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CONTINUING PROFESSIONAL DEVELOPMENT
Maximum Period 6 Hours
PARTNERING CONTRACTS
COMPARED
By
Roger Knowles
PARTNERING CONTRACTS
PUBLIC SECTOR PARTNERING CONTRACT (PSPC)
PPC2000
ECC
Be COLLABORATIVE CONTRACT
INDEX
Page
PSPC CONTENTS
PPC2000 CONTENTS
ECC CONTENTS
Be COLABORATIVE CONTRACT CONTENTS
CONTRACTS ON OFFER
CLAUSE BY CLAUSE COMPARISON
Parties To The Contract
Employer’s Professional Advisers
Contract Documents
Partnering Obligations
Allocation of Risk
Activities Undertaken Before A Contract Is Concluded
KPIs and Continuous Improvement
Value Engineering And Value Management
Programme
Early Warning Meetings
Partnering Team Meetings
Instructions To The Contractor
Commencement and Completion
Contract Price
Open Book Accounting
Grounds For Extension Of Time
Procedures Relating To The Granting Of Extension Of Time
Additional Costs Arising From Delay
Liquidated / Delay / Late Completion Damages
Variations And Changes
Incentives / Pain Share Gain Share
Problem Solving And Dispute Resolution
APPENDIX
Extension of Time Comparison
PSPC
CONTENTS
DOCUMENT REF
Introductory Notes PSPC
Partnering Agreement PSPC P
Option 1 Term Maintenance
Measure and Value PSPC 1
Option 2 Term Maintenance
Target Cost with Cost Reimbursable PSPC 2
Option 3 Authority Design
Lump Sum PSPC 3
Option 4 Contractor Design
Lump Sum PSPC 4
Option 5 Authority Design
Target Cost with Cost Reimbursable PSPC 5
Option 6 Contractor Design
Target Cost with Cost Reimbursable PSPC 6
Option 7 Subcontract
Lump Sum PSPC 7
Option 8 Subcontract
Target Cost with Cost Reimbursable PSPC 8
Option 9 Professional Services PSPC 9
Option 10 Prestart Agreement PSPC 10
Schedule of Costs
For Use with Option 2, 5, 6 or 8 PSPC SC
Fluctuation Rules PSPC F
PPC2000
CONTENTS
1 Project and Partnering Team Members
2 Partnering Documents
3 Communication and Organisation
4 Partnering Objectives
5 Client Representative and Partnering Adviser
6 Partnering Timetable and Project Timetable
7 Health and Safety, Site Welfare and Employees
8 Design and Process Development
9 Intellectual Property
10 Supply Chain
11 Volume Supply Agreement
12 Prices
13 Incentives
14 Pre-Conditions to Start on Site
15 Project on Site
16 Quality and Environment
17 Change
18 Risk Management
19 Insurance and Security
20 Payment
21 Project Completion and Support
22 Duty of Care and Warranties
23 Key Performance Indicators and Continuous Improvement
24 Joint Initiatives and Strategic Alliancing
25 General
26 Termination
27 Problem Solving and Dispute Avoidance or Resolution
28 Special Terms
Appendix 1
Definitions
Appendix 2
Form of Joining Agreement
Appendix 3
Part 1 – Form of Pre-Possession Agreement
Part 2 – Form of Commencement Agreement
Appendix 4
Part 1 – Insurance of Project and Site
Part 2 – Third Party Liability Insurance
Part 3 – Professional Indemnity or Product Liability Insurance
Part 4 – Insurance – General
Appendix 5
Part 1 – Conciliation
Part 2 – Adjudication
Part 3 – Arbitration (if applicable)
ECC
CONTENTS
Schedule of Options
Core Clauses 1 General
2 The Contractor’s Main Responsibilities
3 Time
4 Testing and Defects
5 Payment
6 Compensation Events
7 Title
8 Risks and Insurance
9 Disputes and Termination
Main Option Clauses A Priced Contract with Activity Schedule
B Priced Contract with Bill of Quantities
C Target Cost with Activity Schedule
D Target Cost with Bill of Quantities
E Cost Reimbursable Contract
F Management Contract
Secondary Option Clauses G Performance Bond
H Parent Company Guarantee
J Advanced Payment to the Contractor
L Sectional Completion
M Limitation of the Contractor’s Liability for his Design to
Reasonable Skill and Care
N Price Adjustment for Inflation
P Retention
Q Bonus for Early Completion
R Delay Damages
S Low Performance Damages
T Changes in the Law
U The Construction (Design and Management)
Regulations 1994
V Trust Fund
Z Additional conditions of Contract
Schedule of Cost Components
Shorter Schedule of Cost Components
Contract Data
Be COLLABORATIVE CONTRACT
CONTENTS
1 Working Together
2 Primary Obligations of the Purchaser
3 Primary Obligations of the Supplier
4 Allocation of Risk
5 Measurement of Performance
6 Payment
7 General Terms
8 Definitions
CONTRACTS ON OFFER
When the idea of partnering was first suggested as a procurement process it was considered
by the likes of Sir John Eagan that there would either be no need for a contract at all, or the
existing forms would suffice. Partnering is built upon relationships and as such it was
suggested that the contract conditions have little part to play in the success of the project.
It soon became clear in both the public and private sectors that to have no contract at all
would be totally unacceptable and that the existing standard forms in an unamended state
would not be adequate for the purpose of partnering.
Various methods have been used to provide contractual arrangements to suit a partnering
environment which include the following:
1. JCT Practice Note 4
The JCT has not produced any amendments to its contracts to accommodate
partnering. However it has issued Practice Note 4. The Practice Note recommends that
the parties enter into a non-binding Partnering Charter. A JCT Non-Binding Partnering
Charter for Single Project has been included in the Practice Note. It concluded that a
Binding Partnering Agreement for Single Project or Strategic Partnering for use in
connection with existing forms of contract was an inappropriate mix of concepts and
could lead to extensive difficulties in practice.
2. ECC Partnering Option X12
The Partnering Option advises that a partnering contract is achieved by using a
standard ECC contract together with the Partnering Option X12. This places the
partnering option as a supplement to an ECC contract and is intended for use between
more than two parties working on the same project who are intended to make up the
project partnering team. It is not the intention to duplicate the provisions of the ECC
option which has been chosen, but to supplement it to accommodate the partnering
ethos.
