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Promoting ‘Contract Innovation’

Team Seeks Low-Carbon Supply Chain

16 November 2015

Costain, international law firm Pinsent Masons and the University of Cambridge have secured funding from Innovate UK to see how innovation can be harnessed more effectively and for longer.

Innovate UK is the UK’s innovation agency and sponsored by the Department for Business, Innovation & Skills. The research will take 12 months and will examine how innovation - often overlooked or ignored as projects develop - can be promoted throughout the supply chain.

The project is titled ‘Maximising Innovation Beyond Procurement and Contract Execution’, which reflects the fact that once a contract has been procured, the scope to accommodate innovation within the contract is governed by the contract itself and the nature of the contractual relationship.

“Under many current industry models, the potential for innovation diminishes as a project develops. The aim of this research project is to identify the barriers to innovation and see what steps can be taken to reduce the uncertainty and risk related to innovation. We will then be able to ensure that innovation is maintained throughout the whole life of a project,” said Adam Golden, Legal Executive at Costain, who helped to secure funding for the project.

There are many benefits which come from promoting innovation; it removes the need for hasty decision making which can often result in errors, while increased flexibility ensures the client is not locked into dated technologies and processes. Further benefits include improved asset lifecycle management, optimisation and the option for research and development to be ingrained within projects, as well as the associated cultural benefits this provides. Yet despite the undoubted benefits, there are numerous obstacles - both organisational and contractual - which can work against participants harnessing and implementing innovation.

Mark Wray, Lead Technologist for the Built Environment at Innovate UK, said: “Within current contractual frameworks there is a degree of fear and uncertainty inside the supply chain with regard to innovation. Innovation by its very nature carries a degree of risk. Where collaborative innovations are undertaken and the desired result is not as expected, these relationships can become litigious. What this project aims to do is essentially eradicate this reduction in the ability to innovate, ensuring that the opportunity is maintained throughout the whole life of the project.”

The research will be split into five Work Plans. Firstly, it will devise a ‘Conceptual Model’ which will seek to rectify the problems which currently exist within the current supply chain around contractual and commercial processes; secondly, ‘Behaviours’ will measure the strength of relationships within the supply chain; thirdly, there will be a case study showing how clients have encouraged innovation across their programmes.

From there, the team will produce ‘Commercial and Legal Guidelines’ - or a toolkit - which includes clauses which can be adopted as recommendations for how to get more from the supply chain. This will allow for innovation to be ingrained throughout the whole supply chain relationship. And finally, a White Paper will be produced which will take the learning and discussion points from the organisations involved to stimulate debate within the industry, including among large government customers.

“This project provides an opportunity to test theories of contract design in a commercial setting and will generate new knowledge on the conditions for effective collaboration in complex infrastructure projects,” said Simon Deakin, Professor of Law and Director of the Centre for Business Research, at the University of Cambridge.

Some of the key activities also include a workshop on November 18 to look at the contractual barriers to innovation and, early in 2016, there will be a client-focused contractual innovation briefing to delve deeper into the issue with different stakeholders.

Shy Jackson, a partner with Pinsent Masons who is involved with the project, said: "Understanding the behaviour that drives innovation is critical, but if we are able to identify practical measures that encourage innovation and remove perceived barriers that could make a real difference. In a highly competitive market, this can demonstrate that innovation is more than just another buzz word."

Tim Embley, Costain Group Innovation and Knowledge Manager, added: “I am delighted that we have secured this customer-focused research project. It is vital that we consistently review our business models and mechanisms to bring new solutions to address customer challenges. This project clearly illustrates that Costain and its business partners are deeply committed to collaboration and bringing value to our customers.”

For more information about Innovate UK, please click on the link below:

Innovate UK



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