CONTINUING PROFESSIONAL DEVELOPMENT

Maximum Period 6 Hours

PARTNERING CONTRACTSCOMPARED

By

Roger Knowles

PARTNERING CONTRACTS

PUBLIC SECTOR PARTNERING CONTRACT (PSPC)

PPC2000

ECC

Be COLLABORATIVE CONTRACT

INDEXPage

PSPC CONTENTS

PPC2000 CONTENTS

ECC CONTENTS

Be COLABORATIVE CONTRACT CONTENTS

CONTRACTS ON OFFER

CLAUSE BY CLAUSE COMPARISON

Parties To The ContractEmployer’s Professional AdvisersContract DocumentsPartnering ObligationsAllocation of RiskActivities Undertaken Before A Contract Is ConcludedKPIs and Continuous ImprovementValue Engineering And Value ManagementProgrammeEarly Warning MeetingsPartnering Team MeetingsInstructions To The ContractorCommencement and CompletionContract PriceOpen Book AccountingGrounds For Extension Of TimeProcedures Relating To The Granting Of Extension Of TimeAdditional Costs Arising From DelayLiquidated / Delay / Late Completion DamagesVariations And ChangesIncentives / Pain Share Gain ShareProblem Solving And Dispute Resolution

APPENDIX

Extension of Time Comparison

PSPC

CONTENTS

DOCUMENT REF

Introductory Notes PSPC

Partnering Agreement PSPC P

Option 1 Term MaintenanceMeasure and Value PSPC 1

Option 2 Term MaintenanceTarget Cost with Cost Reimbursable PSPC 2

Option 3 Authority DesignLump Sum PSPC 3

Option 4 Contractor DesignLump Sum PSPC 4

Option 5 Authority Design Target Cost with Cost Reimbursable PSPC 5

Option 6 Contractor DesignTarget Cost with Cost Reimbursable PSPC 6

Option 7 SubcontractLump Sum PSPC 7

Option 8 SubcontractTarget Cost with Cost Reimbursable PSPC 8

Option 9 Professional Services PSPC 9

Option 10 Prestart Agreement PSPC 10

Schedule of CostsFor Use with Option 2, 5, 6 or 8 PSPC SC

Fluctuation Rules PSPC F

PPC2000

CONTENTS

1 Project and Partnering Team Members2 Partnering Documents3 Communication and Organisation4 Partnering Objectives5 Client Representative and Partnering Adviser6 Partnering Timetable and Project Timetable7 Health and Safety, Site Welfare and Employees8 Design and Process Development9 Intellectual Property10 Supply Chain11 Volume Supply Agreement12 Prices13 Incentives14 Pre-Conditions to Start on Site15 Project on Site16 Quality and Environment17 Change18 Risk Management19 Insurance and Security20 Payment21 Project Completion and Support22 Duty of Care and Warranties23 Key Performance Indicators and Continuous Improvement24 Joint Initiatives and Strategic Alliancing25 General26 Termination27 Problem Solving and Dispute Avoidance or Resolution28 Special Terms

Appendix 1Definitions

Appendix 2Form of Joining Agreement

Appendix 3Part 1 – Form of Pre-Possession AgreementPart 2 – Form of Commencement Agreement

Appendix 4Part 1 – Insurance of Project and SitePart 2 – Third Party Liability InsurancePart 3 – Professional Indemnity or Product Liability InsurancePart 4 – Insurance – General

Appendix 5Part 1 – ConciliationPart 2 – AdjudicationPart 3 – Arbitration (if applicable)

ECC

CONTENTS

Schedule of Options

Core Clauses 1 General2 The Contractor’s Main Responsibilities3 Time4 Testing and Defects5 Payment6 Compensation Events7 Title8 Risks and Insurance9 Disputes and Termination

Main Option Clauses A Priced Contract with Activity ScheduleB Priced Contract with Bill of QuantitiesC Target Cost with Activity ScheduleD Target Cost with Bill of QuantitiesE Cost Reimbursable ContractF Management Contract

Secondary Option Clauses G Performance BondH Parent Company GuaranteeJ Advanced Payment to the ContractorL Sectional CompletionM Limitation of the Contractor’s Liability for his Design to

Reasonable Skill and CareN Price Adjustment for InflationP RetentionQ Bonus for Early CompletionR Delay DamagesS Low Performance DamagesT Changes in the LawU The Construction (Design and Management)

Regulations 1994V Trust FundZ Additional conditions of Contract

Schedule of Cost Components

Shorter Schedule of Cost Components

Contract Data

Be COLLABORATIVE CONTRACT

CONTENTS

1 Working Together

2 Primary Obligations of the Purchaser

3 Primary Obligations of the Supplier

4 Allocation of Risk

5 Measurement of Performance

6 Payment

7 General Terms

8 Definitions

CONTRACTS ON OFFER

When the idea of partnering was first suggested as a procurement process it was considered by the likes of Sir John Eagan that there would either be no need for a contract at all, or the existing forms would suffice. Partnering is built upon relationships and as such it was suggested that the contract conditions have little part to play in the success of the project.

It soon became clear in both the public and private sectors that to have no contract at all would be totally unacceptable and that the existing standard forms in an unamended state would not be adequate for the purpose of partnering.

Various methods have been used to provide contractual arrangements to suit a partnering environment which include the following:

1. JCT Practice Note 4The JCT has not produced any amendments to its contracts to accommodate partnering. However it has issued Practice Note 4. The Practice Note recommends that the parties enter into a non-binding Partnering Charter. A JCT Non-Binding Partnering Charter for Single Project has been included in the Practice Note. It concluded that a Binding Partnering Agreement for Single Project or Strategic Partnering for use in connection with existing forms of contract was an inappropriate mix of concepts and could lead to extensive difficulties in practice.

2. ECC Partnering Option X12The Partnering Option advises that a partnering contract is achieved by using a standard ECC contract together with the Partnering Option X12. This places the partnering option as a supplement to an ECC contract and is intended for use between more than two parties working on the same project who are intended to make up the project partnering team. It is not the intention to duplicate the provisions of the ECC option which has been chosen, but to supplement it to accommodate the partnering ethos.