3. ICE Conditions of Contract Partnering Addendum
This addendum works in a similar fashion to the Partnering Option X12 used with the
ECC. It can be used with the ICE conditions and consultancy and subcontract
agreements produced by the ACE and CECA. The partnering contract acts as an
addendum to the contract between for example employer and contractor or contractor
and subcontractor and is entered into by all members of the partnering team. It has
many aspects of Option X12 with regards to partnering objectives. Schedules are also
provided for Partners, Core Group Members, Partnering Objectives, Partnering
Operation and Documents, Partnering Risk Management Arrangements and Partnering
KPIs / Incentive Arrangements.
4. PPC2000
PPC 2000 was the first standard form of Project Partnering Contract. It provides a
foundation and route map for the partnering process and can be applied to any type of
partnered project in any jurisdiction.
SPC 2000 was the first standard form of Specialist Contract for Project Partnering. It
allows the main contractor to enter into contracts with its subcontractors including those
subcontractors who also sign PPC 2000 in a manner consistent with PPC 2000 which
further integrates the agreed relationships and processes.
5. Perform 21
Perform 21 has been designed for Partnering and Best Value in the public sector. It
consists of the Public Sector Partnering Contract PSPC and The Local Government
Best Practice Toolkit. PSPC is an uncomplicated set of conditions which sets out the
basic rights and obligations of the parties making it clear which party carries the
essential matters of risk. The overriding ethos is that of simplicity and ease of use
The key contract is the Partnering Agreement. It is intended that the authority and main
contractor together with consultants and subcontractors who make up the partnering
team will enter into this agreement.
There are ten options which accompany the Partnering Agreement comprise:
1. Term Maintenance – Measure and Value
2. Term Maintenance – Target Cost with Cost Reimbursable
3. Authority Design – Lump Sum
4. Contractor Design Lump Sum
5. Authority Design – Target Cost with Cost Reimbursable
6. Contractor Design – Target Cost with Cost Reimbursable
7. Subcontract – Lump Sum
8. Subcontract – Target Cost with Cost Reimbursable
9. Profession Services
10. Pre-start Agreement
The PSPC contains very little in the way of procedures. Procedures which are part of
the Partnering and Best Value process are all contained in the Local Government Best
Practice Toolkit. The Toolkit comprises a Project Process Map made up of ten stages
commencing with the identification of the project and ending with the post construction
phase.
6. Be Collaborative Contracts
The contract is for the supply of construction related services. The overall aim of the
contract is to provide a framework which underpins collaborative working which is
contractually binding. The key documents comprise a Purchase Order and
Collaborative Construction Terms, and requires the purchaser and supplier to
collaborate. Whilst it is styled as a contract in fact it is a set of conditions which can be
incorporated into a contract. The intention is that the Purchaser will issue the Purchase
Order into which the Collaborative Contract Terms will be incorporated by reference.
CLAUSE BY CLAUSE COMPARISON
Parties To The Contract
PSPC
The Partnering Agreement is intended to be signed by all the members of the partnering
team. Signatures are added on a rolling basis as parties join the team. There is an
expressed term in the Partnering Agreement under which all those who sign the
Agreement will be required to enter into a contract for the construction of the project.
Options 1 to 9 comprise the alternative contracts for the construction of the works. They
include main contracts, subcontracts and a professional service agreement. The
contracts which make up Options 1 to 9 have only the two parties.
PPC 2000
This is a multi-party contract relating to a single project whereby the client, constructor
and the client’s appointed advisers work together under the same terms and conditions.
All or certain of the constructor’s subcontractors can also sign PPC 2000 as members of
the partnering team. SPC2000 can be used in respect of specialist work undertaken by
either those subcontractors who have entered into PPC 2000 or those who haven’t.
ECC Option X12
Option X12 is used for partnering between more than two parties on the same project.
The parties will have entered into one of the Primary Options for the construction of the
works under which they will be paid for their services. In like manner to the PSPC the
option is used for partnering between more than two parties working on the same
project and who will make up the partnering team.
Be
The parties to the contract are the Purchaser and Supplier. There is reference to the
Project Team in clause 1.2 comprising the Client and those Suppliers who are
considered by the Client to be of key importance. The Client is defined as the person
identified in the Purchase Order who is procuring the project. It would appear that the
Client and Purchaser may be one and the same but not necessarily so. However only
the Purchaser and Supplier are parties to the contract.
Employer’s Professional Advisers
PSPC
The only Professional Adviser named in the contract is the Contract Administrator. The
duties of the Administrator include the issuing of instructions and certificates, the
granting of extensions of time and the like.
PPC2000
Clause 5 sets out the functions and duties of the Client’s Representative. A Partnering
Adviser is provided for whose duties are also set out in clause 5. There is also provision
for a Design Team Leader whose duties are included in clause 8.
ECC Option X12
The Project Manager is the person engaged by the Employer who is bestowed with all
the main powers necessary to properly administer the contract. The issue of
instructions, certificates granting of extensions of time and the like fall within the remit of
the Project Manager
A Supervisor is provided whose duties revolve around identifying defective work and
issuing instructions with regard to carrying out tests.
Be
A Purchaser’s Representative is referred to in clause 2.5 who will have authority to act
on the Purchaser’s behalf in relation to the project.
Contract Documents
PSPC
The contract documents vary dependant upon which option has been selected. For
example the Authority Design Lump Sum contract lists the following as contract
documents in Article 5:
Articles of Agreement
Contract Drawings
Specification
Terms and Conditions
Appendix
Priced Documents
The Contractor Design Lump Sum contract provides a similar list of contract document
but with Contract Drawings and Specification replaced with Authority Requirements and
Contractor’s Proposals.
PPC 2000
The contract documents are referred to as Partnering Documents in clause 2.2 and
comprise the following:
Project Partnering Agreement
Partnering Terms
Partnering Timetable
Project Brief
Project Proposals
Price Framework
Consultants Services Schedules
Consultants Payment Terms
KPIs
Any additional or amended Partnering Documents
ECC Contract
The essential documents of an ECC contract are:
Contract data-part one-provided by the Employer
The contractor’s pricing document
Conditions of contract
Main options stated
Secondary options stated
Works information with input as appropriate from
The employer
The contractor
Site information provided by the employer
Contract data-part two-provided by the contractor
Form of tender
Letter of acceptance
Be
No documents are specifically referred to as contract documents. The contract however is
defined as:
“The agreement between the purchaser and the supplier relating to the provision of the
services comprising the purchase order, these terms (Collaborative Construction Terms) and
any other documents referred to in the purchase order”.
