A paper given to the Society of Construction Law Hong Kong on 7 May 2002
The paper discusses the use of relationship contracting to address the adversarial nature of conventional construction contracts. It is recognized that the lump sum method of remuneration in traditional contracting is the main cause of disputes in construction contracts, because it sets the respective interests of employer and contractor in opposition. Relationship contracting is a new approach as it seeks to re-align the respective interests of employer and contractor. The paper examines the advantages and disadvantages of five forms of alternative project delivery under the generic title of relationship contracting, namely partnering, project alliancing, strategic alliancing, management contracting and a Comprehensive Maintenance Contract (CMC) used in defence contracts.
Partnering charter – good faith and co-operation – project alliance agreements – formal alignment of commercial interests – sharing of risk/reward by performance or incentive remuneration – KPIs –no blame/dispute clause and alliance board – liability – strategic alliance and long term nature of – managing contracting role and risks compared with traditional design and construct contracts – hybrid model of Defence CMC.
The author: Doug Jones is a partner of Clayton Utz in Sydney, Australia.