3. ICE Conditions of Contract Partnering AddendumThis addendum works in a similar fashion to the Partnering Option X12 used with the ECC. It can be used with the ICE conditions and consultancy and subcontract agreements produced by the ACE and CECA. The partnering contract acts as an addendum to the contract between for example employer and contractor or contractor and subcontractor and is entered into by all members of the partnering team. It has many aspects of Option X12 with regards to partnering objectives. Schedules are also provided for Partners, Core Group Members, Partnering Objectives, Partnering Operation and Documents, Partnering Risk Management Arrangements and Partnering KPIs / Incentive Arrangements.

4. PPC2000 PPC 2000 was the first standard form of Project Partnering Contract. It provides a foundation and route map for the partnering process and can be applied to any type of partnered project in any jurisdiction.SPC 2000 was the first standard form of Specialist Contract for Project Partnering. It allows the main contractor to enter into contracts with its subcontractors including those subcontractors who also sign PPC 2000 in a manner consistent with PPC 2000 which further integrates the agreed relationships and processes.

5. Perform 21

Perform 21 has been designed for Partnering and Best Value in the public sector. It consists of the Public Sector Partnering Contract PSPC and The Local Government Best Practice Toolkit. PSPC is an uncomplicated set of conditions which sets out the basic rights and obligations of the parties making it clear which party carries the essential matters of risk. The overriding ethos is that of simplicity and ease of useThe key contract is the Partnering Agreement. It is intended that the authority and main contractor together with consultants and subcontractors who make up the partnering team will enter into this agreement.

There are ten options which accompany the Partnering Agreement comprise:

1. Term Maintenance – Measure and Value2. Term Maintenance – Target Cost with Cost Reimbursable3. Authority Design – Lump Sum4. Contractor Design Lump Sum5. Authority Design – Target Cost with Cost Reimbursable6. Contractor Design – Target Cost with Cost Reimbursable7. Subcontract – Lump Sum8. Subcontract – Target Cost with Cost Reimbursable9. Profession Services10. Pre-start Agreement

The PSPC contains very little in the way of procedures. Procedures which are part of the Partnering and Best Value process are all contained in the Local Government Best Practice Toolkit. The Toolkit comprises a Project Process Map made up of ten stages commencing with the identification of the project and ending with the post construction phase.

6. Be Collaborative ContractsThe contract is for the supply of construction related services. The overall aim of the contract is to provide a framework which underpins collaborative working which is contractually binding. The key documents comprise a Purchase Order and Collaborative Construction Terms, and requires the purchaser and supplier to collaborate. Whilst it is styled as a contract in fact it is a set of conditions which can be incorporated into a contract. The intention is that the Purchaser will issue the Purchase Order into which the Collaborative Contract Terms will be incorporated by reference.

CLAUSE BY CLAUSE COMPARISON

Parties To The Contract

PSPC The Partnering Agreement is intended to be signed by all the members of the partnering team. Signatures are added on a rolling basis as parties join the team. There is an expressed term in the Partnering Agreement under which all those who sign the Agreement will be required to enter into a contract for the construction of the project. Options 1 to 9 comprise the alternative contracts for the construction of the works. They include main contracts, subcontracts and a professional service agreement. The contracts which make up Options 1 to 9 have only the two parties.

PPC 2000This is a multi-party contract relating to a single project whereby the client, constructor and the client’s appointed advisers work together under the same terms and conditions. All or certain of the constructor’s subcontractors can also sign PPC 2000 as members of the partnering team. SPC2000 can be used in respect of specialist work undertaken by either those subcontractors who have entered into PPC 2000 or those who haven’t.

ECC Option X12Option X12 is used for partnering between more than two parties on the same project. The parties will have entered into one of the Primary Options for the construction of the works under which they will be paid for their services. In like manner to the PSPC the option is used for partnering between more than two parties working on the same project and who will make up the partnering team.

Be The parties to the contract are the Purchaser and Supplier. There is reference to the Project Team in clause 1.2 comprising the Client and those Suppliers who are considered by the Client to be of key importance. The Client is defined as the person identified in the Purchase Order who is procuring the project. It would appear that the Client and Purchaser may be one and the same but not necessarily so. However only the Purchaser and Supplier are parties to the contract.

Employer’s Professional Advisers

PSPCThe only Professional Adviser named in the contract is the Contract Administrator. The duties of the Administrator include the issuing of instructions and certificates, the granting of extensions of time and the like.

PPC2000Clause 5 sets out the functions and duties of the Client’s Representative. A Partnering Adviser is provided for whose duties are also set out in clause 5. There is also provision for a Design Team Leader whose duties are included in clause 8.

ECC Option X12The Project Manager is the person engaged by the Employer who is bestowed with all the main powers necessary to properly administer the contract. The issue of instructions, certificates granting of extensions of time and the like fall within the remit of the Project Manager

A Supervisor is provided whose duties revolve around identifying defective work and issuing instructions with regard to carrying out tests.

BeA Purchaser’s Representative is referred to in clause 2.5 who will have authority to act on the Purchaser’s behalf in relation to the project.

Contract Documents

PSPCThe contract documents vary dependant upon which option has been selected. For example the Authority Design Lump Sum contract lists the following as contract documents in Article 5:

Articles of Agreement Contract Drawings Specification Terms and Conditions Appendix Priced Documents

The Contractor Design Lump Sum contract provides a similar list of contract document but with Contract Drawings and Specification replaced with Authority Requirements and Contractor’s Proposals.

PPC 2000The contract documents are referred to as Partnering Documents in clause 2.2 and comprise the following:

Project Partnering Agreement Partnering Terms Partnering Timetable Project Brief Project Proposals Price Framework Consultants Services Schedules Consultants Payment Terms KPIs Any additional or amended Partnering Documents

ECC ContractThe essential documents of an ECC contract are:

Contract data-part one-provided by the Employer The contractor’s pricing document Conditions of contract Main options stated Secondary options stated Works information with input as appropriate from The employer The contractor Site information provided by the employer Contract data-part two-provided by the contractor Form of tender

Letter of acceptance

BeNo documents are specifically referred to as contract documents. The contract however is defined as:

“The agreement between the purchaser and the supplier relating to the provision of the services comprising the purchase order, these terms (Collaborative Construction Terms) and any other documents referred to in the purchase order”.