Partnering Obligations
PSPC
The partnering obligations are set out in the Partnering Agreement PSPC P. Clause 2
requires the partners to deal fairly with each other and work together in a spirit of mutual
trust, good faith and co-operation. There is also provision for the appointment of a Core
Group and its role. The Appendix includes space for the details of the Partnering Charter to
be set out.
PPC 2000
Clause 4 sets out the partnering objectives which include trust, fairness, mutual co-operation,
dedication to agreed common goals and an understanding of each others expectations and
values. There is also provision in clause 3 for the appointment of a Core Group and its role.
The Partnering Charter is classed as a Partnering Document in clause 2.6.
ECC Contract
Clause X12.1 requires each partner to work with the other partners to achieve the client’s
objectives as stated in the contract data and the objectives of every other partner stated in
the Schedule of Partners. A Schedule of Core Group Members is included in Option X12
whose duties are set out in clause X12.5 (5).
Be
Clause 1.1 sets out the Overriding Principle which explains that it is the intention of the
purchaser and supplier to work together with each other and with all other project participants
in a co-operative and collaborative manner in good faith and in the spirit of mutual trust and
respect.
Allocation Of Risk
PSPC
The allocation of risk between the parties is dealt with in the Project Process Map as part of
Stage 3.
PPC2000
The Partnering Team is required by clause 18.1 to work together and individually through risk
management exercises, and otherwise in accordance with the Partnering Documents, to
analyse and manage risk in the most effective ways.
ECC
There is no specific reference to the allocation of risk.
Be
There is extensive coverage in clause 4 regarding the allocation of risk. Provision is made
for the Purchase Order to make the Supplier responsible for the production of a risk register,
its update and amendment.
Before the date of the Purchase Order the Supplier and Purchaser will have completed the
form of Risk Allocation Schedule referred to in the Purchase Order.
Key Personnel
PSPC
Each of the 10 options provides in the Appendix for the Key Personnel to be named. Any
substitutes must be of equivalent ability and qualifications.
PPC2000
There is no specific reference to Key Personnel.
ECC
There is no specific reference to Key Personnel.
Be
The Purchaser is required by clause 3.9 to engage the Key Personnel named in the
Purchase Order. They cannot be replaced without the approval of the Purchaser. Any
replacement must be suitably qualified to perform the relevant role.
Activities Undertaken Before A Contract Is Concluded
In keeping with the more modern approach to procurement it is common practice to bring into
the decision making process the contractor and supply chain partners. It is therefore
advisable for those involved to enter into some form of written agreement so that each
partner is familiar with its rights and responsibilities.
PSPC
Option 10 is a Pre-start Agreement which is entered into by the Authority and the Contractor,
Consultant, Specialist or any other member of the supply chain referred to as “the
Contractor” Appendix Part 1 lists the types of services which may be required and includes
such matters as
1. Preparation of a Strategic Brief
2. Advise on EC advertising
3. Advising on a procurement route
4. Development of a target cost
5. Risk Management workshop
6. Start-up workshop
7. Undertaking design work
There is a space to include any services in addition to those specifically set down.
Payment for the services provided under this agreement are made in accordance with the
Schedule of Costs. There is no provision however for the recovery of profit
PPC2000
Appendix 3 Part 1 comprises the Form of Pre-Possession Agreement. Only the Client and
Constructor enter into this agreement. There is space in clause 2 to enter the Pre-
Possession Activities. Clause 4 allows the parties to indicate the amount of money to be paid
to the Constructor for the Activities undertaken in accordance with the Agreement.
ECC
There is no specific reference in the ECC contract to pre-contract activities.
Be
There is no specific requirement to pre-contract activities.
KPIs and Continuous Improvement
PSPC
Stage 6 of the Project Process Map Contractor Selection has under a heading Post Tender
Negotiations an item for Determining KPIs. The intention is to have all KPIs agreed before
work commences. Stage 9 which is the Construction Phase requires the KPIs to be
monitored and reviewed.
PPC2000
1. Clause 23.1 requires all KPIs which have not been finalised at the date of the Project
Partnering Agreement to be finalised by the Core Group and approved by the Client
in accordance with the Partnering Timetable as a precondition to implementation of
the project on site.
2. Each Partnering Team member is required in compliance with clause 23.2 to provide
the Client’s Representative with open book information to demonstrate progress
against KPIs.
3. The Partnering Team members in accordance with clause 23.2 are to work together
to maximise through measurable continuous improvement the potential for the
project to achieve the objects set out in clause 4.
4. Clause 23.6 requires all the Partnering Team to attend a meeting after the project
has been completed to review the completed project and the performance against
the KPIs.
ECC
The Schedule of Partners in the Partnering Option provides for KPIs. There can be more
than one KPI for each Partner or the KPIs may apply to one or several of the Partners. A
Partner is paid the amount stated in the Schedule of Partners if the target stated for a KPI is
improved or achieved. An example of a KPI is given in the Partnering Option.
Be
Clause 5 deals with measurement of performance. KPIs relevant to both Purchaser and
Supplier are to be set out in the Purchase Order. The KPIs will be monitored against the
performance criteria set out in the Purchase Order and formal reviews are to take place
monthly.
Value Engineering And Value Management
PSPC
Value Management and Value Engineering are provided for in the Project Process Map as
part of Stage 4 Project Preparation and Stage 8 Design Development
PPC2000
Clause 8.8 requires the Lead Designer with input from other members of the design team to
amend design as necessary to adopt the results of Value Engineering exercises.
ECC
There is no specific reference to Value Engineering or Value Management.
Be
There is no specific reference to Value Engineering or Value Management.
Programme
PSPC
The preparation of the programme takes place during the Design Development Stage of the
Project Process Map. It is reviewed and updated during the remaining Stages until
completion of the work
PPC2000
There is reference to a Partnering Timetable which governs the activities of the Partnering
Team members in relation to the Project prior to the date of the Commencement Agreement.
The Project Timetable is agreed in accordance with clause 6 of the contract for
implementation of the Project after the date of the Commencement Agreement.
