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Back to the future

ANALYSIS: Partnerships and non-adversarial contracting are the buzzwords of current construction procurement reform. So why has the ICE just launched an updated version of its traditional form of contract?

Sir Michael Latham took a long hard look at the construction industry in 1994 and concluded that procurement practice had to change. Sir John Egan followed last year and came to similar conclusions. Out with competitive tendering, in with negotiated work, partnering and fewer but bigger winners.

The Institution of Civil Engineers' standard form of contract has long been associated with adversarial contract relations.

It is perhaps unfair to dump all these problems at the doorstep of a single contract, one that after all has had a successful history since the 1st Edition was introduced in 1945. The 6th Edition was reprinted in 1995 and again in 1997 to take account of changes in Construction (Design and Management) Regulations for health and safety.

However, the industry has moved on dramatically since then. The ICE's New Engineering Contract has become the darling of the reformers for its encouragement of partnership, value engineering and mutual pain/ gain sharing. Latham, for one, specifically recommended NEC as the contract for the future.

The launch this week of the ICE's 7th Edition traditional contract reignites debate about which contract is best suited to conflict-free construction. Should we embrace the brave new world of the NEC or stick to what many are calling an old fashioned backward looking form?

'The ICE must be seen to be at the centre of the debate regarding industry procurement practice,' says ICE chief executive Mike Casebourne. 'We are keen to promote the NEC, our new form of contract, which is seen by many to be in tune with future processes of the construction industry. But while moving forward we are keen to keep in contact with the present.'

Casebourne adds that the ICE is committed to ensuring that the industry still has a choice. Those content with the ICE Conditions of Contract now have the option of the updated 7th Edition.

'We welcome the debate comparing the two different forms of contract and believe it will continue for some time,' he explains. 'We support all engineers and their clients in making the choices most appropriate to their circumstances.'

Chairman of the Conditions of Contract Standing Joint Committee David Hodgkinson goes further. He is adamant that the new 7th Edition 'fully supports and promotes the benefits of team working and current procurement initiatives.

'This form of contract has been tried and tested and is trusted,' he says. 'We must realise that conflicts within our industry are caused by personalities, not conditions of contract.'

This is true enough. Over the years many projects run under traditional contracts have been successfully delivered.

Those in favour of sticking with the ICE standard form argue that the NEC has never been tested in a court of law. Its plain English wording, they argue, cuts across everything set in legal precedent and until tested poses substantial risks.

On the other hand, the fact that the NEC has not been tested by lawyers might equally be taken as a sign that it does promote a better way of working .

There is no doubt that traditional forms of contract will continue to be used in the industry for many years. It is equally true that there will also be cost overruns, legal battles, and late finishing projects.

Debate over whether these two factors are connected will rage on for as long as both forms of contract are used.

For the time being no dramatic change is likely. As Casebourne points out, clients and contractors will always have favourite forms. So the ICE will not lead the pack and come down in favour of one or the other of its contracts.

This being the case, it is vital that the ICE stays involved with the debate and continues to encourage the industry to focus on doing things better. The best contract form will then float to the top of its own accord.

antonyo@ construct.

(see ICE News page 20)

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