Partnering Obligations

PSPCThe partnering obligations are set out in the Partnering Agreement PSPC P. Clause 2 requires the partners to deal fairly with each other and work together in a spirit of mutual trust, good faith and co-operation. There is also provision for the appointment of a Core Group and its role. The Appendix includes space for the details of the Partnering Charter to be set out.

PPC 2000Clause 4 sets out the partnering objectives which include trust, fairness, mutual co-operation, dedication to agreed common goals and an understanding of each others expectations and values. There is also provision in clause 3 for the appointment of a Core Group and its role. The Partnering Charter is classed as a Partnering Document in clause 2.6.

ECC Contract Clause X12.1 requires each partner to work with the other partners to achieve the client’s objectives as stated in the contract data and the objectives of every other partner stated in the Schedule of Partners. A Schedule of Core Group Members is included in Option X12 whose duties are set out in clause X12.5 (5).BeClause 1.1 sets out the Overriding Principle which explains that it is the intention of the purchaser and supplier to work together with each other and with all other project participants in a co-operative and collaborative manner in good faith and in the spirit of mutual trust and respect.

Allocation Of Risk

PSPCThe allocation of risk between the parties is dealt with in the Project Process Map as part of Stage 3.

PPC2000The Partnering Team is required by clause 18.1 to work together and individually through risk management exercises, and otherwise in accordance with the Partnering Documents, to analyse and manage risk in the most effective ways.

ECCThere is no specific reference to the allocation of risk.

Be

There is extensive coverage in clause 4 regarding the allocation of risk. Provision is made for the Purchase Order to make the Supplier responsible for the production of a risk register, its update and amendment.

Before the date of the Purchase Order the Supplier and Purchaser will have completed the form of Risk Allocation Schedule referred to in the Purchase Order.

Key Personnel

PSPCEach of the 10 options provides in the Appendix for the Key Personnel to be named. Any substitutes must be of equivalent ability and qualifications.

PPC2000There is no specific reference to Key Personnel.

ECCThere is no specific reference to Key Personnel.

BeThe Purchaser is required by clause 3.9 to engage the Key Personnel named in the Purchase Order. They cannot be replaced without the approval of the Purchaser. Any replacement must be suitably qualified to perform the relevant role.

Activities Undertaken Before A Contract Is Concluded

In keeping with the more modern approach to procurement it is common practice to bring into the decision making process the contractor and supply chain partners. It is therefore advisable for those involved to enter into some form of written agreement so that each partner is familiar with its rights and responsibilities.

PSPCOption 10 is a Pre-start Agreement which is entered into by the Authority and the Contractor, Consultant, Specialist or any other member of the supply chain referred to as “the Contractor” Appendix Part 1 lists the types of services which may be required and includes such matters as

1. Preparation of a Strategic Brief2. Advise on EC advertising3. Advising on a procurement route4. Development of a target cost5. Risk Management workshop6. Start-up workshop7. Undertaking design work

There is a space to include any services in addition to those specifically set down.

Payment for the services provided under this agreement are made in accordance with the Schedule of Costs. There is no provision however for the recovery of profit

PPC2000Appendix 3 Part 1 comprises the Form of Pre-Possession Agreement. Only the Client and Constructor enter into this agreement. There is space in clause 2 to enter the Pre-Possession Activities. Clause 4 allows the parties to indicate the amount of money to be paid to the Constructor for the Activities undertaken in accordance with the Agreement.

ECCThere is no specific reference in the ECC contract to pre-contract activities.

BeThere is no specific requirement to pre-contract activities.

KPIs and Continuous Improvement

PSPCStage 6 of the Project Process Map Contractor Selection has under a heading Post Tender Negotiations an item for Determining KPIs. The intention is to have all KPIs agreed before work commences. Stage 9 which is the Construction Phase requires the KPIs to be monitored and reviewed.

PPC2000

1. Clause 23.1 requires all KPIs which have not been finalised at the date of the Project Partnering Agreement to be finalised by the Core Group and approved by the Client in accordance with the Partnering Timetable as a precondition to implementation of the project on site.

2. Each Partnering Team member is required in compliance with clause 23.2 to provide the Client’s Representative with open book information to demonstrate progress against KPIs.

3. The Partnering Team members in accordance with clause 23.2 are to work together to maximise through measurable continuous improvement the potential for the project to achieve the objects set out in clause 4.

4. Clause 23.6 requires all the Partnering Team to attend a meeting after the project has been completed to review the completed project and the performance against the KPIs.

ECCThe Schedule of Partners in the Partnering Option provides for KPIs. There can be more than one KPI for each Partner or the KPIs may apply to one or several of the Partners. A Partner is paid the amount stated in the Schedule of Partners if the target stated for a KPI is improved or achieved. An example of a KPI is given in the Partnering Option.

BeClause 5 deals with measurement of performance. KPIs relevant to both Purchaser and Supplier are to be set out in the Purchase Order. The KPIs will be monitored against the performance criteria set out in the Purchase Order and formal reviews are to take place monthly.

Value Engineering And Value Management

PSPCValue Management and Value Engineering are provided for in the Project Process Map as part of Stage 4 Project Preparation and Stage 8 Design Development

PPC2000Clause 8.8 requires the Lead Designer with input from other members of the design team to amend design as necessary to adopt the results of Value Engineering exercises.

ECCThere is no specific reference to Value Engineering or Value Management.

BeThere is no specific reference to Value Engineering or Value Management.

Programme

PSPCThe preparation of the programme takes place during the Design Development Stage of the Project Process Map. It is reviewed and updated during the remaining Stages until completion of the work

PPC2000There is reference to a Partnering Timetable which governs the activities of the Partnering Team members in relation to the Project prior to the date of the Commencement Agreement. The Project Timetable is agreed in accordance with clause 6 of the contract for implementation of the Project after the date of the Commencement Agreement.

ECCThe contract is very much programme lead. Clause 31 provides in detail the sort of information which must be included in the programme. Each compensation event which may give rise to an entitlement to an extension of time and additional cost must be the subject of a quotation before implementation. If there is likely to be a delay to completion then the quotation must be accompanied by a revised programme.

