rather than acknowledged and managed collectively.

The CLC Covid-19 Contractual Best Practice Guidance published in May 2020 promotes the need “to support construction supply chains through collaborative approaches to payment and revision of contractual clauses”. The Arcadis Global Construction Dispute Report published in June 2020 explains that the common thread running through its results “is that bad relationships doom construction projects” and that the vital factor critical to successful project delivery “is resilience to recovery through collaboration”. The Constructing Excellence (CE) response to Road to Recovery presents a case for behaviour change, which lies at the root of any drive to reform: “Government and industry must work more collaboratively to... implement collaborative procurement strategies”. CE goes on to explain that: “Good progress has been made through the Crown Commercial Service, and this should become the standard for future procurement.” The common theme that emerges is a proposition that promotes the building of collaborative relationships, creating environments where teams work towards the same goal, sharing both risks and rewards.

CE referred to Crown Commercial Service (CCS) as demonstrating headway in crafting collaborative procurement strategies. All CCS construction frameworks, valued at over are £35 billion in total – Consultancy Services, Modular Building Solutions, Construction Works, Building Materials and Equipment – are built around an industry standard alliancing structure enabling the members to create and maintain a collaborative culture and to undertake transparent exchanges of data by reference to shared objectives that are linked to jointly agreed processes, success measures and rewards. This standard alliance enabler is the “FAC-1” Framework Alliance Contract, which has been published and in use since 2016.

FAC-1 creates a collaborative platform through which it invites early engagement of the team at the time most suited to each project and programme of work, bridging the gaps that currently exist between design, construction and operation of built assets. FAC-1 is among a suite of collaborative contracts which Arcadis recommends in its 2020 Report: “Greater use of more collaborative standard forms, i.e. PPC2000, TPC 2005 and FAC-1, might provide more confidence in project delivery”.

So, is this what the new normal should look like? The key ingredient that is needed in order to create solid foundations for the Road to Recovery post- COVID 19 will be the embedding of a collaboration ethos. For this purpose, the industry and its clients will need to embrace proven mechanisms such as a multi-party commercial model which supports joint development of integrated design, construction and operational data through collaboration. It is only through these contractual commitments to robust collaborative systems, as illustrated by the adoption of FAC-1 that teams can agree on the actions and rewards necessary to enable effective risk management and the delivery of improved value over the whole project lifecycle.