Two businesses sign the same standard contract for similar work. In the first, problems are raised the day they are found, options come with them, and decisions are made within days. In the second, information is held back, every ambiguity becomes a negotiating position, and issues surface only when they can be turned into claims. The contract is identical. The behaviour is not.
It is tempting to think collaboration is a contract type: sign an alliance or a partnering agreement and people will work together; sign a conventional fixed-price contract and they will not. Neither is true. A conventional contract can support highly collaborative work if the parties design for it, and an alliance can fail if people revert to defensive habits under pressure. Collaboration is a practice that has to be built, maintained and extended to everyone who actually does the work.
This article explains the difference between the contract and the working system, how to add collaborative practices to ordinary contracts in proportion to the need, why culture shows itself when something goes wrong, and why subcontractors must be part of it. It is general information for businesses that engage contractors and for those that work as contractors and subcontractors.
The contract and the working system
Every engagement runs on two systems:
- The contract sets legal obligations, risk allocation, payment and the mechanism for changes.
- The working system decides how people communicate, solve problems, escalate issues, share information and respond to surprises.
The contract cannot describe every interaction. It can require notice of a risk, but culture decides whether people raise it early with options or late with a claim. Many attempts to improve relationships change the contract wording while leaving the working system untouched: the same people, the same incentives, the same habits. The result is a collaborative document on top of an adversarial way of working.
Collaboration comes in degrees
Collaborative practices can be added to almost any contract. They include:
- Shared objectives, written down and agreed by both sides.
- Joint risk reviews, held regularly rather than once at the start.
- A shared issue log with agreed response times.
- Agreed behaviours, such as raising problems within two days, with options.
- Clear decision times for the customer, so the contractor is not left waiting.
- Constructive escalation, so disagreements move quickly to people who can resolve them while work continues.
How far to go depends on two questions:
| Low dependence on joint problem-solving | High dependence on joint problem-solving | |
|---|---|---|
| Low uncertainty | A conventional contract, managed well | Conventional contract with collaborative practices added |
| High uncertainty | Conventional contract with strong change management | Deeper sharing of risk and reward may be justified |
Routine, well-defined work rarely needs more than good contract management. Work with many handoffs, unknown conditions or a need for joint decisions benefits from deliberate collaborative practices, whatever the contract form. Large risk-sharing arrangements such as alliances are one end of the spectrum, not the only way to collaborate. The matching the contract to the work article covers scaling contract structure to the job.
Collaboration is a capability, not a mood
Collaboration is often confused with pleasantness. Real collaboration includes disagreement, challenge and accountability. People can be friendly while withholding information, and robust while being completely honest. What matters is whether problems surface early and get solved jointly.
Several common assumptions get in the way:
- Senior agreement will flow down. It rarely does without effort. The site supervisor and the contractor’s foreman need the same understanding as the people who signed.
- A kick-off workshop is enough. Collaboration needs maintenance, especially when pressure rises.
- A charter creates trust. Trust grows when commitments are kept, information is shared and behaviour stays reliable under pressure. A charter can describe what that looks like; it cannot create it.
- Collaborative means soft on obligations. The aim is not to replace accountability with goodwill. It is to make it safe to raise difficult information early while everyone remains responsible for what they agreed.
On larger engagements, a neutral facilitator can help set up working norms, run risk workshops and help with difficult conversations. The aim should be to build the parties’ own capability, not to create a permanent dependence on the facilitator.
Culture sits below the procedures
Culture works in layers. On the surface are visible things: procedures, meeting formats, templates. Below them are shared values about fairness, speed and control. Below those are assumptions people rarely state: “contractors always look for variations”, “the customer always changes the scope”, “head office does not understand site work”, “procurement just slows things down”. These assumptions shape behaviour even when official policy says otherwise.
Professional cultures also collide. Engineers may prioritise technical robustness, commercial staff contractual exposure, operations continuity and project leads the schedule. None is wrong. Conflict becomes destructive when one group treats its own definition of success as the only legitimate one.
The way work is bought sends signals too. Choosing on lowest price alone works well for simple, fully specified work. Used for uncertain work, it can select contractors with no room to absorb surprises, who then have every reason to treat each change as a claim.
The real culture appears under pressure
The most revealing moment is not the kick-off. It is the first time something goes wrong: a missed milestone, a scope gap, a failed assumption, an unexpectedly large variation. Then the real norms show:
- Is information disclosed quickly, or are positions protected first?
- Do people look for causes or for someone to blame?
- Are contract notices used as factual governance tools or as threats?
- Can technical and commercial people disagree without going around each other?
Routines make good behaviour easier when pressure rises: joint risk reviews, clear escalation steps, a disciplined issue log and agreed decision times reduce the need for personal trust to carry the whole relationship. Equally, how the customer responds to the first early warning teaches the contractor whether early warnings are worth giving. The resolving disagreements without stopping work article covers keeping undisputed work moving while issues are settled.
Include the people who do the work
Collaboration is fragile if it stops at the main contract. Much of the actual work, risk and practical knowledge sits with subcontractors. If they are chosen only on price, left out of planning and risk discussions, and managed through blame, the collaborative culture is only skin deep.
Invite key subcontractors to risk reviews and planning sessions that affect their work, share the objectives with them, and apply the same expectations about raising problems early. The working culture is only as collaborative as the network actually delivering the job.