Clause 50.3 is unusual in that one quarter of the Price for Work Done is deducted when the Project Manager assesses the sums due for certification during the period during which the contractor has failed to produce a programme. This is hardly in the spirit of partnering.

BeClause 3.14 provides for a project programme if so required by the Purchase Order. It is to be prepared by the Supplier who will be responsible for its monitoring and update.

Early Warning Meetings

PSPCClause 5 of the Partnering Agreement requires each partner to give an early notice to the other partners when aware of any matter which may cause delay or impair performance in achieving the objectives set out in the Partnering Charter.

PPC2000Clause 3.7 requires the Partnering Team to operate an early warning system whereby each member of the Partnering Team is required to notify the others as soon as it is aware of any matter adversely affecting or threatening the project. The clause goes on to add that the Clients Representative is to convene a meeting of the Core Group within 5 working days to agree an appropriate course of action.

ECCThe Contractor and Project Manager are required by clause 16.1 to give early warning notification to the other as soon as either becomes aware of any matter which may increase the total of the prices, delay completion or affect the performance of the works. Their obligation is to co-operate in making and considering proposals for how the effect of notified matters can be avoided or reduced.

BeThere is no specific reference to early warning meetings. The broad terms of the Overriding Principle in clause 1.1 however would include arranging early warning meetings.

Partnering Team Meetings

PSPCThere is no specific reference in the conditions of contract to a requirement for partnering meetings to be held. This is a part of the procedure which is catered for by the Perform 21 Best Practice Toolkit.

PPC2000Clause 3.8 provides for meetings of Partnering Team members to be convened by the Clients Representative at the request of any Partnering Team member or as required by the Partnering Documents. Five days notice is needed and an agenda produced. The meeting can only deal with the matters included in the agenda.

ECCClause 16.1 provides for either the Project Manager or the Contractor to require the other to attend an early warning meeting to which each may invite others. This apart there is no specific reference to Partnering Team meetings.

BeClause 3.14 requires the supplier to be responsible for arranging regular progress meetings of the Project Team if required by the Purchase Order.

Instructions To The Contractor

PSPCThe contractor is required to comply with all reasonable instructions issued by the Contract Administrator in regard to the Works. In most of the options this power is included in clause 7. In addition the Contract Administrator may instruct the Contractor to remove an employee who is engaged on the site; however it must not be unreasonable or vexatious.

PPC2000Clause 5.3 gives the Clients Representative the power to issue instructions to the Constructor. They must however be consistent with the Partnering Documents and must not prejudice the collaborative spirit of the partnering relationship. The Constructor has the authority to notify the Clients Representative within two working days if it is considered that the instruction is contrary to any Partnering Document or otherwise detrimental to the best interests of the project.

ECCThe Contractor in accordance with clause 29 is required to obey instructions in accordance with the contract which are given by the Project Manger or the Supervisor.

BeThe word Contractor is not used; reference is made to the Supplier who is responsible for delivering the services. Clause 3.8 requires the Supplier to comply with all reasonable instructions in writing from the Purchaser or Purchaser’s Representative in respect of the project.

Commencement And Completion

PSPCThe requirements regarding commencement and completion in most of the options are set out in clause 12.0. Commencement occurs on the Commencement Date indicated in the Contract Administrator’s instruction to commence. This instruction must be sent to the Contractor within 28 days of the award of the contract. All work must be completed within the contract period stated in the Appendix. Provision is made for the work to be completed in Sections and space is provided in the Appendix for the periods for completion of each of the Sections.

PPC2000Clause 15.1 requires all the Partnering Team to enter into a Form of Commencement Agreement. This Agreement gives the Date of Possession and the Date for Completion. There is provision for completing the project in sections.

ECCThe Possession Date is stated in the Contract Data - Part One. Completion to comply with clause 30 must be achieved on or before the Completion Date. Provision is made for possession to be given of parts of the site. There is provision for the Contractor to decide the Completion Date for the whole of the works and where this applies the Completion Date is given in the Contract Data Part Two.

BeThe Date or Dates for Completion are specified in the Purchase Order as indicated in clause 8 – Definitions. There is no specific reference to a Commencement Date, however it is anticipated that the Commencement Date will be agreed by the Purchaser and Supplier and included in the Project Programme described in clause 3.14.

Contract Price PSPCWhere the contract is based upon a lump sum as in options 3, 4 and 7 a Contract Sum is included in the Agreement. In the case of those options which provide for a Target Cost with Cost Reimbursable as in options 2, 5, 6 and 8 the Contractor is paid his admissible costs plus a fee. A Target Cost is given in the Agreement.The Partnering Agreement makes provision in Appendix Part 5 for the inclusion of a Guaranteed Maximum Price. Clause 11 of the Terms and Conditions requires all the Partners to use their best endeavours to ensure that the Guaranteed Maximum Price is achieved.

PPC2000There is no provision for including a lump sum price in the contract for carrying out the work. Clause 12.3 allows for prices for all aspects of the project to be developed and agreed by reference to the Price Framework and other Partnering Documents. This enables an agreed maximum price to be established which should fall within any budget stated in the Price Framework.

ECCWhere Primary Options A and B apply a lump sum is provided in Part Two of the Contract Data and referred to as the Tendered Total of Prices. There is no lump sum where Primary Options C, D E and F apply instead the contractor is reimbursed the actual costs plus the fee. There is no reference to a Guaranteed Maximum Price.

BeSection 6 includes two alternatives. The first, Alternative A, includes for the Supplier to be paid the Actual Cost be reference to the Target Cost. Alternative B is for the payment of the Contract Sum. There is provision for a Guaranteed Maximum Price to be included in the Purchase Order which may be subject to revision in accordance with clause 4 which deals with the allocation of risk.

Open Book Accounting

PSPCOptions 2, 5, 6 and 8 are all Target Cost With Cost Reimbursable and provide for open book accounting. For example, clause 5 requires the contractor to provide copies of all records, costs supply and subcontract invoices subject to seven days’ notice. The Authority is entitled to carry out a full audit subject to 14 days’ notice.