ECC
The contract is very much programme lead. Clause 31 provides in detail the sort of
information which must be included in the programme. Each compensation event which may
give rise to an entitlement to an extension of time and additional cost must be the subject of
a quotation before implementation. If there is likely to be a delay to completion then the
quotation must be accompanied by a revised programme.
Clause 50.3 is unusual in that one quarter of the Price for Work Done is deducted when the
Project Manager assesses the sums due for certification during the period during which the
contractor has failed to produce a programme. This is hardly in the spirit of partnering.
Be
Clause 3.14 provides for a project programme if so required by the Purchase Order. It is to
be prepared by the Supplier who will be responsible for its monitoring and update.
Early Warning Meetings
PSPC
Clause 5 of the Partnering Agreement requires each partner to give an early notice to the
other partners when aware of any matter which may cause delay or impair performance in
achieving the objectives set out in the Partnering Charter.
PPC2000
Clause 3.7 requires the Partnering Team to operate an early warning system whereby each
member of the Partnering Team is required to notify the others as soon as it is aware of any
matter adversely affecting or threatening the project. The clause goes on to add that the
Clients Representative is to convene a meeting of the Core Group within 5 working days to
agree an appropriate course of action.
ECC
The Contractor and Project Manager are required by clause 16.1 to give early warning
notification to the other as soon as either becomes aware of any matter which may increase
the total of the prices, delay completion or affect the performance of the works. Their
obligation is to co-operate in making and considering proposals for how the effect of notified
matters can be avoided or reduced.
Be
There is no specific reference to early warning meetings. The broad terms of the Overriding
Principle in clause 1.1 however would include arranging early warning meetings.
Partnering Team Meetings
PSPC
There is no specific reference in the conditions of contract to a requirement for partnering
meetings to be held. This is a part of the procedure which is catered for by the Perform 21
Best Practice Toolkit.
PPC2000
Clause 3.8 provides for meetings of Partnering Team members to be convened by the
Clients Representative at the request of any Partnering Team member or as required by the
Partnering Documents. Five days notice is needed and an agenda produced. The meeting
can only deal with the matters included in the agenda.
ECC
Clause 16.1 provides for either the Project Manager or the Contractor to require the other to
attend an early warning meeting to which each may invite others. This apart there is no
specific reference to Partnering Team meetings.
Be
Clause 3.14 requires the supplier to be responsible for arranging regular progress meetings
of the Project Team if required by the Purchase Order.
Instructions To The Contractor
PSPC
The contractor is required to comply with all reasonable instructions issued by the Contract
Administrator in regard to the Works. In most of the options this power is included in clause
7. In addition the Contract Administrator may instruct the Contractor to remove an employee
who is engaged on the site; however it must not be unreasonable or vexatious.
PPC2000
Clause 5.3 gives the Clients Representative the power to issue instructions to the
Constructor. They must however be consistent with the Partnering Documents and must not
prejudice the collaborative spirit of the partnering relationship. The Constructor has the
authority to notify the Clients Representative within two working days if it is considered that
the instruction is contrary to any Partnering Document or otherwise detrimental to the best
interests of the project.
ECC
The Contractor in accordance with clause 29 is required to obey instructions in accordance
with the contract which are given by the Project Manger or the Supervisor.
Be
The word Contractor is not used; reference is made to the Supplier who is responsible for
delivering the services. Clause 3.8 requires the Supplier to comply with all reasonable
instructions in writing from the Purchaser or Purchaser’s Representative in respect of the
project.
Commencement And Completion
PSPC
The requirements regarding commencement and completion in most of the options are set
out in clause 12.0. Commencement occurs on the Commencement Date indicated in the
Contract Administrator’s instruction to commence. This instruction must be sent to the
Contractor within 28 days of the award of the contract. All work must be completed within the
contract period stated in the Appendix. Provision is made for the work to be completed in
Sections and space is provided in the Appendix for the periods for completion of each of the
Sections.
PPC2000
Clause 15.1 requires all the Partnering Team to enter into a Form of Commencement
Agreement. This Agreement gives the Date of Possession and the Date for Completion.
There is provision for completing the project in sections.
ECC
The Possession Date is stated in the Contract Data - Part One. Completion to comply with
clause 30 must be achieved on or before the Completion Date. Provision is made for
possession to be given of parts of the site. There is provision for the Contractor to decide the
Completion Date for the whole of the works and where this applies the Completion Date is
given in the Contract Data Part Two.
Be
The Date or Dates for Completion are specified in the Purchase Order as indicated in clause
8 – Definitions. There is no specific reference to a Commencement Date, however it is
anticipated that the Commencement Date will be agreed by the Purchaser and Supplier and
included in the Project Programme described in clause 3.14.
Contract Price
PSPC
Where the contract is based upon a lump sum as in options 3, 4 and 7 a Contract Sum is
included in the Agreement. In the case of those options which provide for a Target Cost with
Cost Reimbursable as in options 2, 5, 6 and 8 the Contractor is paid his admissible costs
plus a fee. A Target Cost is given in the Agreement.
The Partnering Agreement makes provision in Appendix Part 5 for the inclusion of a
Guaranteed Maximum Price. Clause 11 of the Terms and Conditions requires all the
Partners to use their best endeavours to ensure that the Guaranteed Maximum Price is
achieved.
PPC2000
There is no provision for including a lump sum price in the contract for carrying out the work.
Clause 12.3 allows for prices for all aspects of the project to be developed and agreed by
reference to the Price Framework and other Partnering Documents. This enables an agreed
maximum price to be established which should fall within any budget stated in the Price
Framework.
ECC
Where Primary Options A and B apply a lump sum is provided in Part Two of the Contract
Data and referred to as the Tendered Total of Prices. There is no lump sum where Primary
Options C, D E and F apply instead the contractor is reimbursed the actual costs plus the
fee. There is no reference to a Guaranteed Maximum Price.
Be
Section 6 includes two alternatives. The first, Alternative A, includes for the Supplier to be
paid the Actual Cost be reference to the Target Cost. Alternative B is for the payment of the
Contract Sum. There is provision for a Guaranteed Maximum Price to be included in the
Purchase Order which may be subject to revision in accordance with clause 4 which deals
with the allocation of risk.
Open Book Accounting
PSPC
Options 2, 5, 6 and 8 are all Target Cost With Cost Reimbursable and provide for open book
accounting. For example, clause 5 requires the contractor to provide copies of all records,
costs supply and subcontract invoices subject to seven days’ notice. The Authority is entitled
to carry out a full audit subject to 14 days’ notice.
