The UK Government’s Construction Playbook has 14 key policies for reforming and modernising aspects of public sector projects (and perhaps, with luck and trickle down, the private sector too). However, it will need some robust contract tools to bring those ideas to fruition.
In a series of posts, I consider how contracts will need to change to adequately respond to the Playbook’s policies or themes.
Outcomes not Inputs
The Playbook wants clients to develop clear outcome-focused designs and specifications in collaboration with industry to drive continuous improvement and innovation. Outcomes are mentioned over 100 times!
Outcomes should not simply focus on speed, cost and quality but include wider value drivers such as:
- social value
- whole-life value
- a ‘golden thread’ of data relating to the project’s purpose.
Instead of a scope, clients (called contracting authorities in the Playbook) are asked to focus on clear outcomes, that align with the government’s economic, social and environmental priorities. The Playbook is keen on better, faster and greener delivery (provided it is also cost-effective or value-based).
At the same time, outcomes depend on better risk allocation, payment and pricing, longer term contracting, innovation, continuous improvement, early engagement, shared goals etc… some of these are uneasy bedfellows.
The Playbook calls for clear and measurable outcomes set early and for these to be prioritised over lowest cost.
What does that mean for contracts?
Clients will add outcomes (via Project Scorecards) into their contracts to inform contractual processes and form the baseline for robust post-completion evaluation.
Although, the engineering and process plant sectors have been masters of outcome-based specifications for decades, most construction projects are measured on their inputs, don’t face rigorous tests before completion and have few measures for failing to meet those standards.
The focus on outcomes is great – let’s face it why should we spend government aka taxpayers’ money on projects which don’t actually meet their needs? But we need to evaluate projects before completion. A high profile example would be the Millennium Bridge, London, which required 18 months of remedial works after completion to dampen the wobbles. This quirk should have been ironed out before the project was certified as complete.
Even engineering projects are not without their problems. The outcome-based specification for the Robin Rigg windfarm resulted in a multi-million Euro a dispute for defects discovered after completion, The contractor had promised the impossible, due to ambiguities from competing functional requirements and an international standard (see Playbook and Standards). Outcomes must not be based on something as esoteric as design life.
Outcomes need to be reflected in testing regimes, remedies for failed tests and in payment. MF/1 is an example of a clear outcome-focused contract but is not in the list of approved contracts. Surely if the government wants a robust evaluation of the project, it should have rights to reject works, rectification of defects, or pre-agreed damages for failure?
Contracts with an outcome-focus will also need revised methods of determining what counts as value for payments (cost is an input measure), independent and objective test supervision, and different risk allocations.
What should you do?
Outcome-focused contracts can help us move towards objective measures of project success, as well as automated processes during the project lifecycle. However, existing contracts do not reflect this approach and will need amending to put the focus on results.
Don’t adapt a construction standard form – use one already fit for that purpose!