The Contract – The root of all evil or the best thing since sliced bread?

In our experience the majority of problems with collaborative relationships stem from contract terms that do not encourage the parties to work together and, from a lack of involvement in the management of the relationship by the commercial staff.

 In any ‘commercial’ relationship there needs to be rules of engagement – usually recorded in a ‘contract’. However, the more closely partners work together, the greater the need for adaptability in the agreement because innovation will open up new opportunities and new ways of working.

 “Our Board cut the checks and balances to encourage collaborating. Now, two years later, we are still wrangling over who was to blame for the £7m hole!”

Chief Engineer, Global Construction Company

Within a flexible contract (see NEC3 for a good example) active communications that reduce the risk of problems and the likelihood of friction are most important. It is far better to nip trouble in the bud than to end up fighting fires. Furthermore, the focus should be on outcomes rather than ‘small print terms and conditions’.

 A change in culture within commercial staff is needed. They should be in there from the start as part of the joint relationship management team working to develop and support its aims and objectives. They should not only be prepared to advise how the current contract applies to the operation but also to change the agreement if circumstances require a different direction. Without this contribution collaboration often struggles.

 “In our project the hard work of the contract staffs has ensured a creative environment. A sound, clearly understood working structure of contract and procedures has been an important success factor.”

Project Manager, UK Defence

 “Although top management have a good relationship with us, their contracts branch still have a 'cannot-do, jobs-worth' attitude. They spend an inordinate amount of time arguing about 'pence'. They are the main stumbling block to a good, timely, efficient relationship.”

Senior Team Leader, UK Defence Contractor

 The Relationship Managers should publish the key features of the commercial agreement so that it can be read by all staff in the joint team. It is a dynamic document and should be kept up to date as the relationship evolves.

 “Our contracts are flexible and there is top level commitment to incentivised, workable arrangements. However, I'm not aware of the details of our contract - we certainly don't have clear objectives at the working level, hence there is uncertainty over how each person contributes.”

Middle Manager, Rail Infrastructure Supplier