The idea that your common law rights are being upheld and respected in the construction industry is potentially one of the greatest misconceptions in Victoria.
In an industry so reliant on the two-party concept of “you give me what I want and I’ll give you what you need,” that concept is the furthest thing from the real truth, as a consequence of the practice and ongoing endorsement of tripartite contraction.
No matter where we look in this industry, we have three individual parties, all with separate and often misguided interests at stake. If we are to view a universally accepted document such as AS2124 as the glue that binds two contracting entities together in legal harmony, we soon discover that the impact of the third party has a profound influence on the primary agreement and subsequent intent of the deal.
The most accepted tripartite agreements have been via the financial institutions. However, in recent years, since these agreements have been locked in, we have built wider and higher barriers that are now artificially inflating not only the cost of building in this state, but the delivery, performance and quality. These barriers are stifling innovation, denigrating debate, and compromising decision making. It all boils down to the old adage “two’s company, three’s a crowd.”
At the project creation stage, we have the “risk taker” (the developer), who is often tagged as ‘the greedy party’ compromised by various unaligned lobby groups. Those groups are the “non-vested parties” or the ‘third party’ and they face off against the planners, who are too often blamed for the delays (and occasionally missing the market).
The solution to this barrier is to apply strict limits as to what the ‘third party’ can legitimately oppose, remove the cash incentives often tossed around by ‘the greedy party’ and apply definitive response times from the planners. A 14 to 21-day objection/cooling off period may be decreed by the appropriate authority to ensure that the desired outcome is achieved. Any evidence of cash incentives or behind the scenes lobbying would automatically send the project back to the start without appeal or compensation.
Allegedly, there is nothing better than letting the truth stand in front of a good story and whenever you have politics, power and profits (a slightly different ‘spin’ on the real meaning of PPP) to be achieved/generated from tripartite contracting, why should we want to complain or even object ?
During the marketing phase, there is even more evidence of tripartite contracting, where the real estate consultant will side with one side or the other to propagate a deal, often compromising the outcome in favour of an exorbitant fee – or “who’s going to pay me more to do less.”
The impost of the tripartite barrier is more often identified and openly practiced during the delivery phase (for the projects that aren’t already compromised by some of the breaches noted above), and the reality is a very, very compromised project. The biggest victim here is the consumer, tax payer and/or end user.
Industrial relations are often blamed, but that is in itself a simple case of tripartite contracting (yes, we expect the unions to exploit weak management.)
But when we open our eyes and realise that we the consumer are copping this exploitation, it is time to take a stand against tripartite contracting. We cannot accept excessive wage demands being foisted upon the industry with the standard “get out clause” of ‘that’s the cost’ and then expect to pass it onto the consumer.
Tripartite contracting is experienced at almost every level of the industry. Whether it is at client/builder/tenant level, a builder/subcontractor/union level, a principal/builder/lessor level, a financier/builder/contract level, or a consultant/builder/developer level, the end result is a barrier that is limiting and/or restricting our development.
Beyond the marketing phase and into the development phase is where the real imposts of the tripartite barriers actually take place and the “games” begin. At this stage, union corruption potentially creates the largest single barrier, followed closely by collusive tendering, all in addition to a practice known as “price maintenance“, skilfully applied to secure the payola to these tripartite conspirators consolidating and expanding the barriers from the construction industry to the property market and the Australian Economy in general.
There is a natural defense mechanism available, unfortunately rarely applied in what has become an aggressive, dog eat dog world. The solution to the “two’s company, three’s a crowd” scenario of construction contracting has its genesis in alliance or relationship contracting
The tried and true saying “what costs nothing is worth nothing” is proven true when we analyse the value that these tripartite claims bring to the end projects. A 30 per cent reduction in construction costs could deliver so much social benefit, contributing to a solution toward homelessness, reducing inflation, improving the yields on our retirement funds managed by the various superannuation and investment institutions and generally making both housing and construction a lot more affordable.