PCC2000
Each Partnering Team Member will allow the Client’s Representative to visit its offices to
inspect its financial records at any time subject to reasonable prior notice, as provided for in
clause 20.12
ECC
The Project Manager can inspect the Contractor’s accounts and records at any time in
accordance with clause 53 Options C, D and E where payment is on an actual cost basis.
Be
Clause 6.1 requires the Supplier to keep detailed records of Actual Cost incurred in a fully
auditable manner which are to be made available to the Purchaser whenever reasonably
required.
Grounds For Extensions Of Time
The grounds for extensions of time as provided for in PSPC, PPC2000, ECC and Be are
compared in Appendix 1. They are referred to as compensation events in the ECC and relief
events in Be.
Procedures Relating To The Granting Of Extensions Of Time
PSPC
The procedure leading to the granting of an extension of time is minimal. Clause 14 in most
options requires the Contractor to provide details and particulars to demonstrate that
completion has been delayed by one or more of the causes set out in the contract. The
amount of detail should be to the extent that the Contract Administrator reasonably requires.
PPC2000
The procedure as required by clause 18.3 comprises:
1. The Constructor notifies the Client’s Representative as soon as it becomes aware of
any of the events giving rise to an entitlement
2. Appropriate evidence and detailed proposals consistent with the Partnering
Documents for overcoming the problem and minimising the adverse effects on time
cost and quality are to be sent
3. The proposals to be implemented within 2 working days unless the Client’s
Representative instructs otherwise
4. The Client’s Representative to respond within 20 working days
5. The response to include a fair and reasonable extension of time if appropriate
6. If the Client or Constructor disputes the extension of time award then the dispute
must be notified in accordance with clause 27.1 within 20 days of the Client’s
Representatives response.
Where a delay has occurred as a result of a default or failure of the Client or any Consultant
as referred to in clause 18.3(1) the Constructor’s entitlement to an extension of time is
subject to the him having given an early warning under clause 3.7. This suggests that a
failure to serve a warning notice could lose the Constructor the right to an extension of time
which is not in the spirit of partnering.
ECC
The procedure relating to the granting of an extension of time is complicated. All grounds for
extensions of time are referred to as compensation events. They give the Contractor an
entitlement to both an extension of time and additional cost. The underlying principle is that
the effects of a compensation event in terms of time and money should be ascertained in
advance of the matter taking effect. The procedures which are set out in clauses 61, 62, 63
and 64 are briefly described as follows:
1. The Project Manager notifies the Contractor of a compensation event which arises
from an instruction at the time of the event. He also instructs the Contractor to submit
a quotation of the effect of the event in terms of time and money. The Contractor puts
the instruction into effect
2. The Contractor may notify the Project Manager of an event which he considers is a
compensation event if not already notified by the Project Manager. This notification
must be within two weeks of him becoming aware of the event
3. If the Project Manager considers that the event is a compensation event he instructs
the Contractor to submit a quotation within one week of the Contractor’s notification
4. If the Contractor is required to submit a quotation he must do so within three weeks of
being instructed.
5. The Project Manager replies within two weeks of the submission
6. If the programme for the remaining work is affected by the compensation event the
Contractor includes a revised programme in his quotation
7. If the Contractor does not submit a quotation as instructed or the Project Manager
disagrees with the Contractor’s assessment then the Project Manager assesses the
compensation event.
An unusual aspect of the ECC contract with regard to the granting of extensions of time
occurs in clause 63.3. Under the terms of this clause extensions of time are assessed as the
length of time, due to the compensation event, planned completion is later than the planned
completion shown on the Accepted Programme. Where a programme provides for an early
completion the extension of time is calculated from the early Completion Date. Most other
contracts provide for the assessment of delay to be measured against the Completion Date
included in the contract.
Be
Clauses 4.6 to 4.12 provide seven distinct stages leading to the granting of an extension of
time.
1. Clause 4.6 requires the Purchaser or Supplier to notify the other as soon as it
becomes aware that a relief event has occurred.
2. Where the relief event affects another member of the Project Team, clause 4.7
requires the member to be promptly informed.
3. Not later than 14 days after the notification, the Supplier is required by clause 4.8
to provide a statement setting out in as much detail as reasonably practicable the
effect on cost and the Date or Dates for Completion.
4. The Supplier is required by clause 4.9 to provide any additional information
reasonably required by the Purchaser.
5. Clause 4.10 requires the Purchaser and Supplier to use reasonable endeavours
to agree the effects of the relief event referred to in the Supplier’s statement.
There must also be co-operation to agree any action that reduces or minimises
any adverse effect of the relief event.
6. If the Purchaser decides the effect of the relief event is too uncertain, it will agree
with the Supplier the assumption to be made to enable an estimate to be
calculated. Agreement will be made to any corrections needed at a later stage to
the original estimate.
7. Any failure to reach agreement of the effects of a relief event will be resolved in
accordance with the Dispute Resolution Procedure.
Additional Cost Arising From Delay
Where a delay to the completion of the work occurs there is almost always a resultant
additional cost. Each of the three forms of contract under review has it own way of dealing
with the situation
PSPC
The matter of additional cost which results from a delay to completion is approached in a
simple manner. Options 1 and 2 which deal with Term Maintenance and Options 5, 6 and 8
which are Target Cost and Cost Reimbursable allow for additional cost to be certified and
paid in respect of all delays which give rise to an extension of time entitlement. The grounds
for extensions of time are set out in Appendix 1. Options 3,4 and 7 are all lump sum
contracts which allow for additional cost to be certified and paid for all delays which give rise
to an extension of time except:
“Any matter outside the control or responsibility of the Contractor or of others employed
or engaged by the Contractor”
PPC2000
Clause 18.5 provides for the reimbursement of Site Based Overheads where delay occurs
which gives rise to an entitlement to an extension of time as set out in Appendix 1, except for
the following reasons:
1. Delay in receipt of third party consents (ref 6)
2. Weather conditions (ref 8)
3. Delay by local authority or statutory body (ref 9)
4. Loss or damage arising from Constructor’s insured risk (ref 11)
5. Strike or industrial action (ref 12)
6. Exercise of statutory power by government (ref 13)
ECC
All clause 60 compensation events which are set out in the Appendix entitle the contractor to
an extension of time an additional cost.