PCC2000Each Partnering Team Member will allow the Client’s Representative to visit its offices to inspect its financial records at any time subject to reasonable prior notice, as provided for in clause 20.12

ECCThe Project Manager can inspect the Contractor’s accounts and records at any time in accordance with clause 53 Options C, D and E where payment is on an actual cost basis.

BeClause 6.1 requires the Supplier to keep detailed records of Actual Cost incurred in a fully auditable manner which are to be made available to the Purchaser whenever reasonably required.

Grounds For Extensions Of Time

The grounds for extensions of time as provided for in PSPC, PPC2000, ECC and Be are compared in Appendix 1. They are referred to as compensation events in the ECC and relief events in Be.

Procedures Relating To The Granting Of Extensions Of Time

PSPCThe procedure leading to the granting of an extension of time is minimal. Clause 14 in most options requires the Contractor to provide details and particulars to demonstrate that completion has been delayed by one or more of the causes set out in the contract. The amount of detail should be to the extent that the Contract Administrator reasonably requires.

PPC2000The procedure as required by clause 18.3 comprises:

1. The Constructor notifies the Client’s Representative as soon as it becomes aware of any of the events giving rise to an entitlement

2. Appropriate evidence and detailed proposals consistent with the Partnering Documents for overcoming the problem and minimising the adverse effects on time cost and quality are to be sent

3. The proposals to be implemented within 2 working days unless the Client’s Representative instructs otherwise

4. The Client’s Representative to respond within 20 working days 5. The response to include a fair and reasonable extension of time if appropriate6. If the Client or Constructor disputes the extension of time award then the dispute

must be notified in accordance with clause 27.1 within 20 days of the Client’s Representatives response.

Where a delay has occurred as a result of a default or failure of the Client or any Consultant as referred to in clause 18.3(1) the Constructor’s entitlement to an extension of time is subject to the him having given an early warning under clause 3.7. This suggests that a failure to serve a warning notice could lose the Constructor the right to an extension of time which is not in the spirit of partnering.

ECC The procedure relating to the granting of an extension of time is complicated. All grounds for extensions of time are referred to as compensation events. They give the Contractor an entitlement to both an extension of time and additional cost. The underlying principle is that the effects of a compensation event in terms of time and money should be ascertained in advance of the matter taking effect. The procedures which are set out in clauses 61, 62, 63 and 64 are briefly described as follows:

1. The Project Manager notifies the Contractor of a compensation event which arises from an instruction at the time of the event. He also instructs the Contractor to submit a quotation of the effect of the event in terms of time and money. The Contractor puts the instruction into effect

2. The Contractor may notify the Project Manager of an event which he considers is a compensation event if not already notified by the Project Manager. This notification must be within two weeks of him becoming aware of the event

3. If the Project Manager considers that the event is a compensation event he instructs the Contractor to submit a quotation within one week of the Contractor’s notification

4. If the Contractor is required to submit a quotation he must do so within three weeks of being instructed.

5. The Project Manager replies within two weeks of the submission6. If the programme for the remaining work is affected by the compensation event the

Contractor includes a revised programme in his quotation7. If the Contractor does not submit a quotation as instructed or the Project Manager

disagrees with the Contractor’s assessment then the Project Manager assesses the compensation event.

An unusual aspect of the ECC contract with regard to the granting of extensions of time occurs in clause 63.3. Under the terms of this clause extensions of time are assessed as the length of time, due to the compensation event, planned completion is later than the planned completion shown on the Accepted Programme. Where a programme provides for an early completion the extension of time is calculated from the early Completion Date. Most other contracts provide for the assessment of delay to be measured against the Completion Date included in the contract.

BeClauses 4.6 to 4.12 provide seven distinct stages leading to the granting of an extension of time.

1. Clause 4.6 requires the Purchaser or Supplier to notify the other as soon as it becomes aware that a relief event has occurred.

2. Where the relief event affects another member of the Project Team, clause 4.7 requires the member to be promptly informed.

3. Not later than 14 days after the notification, the Supplier is required by clause 4.8 to provide a statement setting out in as much detail as reasonably practicable the effect on cost and the Date or Dates for Completion.

4. The Supplier is required by clause 4.9 to provide any additional information reasonably required by the Purchaser.

5. Clause 4.10 requires the Purchaser and Supplier to use reasonable endeavours to agree the effects of the relief event referred to in the Supplier’s statement. There must also be co-operation to agree any action that reduces or minimises any adverse effect of the relief event.

6. If the Purchaser decides the effect of the relief event is too uncertain, it will agree with the Supplier the assumption to be made to enable an estimate to be calculated. Agreement will be made to any corrections needed at a later stage to the original estimate.

7. Any failure to reach agreement of the effects of a relief event will be resolved in accordance with the Dispute Resolution Procedure.

Additional Cost Arising From Delay

Where a delay to the completion of the work occurs there is almost always a resultant additional cost. Each of the three forms of contract under review has it own way of dealing with the situation

PSPCThe matter of additional cost which results from a delay to completion is approached in a simple manner. Options 1 and 2 which deal with Term Maintenance and Options 5, 6 and 8 which are Target Cost and Cost Reimbursable allow for additional cost to be certified and paid in respect of all delays which give rise to an extension of time entitlement. The grounds for extensions of time are set out in Appendix 1. Options 3,4 and 7 are all lump sum contracts which allow for additional cost to be certified and paid for all delays which give rise to an extension of time except: “Any matter outside the control or responsibility of the Contractor or of others employed

or engaged by the Contractor”

PPC2000Clause 18.5 provides for the reimbursement of Site Based Overheads where delay occurs which gives rise to an entitlement to an extension of time as set out in Appendix 1, except for the following reasons:

1. Delay in receipt of third party consents (ref 6)2. Weather conditions (ref 8)3. Delay by local authority or statutory body (ref 9)4. Loss or damage arising from Constructor’s insured risk (ref 11)5. Strike or industrial action (ref 12)6. Exercise of statutory power by government (ref 13)

ECCAll clause 60 compensation events which are set out in the Appendix entitle the contractor to an extension of time an additional cost.

