Traditional & Relational Construction Contracts

5) ”Traditional & Relational Construction Contracts”

(Date of Publication = 04 March, 2013)

Traditional Construction Contracts are like puritanical parents. They try to make their child mannered and systematic, but suck away all the creativity in him. The child hardly grows into a proper man, and never a great man. Construction Contracts

The nature of a Construction activity is such that disputes are inevitable in it. Traditional contracts idealize the situations and fail to provide the necessary flexibility to parties of the project in this regard. They encourage adversarial relationships between the parties by encaging them in their respective boundaries, resulting in no cooperation, limited trust and ineffective communication. Consequentially, the time, cost and quality targets are not met, and the deadlocks are very frequent. Moreover, there is no room for any innovation, and there is absolutely no possibility of implementing any idea for the betterment of the project. Construction Contracts

Relational contracts (RC) are different types of special contracts in construction (like Partnering, Alliancing, Public Private Partnership, Joint Venture etc.) which are designed to encounter the above mentioned issues. The core of RC is to establish favorable working relationships between the parties through a formal strategy of commitment and communication aimed at win-win situations for all parties and well-being of the project. Whether legal/contractual in nature (Alliancing) or not (Partnering), these setups make a huge difference in performance, and that’s why many countries have experimented and then adopted them, with USA, UK, Australia and Honk Kong being the most notable. As far as Pakistan is concerned, our construction industry is not that mature yet to directly jump onto such a modern setup. But that doesn’t mean at all that RC are not for Pakistan. There is always a first step. The biggest hurdle is the baseless fear in our minds to adopt anything new. Moreover, the culture we have here requires this to be done a little more officially or “from the boss”. PEC should play its role to encourage better cooperation between the parties of a project. Construction Contracts

Modern contract laws are knocking at our doors. Let’s greet them with arms wide open

Faizan Shafique
Lecturer Uet Lahore

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