2014 Olswang Construction Law Conference: 21st Century Construction
This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.
Following the 2014 Olswang Construction Law Conference on 6 February 2014, Constructive will be taking a look at various highlights from the key issues explored by our speakers over the next few days.
The theme of this year’s conference was “21st Century Construction”. How can clients and contractors procure construction projects more efficiently? How can they get better value for our money? But it’s not just cost savings that matter. It’s about finding the right balance of risk, administration and time and managing projects to minimise cost overruns and disputes. The Conference focused on how legal structures can help achieve all of this.
The first in this series of blogs on the Olswang Construction Law Conference picks out highlights from the first talk. This discussed how collaborative working ties into industry trends for 2014.
The Office of National Statistics states that UK construction output is up 2.2% over 2013, making it the strongest year from the sector since 2007.
Constructive has seen the effects of a sustained recovery in the economy as well the effects of the Help to Buy scheme and the housing shortage. Overseas buyers are helping to heat up the London market but significant growth can also be seen further afield in Yorkshire, Wales and the South-East.
The buzzword amongst experienced developers at the minute is ‘collaboration’. Collaboration can make projects come in on time and on budget and sidestep the pitfalls created by adversarial relationships such as delays, cost overruns and disputes. In his speech, Francis Ho mentioned what he considers to be the growing trifecta of collaboration: framework agreements, two-stage tendering and, perhaps unusually, construction management.
Framework agreements allow the contractual terms of a relationship between a supplier (such as a consultant and contractor) and employer to be negotiated under an umbrella agreement that forms the basis of an appointment for multiple sets of works or services then instructed under an “order” or call-off agreement. The project-specific details are agreed for each separate set of requirements in an order. Establishing a relationship under such a mechanism avoids costly negotiation of an individual appointment for each set of works and creates long-term relationships with suppliers. It can also provide a mechanism for benchmarking long-term performance through key performance indicators and may allow suppliers to be appointed.
Two-stage tendering is a process by which the preferred contractor is selected in the first stage through competitive tender and the contract terms and process with this party are finalised in the second stage. The advantage of this added layer of negotiation is that the contractor inputs into design and buildability from the outset which may achieve more cost ortime certainty on a more complex project. As the market heats up, we’ll see more of this as employers seek to derisk more complex projects and major contractors, with fuller order books, are able to choose the projects they wish to undertake.
Finally, where clients are experienced in hands-on development, electing construction management as a procurement route may encourage stronger collaboration between employer and contractor and allow for flexibility to change designs where required. Indeed, effective collaboration is necessary to make construction management a success. Due to bad press and the rise of design and build procurement, construction management has become a much unloved procurement route but is making a comeback in specialist engineering projects and housebuilding as employers and contractors realise that it, in the right circumstances, it can deliver better value and outcomes.
Copies of Francis’ slides from the 2014 Construction Law Conference can be found and downloaded here:
If you have any queries on the 2014 Olswang Construction Law Conference or would like to be kept informed of future Olswang Construction events, please do email constructionevents@olswang.com. You can also Tweet us at Twitter with the hashtag #olswangconstruction.
Our next blog in this series will discuss changes to the Building Regulations.
