All parties involved share the risk.
Transparency and open communication
Everybody is stimulated to provide their input, no matter rank, role or organisation.
Stimulate teamwork and collaboration
Everybody is encouraged to share their expertise and jointly work on solutions.
Stimulating problem solving and making the group accountable for issues removes the blame game and finger-pointing, which generally leads to unnecessary discussions and delays.
Through a lean and cooperative approach, wastage of time and materials can be reduced.
Removal of ‘the contingency’ costs
Removal of conventional fixed-price contracting removes ‘the contingency’ cost from contracts. This cost is typically charged by non-owner participants to cover their risk. In a fixed-price contract, this is paid whether or not this risk has materialised.
Preventing (the fear of) legal claims saves costs and stimulates innovation
The fear of legal disputes often steers stakeholders to operate within the limits of contracts. With collaborative contracting, collective risk-sharing and open communication encourages risk management practices and stimulates the finding of innovative cost savings without the fear of any legal claims if this fails.
Additionally, with more traditional contracts, when legal disputes do occur, the administration costs involved can have a significant financial impact on the project.