When Honda UK won the British Construction Industry Award in 2002 for its new European Car Plant, the judges cited “‘The one team one goal’ culture of openness and transparency”. Honda’s Key Performance Indicator of building cost must have been even more gratifying; the figure of £701 per square metre showed a 40% saving on the (inflation-adjusted) cost of their first plant in Swindon nine years earlier, even more than the 30% improvement sought by Sir Michael Latham in his landmark report ‘Constructing the Team’ in the mid-1990s.
Sir John Egan, Chairman of the Strategic Forum for Construction, in the 2002 consultation paper Accelerating Change considered that “the greater efficiencies available from integrating the whole of the team, from clients through to manufacturers, at the earliest practical point is worth re-stating for all.”
Sir John is one of the most powerful voices to speak in favour of partnering and said, in the published Accelerating Change report that: “Integrated teams should be based, wherever possible, on strategic partnering. Knowledge and expertise can then be transferred more effectively from one project to the next.” While in individual projects integrated teams can offer their clients “an improved service based on past experience, the ability to innovate and through the development of a culture of continuous improvement.”
Partnering without a legal framework
Sir John and other leading advocates of partnering are known to have favoured a non-contractual approach, on the basis that the spirit in which the parties have agreed to work should avoid conflict; potential disputes could be resolved without confrontation. Some form of statement of intent or charter would be the most that would be needed according to this model. However, not all experience has lent support to this approach.
The Cardiff Bay experience On 5th May 1997, contractors Birse Construction and clients St David Ltd attended a Team Building Seminar regarding the Adventurers Quay development in Cardiff Bay. They drew up and signed a Partnering Charter, with the overall stated aim:
“To produce exceptional quality development within the agreed time frame, at least cost, enhancing our reputations through mutual co-operation and trust”.
The Partnering Charter contained a statement of detailed intentions:
To promote an environment of trust, integrity, honesty and openness
To maximise profit for all parties
To inspire, design and construct an award winning flagship development
To enhance the reputation of the team
To enhance the ethos of Partnering
On November 14th 1997, the parties expressed a “common aim to sign the contract prior to the Christmas break”.
On March 5th 1998, the client notified the contractor of its intention to deduct liquidated damages for delay.
On July 1st 1998, practical completion of Phase 1A was certified.
On August 11th 1998, the contractor left the site. The client treated this as abandonment; the contractor said there was no contract to abandon.
On September 8th 1998, proceedings were issued by the contractor in the Technology and Construction Court (TCC), claiming payment on a quantum meruit in the absence of a contract.
Outcome The fact that the Cardiff bay project ended with judgment in the TCC in Birse Construction Ltd v St David Ltd  BLR 194 is not put forward as proof that partnering is a failed idea. It is not even evidence casting doubt on its validity. However, the issue as to whether an enforceable agreement of any kind existed was certainly disastrous for the parties and a principal cause of, and element in, the litigation. It left open the question as to whether there was an arbitration agreement between them for resolving disputes. It left open the question of the effect, if any, of the partnering charter. It left open the mechanism for payment.
Experiences like this and like those in some other well-publicised partnered project disputes have emphasised the need for certainty. They show the need for any partnering arrangement to be supported by an appropriate legal framework.
Partnering with a legal framework
Traditional contracts The natural starting point for many parties is to base their partnering arrangement upon a familiar form of contract. They may decide, for example, to enter into a contract on an I Mech E or ICE form and to supplement this arrangement with a partnering charter. Whilst this structure has the benefit of familiarity, care needs to be taken to ensure that the legal consequences of this arrangement are in accordance with the parties’ intentions. The traditional forms of contract are strictly bilateral, so there is no ‘team’ arrangement beyond the partnering charter. Moreover, the partnering charter and the form of contract need to be consistent. Careful drafting of the partnering charter and appropriate amendment to the underlying contract are therefore required. This is so even where the partnering charter is expressed to be non-binding: as noted in Birse v St. David such a charter “clearly intended to provide the standards by which the parties were to conduct themselves and against which their conduct and attitudes were to be measured”. The terms of the partnering charter are, therefore, to be taken into account in the interpretation of the contract.
There is an obvious contrast, to put it no more strongly, between the language employed in traditional contracts, which assumes the need to protect the rights of a party against infringement by the other party, and that in a partnering charter, which assumes that all parties are committed to a single goal and to looking after each other’s interests as well as their own. This has led some parties to conclude that a traditional form of contract is not an appropriate starting point for partnering. Thus it is that a number of specialised contractual products have been produced, as well as purpose-built contracts developed for individual partnered projects.
Use of innovative contract forms for partnering The New Engineering Contract (NEC) was introduced by the Institution of Civil Engineers (ICE) as an alternative to the more traditional engineering forms of contract. Its innovative use of simple language and narrative, and present tense