Exposing the pitfalls of complex construction contracts

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Unveiling the Challenges: The Complexities of the NZS:3910 Contract

As a contractor, I’ve had my fair share of experiences with contracts in the construction industry. One contract that frequently comes up is the 3910, which aims to be fair but often ends up being unfair due to various reasons. In this article, I want to shed some light on the challenges we face as contractors and discuss ways to promote collaboration and mitigate risks in construction projects.

The Burden of Special Conditions: Overshadowing the 3910 Contract

The 3910 contract, in its essence, is relatively straightforward and reasonable. However, the real challenge lies in the numerous special conditions that are attached to it. These conditions can range from a couple of pages to a whopping 200 pages, which often overshadow the original contract itself. Another factor that complicates matters is the role of the engineer to the contract. Whilst this role is supposed to be impartial, it becomes problematic when the engineer is primarily paid by the principal, leading to doubts about their true impartiality.

A Glimpse of Hope: Exploring the New 3910 Review

Fortunately, there is hope for positive changes with the new 3910 review that has recently come out. Although I haven’t had the chance to review it thoroughly, I believe it might address some of the existing issues. However, regardless of contract revisions, the adversarial nature of contracts seems to persist. It appears that the spirit of collaboration, where all parties genuinely strive to deliver a successful project, has been overshadowed by a focus on contractual obligations and conditions.

Passing the Buck: Overcoming the Downstream Risk Transfer

One of the key problems I’ve identified in this regard is the lack of collaboration fostered by the contract itself. Instead, it often promotes a practice of passing risks downstream. Main contractors frequently transfer risks to subcontractors, and this process continues all the way down the procurement chain. As the saying goes, “the buck stops here,” and this dynamic is far from ideal.

Embracing Digital Innovation: Revolutionising the Construction Landscape

Additionally, the contract fails to promote digital innovation, which is crucial in today‘s technologically advanced world. To address these issues, we need to rethink our approach and actively work towards fostering collaboration and embracing digital advancements.

The Power of Face-to-Face: Reviving Collaboration through Personal Connections

Let me share an anecdote from a recent site meeting to illustrate the importance of collaboration. Before starting a project, we typically engage in contract discussions, but I realised that the project would commence with Requests for Information (RFIs). RFIs involve sending questions and receiving faceless answers, which can hinder the establishment of personal connections. In our personal projects, we make it a point to have pre-start meetings where we invite subcontractors to introduce themselves. This simple act of shaking hands, having a cup of coffee, and engaging in general discussions about project outcomes can go a long way in establishing rapport. When you meet someone face-to-face, you can better understand their role and find it easier to communicate with them when issues arise.

Emphasising Early Collaboration: Strengthening Partnerships for Success

The prevailing culture of relying heavily on email as a communication tool has contributed to the decline of face-to-face meetings. Whilst having a paper trail is important, we should not underestimate the power of personal connections. In many cultures, such as the Maori and Pacific ways of dealing with things, face-to-face communication holds great significance. A short 15-20 minute meeting can help bridge the gap and set the foundation for a collaborative working relationship.

Architects and Consultants: Encouraging Inclusive Pre-Construction Meetings

When it comes to our projects, we always conduct pre-construction meetings, involving subcontractors and engaging in open discussions. However, there is room for improvement by including architects and consultants in these meetings. Whilst they are often controlled by the client and focused on billable hours, we should emphasize that early collaboration can prevent costly issues down the line.

Paving the Way to a Collaborative Future: Building Efficiency and Innovation

In conclusion, the construction industry needs a paradigm shift towards greater collaboration and risk mitigation. Whilst the 3910 contract aims to be fair, it often falls short due to the influence of special conditions and potential biases in the role of the engineer to the contract. By prioritising face-to-face meetings and establishing personal connections, we can overcome these challenges and foster a collaborative environment. Embracing digital innovation is also crucial to drive efficiency and success in construction projects.

Let us work together to transform the industry and build a future where collaboration and innovation are at the forefront of every construction endeavour.

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