The Civil Engineering Contractor July 2018 | Page 29

INSIGHT
There is no reason why, for example,
the workforce could not be a part
of the alliance and perhaps benefit
financially from the success of the
alliance. Similarly, other stakeholders
could also participate on the same
basis. This could be for example the
community, the business forum, and
other interested parties.
When an alliance is formed to
carry out the work to a contract,
the members of the alliance all adopt
an open-book approach; there are
no hidden profits or agendas. The
expectations and aspirations of the
alliance members are also all aligned
so that there is no energy expended
in fighting contractual battles (such
as we see every day on our normal
adversarial contracts).
So, everyone works together and there
is one common goal. Sounds wonderful,
doesn’t it? If it is that easy, why haven’t
we been doing all our contracts this way
for the past 20 or 30 years?
Well, the answer is that we as
human beings find it easier to be in
conflict rather than in peace. Our
natural reaction is to go on the attack.
Cooperating is harder than fighting.
Special arrangements must therefore
be adopted to ensure that the parties
to the contract and the individuals
deployed on the contract are able to
collaborate.
So, when we are setting up an
alliance, we can either use a normal
competitive tender process or we can
have a prequalification process to select
a preferred bidder.
There are three criteria for making
the selection of the preferred bidder:
price, commercial terms, and cultural
fit. This last criterion is intended to
ensure that the parties can collaborate.
Once the alliance has been set up,
alliance non-friendly individuals are
either removed or are counselled so
that their conduct can be modified so
that they “trust before they mistrust”.
On many alliance contracts, any form
of extreme adversarial behaviour is
dealt with ruthlessly. For example, if
a dispute arises between the parties
to an alliance, either the disputing
parties are ejected from the alliance
or the whole alliance can be brought
to an end.
There is no doubt that there is a
move to more collaborative behaviour
anticipated by most of our contracts.
For example, both the NEC4 and the
FIDIC Rainbow Suite Second Edition,
both published last year, have dispute
avoidance mechanisms that will not
work if the parties to the contract
cannot collaborate (and that requires
trust and cooperation!).
Both our GCC and JBCC contracts in
South Africa have similar arrangements.
The GCC has an Amicable Settlement
clause and the JBCC has an arrangement
where the parties can adopt mediation
as a means of resolving differences.
Collaboration is therefore not an
unknown concept, but this observer
would suggest that to effectively
manage contract and construction risk,
we need to trust and cooperate to a
far greater extent than is currently
the case. On complex large contracts,
alliancing could provide a far more
attractive and effective option than the
adversarial implementation strategies
that we are seeing on the few mega
projects that are available for our local
contractors. nn
the subcontractors, the suppliers
and probably most importantly, the
workforce, all have separate agendas
and find it impossible, or at best, very
difficult, to work collaboratively.
This is one of the reasons that so
many of our contracts in this day and
age are unsuccessful. By unsuccessful,
we mean financially, from a programme
perspective, quality, and health and
safety issues. This translates into the
construction groups in South Africa
finding themselves in extreme financial
distress.
If one monitors the construction
scene in the United Kingdom for
example, things do not seem to be any
better there either.
One of our observations when
discussing risk management is that
if you do not manage the risk on a
construction contract, the risk will
manage you.
If we start from the perspective
of risk identification, with the
observation that a lack of cooperation
and trust exists between the parties
to the contract, and this, owing to the
environment that we work in, cannot
be changed, then that risk will manage
you and the contract will probably end
in disaster.
This is the reality of our construction
environment.
So, we have to do two things: We
have to find a way to trust and we
have to find a way to cooperate. The
adversarial implementation strategy
has been found not to work. The
alternative is collaboration.
In this observer’s view, the
collaborative model provided by the
NEC Engineering and Construction
Contract, does not go far enough and
an alliance-type contract form should
be adopted. As a part of the NEC4 suite
of documents published in the middle
of last year, an Alliance Contract was
introduced.
There are two types of alliances:
employer alliances and contractor
alliances. In the former, the employer,
the consultants, and the contractors all
form the alliance. In the latter case, just
the contractors make up the alliance.
In an environment such as ours where
we are endeavouring to find ways
of trusting and cooperating, an all-
inclusive arrangement like an employer
alliance seems the obvious way to go.
Ian Massey is director at MDA Consulting
construction and technology attorneys.
About MDA Consulting
MDA Consulting provides solutions
to contractual and commercial
challenges, while MDA Attorneys
(MDA) works closely alongside
clients, offering legal services
for large-scale construction and
technology projects in sub-Saharan
Africa and worldwide.
Clients include domestic and
international companies involved in
major projects in the infrastructure,
water management, petrochemical,
mining, energy, and building
sectors.
CEC July 2018 - 29