Traditional construction contracts are typically one-sided and tend to favour the client by placing most of the responsibility onto the contractor.
With unpredictable supply chains and economic uncertainty, it is becoming increasingly common for delays or contractual disputes to arise.
Collaborative contracts can offer a different way of working and allow both parties to create a framework built on shared objectives and collective responsibility.
These contracts are gaining attraction in the construction industry, but they must be drafted correctly and have strong governance so that your project remains protected.
Why may tradespeople use collaborative contracts?
A collaborative contract takes each party’s interests into account and often includes shared risk and reward and joint decision-making processes.
They are written in clear, practical language so that they can be used on a day-to-day basis rather than as a formal document that is only referenced during disputes.
Tradespeople may choose collaborative contracts as they encourage early communication with clients and other contractors about potential problems and can help reduce the likelihood of costly disputes.
Collaborative contracts can allow for early contractor involvement and identify potential inefficiencies well before construction begins.
However, if roles and responsibilities are not clearly defined, misunderstandings can arise that undermine trust and delay progress.
In addition, if any party fails to behave collaboratively and reverts to a traditional adversarial mindset, the effectiveness of the model can be compromised.
How to prepare a collaborative contract?
Preparing a collaborative contract requires careful planning and should clearly define each party’s responsibilities, shared goals and expected outcomes.
Both parties should agree on how risks and costs will be allocated and early warning procedures should be clear.
The contract must also include predicted detail costs, a project timeline, termination clauses and the process if a dispute arises.
With the right legal help, you can draft a contract that all parties involved can understand and clearly define responsibilities.
How can we help you draft a collaborative contract?
Collaborative contracts can be an effective way to protect your business from potential disputes.
We can help draft and review your contract so that it includes potential risks and complies with legal requirements.
With the right legal guidance, collaborative contracts can provide clarity and improve efficiency in your construction project.
If you need advice on how to draft or review construction contracts, contact our Construction Law team today.