Resolving board conflict in collaborative contracting

Out-Law Analysis | 03 Feb 2021 | 11:17 am | 2 min. read

Creative tension is important in driving a construction project to reach its full potential, even in the collaborative environment.

Devolving strategic leadership to a project board tasked with making decisions on a 'best for project' basis will be central to success, as will recourse to independent expertise where conflicts arise.

Use of collaborative contracting models is an informed choice. For clients, however, it may seem counter-intuitive, as when spending a significant amount of money on a major project the instinct is often to be able to micro-manage and to place all of the project risk on the contractor.

Blundell Nigel

Nigel Blundell

Partner

Appointing a project board, with representatives from each key project participant, and charging them with delivering the project against a range of metrics is the smart solution.

This approach sets the project up for failure, as leaving decisions at every stage of the project to the client is often the root cause of delay, cost overrun and disputes.

Appointing a project board, with representatives from each key project participant, and charging them with delivering the project against a range of metrics is the smart solution. However, this can only work where all parties' interests are aligned. Board decisions must be made unanimously to ensure complete buy-in.

Resolving board deadlock is particularly relevant in alliancing contracts with a 'no claims' clause. 'No claims' is a slight misnomer, as it still allows actions to be brought in a restricted number of categories. That said, there is an argument that a difference of opinion at board level is not necessarily a dispute "between the parties" and may not fall within the limited types of dispute which can be brought.

Standard contracts take different approaches. The NEC alliance contract provides for the agreement of all members of the board, who are also involved in resolving disputes between members of the alliance. The NEC contract has a no claims provision. The first step in resolving a dispute is to refer it to the board. If that doesn't resolve the dispute, then the board can refer it to an independent expert or their respective senior representatives for an opinion. That opinion is then used by the board to determine the dispute.

Strictly, the NEC contract is silent on whether the inability of the board to agree should itself be referred to the independent expert or senior representatives as a "dispute between the alliance" - but this will be the pragmatic approach for those using this type of contract.

The PPC/FAC suite of contracts published by the Association of Consultant Architects (ACA) adopts a different approach. The contract allows for disputes to be resolved in the traditional ways. The contract's core group must make decisions by consensus. To assist this process, the contract providers for partnering with an independent adviser who can attend core group meetings and assist in the resolving of problems and avoidance of disputes. The independent adviser can provide fair, independent and constructive advice to the project.

Building in some form of independent support to the project board is a sensible tool since it provides the board with an experienced voice which can provide critical support when conflicts arise. It is akin to the role of a non-executive director.

Some boards we have worked with take a different view. They believe that their obligation to act on a 'best for project' basis means that they themselves must find the solution. Since they are collaborating, if they can't find a best for project solution, bluntly, they consider that they have failed.