Be
All relief events set out in the Appendix entitle the Supplier to an extension of time and
additional cost.
Liquidated / Delay / Late Completion Damages
PSPC
There are no provisions for applying a prefixed amount of damages for late completion in the
following options:
Option 1 Term Maintenance Measure and Value
Option 2 Term Maintenance Target Cost With Cost Reimbursable
Option 9 Professional Services
Option 10 Prestart Agreement
The other Options all provide for a prefixed amount of damages to be applied in the event of
late completion. In the case of Options 7 and 8, which are the subcontracts, the late
completion damages clauses are optional.
PPC2000
There is no provision for a prefixed amount to be levied in the event of late completion.
ECC
Delay Damages are provided for in Secondary Option R.
Be
Clause 7.10 provides for liquidated damages to be provided for in the Purchase Order.
Variations And Changes
Where contracts are based upon a lump sum the evaluation of variations and changes is
employed to adjust the lump sum. In respect of contracts which provide for cost reimbursable
and a target, the cost implications of variations and changes will be applied to adjust the
target.
PSPC
In most of the options clause 15.0 deals with variations. The Contract Administrator may
order a variation by way of:
1. Variation or modification of the design, quality or quantity of the work
2. Addition to, omission from or alteration to the works
3. Change to the sequence of the works
The rates and prices in the Priced Documents are used where relevant or rates and prices
adduced there from. If there are no suitable rates and prices then a fair valuation is applied.
A valuation of the variation may be agreed by the Contractor and the Contract Administrator
before work commences.
PPC2000
Clause 17 deals with Changes as follows:
1. Any member of the Partnering Team may propose a change to the Client
2. The proposed change will be considered by the Client and his representative advised
by other Partnering Team members.
3. If approved the change will be notified by the Client to the Constructor
4. The Client may propose a change.
5. If the Client proposes a change the Constructor will within 10 working days submit a
proposal showing the effect of the change on the amounts payable and on the
Agreed Maximum Price. In each case the calculation will be based upon the Price
Framework.
6. The Client will consider the Constructors proposal with his representative advised by
other relevant Partnering Team members. The intention being to reach agreement
with the Constructor within 5 working days and for the Client’s Representative to
instruct the Constructor to proceed.
7. The Client’s Representative may request the Constructor to withdraw the proposal.
8. If agreement isn’t reached then the Clients Representative will ascertain the cost
effect on a fair and reasonable basis using where appropriate prices in the Price
Framework.
9. If the Client considers a proposed change is sufficiently urgent the Client’s
Representative will instruct the Constructor to proceed in advance of the
aforementioned procedure which can be dealt with later.
ECC
The Works Information is set out in the Contract Data-Part One which is provided at tender
stage by the Employer. It will usually include such matters as the drawings and specification
or Employers Requirements. All changes and variations are classed as compensation events
and dealt with under clause 60.1(1). All compensation events are priced in advance of the
work being carried out in compliance with clause 62. The evaluation in all cases is based
upon an assessment of the costs likely to be incurred.
Be
There is not specific reference to variations or changes to the Client’s Brief. Clause 3.8
however requires the Supplier to comply with the reasonable instructions in writing received
from the Purchaser or Purchaser’s Representative relating to the Project.
Incentives/Painshare Gainshare
Many Partnering contracts provide for the Contractor to be paid in accordance with his
recorded costs. This is often referred to as Open Book as the Contractor provides access to
all his costs and accounts to the Clients Representatives. As an aid to efficiency Contractors
are usually required to work to a Target cost. Any savings as a result of the final cost coming
in at less than the Target are shared between the Contractor and the Client. Likewise any
excess of cost over Target is shared. An exception is ProCure 21 which is used as a
procurement route in the health sector. Where this system applies the health trust shares in
any saving on cost but does not contribute to any excess.
PSPC
1. Option 2 deals with Term Maintenance, Target Cost with Cost Reimbursable and
includes in clause 25 a Pain Share/Gain Share arrangement. Options 5 and 6 deal with
Authority Design and Contractor Design respectively which under clause 20 have a Gain
Share/Pain Share arrangement. Option 8 is the Subcontract which in clause 17 provides
for Gain Share/ Pain Share.
2. The Term Maintenance option includes for calculating the target by measurement of the
work included in the order with adjustments made in respect of variations and additional
costs resulting from delay which entitle the contractor to an extension of time.
3. Options 5, 6 and 8 give no guidance as to how the target is to be fixed. Perform 21 which
is the overarching procurement route has a Project Process Map which includes as part
of Stage 5 Developing a Framework Process and Stage 6 Contractor Selection Process.
These two stages include for deciding the methodology to be used in calculating the
target. Adjustment of the target is provided for in clause 18 of options 5 and 6 and clause
21 of option 8. The affect of variations and the additional cost resulting from delays to
completion, except delays due to matters outside the control or responsibility of the
contractor, give rise to an adjustment of the target
4. The contractor’s costs are calculated in accordance with Schedule of Costs. A sharing of
the saving or excess of costs is to be calculated in accordance with the percentage split
set out in Appendix to each of the options.
PPC2000
Clause 13.1 requires the Core Group to seek to agree incentives additional to any described
in the Partnering Documents. The incentives are to be implemented by the Partnering Team
in accordance with clause 13.2.
ECC
Clause X 12.4(1) of the Partnering Option indicates that the Partner is to be paid the amount
stated in the Schedule of Partners if the target for the KPI is improved or achieved. In the
Guidance Notes it states that there can be more than one KPI for each Partner and that KPIs
may apply to one Partner or to several or all Partners. An example of a KPI is also set out in
the Guidance Notes.
Options C and D provide for a Target Price to be fixed and the contractor paid his Actual
Costs. He is also paid a share of the saving between Target Price and Actual Cost in
accordance with clause 53.
Secondary Option Q provides a facility for the payment of a bonus for early completion.
Be
Clause 7.11 makes provision for a bonus for early completion to be specified in the Purchase
Order.
Problem Solving And Dispute Avoidance
PSPC
There is a two day Partnering Workshop in Stage 5 Operational Detail of Framework
Agreement when the Partnering Team meet and as part of the procedure they agree a
problem solving and dispute avoidance process.
