December 5, 2011

Heenan Blaikie construction lawyer gives tips for alliance, joint venture participants

PATRICIA WILLIAMS

staff writer

CAMBRIDGE, Ont.

In contrast with construction agreements typically used throughout the industry today, team-based contracts are much less about ‘me’ and much more about ‘us and the project,’ says Geza Banfai, a senior partner in Heenan Blaikie.

Speaking at the Grand Valley Construction Association’s recent PACE (planning, advocacy, contracts and evolution of procurement) event, Banfai said these agreements, used in situations involving joint ventures, alliances and integrated project delivery, contain contract language “that may seem a bit strange to you and sound like motherhood statements.

“They contain provisions that are expressly designed to encourage the correct, teaming behaviours,” said Banfai, who is certified by the Law Society of Upper Canada as a specialist in construction law.

“At the extreme, they are entirely about us and the project.”

Banfai, a fellow of the Canadian College of Construction Lawyers, said contractual provisions could stipulate for example that the parties are bound together as equals, require early involvement in the project by such participants as the owner, general contractor, consultants and the primary trade contractor and mandate jointly developed financial targets.

Other clauses could require mandatory, collective decision-making, shared financial risks and rewards, open-book, fiscal transparency, multi-party contracts, location of team members at one site, and mandatory and frequent team meetings as well as liability waivers and “no sue” clauses.

“This is where the rubber hits the road,” Banfai said in reference to waivers and no-sue clauses.

“That’s frequently a tough one for people to swallow.”

Banfai, who practises in Heenan Blaikie’s infrastructure and construction litigation group, told consultants, buyers of construction services and a sprinkling of contractors attending the event that there has been “a paradigm shift” in the industry when it comes to the degree of collaboration on projects.

Project delivery models have evolved from the traditional design-bid-build approach, where the architect “throws the design over the fence” to the contractor, through design-build which requires a certain amount of collaboration to ultimately, the “relatively new world” of integrated project delivery (IPD) where collaboration is the name of the game.

“This (IPD) is still relatively novel, even in the United States, which tends to be ahead of Canada when it comes to trends,” said Banfai who personally believes that more widespread adoption of this approach is inevitable.

The GVCA event was held Nov. 18.

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