BeAll relief events set out in the Appendix entitle the Supplier to an extension of time and additional cost.

Liquidated / Delay / Late Completion Damages

PSPCThere are no provisions for applying a prefixed amount of damages for late completion in the following options:

Option 1 Term Maintenance Measure and ValueOption 2 Term Maintenance Target Cost With Cost ReimbursableOption 9 Professional ServicesOption 10 Prestart Agreement

The other Options all provide for a prefixed amount of damages to be applied in the event of late completion. In the case of Options 7 and 8, which are the subcontracts, the late completion damages clauses are optional.

PPC2000There is no provision for a prefixed amount to be levied in the event of late completion.

ECCDelay Damages are provided for in Secondary Option R.

BeClause 7.10 provides for liquidated damages to be provided for in the Purchase Order.

Variations And Changes

Where contracts are based upon a lump sum the evaluation of variations and changes is employed to adjust the lump sum. In respect of contracts which provide for cost reimbursable and a target, the cost implications of variations and changes will be applied to adjust the target.

PSPCIn most of the options clause 15.0 deals with variations. The Contract Administrator may order a variation by way of:

1. Variation or modification of the design, quality or quantity of the work2. Addition to, omission from or alteration to the works

3. Change to the sequence of the works

The rates and prices in the Priced Documents are used where relevant or rates and prices adduced there from. If there are no suitable rates and prices then a fair valuation is applied.

A valuation of the variation may be agreed by the Contractor and the Contract Administrator before work commences.

PPC2000 Clause 17 deals with Changes as follows:

1. Any member of the Partnering Team may propose a change to the Client2. The proposed change will be considered by the Client and his representative advised

by other Partnering Team members.3. If approved the change will be notified by the Client to the Constructor4. The Client may propose a change.5. If the Client proposes a change the Constructor will within 10 working days submit a

proposal showing the effect of the change on the amounts payable and on the Agreed Maximum Price. In each case the calculation will be based upon the Price Framework.

6. The Client will consider the Constructors proposal with his representative advised by other relevant Partnering Team members. The intention being to reach agreement with the Constructor within 5 working days and for the Client’s Representative to instruct the Constructor to proceed.

7. The Client’s Representative may request the Constructor to withdraw the proposal.8. If agreement isn’t reached then the Clients Representative will ascertain the cost

effect on a fair and reasonable basis using where appropriate prices in the Price Framework.

9. If the Client considers a proposed change is sufficiently urgent the Client’s Representative will instruct the Constructor to proceed in advance of the aforementioned procedure which can be dealt with later.

ECCThe Works Information is set out in the Contract Data-Part One which is provided at tender stage by the Employer. It will usually include such matters as the drawings and specification or Employers Requirements. All changes and variations are classed as compensation events and dealt with under clause 60.1(1). All compensation events are priced in advance of the work being carried out in compliance with clause 62. The evaluation in all cases is based upon an assessment of the costs likely to be incurred.

BeThere is not specific reference to variations or changes to the Client’s Brief. Clause 3.8 however requires the Supplier to comply with the reasonable instructions in writing received from the Purchaser or Purchaser’s Representative relating to the Project.

Incentives/Painshare Gainshare

Many Partnering contracts provide for the Contractor to be paid in accordance with his recorded costs. This is often referred to as Open Book as the Contractor provides access to all his costs and accounts to the Clients Representatives. As an aid to efficiency Contractors are usually required to work to a Target cost. Any savings as a result of the final cost coming in at less than the Target are shared between the Contractor and the Client. Likewise any excess of cost over Target is shared. An exception is ProCure 21 which is used as a procurement route in the health sector. Where this system applies the health trust shares in any saving on cost but does not contribute to any excess.

PSPC1. Option 2 deals with Term Maintenance, Target Cost with Cost Reimbursable and

includes in clause 25 a Pain Share/Gain Share arrangement. Options 5 and 6 deal with Authority Design and Contractor Design respectively which under clause 20 have a Gain Share/Pain Share arrangement. Option 8 is the Subcontract which in clause 17 provides for Gain Share/ Pain Share.

2. The Term Maintenance option includes for calculating the target by measurement of the work included in the order with adjustments made in respect of variations and additional costs resulting from delay which entitle the contractor to an extension of time.

3. Options 5, 6 and 8 give no guidance as to how the target is to be fixed. Perform 21 which is the overarching procurement route has a Project Process Map which includes as part of Stage 5 Developing a Framework Process and Stage 6 Contractor Selection Process. These two stages include for deciding the methodology to be used in calculating the target. Adjustment of the target is provided for in clause 18 of options 5 and 6 and clause 21 of option 8. The affect of variations and the additional cost resulting from delays to completion, except delays due to matters outside the control or responsibility of the contractor, give rise to an adjustment of the target

4. The contractor’s costs are calculated in accordance with Schedule of Costs. A sharing of the saving or excess of costs is to be calculated in accordance with the percentage split set out in Appendix to each of the options.

PPC2000Clause 13.1 requires the Core Group to seek to agree incentives additional to any described in the Partnering Documents. The incentives are to be implemented by the Partnering Team in accordance with clause 13.2.

ECCClause X 12.4(1) of the Partnering Option indicates that the Partner is to be paid the amount stated in the Schedule of Partners if the target for the KPI is improved or achieved. In the Guidance Notes it states that there can be more than one KPI for each Partner and that KPIs may apply to one Partner or to several or all Partners. An example of a KPI is also set out in the Guidance Notes.

Options C and D provide for a Target Price to be fixed and the contractor paid his Actual Costs. He is also paid a share of the saving between Target Price and Actual Cost in accordance with clause 53.

Secondary Option Q provides a facility for the payment of a bonus for early completion.

BeClause 7.11 makes provision for a bonus for early completion to be specified in the Purchase Order.

Problem Solving And Dispute Avoidance

PSPCThere is a two day Partnering Workshop in Stage 5 Operational Detail of Framework Agreement when the Partnering Team meet and as part of the procedure they agree a problem solving and dispute avoidance process.

PPC2000

1. As soon as one of the Partnering Team becomes aware of a difference or dispute with another Partnering Team member he must give notice to the other member and send a copy to the Client’s Representative.