PPC2000
1. As soon as one of the Partnering Team becomes aware of a difference or dispute
with another Partnering Team member he must give notice to the other member
and send a copy to the Client’s Representative.
2. The Partnering Team member so advised guided by the Partnering Adviser applies
the Problem Solving Hierarchy described in the Commencement Agreement. The
employees named therein are required to express their views, propose their
solutions within a timetable for trying to achieve a settlement.
3. If no agreement is reached the Client’s Representative convenes a meeting of the
Core Group giving no more than 10 working days notice.
4. If the difference or dispute is not settled by the Core Group any Partnering Team
member may refer it to conciliation or mediation or any other form of ADR
recommended by the Partnering Adviser
5. This procedure is without prejudice to the right to refer the dispute or difference to
adjudication.
ECC
There is no reference to problem solving or dispute avoidance in the ECC contract which is
an omission in need of correction.
Be
Clause 7.28 requires the Purchaser and Supplier to resolve any dispute by direct
negotiations between senior executives. Each of them to give serious consideration to any
request by the other to refer the dispute to mediation if negotiations fail.
APPENDIX
Extensions of Time Comparison
PSPC Clause 14.0 in most options
PPC2000 Clause 18.3
ECC Clause 60.1 referred to as compensation events
Be Clause 4 referred to as relief events
Ref Grounds for EOT PSPC PPC2000 ECC Be
1 Action, omission or default of 14.1.1 18.3 (i) 60.1 (3) 4.5
Authority / Employer / Client 18.3 (xiv) 60.1 (5)
60.1 (18)
2 Any matter outside the control 14.1.2
or responsibility of the
contractor
3 Contractor suspends work for 14.1.3 18.3 (xii) 60.7
non payment
4 Variations and changes 14.1.14 17.0 60.1 (1) 4.5
5 Discovery of antiquities 18.3 (ii) 60.1 (7)
6 Delay in receipt of third party 18.3 (iii)
consents
7 Change of law or regulation 18.3 (iv)
8 Weather conditions 18.3 (v) 60.1 (13)
9 Delay by local authority or 18.3 (vi)
statutory body
10 Opening up for inspection and 18.3 (vii)
testing
11 Loss or damage arising from 18.3 (viii)
Contractor’s insured risk items
12 Strike or industrial action 18.3 (ix)
13 Exercise of statutory power by 18.3. (x)
government
14 Failure by client / employer to 18.3 (xi) 60.1 (2)
access or give possession on
time
15 Use or threat of terrorism 18.3 (xiii)
16 Delay damage or obstruction 18.3.(xv)
by specialist appointed by
client
17 Any other event referred to in 18.3 (xvi)
Commencement Agreement
18 Project manager or supervisor 60.1 (6)
does not reply to contractor’s
communication on time
19 Project manager or supervisor 60.1 (8)
changes a decision previously
communicated to the
contractor
20 Project manager withholds an 60.1 (9)
acceptance for reasons not
stated in the contract
21 Supervisor instructs contractor 60.1 (10)
to search and no defect is
found
22 Test or inspection by 60.1 (11)
supervisor causes
unnecessary delay
23 Contractor encounters 60.1 (12)
unexpected physical conditions
24 Employer’s risk item 60.1 (14)
25 Project manager certifies take 60.1 (15)
over of part of the works
26 Employer does not provide 60.1 (16)
materials etc for tests as stated
in Works Information
27 Project manager notifies a 60.1 (17)
correction to an assumption
about the nature of a
compensation event
28 Inaccuracies in Bill of Appendix
Approximate Quantities 2
29 Any risk referred to in the Risk 4.5
Allocation Schedule not
allocated to the Supplier
30 Any risk not referred to in the 4.5
Risk Allocation Schedule which
could not reasonably have
been foreseen and beyond the
control of the Supplier
TEST QUESTIONS AND ANSWERS
QUESTIONS
Question 1
Name the four contracts in common use which provide for partnering on construction
projects.
Question 2
How do the contracts deal with Partnering obligations?
Question 3
How do the contracts deal with the allocation of risk?
Question 4
What provision is made in the contracts for undertaking activities before a formal contract is
entered into?
Question 5
What provision is made in the contracts for bench marking and continuous improvement?
Question 6
What procedure is required by PPC2000 relating to the granting of an extension of time?
How does this compare with PSPC?
Question 7
How do the contracts deals with liquidated, delay or late completion damages?
Question 8
How do the contracts deal with incentives?
Question 9
What provisions are there in the contracts for programmes?
Question 10
In what manner, if any, do the contracts deal with problem solving and disputes avoidance?
MODEL ANSWERS
Question 1
Public Sector Partnering Contract
PPC2000
ECC Option X12
Be
Question 2
The PSPC requires the parties to deal fairly with each other and work together in a spirit of
mutual trust, good faith and co-operation.
PPC2000 sets out the partnering obligations which includes trust, fairness, mutual co-
operation, dedication to common goals and an understanding of each others’ expectations
and values.
The ECC requires each partner to work with the other partners to achieve the client’s
objectives as stated in the contract data and the objectives of every other partner stated in
the Schedule of Partners.
The Be contract sets out the Overriding Principles which explain that it is the intention of the
Purchaser and Supplier to work together with each other and with all other project
participants in a co-operative and collaborative manner in good faith and in the spirit of
mutual trust and respect.
The PSPC, PPC2000 and EC Option X12 all provide for the appointment of a Core group
together with its duties.
Question 3
Allocation of risk under the PSPC is dealt with in the Bet Practice Toolkit which, together with
the PSPC comprises Perform 21.
Under PCC2000 the Partnering Team is required to work together and individually through
risk management exercises and otherwise in accordance with the Partnering Documents to
analyse and manage risk in the most effective manner.
Be contains extensive coverage of how risk is to be allocated. The Supplier is required to
produce a risk register and keep it up to date. These matters are all deal with in the
Purchase Order.
There is no specific reference to risk allocation in the ECC.
Question 4
PSPC provides for a Pre-Start Agreement to be used. There is a list of typical services
which the contractor may be required to provide. These include:
Preparation of a Strategic Brief
Advising on EC advertising
Advising on a procurement route
Developing a Target Cost
Undertaking risk management and start up workshops
Undertaking design work
This is not an exclusive list as there are provisions for other non specified services to be
added.
There is provision for payment in accordance with a Schedule of Costs but no allowance for
profit.
