20 Oct Collaborative Contracting
Contracts are one of the most important sources of commitment in our daily lives, that occur among individuals, entities, governments, or among each of these parties. We commit to a contract almost always everyday — sometimes — unconsciously, which establish a legal bind between us and the other party in the contract. However, we pay attention to contracts with considerable amounts as the consequence of violating such contract is harsh. Therefore, and as construction contracts are usually carries a lot of responsibilities and cost a significant monetary obligation, experts try to reach to a way to minimize common obstructions of construction agreements by introducing what is known as: Collaborative Contracting.In contemporary legal thought, the contract is commonly defined as the agreement of two or more wills to make an impact by law. In contemporary Islamic jurisprudence, it is defined as “the association of the positive issued by one of the sane to the acceptance of the other in a way that proves its impact on the contract”. This is the definition introduced by the Iraqi law, the old Kuwaiti trade law, and the Jordanian law.The importance of the contract is highlighted in its preservation of rights, the defining of obligations and its documentation of rights between contractors. It is also a way to reduce the prevention of conflict between the contract parties, and a way to manage their relationship under the contract.Because traditional construction contracting involves several risks in processing changeable data (variation orders, BOQ, etc.) and in reaching to acceptable results; Collaborative Contracting came in as a solution to mitigate risks that can hold construction progress or slowing it down.The concept of Collaborative Contracting is a sort of contracts that involve a high degree of continued good faith between the parties to the contract, formulated in a legal manner that considers both parties’ intentions and the technical criteria of the project. Collaborative Contracting also considers meeting payments dues all along the contract.Collaborative Contracting can be understood in the form of ongoing cooperation between the law firm and the trainee lawyer, and between the human resources company and an intern, where their intentions are mutually cared for by both parties to achieve goals defined in the contract, quality employment and knowledge transfer. All done in good faith in a jointly process that involves agreed decision making mechanism.
In contraction projects, Collaborative Contracting provides legal measures to prevent delays in delivery, or to reduce its duration to the minimum can-do timeframe while reducing the cost of delay. On the other hand, there are many models of delay of project delivery in traditional contracting, where it is negatively affecting the final cost of the project and creating uncounted risks.Moreover, Collaborative Contracting when compared to the traditional contract; shows consistency and legal certainty regarding the quality of the final product, maintains timing, and considers final cost of martials.Collaborative Contracting provides a high competency relationship and protects the owner and the executor of the project from any possible conflict. Focusing on early involvement of the contractor from the beginning of the project, precisely in planning and modification process throughout the period of the contract, by the presence of its representative in a project implementation committee established between the contractor and the owner. The Committee should hold its meetings extensively during the project and must have effective approving powers, to decide in each request raised by either party.One of the most important benefits of Collaborative Contracting is the distribution of risks so that neither party takes all or most of the risk, hence, the contract maintains its function as mutual business practice intended for profit and interest for both parties. Unlike a traditional contract in which the risk is placed entirely on one side of the contract throughout the contract period, usually resulted from sequence actions trigged by one violation or delay in progress or payment. Commonly in traditional contracts, in the first phase the risk is fully on the owner’s side, then it moves to be fully or predominantly on the contractor’s side, then it moves to be fully or predominantly on the part of the owner or tenant, and so on.
Finally, Collaborative Contracting is useful in all kinds of construction projects; but at the level of mega-projects, the need is greater or maybe it is necessity there because the risks are higher; and therefore, the contracting parties need to fairly distribute risks in an innovative method such as the method in subject, in order to achieve better and nearly guaranteed outcomes.