2. The Partnering Team member so advised guided by the Partnering Adviser applies the Problem Solving Hierarchy described in the Commencement Agreement. The employees named therein are required to express their views, propose their solutions within a timetable for trying to achieve a settlement.

3. If no agreement is reached the Client’s Representative convenes a meeting of the Core Group giving no more than 10 working days notice.

4. If the difference or dispute is not settled by the Core Group any Partnering Team member may refer it to conciliation or mediation or any other form of ADR recommended by the Partnering Adviser

5. This procedure is without prejudice to the right to refer the dispute or difference to adjudication.

ECCThere is no reference to problem solving or dispute avoidance in the ECC contract which is an omission in need of correction.

BeClause 7.28 requires the Purchaser and Supplier to resolve any dispute by direct negotiations between senior executives. Each of them to give serious consideration to any request by the other to refer the dispute to mediation if negotiations fail.

APPENDIX

Extensions of Time Comparison

PSPC Clause 14.0 in most optionsPPC2000 Clause 18.3ECC Clause 60.1 referred to as compensation eventsBe Clause 4 referred to as relief events

Ref Grounds for EOT PSPC PPC2000 ECC Be

1 Action, omission or default of

Authority / Employer / Client

14.1.1 18.3 (i)

18.3 (xiv)

60.1 (3)

60.1 (5)

60.1 (18)

4.5

2 Any matter outside the control

or responsibility of the

contractor

14.1.2

3 Contractor suspends work for

non payment

14.1.3 18.3 (xii) 60.7

4 Variations and changes 14.1.14 17.0 60.1 (1) 4.5

5 Discovery of antiquities 18.3 (ii) 60.1 (7)

6 Delay in receipt of third party

consents

18.3 (iii)

7 Change of law or regulation 18.3 (iv)

8 Weather conditions 18.3 (v) 60.1 (13)

9 Delay by local authority or

statutory body

18.3 (vi)

10 Opening up for inspection and

testing

18.3 (vii)

11 Loss or damage arising from

Contractor’s insured risk items

18.3 (viii)

12 Strike or industrial action 18.3 (ix)

13 Exercise of statutory power by

government

18.3. (x)

14 Failure by client / employer to

access or give possession on

time

18.3 (xi) 60.1 (2)

15 Use or threat of terrorism 18.3 (xiii)

16 Delay damage or obstruction

by specialist appointed by

18.3.(xv)

client

17 Any other event referred to in

Commencement Agreement

18.3 (xvi)

18 Project manager or supervisor

does not reply to contractor’s

communication on time

60.1 (6)

19 Project manager or supervisor

changes a decision previously

communicated to the

contractor

60.1 (8)

20 Project manager withholds an

acceptance for reasons not

stated in the contract

60.1 (9)

21 Supervisor instructs contractor

to search and no defect is

found

60.1 (10)

22 Test or inspection by

supervisor causes

unnecessary delay

60.1 (11)

23 Contractor encounters

unexpected physical conditions

60.1 (12)

24 Employer’s risk item 60.1 (14)

25 Project manager certifies take

over of part of the works

60.1 (15)

26 Employer does not provide

materials etc for tests as stated

in Works Information

60.1 (16)

27 Project manager notifies a

correction to an assumption

about the nature of a

compensation event

60.1 (17)

28 Inaccuracies in Bill of

Approximate Quantities

Appendix

2

29 Any risk referred to in the Risk

Allocation Schedule not

allocated to the Supplier

4.5

30 Any risk not referred to in the

Risk Allocation Schedule which

could not reasonably have

been foreseen and beyond the

control of the Supplier

4.5

TEST QUESTIONS AND ANSWERS

QUESTIONS

Question 1

Name the four contracts in common use which provide for partnering on construction projects.

Question 2

How do the contracts deal with Partnering obligations?

Question 3

How do the contracts deal with the allocation of risk?

Question 4

What provision is made in the contracts for undertaking activities before a formal contract is entered into?

Question 5

What provision is made in the contracts for bench marking and continuous improvement?

Question 6

What procedure is required by PPC2000 relating to the granting of an extension of time? How does this compare with PSPC?

Question 7

How do the contracts deals with liquidated, delay or late completion damages?

Question 8

How do the contracts deal with incentives?

Question 9

What provisions are there in the contracts for programmes?

Question 10

In what manner, if any, do the contracts deal with problem solving and disputes avoidance?

MODEL ANSWERS

Question 1

Public Sector Partnering ContractPPC2000ECC Option X12Be

Question 2

The PSPC requires the parties to deal fairly with each other and work together in a spirit of mutual trust, good faith and co-operation.

PPC2000 sets out the partnering obligations which includes trust, fairness, mutual co-operation, dedication to common goals and an understanding of each others’ expectations and values.

The ECC requires each partner to work with the other partners to achieve the client’s objectives as stated in the contract data and the objectives of every other partner stated in the Schedule of Partners.

The Be contract sets out the Overriding Principles which explain that it is the intention of the Purchaser and Supplier to work together with each other and with all other project participants in a co-operative and collaborative manner in good faith and in the spirit of mutual trust and respect.

The PSPC, PPC2000 and EC Option X12 all provide for the appointment of a Core group together with its duties.

Question 3

Allocation of risk under the PSPC is dealt with in the Bet Practice Toolkit which, together with the PSPC comprises Perform 21.

Under PCC2000 the Partnering Team is required to work together and individually through risk management exercises and otherwise in accordance with the Partnering Documents to analyse and manage risk in the most effective manner.

Be contains extensive coverage of how risk is to be allocated. The Supplier is required to produce a risk register and keep it up to date. These matters are all deal with in the Purchase Order.

There is no specific reference to risk allocation in the ECC.

Question 4

PSPC provides for a Pre-Start Agreement to be used. There is a list of typical services which the contractor may be required to provide. These include:

Preparation of a Strategic BriefAdvising on EC advertising

Advising on a procurement routeDeveloping a Target CostUndertaking risk management and start up workshopsUndertaking design work

This is not an exclusive list as there are provisions for other non specified services to be added.

There is provision for payment in accordance with a Schedule of Costs but no allowance for profit.

