latham's MAJOR proposals - 'The time to choose has arrived'

Radical and wide ranging changes to the way construction operates were put forward this week as the way to solve conflict in the industry and rediscover trust in contractual relationships.

A new approach to drawing up contracts, backed by legislation, is the key to reducing the industry's dire problems according to Sir Michael Latham's eagerly awaited review published this week.

Launching the report, called Constructing the Team, Latham threw down the gauntlet to the industry and its clients. He said: 'The time to choose has arrived.'

The report calls for a massive change in attitude in the industry which would see a simpler contract, the end of pay-when-paid clauses, and the introduction of trust funds to protect contractors' money.

And the Government, through the Department of the Environment, is urged to lead the way by taking the responsibility for implementing the report and committing itself to being a best practice client.

The report has immediately been warmly welcomed from every sector of the industry and backed by a determination to take the opportunity provided by Latham to solve the industry's ills.

Main contractors, specialist contractors, professional bodies and clients all praised the report and expressed a willingness to adopt its recommendations - of which there are many.

Changes to contract conditions will be fundamental. The report backs the New Engineering Contract as a model for the industry and calls for changes to the Joint Contracts Tribunal and the Conditions of Contract Standing Joint Committee to improve client representation.

Sir Michael said: 'Endlessly refining existing conditions of contract will not solve adversarial problems. A set of basic principles is needed on which modern contracts can be based.

'A complete family of interlocking documents is required. The New Engineering Contract (NEC) fulfils many of these principles and requirements, but changes to it are desirable and the matrix is not yet complete.'

Sir Michael wants to see legislation introduced in 1996 through the Construction Contracts Bill to ensure that the industry improves itself.

New laws proposed for the 1995/96 Parliamentary session would result in fundamental changes and see:

l insurance against building defects for 10 years

l a levy on insurance premiums to fund industry research

l more clearly defined responsibility for building liabilities.

l a new standard form of construction contracts.

While the NEC is dubbed 'extremely attractive' by Sir Michael, critics such as construction lawyer McKenna & Co warn that he has underestimated the enormous volume of work required to convert it into a industry-wide contractual solution.

Roger Button, of Jaques and Lewis, expressed disappointment at light penalties for Dutch auctioning. He also commented that adjudication procedures needed careful thought.

'If the proceedings are too informal, the issues may not be investigated sufficiently thoroughly and one party or the other may feel sufficiently aggrieved to start arbitration proceedings.

'If, on the other hand, they are too formal, they will come to resemble arbitration with all its associated delay and expense.'

l See pages 2/3, and 12/13.




l Radical changes in contract conditions with New Engineering Contract as model. Changes to Joint Contracts Tribunal

l A Construction Contracts Bill to introduce legislation declaring pay-when-paid unfair and invalid, outlawing unfair contract clauses, and setting up mandatory trust funds to guarantee payments to subcontractors

l A timetable for the Construction Contracts Bill leading to its introduction during the 1995/96 session

l Adjudication to be the normal method of dispute resolution

l DoE to be designated as lead department and to be a best practice client