Collaborative working arrangements break down established barriers to success and facilitate the creation of a culture of trust, open communications, feedback, and a desire for continuous improvement. This can help achieve a dispute-free project.
This article is about “collaborative working” arrangements as they are used in the U.K., where the term encompasses both “partnering” and “alliancing.” Partnering describes a co-operative relationship between the owner of a project and a single supplier or contractor, whereas alliancing describes a collaborative relationship between the owner and multiple suppliers or contractors.
Under collaborative working relationships, the key stakeholders unite with a common purpose to complete a successful project and they change the traditional contractual and organizational framework of the contract to facilitate this goal.
Under traditional contracting, suppliers and contractors compete for contracts based on price. When contractors and suppliers are selected based on the lowest bid, they can end up working for inadequate profit margins. Accordingly, they may have insufficient resources to perform the job adequately, let alone to improve the quality of their products and services, such as by hiring more qualified personnel, or investing in new equipment or training. To produce a positive margin they may deliver the minimum product or services under the terms of the contract, seek payment for extra work, and/or squeeze subcontractors on their profit margins. The motivation to do the minimum creates a need for extensive insurance coverage.