Partnering is not the solution for all contractual problems

Effective partnering does not rest on contracts. Contractors can add significantly to the cost of a project and often add no value for the client. If the relationship between a constructor and employer is soundly based and the parties recognize their mutual interdependence, then formal contract document should gradually become obsolete. Rethinking Construction (1998)

Partnering is a concept where a collaborative approach has existed for many years in the construction industry world wide. This is not a procurement path itself but an alternative and non-confrontational working arrangement. During the last decade has become more formalized and now standard documentations are available to use the partnering arrangement. There are many definitions for the term partnering. But all of them are giving the similar meaning two or more organizations working together to obtain mutual benefit and towards a common goal. There are two types of partnering; project and strategic partnering. Project partnering also be adopted as a trial before the longer term relationship of strategic partnering. This collaborative approach is now in use around the world under a variety of names such as alliancing, partnering, strategic alliances and relational contracting framework arrangement. In the supplier/customer relationship or in the traditional confrontational contracts, both parties look forward to have their contractual entitlement and protect their contractual rights. Therefore, always it tends to blame each other and always there is a looser and winner in this process. As a result of that confrontation some times it is possible to add significant cost to and delay the project without giving any value. The basic hypothesis in the Partnering process is to give win-win situation for both the parties by working towards the common goal. To have a thorough understanding of the stakeholders requirements and ensure that effective measures are developed and implemented to satisfactorily address these requirements. The most appropriate time to introduce partnering is at the feasibility stage of the project. Then parties are having better understanding from the root of the project and individual commitments. Ideally contractors need to be aware at the time they produce their tenders of the intention to partner, as it may have financial implications. To become partnering process effective, top level management must be committed to the approach. Effective partnering generally does not rest on contracts. Contracts are made to apportion authorities, liabilities and risks. In Birse Construction Ltd V St David Ltd (1999), there was a partnering arrangement between a developer (Employer) and a contractor. Trial of a preliminary issue arising in the course of an application by the defendant ('St David') to stay an action by the claimant ('Birse') to recover payment for certain building works on the basis of a quantum meruit. Birse had carried out substantial building works for St David. Birse contended that by 11 August 1998, the date on which it left the site, it

had executed works to the value of and/or for which a fair commercial price was just over 6.75 million. St David had already paid very nearly 5.75 million. By this action Birse sought to recover the balance. St David claimed that the terms of the contract had been agreed in the course of oral and written negotiations, and that a copy of the contract as finally agreed, with various enclosures, had been forwarded to Birse. Birse claimed never to have received any such document, and denied ever having reached any final agreement as to the terms of the contract. It was held that on the basis of the oral evidence and the contemporaneous documentation the court was satisfied that no binding contract had ever been concluded between the parties. In particular, the absence of any copy of a covering letter in St David's disclosure, and the absence of any chasing letter when no signed contract was returned were "distinctly odd", if the case for St David were indeed true. In those circumstances there was no binding arbitration clause, and the application by St David for a stay fell to be dismissed. The importance of having a valid contract further established; In Monk Construction Ltd v Norwich Union Life Assurance Society (1992) the Plaintiff was sent a letter authorising preliminary works up to a limit of 100,000 and stating that, if no contract was entered into, payment would be limited to their 'proven costs'. No contract was signed and completed all the works. Plaintiffs claimed payment for all the work on quantum meruit. Defendants argued that the letter covered all the work and that therefore the 'proven costs' ceiling (i.e. 100,000) applied. It was held in favour of the plaintiffs. The letter was only intended to cover the preliminary works in circumstances where no further work was carried out by the plaintiffs. There are several standards forms developed in the industry which can be used with the concept of partnering to avoid potential disputes and gain management benefits. The PPC 2000 ACA Standard Partnering Form, ICE Partnering Addendum and JCT Partnering Charter are some of the recognized form of contracts. Partnering is not only about systems and methods, but about empowering people to operate more efficiently and effectively. Incorporating this partnering process within the construction contracts the desired benefits will be achieved if the parties are maintaining their relationship as intended. The main objective of the partnering process is to achieve a project completion to the both parties satisfaction. There are potential benefits to the client and to the contractor of successful partnering process: benefits to the client can be identified such as better value for money, at least the same level of quality, less confrontation and therefore speedy delivery, less risk, grater certainty of satisfaction, fewer claims, less bureaucracy, better communication, understanding and tolerance of problems, faster construction and continuous improvement; benefits to the contractor can be identified as; increased profit potential, less confrontation, greater certainty of workload, better communication and understanding from clients, less bureaucracy, more involvement in key decision making, no competitive tendering process, therefore reduce overheads and reliable flow of design information.

Despite those advantages, the client begins to wonder if he is paying too much because of non competitive pricing. Although becoming a partner the contractor can be too comfortable and reliant upon too few clients, without much competition and innovation. Therefore the client may argue that such contractors can add significantly to the cost of a project and often add no value for the client. On the other hand the contractor can also argue that the client expects too much, so become disillusioned. The arrangement fails owing to a lack of understanding by one partner of the other partner of the business. There are some key features in the partnering which can be achieved by proper administration of the process as set out the in the JCT Partnering Charter: In good faith In an open and trusting manner In a co-operative way In a way to avid dispute by adopting by adopting a no blame culture Fairly towards each other and Valuing the skills and respecting the responsibilities of each other

In summary partnering is not a solution for all contractual problems and prior to make a decision to choose a partnering relationship the suitability to the proposed project is to be examined. There are some advantages by adhering the above process such as; mutual objectives, joint problem resolution, continuous improvements. Disadvantages will be occurred due to misunderstanding of the parties and when the reliant upon too few clients. Partnering should be used when it is likely to be most effective. It is suitable for large public sector projects and more complex project where the risks cannot be fully identified or measured properly. or can be too complex project where the risks cannot be fully identified or measured properly.

Udaya Samaraweera
BSc, (Hons.) Quantity Surveying Senior Quantity Surveyor Halcrow International Partnership