A Form of Pre Possession Agreement is included in PPC2000. Space is provided to enter in
the Pre-Possession Activities and the amount of money to be paid to the contractor for
carrying them out.
The ECC and Be make no reference to activities to be undertaken before a formal contract is
entered into.
Question 5
There is no specific reference to bench marking and continuous improvement in PSPC.
However, provision is made in the Best Practice Toolkit under a heading Post Tender
Negotiation for determining KPIs.
PPC2000 requires all KPIs which have not been finalised at the date of the Project
Partnering Agreement to be finalised by the Core Group and approved by the Client in
accordance with the Partnering Timetable as a precondition to implementing the project
onsite.
All members of the Partnering Team must provide the Client’s Representative with open
book information to demonstrate progress against KPIs. The Partnering Team is required to
work together to maximise potential through continuous improvement which is subject to
measurement to ensure the project achieves its objectives. Provision is also made for a
review meeting after the project has been completed to compare performance against the
KPIs.
The ECC provides for KPIs to be set out in the Schedule of Partners. There can be more
than one KPI for each partner or the KPIs may apply to one or several of the Partners. Some
element of payment is dependent upon achieving the KPIs.
In Be, KPIs relevant to both Purchaser and Supplier are to be set out in the Purchase Order.
The KPIs are to be monitored monthly against performance when formal reviews are to take
place.
Question 6
PPC2000 requires the contractor to notify the Client’s Representative as soon as it becomes
aware of any event giving rise to an entitlement to an extension of time. The Contractor is
also required to send appropriate evidence which supports its notice together with proposals
to overcome the problem and minimise the effects on time, cost and quality. These
proposals must be implemented within 2 working days unless the Client’s Representative
instructs otherwise. It is the duty of the Client’s Representative to respond within 21 days
and grant a fair and reasonable extension of time if appropriate.
The PSPC requirements are minimal in that the Contractor is required to provide details and
particulars in sufficient detail as the Contract Administrator reasonably requires to
demonstrate that the completion date has been delayed.
Question 7
There is no difference in essence between liquidated damages, delay damages and late
completion damages. They are all provisions under which the contractor compensates the
employer for completing late.
There is no provision in PPC 2000 for liquidated/ late completion or delay damages.
Secondary Option R in the ECC provides for the parties to include for delay damages if
required.
The Be contract provides for liquidated damages to be provided for in the Purchase Order.
With regard to the PSPC there are no provisions for a prefixed amount of damages for late
completion in the following options:
1. Option 1 Term Maintenance Measure and Value
2. Option 2 Term Maintenance Target Cost With Cost Reimbursable
3. Option 3 Professional Services
4. Option 10 Pre-Start Agreement.
The other PSPC options all provide a prefixed amount of damages to be applied in the event
of late completion. In the case of options 7 and 8 which are the subcontracts late completion
damages are optional.
Question 8
Pain Share / Gain Share
Many partnering contracts provide incentives for the contractor to reduce costs by paying the
contractor on a cost reimbursable basis incentivised by the use of a target price. The target
price is fixed before work commences and if the final costs are less than the target price the
parties share the difference, sometimes referred to as a gain share, on a prefixed basis.
Where the costs exceed the target price both the parties contribute to the overspend,
sometimes referred to as a pain share, on a prefixed basis.
The PSPC provides for a pain share/gain share arrangement in the following options:
1. Option 2 Term Maintenance Target Cost With Cost Reimbursable
2. Option 5 Authority Design Target Cost With Cost Reimbursable
3. Option 6 Contractor Design Target Cost With Cost Reimbursable
4. Option 8 Subcontract Target Cost With Cost Reimbursable
The ECC provides for a gain share/pain share in the following options:
1. Option C Target Cost With Activity Schedule
2. Option D Target Cost With Bill of Quantities
Bonus
Some contract include for the payment of a bonus for meeting prefixed targets.
The ECC provides KPIs in the Schedule of Partners in the Partnering Option. A Partner is
paid the amount stated in the Schedule if the target stated for the KPI is achieved or
improved.
The Be contract includes for KPIs relevant to both Purchaser and Supplier to be set out in
the Purchase Order. The KPIs will be monitored against the performance criteria set out in
the Purchase Order.
PPC 2000 provides for the inclusion of KPIs to be finalised by the date of the Project
Partnering Agreement. Those which have not been agreed by this date will be the subject of
agreement between the Core Team and the Client in accordance with the Partnering
Timetable. All Partners are to provide open book information to demonstrate to the Client’s
Representative progress achieved against the KPIs. Continuous improvement must be
demonstrated with a review when the project is completed.
Question 9
Most contracts include a provision under which the contractor is required to provide a
programme. The PSPC is somewhat different in that there are no procedures included in the
contract. Perform 21, of which the PSPC forms a part, includes The Best Practice Toolkit.
The preparation of the programme takes place during the Design Development Stage which
is part of the Best Practice Toolkit.
There is reference to a Partnering Timetable in PPC 2000 which governs the activities of the
Partnering Team members prior to the date of the Commencement Agreement. After the
date of the Commencement Agreement the programme of the works is included in the
Project Timetable.
The ECC is very much programme led. The type of information to be included in the
programme is detailed in the contract. Each compensation event must be the subject of a
quotation before the work is implemented. If there is likely to be a delay to completion as a
result of the compensation event the quotation must be accompanied by a revised
programme.
Question 10
There is no reference in the ECC to problem solving or disputes avoidance.
The Be contract requires the Purchaser and Supplier to resolve any dispute by direct
negotiations between senior executives.
Stage five of the Best Practice Toolkit used with PSPC as part of Perform 21 includes for a
two day workshop. As part of the procedure the Partnering Team agrees a problem solving
and dispute avoidance process.
PPC 2000 is very specific on the matter of problem solving and provides the following
process:
1. As soon as one of the Partnering Team becomes aware of a difference or dispute
with another member of the Team notice must be served on the other member and a
copy sent to the Client’s Representative.
2. The Problem Solving Hierarchy described in the Commencement Agreement is
applied by the Partnering Team member guided by the Partnering Adviser.
3. If no agreement is reached the Client’s Representative convenes a meeting of the
Core Group giving no more than 10 working days notice.
4. If the dispute is not settled it may be referred to conciliation, mediation or any other
form of ADR recommended by the Partnering Adviser.
