30 April 2019

Fostering Greater Collaboration across the Construction Sector

Build UK has published a recommendation on contract terms which seeks to form a new common ground between clients and the supply chain on contractual practice in the construction sector.

It is widely recognised that the industry needs to work in more collaborative ways, and Build UK and its members have identified a number of contract terms that prevent this.

The recommendation, which is non-binding, sets out six terms which should not be used if better project outcomes are to be achieved. The terms cover the following areas:

  • Fitness for purpose
  • Unquantifiable risks
  • ‘Specified Perils’
  • Breach of contract
  • Uncapped liabilities
  • Performance securities.

Further details can be found on the Build UK website.

Build UK worked with representatives across the construction sector in developing the recommendation and there is widespread support for not using the identified terms.

In accordance with competition law, members are free to negotiate their own respective contract terms. However, Build UK believes that eliminating the use of the terms within the recommendation can encourage a fairer transfer of risk through the supply chain and result in a more sustainable construction industry.

The recommendation also directly contributes to achieving targets set out in the Construction Sector Deal, which specifically calls for improving contractual practices.

Mark Castle, Chairman of Build UK, said:

“We currently see various contractual practices being used in the construction industry that actively inhibit a spirit of collaboration. They create inefficiencies, conflict, and transfer risk in a way that is inequitable at best, and unreasonable at worst.  We at Build UK are challenging the status quo when it comes to contract terms. We believe that by eliminating these poor commercial practices, the industry can become more sustainable in terms of productivity, innovation and profitability.”

Geoff Hunt, Chief Operating Officer, Arup UK, India, Middle East and Africa, said:

“The built environment sector is complex and with such huge projects to deliver there is a lot at stake for all parties. This means that equitable contract terms that address the risk and opportunity for all stakeholders, and which are relevant for the project and the longer term relationships that our industry needs, are important. However, we need a more collaborative approach in which all parts of the value chain are working together as a team. Getting away from saying ‘this is the way things have always been’ is a good place to start and for that we should all expect better behaviours. So we wholeheartedly support the Build UK recommendation on contract terms.”