International Construction Law Review
IN SEARCH OF THE PERFECT PROJECT: INCENTIVISING PERFORMANCE AND COLLABORATION IN CONSTRUCTION PROJECTS THROUGH KEY PERFORMANCE INDICATORS
ARENT VAN WASSENAER
Allen & Overy LLP, Amsterdam
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1. THE MANTRA
Probably nobody will object if one defined a perfect project as a project, completed (a) on time, (2) within budget, (3) according to (or better than) the agreed specifications (quality), (4) with no disputes, (5) safe and (6) with no or minimal hindrance to all stakeholders (including the environment, users, etc.). Provided that “budget” is being seen as each of the party’s respective budgets, it is in the interest of all parties involved in a project that such projects are completed successfully in the aforementioned fashion. It is suggested that we agree that this definition of the perfect project should be called the “Mantra” for construction projects.2
Also, probably nobody will object if one described the “human factor” in construction projects, as the “hinge-factor” which may define good from bad performance. A bad contract with an excellent Project Team (with owner’s and contractor’s representatives) has a higher chance of being completed in a perfect manner than a “good” contract executed by a “bad” team.3 This is the main reason why the “partnering” concept has taken off widely in the United States,4 the alliancing concept in Australia,5 and why forms such as NEC–3 and JCT Construction Excellence have become so widely used in the United Kingdom.
1 This article has appeared in Alleen Samen, a Liber Amicorum for Matton van den Berg (published on 23 April 2010) and is—with some slight revisions—reprinted here with the kind permission of the editors at the Instituut voor Bouwrecht, The Hague, The Netherlands.
2 See also the Mantra in Arent van Wassenaer and Coen Thomas, www.werkinuitvoering21.com, “Interactief naar een nieuwe generatie bouwcontracten” Vereniging voor Bouwrecht, No 36, 2009.
3 See, inter alia, Matton van den Berg and Peter Kamminga, “Optimising Contracting for Alliances in Infrastructure Projects” [2006] ICLR 59–77.
4 See, for instance, the “2008 Field Guide to Partnering on Caltrans Construction Projects” which can be downloaded from the website of the California Department of Transport’s partnering website: www.dot.ca.gov/hq/construc/partnering.html
5 See, for instance, Project Alliancing Practitioner’s Guide 2006 (Department of Treasury and Finance of Victoria) and which can be downloaded from its website: www.dtf.vic.gov.au/CA25713E0002EF43/pages/asset-management---project-support-project-alliancing; see also Doug Jones, “Project Alliances: (Why) Do They Work?” [2001] ICLR 411–436; finally see In Pursuit of Additional Value, A Benchmarking Study into Alliancing in the, Australian Public Sector (Department of Treasury and Finance, State of Victoria 2009) (downloaded via internet, www.dtf.vic.gov.au).
Pt 3] Incentivising Performance and Collaboration through KPIs
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