Collaboration cannot cover structural problems
Workshops and charters are sometimes used to paper over problems that are really structural: an unclear scope, incentives that reward one party for every change, or a site team without authority to agree anything. Good working relationships cannot fix those. Settle them in the scope, pricing and decision rights.
Cooperation that comes easily at the start can also fade when money, delay or liability become serious. Plan for that moment while relations are good. Agree how variations will be priced, for example with schedule rates, how delays will be assessed, and what information each side will share when a problem arises. Then the difficult conversation follows a method both sides agreed when nobody was under pressure.
When you are the contractor
Many small businesses sit on the other side of this relationship, as contractors or subcontractors. The same practices work from that side. Propose a short regular risk review, raise problems early with options rather than just the problem, ask the customer to commit to decision times, and keep a clear record of issues, instructions and responses. Contractors who make early warnings useful and fair are easier to work with, and are often the ones invited back.
Five questions for a significant engagement
- What behaviours will this job need, especially under pressure?
- Which existing habits and assumptions, on both sides, support or undermine them?
- What could cause friction across the boundary between the parties?
- Which practices and terms reinforce the behaviour we need?
- How will we respond the first time someone raises a problem early?
The answers do not need to become a formal assessment. Their purpose is to expose predictable behavioural risks before they become disputes. The not every supplier is a partner article covers deciding which relationships deserve this investment.
A worked example
This is an illustration. A physiotherapy business is fitting out a new clinic in an older building, under a fixed-price contract with a local builder. The opening date is tight because the lease and staff start dates are fixed, and the condition of the building behind the walls is unknown.
Rather than seek a different contract form, the owner and the builder agree a few practices alongside the standard contract:
- A fortnightly 45-minute risk review, including the electrician and joiner, the two subcontractors whose work most affects the opening date.
- A shared issue log, with the builder raising any problem within two working days with at least one option, and the owner deciding within three working days.
- Escalation within a week to the owner and the builder’s director for anything unresolved, with undisputed work continuing meanwhile.
- A stated expectation: early warnings are welcome and will not be held against anyone.
In week three, the builder finds that old drainage under the floor does not meet current requirements and needs replacing. The issue is logged the same day with two options and indicative prices. The owner decides within two days. The variation is priced openly, the plumber is brought forward and the joiner adjusts their sequence at the next risk review.
At the week five review, the electrician points out that the switchboard location on the drawings clashes with the joiner’s planned reception counter. Because both are in the room, they agree a small change to the counter on the spot, and the owner approves it the next day. Without the joint review, the clash would have been discovered when the counter arrived on site.
The clinic opens one week late instead of the three or four weeks the drainage problem might otherwise have caused. When the builder later offers a suggestion that saves the owner money on joinery, it comes up at the risk review rather than being held back. Both businesses work together on the next clinic.
How this applies to a small Australian business
- Separate the relationship approach from the contract form.
- Add collaborative practices in proportion to uncertainty and dependence.
- Agree response and decision times on both sides.
- Include key subcontractors in risk reviews and planning.
- Respond well to the first early warning.
- Watch for unstated assumptions about the other party.
- Use contract notices as governance tools, not threats.
- If you are the contractor, propose these practices yourself.
Signals worth watching
- Problems raised only when they can be claimed.
- Partnering language with adversarial behaviour.
- Subcontractors who learn about changes last.
- Workshops held once and never followed up.
- Issues labelled “supplier performance” that are really mismatched expectations.
- Customers slow to decide while expecting contractors to be fast.
Common mistakes
- Assuming the contract will create collaboration.
- Treating collaboration as niceness rather than honest, early problem-solving.
- Leaving subcontractors outside the relationship.
- Punishing the first early warning.
- Using workshops to cover structural problems in scope, incentives or authority.
- Choosing purely on price for uncertain work.
Frequently asked questions
Do we need an alliance contract to collaborate? No. Most of the benefits come from practices that can be added to ordinary contracts.
Will collaboration weaken our contractual position? Not if obligations remain clear. Collaborative practices should sit alongside the contract, not replace it.
How do we include subcontractors we do not contract with directly? Through the head contractor, by asking for key subcontractors to attend risk reviews and planning sessions that affect them.
What if the other party will not collaborate? Keep your own practices consistent, document issues carefully and rely on the contract mechanisms. Behaviour sometimes changes when the other side sees early warnings are handled fairly.
How do we know whether collaboration is working? Look at how early problems are raised, how quickly decisions are made and how many issues turn into formal claims. Those tell you more than how friendly meetings feel.
Is facilitation worth paying for? On larger or higher-risk engagements, often yes, especially at the start and when relationships come under strain.
Questions to ask
- What behaviours does this engagement need when things go wrong?
- Which practices will support them, whatever the contract says?
- Are the subcontractors who carry the risk included?
- How quickly will we, as the customer, make decisions?
- What assumptions do we hold about the other party?
- How did we respond the last time someone warned us early?
Bringing it together
Collaboration is something parties do, not something a contract form delivers. Add collaborative practices to ordinary contracts in proportion to the uncertainty and the need for joint problem-solving: shared objectives, joint risk reviews, response times and quick escalation. Include the subcontractors who do the work, watch for the unstated assumptions both sides bring, and remember that the real culture appears the first time something goes wrong. Respond well to the first early warning, and you are more likely to get the next one.
Source: KEVOS notes, drawing on teaching material on relationship contracting, project culture and procurement, including South Australian case research on collaborative contracting and D. Walker and S. Rowlinson’s systems view of culture. Examples and figures in this article are illustrations. This article is general information.
