Monthly Archives: July 2020

Driving Collaboration with Joint Governance Arrangements

Well, everyone can master a grief but he that has it.” – W. Shakespeare ‘Much Ado about Nothing’ (1599)

Why Pursue Joint Governance?

To realise the full range of collaborative benefits, parties should adopt a joint approach to problem solving, risk management, communication, and decision making.  In other words, a joint governance approach is required as recommended by ISO 44001 Collaborative Business Relationships:

The partners shall establish and agree a formal foundation for joint working, including contractual frameworks or agreements, roles, responsibilities and ethical principles. A joint management team shall be established from the initiating organisation and its collaborative partner.[1]

Included in the governance structure is a need for:

  1. Joint Communications,
  2. Joint Knowledge Management,
  3. Joint Risk Management, and
  4. Joint Issues Resolution.[2]

Figure 1 below illustrates the key processes required for parties to work together collaboratively.

Figure 1 – ISO 44001 Working Together Processes[3]

Successful collaborative outcomes may not necessarily require all the above process to be joint. In some situations, it may not be possible to have a fully joint approach as each individual entity may face their own governance, legislative, and commercial constraints that prohibit sharing of all risks and information.  What the evidence shows is that where organisations are more tightly coupled and share information, superior value is more likely to be delivered.[4] 

Implementing Joint Governance

A joint governance approach is not something that is added to a relationship after contract signature, rather joint governance must be implemented throughout the procurement lifecycle.  The following areas should be contemplated to realise collaborative benefits:

Joint Risk Management.  Where parties work collaboratively to identify all relevant risks then a project is more likely to be successful. If each party manages their risks severally then there is greater scope for errors of omission and errors of commission in the risk management process.  Ideally, parties should engage collaboratively in the very early stages of a project (prior to contract signature) to run joint risk workshops and follow this with a joint liability risk assessment. This activity should then be followed by negotiated risk transfer where buyers and suppliers jointly agree who is best able to manage risks. The sharing of risks should also be contemplated here where appropriate.  Negotiated risk transfer approaches are often used in two stage managing contract approaches.[5] Once the contract is afoot, joint risk management should continue to; ensure there is a single source of truth with risks, effectively deal with new risks, and provide transparency in the relationship.

Joint Decision Making. A fully collaborative venture should pursue joint decision making to the maximum extent possible. Joint decision making encourages collaboration, reduces adversarial behaviours, and allows for greater agility and responsiveness in commercial dealings.  Joint decision making is a common feature of project alliances and other highly collaborative contract arrangements.[6] For many organisations, the prospect of joint decision making can seem daunting. Joint decision making does not mean that every commercial decision must be joint, rather those decisions relevant to project delivery should be joint. Joint decision making may be implemented at the operational level or even the programme board level.[7]  Where joint decision making is implemented, the prospect of deadlocks must be considered. Deadlocks may be resolved by the customer owning a ‘casting vote’ or through expert determination mechanisms.

Joint Communications. Collaborative ventures are far more likely to succeed where there is a common and timely communications framework. This is made clear in the Managing Successful Programmes framework; “the programme will need to control communications to ensure they are consistent, clear, timely and accurate”.[8] Coherence in communication mitigates the risks of disputes and issues arising and also supports a culture of ‘no surprises’.  Collaborative ventures should consider the use of shared systems to provide a common communications baseline.

Joint risk management, decision-making and communications should be integrated into the governance framework of the relationship making sure the contracts terms and conditions support such approaches. In addition to the head contract, the parties may wish to implement a joint program steering group that addresses the above.

Conclusions

Effective collaboration requires parties to work together to ‘fix the problem and not the blame’. This is far more likely to occur where parties engage in joint risk management, joint decision making and with joint communications. This does not mean that every decision must be joint, rather those decisions that would benefit from both buyer and supplier involvement should be joint.  Commercial frameworks need to be crafted to support joint outcomes. This is not just the contracts terms and conditions but also the statements of work, partnering charters, and other governance documentation.


[1] ISO 44001 Collaborative Business Relationships (2017) [8.6.2.1], [8.6.2.5]

[2] Ibid, pp 23-25.

[3] Ibid, Figure 7.

[4] See esp., UK Ministry of Defence ‘A Partnering handbook for Acquisition Teams’ (2008) pp 9-10; T. Lendrum ‘Building High Performance Business Relationships’ (2011); Arthur McInnis, ‘Relational Contracting under the New Engineering Contract: A Model, Framework and Analysis’ (paper presented to the Society of Construction Law, UK September 2003); State of Flux ‘Supplier Relationship Management Research Report 2012: Voice of the Supplier – A Step Closer to Mutual Benefit’ (2012).

[5] Queensland Government ‘Relational Procurement Options – Alliance and Early Contractor Involvement Contracts’ (2008)

[6] Australian Government ‘National Alliance Contracting Guidelines – Guide to Alliance Contracting’ (2015).

[7] Alexos, Managing Successful Programmes (2014) p 40.

[8] ibid, p 62.