Sarah Fox suggests contracts should dance to a different tune.
When we do the hokey-cokey we put “our whole self in, whole self out, in, out, in, out and shake it all about”.
That phrase reminds me of the contract terms describing performance standards for a construction project. The terms are a delightfully old-fashioned mix of “reasonable skill and care” (mere competence), “good industry practice” (average skills), “workmanlike manner” (err?), “complying with legislation” (usually the bare minimum), and whatever expertise the contractor or consultant professes to have (past history).
Although the contract terms stick to vague concepts, they are supplemented by highly sophisticated specifications and modelling. So why do projects still regularly fail meet the client’s objectives? The Millennium Bridge wobbled, the M60 extension flooded, 100 Fenchurch Street melted cars… ever since the Tower of Pisa started to lean before the first phase of its 199-year construction was complete, our industry has collectively shrugged when a project fails. After all, we were doing our best…
Instead of an input focus, perhaps we should learn from process engineering, where contracts focus on outputs and fearlessly adopt fitness for purpose, tiered testing regimes and limited liability for defects. Or we could draw on facilities management contracts – they define success by reference to clear targets. If these industries can do it, why not construction?
Doing the hokey-cokey, like coordinating any eclectic mix of people, depends on knowing what it looks like when done well. Equally, on a construction project, we have to define success and select the outputs which will combine to create that success.
These outputs, and their related objective specifications, are essential if we are to move from wet-signed to “smart” contracts. Smart contracts rely on computer codes which require clear yes/no answers to specific questions such as whether a party has met their contractual obligations. Our reliance on “reasonable skill”, or “good industry practice” is too nebulous a code to decipher.
Creating contracts with clear objective performance standards will build trust (based on clear proof of success) and avoid disputes (over whether each party did what was asked of them), as well as help us move towards smart contracting.
Sarah Fox is a contract strategist, author and speaker at 500 Words Ltd