Fit for the future or pandering to the past?

How did we get here? How did we get to the point where contracts in the UK construction industry no longer help companies do business?

One of the aims of standard forms was to reduce the time you spend writing, negotiating, assessing risk transfer and pricing your responsibilities on a project. They were initially intended to create a framework on top of which niche or project-specific issues were varied. Frankly, that worthy aim no longer holds true.

For any project there is a wide choice based on project type, philosophy, drafting, payment, design responsibility and risk transfer. Knowing the precise twists and turns of these long and complex standard forms, which change every 5 years or so, is a Herculean task for lawyers and clients alike. That task is made harder as each standard form attracts changes (butchering according to one of my subcontractor clients) in the form of length schedules of amendments.

Those schedules don’t merely refine project-specific issues. Instead they attempt to close loopholes, protect clients from recent cases, add missing clauses, refine ambiguous obligations, and pass more risk to an unsuspecting contractor. Clients, funders, commentators and judges promote these changes and lawyers fall into line, like obedient sheep.

What are we left with? A set of core obligations, remedies, procedures and rights for the parties that work across all contracts and all projects? Not even that. There are no actual ‘standard forms’ left.

You face Hobson’s choice: you can try to review each contract in minute detail to see what remains of the baseline standard form and work out what the changes mean for you; or you can wing it and sign without reading. Neither of these options is practical or palatable, and yet they represent the ends of the construction contract negotiation spectrum. Where does your company sit?

Instead of aiming for comprehensive or watertight contracts, we could look at adopting contracts based on trust. These would provide a framework for success by sharing risks, limiting the contractor’s liabilities and defining a project success for the whole supply network. This approach is not foolproof, but then neither are our current adversarial complex contracts. The Government Construction Strategy believed contracts based on partnering and long-term relationships, both elements of trust, could reduce the cost of construction projects.

When a senior TCC judge recommends that those who draft standard form contracts should go back to the drawing board, isn’t it time to develop contracts fit for the future, and stop pandering to the precedents of our past?

Originally published in Construction Manager July 2017

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