Collaboration as a method to develop a collaborative contract – a sneak peak of how Task Group 17 of FIDIC works together

Kiri Parr
Brisbane, Queensland

Andrea Chao
Amsterdam

Introduction

Report after report indicates that construction projects are becoming increasingly large and complex. Projects are now being delivered in rapidly changing environments – technological, social, political and environmental. A broad range of innovative solutions have been employed to help respond to these developments. One of these solutions is the use of collaborative contract forms. In several jurisdictions these contract forms are already regularly used, but there is an emerging call to boost their usage on an international scale. The International Federation of Consulting Engineers (FIDIC) is well known for its internationally recognised and globally used suite of contracts. In 2021 it established Task Group 17 (Collaborative Contracts) to prepare a collaborative contract form as an addition to this suite. Obviously, for lawyers the content of such a contract will be particularly interesting.

It is also interesting to gain insight into the process being used to develop such a contract: a collaborative process that has features that can be used by construction lawyers everywhere.

Over the past few decades, the international construction industry has witnessed the emergence of collaborative forms of contract as a procurement model. Countries such as Australia, the Netherlands, the United Kingdom and the United States have developed contract solutions that aim to combat adversarial and dispute-prone attitudes on construction projects – attitudes that can give rise to disputes and failing projects. Collaborative contract forms are designed to deliver long-term value and promote win-win outcomes through aligned purpose, continuous dialogue, good faith and cooperative attitudes, early warnings, risk and opportunity sharing, early involvement of the supply chain and collaborative targets. Collaborative forms of contract are categorised by users as relational contracts (as opposed to transactional) – the contracts provide a structure and incentives that support the parties working together to deliver complex, multiparty and high-risk scenario projects.

In 2020, the FIDIC Board approved an initiative by the FIDIC Contracts Committee to define and develop a form of collaborative contract (or contracts) that would best complement the existing FIDIC suite of contracts, especially as these contracts already include collaborative elements. The selection process of Task Group members was done in a thorough manner, where potential members were identified, followed by a series of interviews. The FIDIC Contracts Committee, which overlooks this Task Group 17, knew that the future members of this Task Group would need to reflect a broad range of knowledge and experience, would not be well known to each other and would have a considerable task ahead. Finding Task Group members meant looking for people who could be team players, would be able to build constructive debate across their broad experiences and would be able to support the project over the long term. Every prospective member was asked to stop and really think about whether they could make the commitment to the project. This already shows similarities to how innovative procurement processes are being set up to find advisers, contractors and suppliers to deal with complex projects.

This selection process resulted in the formation of Task Group 17 in 2021. It consists of ten professionals active in the construction industry. The background of the members is diverse: technical, legal, project management, working for employers and contractors, academic, as well as independent consultants, with and without experience of collaborative contracts and based in a range of jurisdictions that is wide enough to obtain global perspectives (albeit limited to a certain range of time differences to allow for all members to attend all calls).

This was one of the challenges identified right at the start by the Task Group: the members do not (or hardly) know each other, nor do they know each other’s views and cultural or professional backgrounds. Yet, the Task Group has a task that will help the construction industry: to prepare one or more collaborative contracts that will benefit the international/global construction industry. So the Task Group needs to make this a success.

To that end, the very first priority of the Task Group was to agree what it wanted to achieve and how the members wanted to work together.

The principles agreed by the Task Group, and around which all of its work is orientated, are:

• We can have an impact the market for the generations to come.

• How we work must resonate how we feel parties on construction projects should work.

• Applying collaborative principles when working together:

– act in good faith;

– communicate and keep each other updated;

– act proactively, transparently and flexibly;

– be focused on good collaboration and the goals of Task Group 17;

– dare to raise discussions and concerns, and settle these in a professional manner; and

– dare to flag your own and others’ (potential) mistakes and pitfalls, and actively seek and help with solutions.

• We, as a team, can create the new standard(s) on collaborative contracting.

• We all need to have an open mind.

• 360-degree view of the relevant laws and practices across the globe .

• Stay away from too domestic-centric approaches.

• Dare to question.

• No preconceptions.

• No bias. Re any precedents, earlier approaches, etc: it is OK to share for inspiration, but it is not OK to copy/replicate (ie, no ‘putting an international stamp on a national precedent’).

• No promises towards third parties.

• We will start from an empty piece of paper.

• We will all be involved and have our voice heard.

• Principle: consensus – voting is the absolute last resort.

During each meeting of the Task Group these principles are emphasised, and are reflected upon during discussions.

As a result, the Task Group has observed during the execution of its own tasks that (especially in an international context):

• It is important to understand that language and labels can have an impact on how suggestions are understood or perceived. The person who hears a certain word or concept might have preconceived notions regarding what that word or concept means.

• Working from first principles means the members can tackle preconceived notions, orientate conversations more constructively, overcome any implied assumptions or biases and focus on the goals of the project.

• The diversity of perspectives brought out through constructive debates supports deep analysis and original thinking.

• A contract is more than just a legal tool, it is a project management tool. This is one of the reasons why it is critical to have engineers, project managers and other professionals with direct experience delivering projects at the core of the problem-solving team.

• Two heads are better than one. When dealing with complex projects, it is always beneficial to engage the wisdom of the crowd (as the Task Group has done in early 2022 by circulating a survey).

At the time of writing this article, the Task Group has made considerable progress towards its goals. Given that the collaborative approach is working for this Task Group, we hope that this experience can provide inspiration for the lawyers within this IBA group who are having to design their own approach to drafting construction contracts. Collaboration processes can be built in everywhere: they are not just for the project delivery team.