The Oxford dictionary definition of a Partner is, as follows: ‘a person who shares or takes part with another or others, esp. in business’ 
 

This definition is salient to its context within the construction industry. Indeed Sir Michael Latham’s report, ‘Constructing the Team’, sought to achieve matters that one might submit are partnering issues. The Latham Report took, a more pragmatic approach namely that the various contract drafting bodies join to produce a set of basic principles and be part of a family of interlocking documents.

Many people believe that the ACA Standard Form PPC 2000 is developed, as with the NEC form of Contract, in response to the Latham report. However, the consultative document of the NEC and first edition predated the report, the Latham Report being published in 1994. The PPC 2000 however is very much a product of the Latham philosophy.

Latham identified within his report, provisions which he considered should be adopted in Construction Contracts. The ACA Standard Form PPC 2000 published by the ACA, is stated to be the first standard form of Project Partnering Contract and which "provides the foundation for the partnering process and can be applied to any type of partnered project…".

However, can such ‘partnering’ by way of a Standard Form of Contract achieve the ambitions of Sir Michael Latham’s report?

PPC 2000 appears to assist the parties to a Construction Contract in achieving such a ‘Partnering’ approach as sought by Sir Michael Latham, as follows:

Firstly, as recommended by Latham, PPC 2000 provides an ‘easily comprehensible language with notes’ by way of Appendix 1 to the form where there is an extensive list of definitions which, in some respects, assists in the understanding of the new form, these terms include a number of terms which are not found in other standard forms including:

‘Agreed Maximum Price, Core Group, KPIs, Partnering Charter, Problem - Solving Hierarchy, Project Partnering Agreement and Risk Management.’

General Obligations - Co-operation

The Partnering Terms provide in a number of places for the Parties to co-operate, act reasonably and the like. See for example clause 1.3 and at Clause 1.7 where it provides:

"1.7 In all matters governed by the Partnering Contract, including without limitation any required notice, request, submission, decision, consent, approval, comment, valuation, agreement, opinion, instruction and other communication and activity, the Partnering Team members shall act reasonably and without delay." (Emphasis added)

The Early Warning procedures at clause 3.7 also link in to this expressed philosophy. Further ‘key’ Latham report ethos clauses are, as follows:

Clause 3.1 Core Group

The Partnering Team is to establish a Core Group whose role is to "Stimulate the progress of the Project and the implementation of the Partnering Contract…" Clause 3.6 notably provides that:

"Decisions of the Core Group shall be by consensus of all Core Group members present at that meeting. The Partnering Team members shall comply with any decision of the Core Group made within the scope of its agreed functions." (Emphasis added)

Clause 5.3 Instructions

Clause 5.3 provides: - "Where necessary and without prejudicing the collaborative spirit of the partnering relationships, the Client Representative may issue such instructions …." (Emphasis added)

Clause 8 Design

The key partnering issues addressed within clause 8 are as follows: "8.1 The Lead Designer and the other Design Team members shall develop the design and process of the Project, in accordance with this clause 8, with the objective of achieving best value for the Client. (Emphasis added) 8.2 The Design Team shall work together and individually in the development of an integrated design, supply and construction process for the Project in accordance with the Partnering Documents and under the co-ordination of the Lead Designer."(Emphasis added)

Clause 13 Incentives These can be dealt with in a number of different ways and clause 13.1 proposes that the Core Group considers incentives etc. to encourage Partnering Team members to maximise their efforts for the benefit of the Project.

Moreover joint initiatives and strategic alliancing are encouraged and provided for at Clause 24. In respect of incentives, PPC 2000 has express provision for the Client to deal with the issue of considering incentives etc, to encourage the Contractor ‘to maximise his efforts for the benefit of the Project’. PPC 2000 has, moreover at clause 13.2, facility for the Client to ‘share’ savings with the Contractor.

Clause 18 Risk Management This is dealt with specifically at Clause 18, although clearly the question of risk is dealt with throughout the Contract. Clause 18.1 provides the general approach as follows;

“The Partnering Team members recognise the risks involved in the design, supply and construction of the Project, and the costs associated with those risks. The Partnering Team members shall work together and individually, through Risk Management exercises in accordance with clause 5.1(iii), and otherwise in accordance with the Partnering Documents, to analyse and manage risks in the most effective ways …’ (Emphasis added)

Clause 20 Payment

As sought by the Latham Committee, payment is made clearer and more rewarding at Clause 20.2, which provides for the application mechanism and links in with any agreed milestones or payment arrangements contained in the Price Framework.

Stimulus to good management

Procedures have been adopted which are intended to contribute positively to the management of the work. The two principles on which PPC2000 is based and which impact upon the objective of stimulating good management are: • foresight which applied collaboratively mitigates problems and shrinks risk, and • clear division of function and responsibility helps accountability and motivates people to play their part.

A new hat and coat or just the hat?

PPC 2000 is most evident in its attempt to achieve Sir Michael Latham’s objectives at clause 4.1 and 4.2 wherein it states:

‘4.1 "The Partnering Team members shall establish, develop and implement their partnering relationships in accordance with the Partnering Documents, with the objectives of achieving for the benefit of the Project and for the mutual benefit of Partnering Team members:-

(i) trust, fairness, dedication to common goals and an understanding of each other’s expectations and values;

(ii) finalisation of the required designs, timetables, prices and supply chain for the Project;

(iii) innovation, improved efficiency, cost-effectiveness, lean production and reduction or elimination of waste;

(iv) completion of the Project within the agreed time and price and to the agreed quality;

(v) measurable continuous improvement by reference to the targets described in clause 4.2 and the KPIs;

(vi) commitment to people including staff and the users of the Project."

4.2 "Each Partnering Team member undertakes to the others to do all that it can, within its agreed role, expertise and responsibilities and in accordance with the Partnering Documents, to implement the recommendations identified by the Construction Task Force in their July 1998 Report "Rethinking Construction" and to pursue for the benefit of the Project and for the mutual benefit of Partnering Team members the targets stated in the KPIs for:-

(i) reduced capital cost and whole list costs;

(ii) reduced design, supply and construction time;

(iii) reduced defects and zero defects;

(iv) reduced accidents;

(v) increased predictability;

(vi) increased productivity;

(vii) increased turnover and profit;

(viii) improved quality;

(ix) improved Sustainability;

The above correlates with most, if not all, of Sir Michael Latham’s 13 objectives. However, whilst the development of such a Partnering Contract will hopefully mitigate the opportunity for disputes, the old adage ‘You can lead a horse to water but you can’t make it drink’ seems appropriate in this context. In essence many parties to this Contract will not find a quick fix remedy for building relationships. They shall be wise to remember that a Contract does not make relationships work, it merely provides the mechanics/rules for those parties to abide by. As such whilst the PPC 2000 is admirable in its objective(s), for those without the desire to Partner they may have only bought a new hat rather than the complete ensemble.

The PPC2000 describes itself as being “the first Standard Form Project Partnering Contract” and has been variously trumpeted as being “a blow for freedom” by Sir John Egan and “the full monty of partnering and modern best practice” by Sir Michael Latham. So what are the key features of this form of contract?