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Collaborative Contracting - A Paradigm Mindset Shift?

The term collaborative contracting has more recently entered the plethora of new phrases in the vocabulary of the built environment and is becoming a buzzword garnering more importance than ever in our sector. Can collaboration build and foster successful contracting relationships and a meeting of minds? Is a collaborative contract required to ensure that parties do get on amicably when what really matters is people management and a dovetailing of aspirations, attitudes and conduct?

The concept of working collaboratively has been with the construction industry for many years and much has been written, advocated and well-publicised. Such relationship-based arrangements and non-binding statements on trust, fairness, openness and cooperation have been used successfully in developing and improving collaboration between parties in a construction project.

The impetus for collaborative practices within the construction industry is greater in more recent times than ever as projects become increasingly complex and dynamic with concurrent and competing multi-stakeholders’ interests and priorities. Without a doubt, collaboration is about people. No matter how good procedures and practices are, it has been proven from experience that the people taking part make the real difference. It is the team-working, sharing of tasks, problems and successes which all contribute to meaningful success stories.

While not all projects may be suited for collaborative contracting (in consideration of the nature, scale and timelines), it still offers a clear set of these advantages compared to traditional or conventional “arms-length” approaches – productivity improvements, less confrontational environment, opportunity for trusted parties with common objectives to deliver on time and within budget, better time and cost predictability, financial motivation through the prospect of incentives and rewards, collective problem-solving and decision-making on solutions, and early warning triggers on adverse effects of potential issues for avoidance or mitigation action.

Collaborative contracting approaches do yield better outcomes if the challenges and risks are effectively and eminently addressed upfront. Such early identification and resolution are the crux of successful collaborative working.

A well-framed collaborative contract provides for parties to work together proactively in a spirit of mutual trust, respect and cooperation. Standard forms have been developed to interweave the best practice and principles of collaborative working into a clear and binding formal contract. Under the Public Sector Standard Conditions of Contract (PSSCOC) standard contract forms which are widely used in the public sector both for conventionally procured and design-build projects in Singapore, bolt-on clauses on collaborative contracting are incorporated as an option module. The key aspects that are featured in the collaborative contracting option module (the “Option Module”) are illustrated in Figure 1.

Collaborative-Contracting-Fig-1

A snapshot of the procedural requirements described in the Option Module is set out diagrammatically in Figure 2.

Collaborative-Contracting-Fig-2

With the launch of the Option Module for public sector projects and an increased emphasis on collaboration in the built environment sector, well-constructed bespoke particular conditions incorporating collaborative clauses can be produced with legal advice for the commonly used private sector standard forms in Singapore, namely, the REDAS Design and Build Conditions of Main Contract, 4th Edition and the SIA Building Contract 2016.

Whatever collaborative contracts and agreements there are now and to follow, they are only the tools that empower the people and encourage them along. At the end of the day – collaboration or no collaboration, it all depends on the people – the parties themselves!

About the Author

Eugenie Lip

Eugenie Lip

Executive Director
AIS Contracts Advisory and Support Group
AIS Academy

Winner
Woman of the Built Environment Award
RICS Awards 2021 Southeast Asia

Eugenie is an accomplished Executive Director at Asia Infrastructure Solutions, where she co-leads the AIS Contracts Advisory and Support Group and AIS Academy. With extensive experience in the construction industry, she is highly regarded as a thought leader and sought-after speaker in Singapore and Southeast Asia.

Her expertise lies in the specialised fields of construction law, contract advisory work, construction contracts, procurement and project delivery strategies, standard contract forms, and dispute avoidance. She is also an Adjunct Professor at Universiti Sains Malaysia.

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For a complete and more detailed discussion on collaborative contracting, refer to AIS Client Practice Note, So, Do We Need to Collaborate? Commentary Note on Collaborative Contracting, available for download below.

Do We Need to Collaborate?

SO, DO WE NEED TO COLLABORATE?

Commentary Note on Collaborative Contracting

This commentary note examines the key core drivers and impetus for collaboration and also discusses the critical success factors, potential benefits and challenges, and the possible approaches and some watchpoints flowing from collaboration principles in standard contract forms and bespoke agreements.

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