A Form of Pre Possession Agreement is included in PPC2000. Space is provided to enter in the Pre-Possession Activities and the amount of money to be paid to the contractor for carrying them out.

The ECC and Be make no reference to activities to be undertaken before a formal contract is entered into.

Question 5

There is no specific reference to bench marking and continuous improvement in PSPC. However, provision is made in the Best Practice Toolkit under a heading Post Tender Negotiation for determining KPIs.

PPC2000 requires all KPIs which have not been finalised at the date of the Project Partnering Agreement to be finalised by the Core Group and approved by the Client in accordance with the Partnering Timetable as a precondition to implementing the project onsite.

All members of the Partnering Team must provide the Client’s Representative with open book information to demonstrate progress against KPIs. The Partnering Team is required to work together to maximise potential through continuous improvement which is subject to measurement to ensure the project achieves its objectives. Provision is also made for a review meeting after the project has been completed to compare performance against the KPIs.

The ECC provides for KPIs to be set out in the Schedule of Partners. There can be more than one KPI for each partner or the KPIs may apply to one or several of the Partners. Some element of payment is dependent upon achieving the KPIs.

In Be, KPIs relevant to both Purchaser and Supplier are to be set out in the Purchase Order. The KPIs are to be monitored monthly against performance when formal reviews are to take place.

Question 6

PPC2000 requires the contractor to notify the Client’s Representative as soon as it becomes aware of any event giving rise to an entitlement to an extension of time. The Contractor is also required to send appropriate evidence which supports its notice together with proposals to overcome the problem and minimise the effects on time, cost and quality. These proposals must be implemented within 2 working days unless the Client’s Representative instructs otherwise. It is the duty of the Client’s Representative to respond within 21 days and grant a fair and reasonable extension of time if appropriate.

The PSPC requirements are minimal in that the Contractor is required to provide details and particulars in sufficient detail as the Contract Administrator reasonably requires to demonstrate that the completion date has been delayed.

Question 7

There is no difference in essence between liquidated damages, delay damages and late completion damages. They are all provisions under which the contractor compensates the employer for completing late.

There is no provision in PPC 2000 for liquidated/ late completion or delay damages.

Secondary Option R in the ECC provides for the parties to include for delay damages if required.

The Be contract provides for liquidated damages to be provided for in the Purchase Order.

With regard to the PSPC there are no provisions for a prefixed amount of damages for late completion in the following options:

1. Option 1 Term Maintenance Measure and Value

2. Option 2 Term Maintenance Target Cost With Cost Reimbursable

3. Option 3 Professional Services

4. Option 10 Pre-Start Agreement.

The other PSPC options all provide a prefixed amount of damages to be applied in the event of late completion. In the case of options 7 and 8 which are the subcontracts late completion damages are optional.

Question 8

Pain Share / Gain Share

Many partnering contracts provide incentives for the contractor to reduce costs by paying the contractor on a cost reimbursable basis incentivised by the use of a target price. The target price is fixed before work commences and if the final costs are less than the target price the parties share the difference, sometimes referred to as a gain share, on a prefixed basis. Where the costs exceed the target price both the parties contribute to the overspend, sometimes referred to as a pain share, on a prefixed basis.

The PSPC provides for a pain share/gain share arrangement in the following options:

1. Option 2 Term Maintenance Target Cost With Cost Reimbursable

2. Option 5 Authority Design Target Cost With Cost Reimbursable

3. Option 6 Contractor Design Target Cost With Cost Reimbursable

4. Option 8 Subcontract Target Cost With Cost Reimbursable

The ECC provides for a gain share/pain share in the following options:

1. Option C Target Cost With Activity Schedule

2. Option D Target Cost With Bill of Quantities

Bonus

Some contract include for the payment of a bonus for meeting prefixed targets. The ECC provides KPIs in the Schedule of Partners in the Partnering Option. A Partner is paid the amount stated in the Schedule if the target stated for the KPI is achieved or improved.

The Be contract includes for KPIs relevant to both Purchaser and Supplier to be set out in the Purchase Order. The KPIs will be monitored against the performance criteria set out in the Purchase Order. PPC 2000 provides for the inclusion of KPIs to be finalised by the date of the Project Partnering Agreement. Those which have not been agreed by this date will be the subject of agreement between the Core Team and the Client in accordance with the Partnering Timetable. All Partners are to provide open book information to demonstrate to the Client’s Representative progress achieved against the KPIs. Continuous improvement must be demonstrated with a review when the project is completed.

Question 9

Most contracts include a provision under which the contractor is required to provide a programme. The PSPC is somewhat different in that there are no procedures included in the contract. Perform 21, of which the PSPC forms a part, includes The Best Practice Toolkit. The preparation of the programme takes place during the Design Development Stage which is part of the Best Practice Toolkit.

There is reference to a Partnering Timetable in PPC 2000 which governs the activities of the Partnering Team members prior to the date of the Commencement Agreement. After the date of the Commencement Agreement the programme of the works is included in the Project Timetable.

The ECC is very much programme led. The type of information to be included in the programme is detailed in the contract. Each compensation event must be the subject of a quotation before the work is implemented. If there is likely to be a delay to completion as a result of the compensation event the quotation must be accompanied by a revised programme.

Question 10

There is no reference in the ECC to problem solving or disputes avoidance.

The Be contract requires the Purchaser and Supplier to resolve any dispute by direct negotiations between senior executives.

Stage five of the Best Practice Toolkit used with PSPC as part of Perform 21 includes for a two day workshop. As part of the procedure the Partnering Team agrees a problem solving and dispute avoidance process.

PPC 2000 is very specific on the matter of problem solving and provides the following process:

1. As soon as one of the Partnering Team becomes aware of a difference or dispute with another member of the Team notice must be served on the other member and a copy sent to the Client’s Representative.

2. The Problem Solving Hierarchy described in the Commencement Agreement is applied by the Partnering Team member guided by the Partnering Adviser.

3. If no agreement is reached the Client’s Representative convenes a meeting of the Core Group giving no more than 10 working days notice.

4. If the dispute is not settled it may be referred to conciliation, mediation or any other form of ADR recommended by the Partnering Adviser.