If you Google “collaboration” there are two very different definitions:
“the action of working with someone to produce something”
and alternatively,
“traitorous cooperation with an enemy”
This latter definition can be applied, for example, to the likes of Kim Philby the high-ranking member of British intelligence who worked as a double agent before defecting to the Soviet Union.
I am always surprised by how often this alternative definition of collaboration can also be applied to the attitude of people checking costs on cost reimbursable contracts such as NEC Option C and Option E.
We recently worked alongside a major Design and Consultancy firm who took the view that the contractor we were reviewing, under an NEC option C contract, like all contractors was, “at it”. Their whole attitude was based on an adversarial approach which assumed the contractor was attempting to overcharge our mutual client. They attempted to create commercial arguments which were not supported by the contract and to extrapolate their findings to give the impression of a significantly greater overcharge than existed.
The rationale for this adversarial approach to challenging cost is often to demonstrate added value to clients by attempting to negotiate cost reductions.
The Project Manager in assessing payments to contractors in NEC contracts must act impartially and independently even though he is employed either directly or indirectly by the client. The adversarial approach described above does not therefore comply with the contract.
It also has a number of negative effects on the intended definition of collaboration which is “to work together to produce a piece of work”.
In my experience these include:
- The contractor can feel that the client is not acting in a collaborative way and may also move away from this approach
- The contractor may not allow the cost checker full access to his books and records
- The contractor may seek to find ways to recover its margins, which are lost to aggressive Payless Notice.
- The contractor may seek to recover its cashflow again to recover its position as a result of aggressive Payless Notice
- Goodwill may be undermined
Conclusion
An adversarial approach to cost verification can undermine collaboration.
To find out more about our collaborative approach to cost assurance or for a confidential chat about a potential issue please get in touch.
Darren Ward FCA, AQ – Managing Director
darrenward@theorangepartnership.co.uk
