Successful procurement is mostly about three things: understanding the deal; understanding the parties; and attention to detail. Here I am looking at the first one, as it is the first issue to consider, and sets the project up for success.
Understanding the deal
What is it that the client wants to have built? In pure property transactions it is common for the parties and/or their agents to agree (and document) the heads of terms - the most material parts of the deal - so that during the drafting of the documents and any negotiations on the contract documents the lawyers can refer to what was actually agreed between the principals. In construction we never have heads of terms, and even the construction works are part of a property deal the heads rarely say more than “warranties are required”, which doesn’t really help the construction lawyers (pause for music from the world’s smallest violin, obviously). But whilst the technical details of the project are very definitely within the remit of the engineers and surveyors, understanding the deal is essential to the parties’ choice of contract structure.
The first question is always: is this a building project, or an engineering project? The answer may not be as obvious as it sounds. If, for example, you are building a residential development or an office block, it’s clearly building; if you are building a road bridge or an oil refinery it’s clearly engineering. But if you’re building a data centre, or a food processing facility it might look like a building project because there will be a big building involved, but it’s really an engineering project, the building is just the weatherproof envelope, and the part that matters and that should take priority in contract structure, is the engineering or electronic plant inside. It important to understand at the outset which is the cart and which the horse.
The reasons it matters is because, and this isn’t news to anybody, a contract is just a record documenting the control of, and responsibility for, risks. So it is essential to have a contract structure that addresses the most important risks. If it’s an office block you don’t choose a procurement method that addresses the risk of kerb heights in the car park above the fire safety of the building. So your choice of contract should be primarily one for building projects, and the car park sub-contract should deal with the kerbs. If you’re building a new bridge over a motorway the contract needs to deal first and foremost with the engineering - design and installation - of the bridge, not be led by building the hut for the toll booths. Data centres and manufacturing facilities need to deal with the mechanical and electrical engineering procurement, and so the contract should be one appropriate for that, with the building a sub-contract package.
We are fortunate that, in the UK, there are a number of forms of contracts published that can be used as the basis for all of these projects, and more, so providing you understand the deal you will be able to choose the best type of contract to start from. For civil engineering works there are the Infrastructure Conditions of Contract -based on the old ICE 7th and its associated documents, which are absolutely excellent. For mechanical or electrical projects there is the MF series, with or without installation. For projects involving any sort of processes, whether oil refining or making ready meals, there is the IChemE suite. Government and local authority projects mostly use the NEC/ECC, and for building projects there are the various versions of JCTs, the old GC Works (a very good contract but one that has fallen out of use) the PPC2000 for partnering, and others.
Some of these contracts are marketed as “standard” forms, designed to be used unamended, and some as “model” forms, which accept that any published form will be one-size-doesn’t-actually-fit-anybody and that they all need to be amended to fir the circumstances, the project, and the parties. But they are mostly a good, and economical, starting point.
Which version of any particular publisher’s offering you choose will depend on two things: who is undertaking the design; and what they payment arrangements are. And picking the right version to work with those two issues is dependent on what the deal between the parties is.