Legal

Why construction is like doing the hokey-cokey

1 May 2017 | By Sarah Fox

Sarah Fox suggests contracts should dance to a different tune.

Sarah Fox

When we do the hokey-cokey we put “our whole self in, whole self out, in, out, in, out and shake it all about”.

That phrase reminds me of the contract terms describing performance standards for a construction project. The terms are a delightfully old-fashioned mix of “reasonable skill and care” (mere competence), “good industry practice” (average skills), “workmanlike manner” (err?), “complying with legislation” (usually the bare minimum), and whatever expertise the contractor or consultant professes to have (past history).

Although the contract terms stick to vague concepts, they are supplemented by highly sophisticated specifications and modelling. So why do projects still regularly fail meet the client’s objectives? The Millennium Bridge wobbled, the M60 extension flooded, 100 Fenchurch Street melted cars… ever since the Tower of Pisa started to lean before the first phase of its 199-year construction was complete, our industry has collectively shrugged when a project fails. After all, we were doing our best... 

Instead of an input focus, perhaps we should learn from process engineering, where contracts focus on outputs and fearlessly adopt fitness for purpose, tiered testing regimes and limited liability for defects. Or we could draw on facilities management contracts – they define success by reference to clear targets. If these industries can do it, why not construction?

Doing the hokey-cokey, like coordinating any eclectic mix of people, depends on knowing what it looks like when done well. Equally, on a construction project, we have to define success and select the outputs which will combine to create that success.

These outputs, and their related objective specifications, are essential if we are to move from wet-signed to “smart” contracts. Smart contracts rely on computer codes which require clear yes/no answers to specific questions such as whether a party has met their contractual obligations. Our reliance on “reasonable skill”, or “good industry practice” is too nebulous a code to decipher. 

Creating contracts with clear objective performance standards will build trust (based on clear proof of success) and avoid disputes (over whether each party did what was asked of them), as well as help us move towards smart contracting. 

Sarah Fox is a contract strategist, author and speaker at 500 Words Ltd

Comments

The irony of a iawyer urging other professionals/constructors to offer "clear objective performance standards" appears to have escaped Ms Fox.

David W Gray, 2 May 2017

Most problems I've seen on projects are a combination of things.

Frequently a lack of experience, often enough in the people running a project, combined with a refusal to face up to problems when it would make a difference, as no one wants to take responsibility for delaying the project.

I know on the project I'm currently working on, I've been highlighting the same design problems in some cases for over 2 years now, and we're still struggling to get our Architects and Engineers, and indeed client, to take them seriously, as the design contracts were a disaster in being set up, then not managed at all.

We're now in a position where it may cost serious money to rectify design problems, or the client will end up with a building that won't work as intended.

Kale, 4 May 2017

It would have been helpful if Divid offered a more constructive response to Ms Fox's very objective insight to the significance of contracts. I couldn't agree more with Ms Fox that most contracts are not created with the output in mind. What I gather from speaking with professionals particularly in engineering and construction sector is that they leave the responsibility of contract wording to the legal department. Hence the "smart" contract alluded to by Sarah is not common place. I often will demonstrate how PM can use contracts to achieve Win-Win and NOT 50:50 in my lectures.

Obuks Ejohwomu, 5 May 2017

As contract drafter's role is to help their clients do business. Often clients prefer to rely on the market norm to minimise the time and cost of contract negotiations. The current market norm is subjective standards like those mentioned in my piece. What I advocate is for the market norm to change which requires a collective preference for objective standards. If we can make a change, why not?

Sarah Fox, 10 May 2017

I strongly agree with Ejohwomu that all contracts are being drafted to meet certain objectives, the problem is how contracts are drafted ? though. this is what Sara pointed out in her last post too. this issue emanates from the complexity of construction process itself which makes it a daunting task to embed these objectives while minding the process and its complexity. If the client for example sets as an objective that he wants to be involved in quality assurance of the built product this transforms into tens of clauses and contractual requirements depending on another set of tens of boundary conditions, there is always that dichotomous relation between the legal and technical contents of construction contracts; we need either lawyers who are technically trained on techs who are legally trained or a process that ensures that knowledge of both is built in in the contract; definitely it is a pure proce-specific issue

Ghazi Osman, 11 May 2017

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