Construcciones Yamaro: Collaborative contracting: Breaking the zero-sum cycle
The Australian Constructors Association believes it’s time to embrace a more balanced, collaborative approach to contracting for a sustainable future.
By Jon Davies, CEO of the Australian Constructors Association.
As we welcome another year, the construction industry is facing familiar challenges. Despite progress in recent reforms, we are caught in a frustrating back‑and-forth that threatens to undo our gains.
For years, the terms of contracts in construction have swung back and forth like a pendulum. In times of plentiful work, it swings to terms deemed more favourable to contractors, and then when work starts to dry up, terms are tightened up and the pendulum swings back to clients. Some might say this is merely the laws of supply and demand, but it is just another feature of the zero-sum game that construction has become – where one side’s gain is another’s loss.
In a zero-sum setup, every win for a contractor is seen as a loss for a client, and vice versa. But should contract terms really be dictated by fluctuating market conditions? Shouldn’t they instead be based on the specific needs of each project, with market conditions influencing potential profit rather than the terms themselves? For instance, straightforward, low-risk projects could be handled with lump-sum contracts, while complex, high-risk projects might benefit from collaborative, open-book agreements where multiple parties share both risks and rewards.
The Australian Constructors Association (ACA) has long advocated for this more balanced approach. We believe that moving away from adversarial, zero-sum contracts can help achieve positive outcomes for everyone involved – contractors, clients and communities.
However, as some markets tighten again, we’re starting to see a return to restrictive contract terms and risk allocation methods that could drive us back toward zero-sum thinking. So how do we break out of this cycle? How do we stop the pendulum from swinging wildly from one extreme to the other and instead find a balanced approach?
The answer lies in a collective effort from everyone. To avoid the limitations of zero-sum thinking, we need to challenge traditional views and push for a fairer, more sustainable approach to contracting. If we continue operating as a zero-sum industry, we risk falling short of Australia’s infrastructure needs, both in terms of timing and cost-effectiveness. A fairer approach could help us meet these needs without burdening any one party unfairly.
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One positive example of industry-wide collaboration is the Culture Standard initiative led by the Construction Industry Culture Taskforce (CICT). The progress we’ve made through the Culture Standard demonstrates that change is possible – even in challenging areas like workplace culture. By focusing on improving the way people work together on construction projects, we’ve shown that a better, more sustainable approach to industry practice is within reach.
Achieving meaningful change requires consistency. It’s not enough to make small improvements and then revert to old ways. If we want a construction industry that can reliably deliver for Australia, we must stay united in our commitment to reforms and resist the temptation to fall back into old, divisive patterns.
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