Utilising collaborative contracts to increase a successful delivery of data centres

In our previous article we touched upon a range of challenges we are currently seeing on the development of data centres. We also touched upon how Early Contractor Involvement (ECI) can be adopted to address such challenges. There are also other legal tools that can be utilised. In this article we will touch upon the legal tool referred to as ‘collaborative contracting’.

The aforementioned challenges are all characterised by the fact that neither the employer nor the contractor can successfully tackle these without the involvement of the other party, and that the solution may only be identified at a far advanced design phase. Adding to the complexity is that nowadays it is not uncommon with such assets to work with a multi-contractor approach. Rather than having one single contractor acting as general contractor and being the main point of contact, the employer increasingly choses a multi contractor approach. This includes Owner Furnished Contractor Installed (OFCI), but may also be the result of sheer pressure by current market circumstances. 

Consequently, for construction projects facing one or more of the challenges mentioned above, traditional contracts might not be the best route to help deliver a successful project. This is giving rise to the development of a range of collaborative contracts: contracts that seek to improve the engagement, active communication and collaboration between employer and contractor. 

Collaborative contracts, sometimes also referred to as relational contracts, often include one or more of the following elements:

• Early contractor involvement (being the topic of the previous article).
  
• Applying a joint risk and decision-making process throughout the project.
  
• Applying collaborative contracting throughout the project.
  
• A collaborative contractual model adopts the view that the contract not only needs to describe the goal but also needs to describe how that goal is to be achieved, thereby giving the developer a more active role. This is not only a legal tool but also a project management tool, which helps deal with surprises during a construction project as effectively as possible.
  
• It ensures that parties continuously communicate, align, are aware of the process, are on the lookout for issues & solutions (even if these do not relate to their own work package) and hold each other accountable (especially in a non-legal manner). Therefore, it is geared towards mitigating (interface) risks.
  
• The employer, and where needed: also other stakeholders, to have an active role.
  
• It ensures involvement of the chain of suppliers & contractors (as these are often the answer to problems, and sometimes also the cause thereof).
  

Bird & Bird have extensive experience with such contracts, and in drafting new model contracts. Bird & Bird are contributing to the development of an international standard collaborative contract through our partner Andrea Chao’s role as chair of Task Group 17 of FIDIC, which is tasked with the development of such contracts for the FIDIC Contract Suite. This contract is expected to be launched end of 2024/early 2025. Please do reach out to us if you want to explore how this approach could support the delivery of your project.

For more information, please contact Andrea Chao.