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The Egan Report
comments:-
'Effective partnering does not rest on contracts. Contracts can add
significantly to the cost of a project and often add no value to the
client. If the relationship between the constructor and employer is
soundly based and the parties recognise their mutual interdependence,
then formal contract documents should gradually become obsolete.'
Sir John Egan has, privately, admitted that this statement may not be
capable of literal fulfilment and, rather than all contracts, it is the
traditional forms of construction contract that should become obsolete.
The example of other industries more advanced in the adoption of collaborative
arrangements and supply
chain management suggests that contracts will not disappear though
they are likely to become much simpler, with greater reliance placed on
non-contractual relationships and processes. See, for example, the contractual
arrangements between vehicle assemblers and their key parts suppliers
in the motor industry.
Over the past 50 years, the traditional standard forms of construction
contract have all been based on an underlying relationship
of master and servant: the client knows what he wants and directs the
contractor to provide it. This relationship also underpins most professional
appointments and subcontract arrangements. It is an arrangement that does
not sit happily with the emphasis placed on collaboration and team working,
particularly given the usual absence of any express direction to work
together and share information with other project participants.
The inherent nature of traditional construction contracts, allied to
the unhappy experiences of cut-price tendering in the late 1980s and early
1990s has encouraged the adoption of protective drafting in construction
contracts: from the client/purchaser side, the emphasis has been on passing
risk
under contracts and, from the supply side, the emphasis has been placed
upon defining maximum (rather than minimum) levels of commitment. It is
therefore little wonder that contracts should remain in the proverbial
"drawer" during the initial stages of a project when relationships
are being developed and why they produce such fertile ground for conflict
when they are eventually taken out of the proverbial drawer when problems
arise.
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