So how do these contracts - PPC2000 and FAC-1 - help shift the approach to risk?
“So allocating risk is fine if you've been through a process of joint analysis of that risk to understand what it is, where it comes from.
“And there are two types of risk.
“There are risks that are perceived early on, and that you might do something about. Perhaps the site used to be a fuel depot. Is the ground polluted? Is this a risk? And you can do a lot of preparatory work to mitigate that risk and eliminate its cost - maybe share the cost, maybe insure against it. You can undertake that mitigation work at a strategic level or a project level.
“Then you have the second type of risk, the type you don't expect, like COVID-19. These risks are unpredictable, but you can still put in place early warning and response measures, and management systems, to reduce their impact.
“So those conversations are prompted at a strategic level under FAC-1, but also at project level under PPC2000.
“The lesson learned at project level on PPC2000 was to create an early period with a contractor on board to understand how they see risk. They have been appointed under a pre-set budget, a pre-set brief. We're not allowing them to be paid more or to do a different project, but we are testing what they think of design, what they think of risk, what they think of time, and learning.
“And invariably, through that process, we have eliminated disputes. There are, I think, only two court cases involving PPC2000. I'm aware of maybe three, in total, over 22 years. There's no comparison, then, with the rest of the industry, and that’s because people have greater knowledge and they're exploring the sort of things that worry other team members. That's the difference.”
Under a collaborative approach, those conversations are, of course, wider than just risk, so how does the early involvement you have described change behaviours?
“Under the traditional framework, project-level behaviours are stimulated by where you’re going to get the next project. If you've got a decent project, but it's coming to an end and there's nothing else coming in, the temptation is to suck as much money as you can out of the current project and not to compromise your interests for the greater good.