Blog Author: Richard Saxon CBE – Past Chair, JCT
Debates are as much a form of entertainment as a way of reaching decisions. But they can still reveal true opinion usefully if the protagonists are so minded. At my school, we were allocated the ‘for’ and ‘against’ roles randomly, to sharpen our wits. As debates progress, positions can become more nuanced.
An example of this was the online debate held by Infrastructure Intelligence magazine on the proposition: “That digital transformation is dependent on new forms of contract.” In the Yes corner were Richard Robinson, CEO of Atkins and sponsor of the event, supported by Dev Amratia, CEO of nPlan. In the No corner were Keith Waller, programme director of the Construction Innovation Hub and Martin Perks, commercial programme director of Highways England. A large audience of people interested in the subject of contracts were online and asked many questions.
In the chair was Lisa Kelvey, partner for major projects delivery at KPMG. Lisa set the scene by pointing to how slow the construction industry was to adopt digital processes. One excuse made to KPMG in a recent survey was that contracts stood in the way. But was this true?
Richard Robinson started with three points: Firstly, we have a history of flat productivity and poor digital uptake; surely these are interconnected as manufacturing shows the opposite pattern. Secondly, we must change to a value-capturing way of contracting or there will be no reward for productivity. That means new business models, presumably digitally enabled. Thirdly, digital technologies shift the boundaries of responsibility, making traditional contractual ideas of intellectual property a barrier to investment.
Dev Amratia pointed to all the historic reports about construction which call for collaboration, yet we still hold back. Transfer of risk has been impossible to measure until digital tools like nPlan emerged. New contracts are needed to exploit this measurability fairly.
Keith Waller compared contracts to cars: When crashes occur, blame the driver, he said, not the car which is only to blame 1% of the time. It is lack of skill and poor behaviours that inhibit digital uptake, not the contract. We need to focus on training. Martin Perks pointed to the confused handling of digital and paper systems typical of contract practice. The pro-collaboration NEC contract came out of the Latham Review but is often crippled by amendments designed to defeat collaboration. Poor behaviour is the core issue. These are all human choices, not the fault of the contract. Another form of contract would only complicate the scene further.
The debate then swung over to questions from the chair and audience. Can we really change behaviour without a new form of contract? Keith Waller pointed to the policy context in the Construction Playbook with its emphasis on value-creating behaviour. New contracts could help performance, but it is not dependent on them. Richard Robinson asked Keith what he drove, surely a modern car. Yes, said Keith but a Model T would get me there. It is all driver skill. No, said Dev, the behaviour is driven by the flawed contract. Arcadis shows that 75% of disputes stem from behaviours, said Keith. We need to build human capability.
As the debate progressed it became clear that those in the No corner would welcome new, digital-friendly forms of contract. Using the car analogy again, the arrival of self-driving cars would be welcome. They put the emphasis for success on the human factors however, aided by aligning interests and improving procurement. Value capture by the supply side would be transformative.
The closing vote by the audience went to the Yes side, by 58 to 35, with 6 undecideds. As Keith Waller is to be the JCT Povey Lecturer for 2021, it will be interesting to hear his views on cars and contracts in a less artificial context. Over to you, JCT.