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style attracted those who were critical of the traditional forms, which were seen as inaccessible and legalistic. The NEC was regarded as suitable for partnering arrangements because of its general ethos. Clause 10.1 provides, for example: “The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation. The Adjudicator shall act as stated in this contract and in a spirit of independence.” More specifically, the NEC Contract included such features as an early warning system and contemplates the use of a programme as a proactive management tool.

The NEC suite goes further than this. Option X.12, the Partnering Option, is intended for partnering between more than two parties working on the same project or programme of projects. It includes provisions for the creation of a Core Group, the use of common information systems and the payment of incentives upon achievement of Key Performance Indicators (KPIs). Option X.12 is not, however, a multiparty contract. Instead, the client is to enter into a series of bilateral NEC contracts with each participant and with Option X.12 included in a form common to each separate contract. This approach gives rise to difficulties in the enforcement of provisions such as Clause X.12.3 which provides as follows:

“A Partner may ask another Partner to provide information that it needs to carry out work in his own contract and the other party provides it.”

A contractor/consultant may not enforce such provisions directly against another contractor/consultant in the absence of any bilateral contract between them. There is also no means for the consolidated resolution of disputes.

Whilst reservations can be expressed about the bilateral structure in Option X.12, NEC has made a significant contribution to the cause of partnering. This has continued with the NEC 3rd Edition which includes a Risk Register for use as a project management tool in the proactive avoidance and management of risk. The NEC 3rd Edition suite also includes a Term Service Contract and a Framework Contract which may be used as the basis for long term partnering.

The lesser known Be Collaborative Contract also includes a Risk Register. A Risk Allocation Schedule is also provided, which enables the parties to allocate the consequences of a risk on a percentage basis instead of allocating the entire consequences of a risk to one of the parties, as would usually be the case. There is also an ICE Partnering Addendum, published in 2003, for use with the latest editions of the ICE’s bi-party engineering and consultancy agreements, which adopts a similar approach to NEC Option X.12.

In concluding this brief review of contractual products available for consideration for use on partnered projects, reference should be made to those prepared by the Association of Consultant Architects (ACA) for use in construction projects.

PPC 2000 is the ACA Standard Form of Contract for Project Partnering and is a multiparty partnering contract. In 2003, the authors claimed that in its first 2½ years of use it had been adopted on projects with a value of over £5 billion. Its purpose, as stated in the ACA Guide, is to act as “a process document, commencing at the earliest point in the formation of a team and acting as a hub to describe the practical working relationships between project team members and the practical processes necessary to develop designs, manage risk, formulate a full supply chain and procure a completed project”.

SPC 2000 is the ACA Standard Form of Specialist Contract for Project Partnering, which is intended to be entered into between the Contractor and its Specialist Sub-Contractors. SPC 2000 is intended for use with PPC 2000, because the latter does not deal with sub-division of performance and supply of sub-division of the performance and supply of services, works and goods by specialist sub-consultants, sub-contractors and suppliers or with sub-division of payments to them by the contractor.

TPC 2005 is the ACA Standard Form of Contract for Term Partnering, being the equivalent of the NEC Term Service and Framework Contracts.

Specific issues in Partnering/Alliancing

Pain/Gain Sharing Agreements One of the techniques used in collaborative arrangements to encourage co- operative working is the Pain/Gain sharing agreement, whereby the parties can both (all) achieve benefits by efficient working and agree to share, or at least pre-allocate, the consequences of failure to meet KPIs. These techniques can provide effective incentives to the parties, but the case of Alstom Signalling Ltd v Jarvis Facilities Ltd [2004] EWHC 1285 is a reminder that the legal machinery to make them work must be put in place; the provisions will not be implied from the parties’ intentions.

The parties had begun to work out the Pain/Gain Share agreement:

If the ‘Final Cost/Price’ came in below the adjusted ‘Target Cost/Price’, the gain would be shared by Railtrack (the client), Alstom (the contractor) and the sub- contractors, of whom Jarvis was one.

If the Final Cost/Price was up to £500,000 above the Target Cost/Price, Alstom and Railtrack would share the initial ‘pain’.

However, the dispute which came to the TCC was over the extent to which Jarvis, to whom much of the work was sub-contracted, had agreed to participate in losses above this figure. The parties had agreed that the Pain/Gain Share arrangements should extend to the sub-contract but had been insufficiently specific as to how they would operate there. In the end, the pain/gain share mechanism failed and Alstom’s argument that it should be regarded as an essential implied term failed too.

Open book accounting In circumstances where the whole or part of the contractor’s reimbursement is based on actual expenditure, it is assumed that the employer is entitled to see the Contractor’s books and payment records to verify the expenditure claimed. There are two main reasons for this. First, it is an essential part of the spirit of trust and co-operation that one of the parties is not concealing information from the other to try to obtain an advantage. More specifically, open book accounting is intended to eliminate or at least reduce the scope for contentious claims, which overcome some projects run under traditional contracts, since the employer will only be paying on the basis of objectively verifiable evidence and not seeking to resist a skilfully constructed claim.


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