procurement guide - partnering

basis:


“Effective partnering should allow formal contracts to be dispensed with“ - Sir John Egan.

The partnering approach creates a trust relationship, fairness and dedication between all the parties to the contract which involves the client, the design team, the contractor(s) and sub-contractor(s) working to identified common goals.

A wide range of contract suites followed the Egan Report to provide the necessary framework to enable Partnering to happen, led by PPC 2000 published by the Association of Consultant Architects (ACA).

Partnering often allows projects to start on site many months earlier than would have been the case if a more traditional procurement method had been used.

However, whilst PPC 2000 was a sound foundation for partnering it is up to the project team to deliver the benefits. It is therefore important for the project team to be aware that  "PPC 2000 could assist partnering teams who do not give serious thought to the best way in which its provisions are to put into effect” 

The management of risk is an important element of Partnering and demands a structured approach to establish and actively maintain a project risk register. 

At the outset of a Partnering Contract the client will often appoint a Partnering Advisor to record and document the project team relationships, the commitments made by each party and their expectations. He is an honest broker who has no affiliation to any party. 

As an example, the documents needed in the case of PPC2000 would be:

  • The Project Partnering Agreement - sets out and governs the activities of all the partnering team members during the pre-construction phase and is signed as far in advance of the start on site as is possible.
  • The Partnering Terms – will include The partnering terms, the project brief, the project proposal, known costs, provisional KPI’s, preliminaries (site overheads) and a partnering charter. A budget at this stage is not required.
  • Any Joining Agreements – this replaces sub-contract forms. Partners can join at any time.
  • Any Pre Possession Agreement – the purpose of this document is to provide the ability to undertake work on or off site prior to approval to commence on site. For example: surveys and investigations, planning and building regulations approvals, Insurances and Bonds and Health and Safety plan (pre-possession only), and the like.
  • The Commencement Agreement – the document includes the document includes express confirmation by all the partnering team members that to the best of their knowledge the project is ready to commence on site. It will include an ‘agreed maximum price’ (note not guaranteed), the project drawings, supply chain packages and associated drawings, the project timetable, KPI/Incentives, Surveys and other investigations, Planning and Building regulations, funding, H&S plan, Bond, Insurances, etc.
  • The Partnering Charter – an agreed statement of the values, goals and priorities of the Partnering team members and interested parties.
  • The Project Brief
  • The Project Proposal
  • The Price Framework
  • The Consultant Service Schedule
  • The Consultant Payment Terms
  • The KPI’s – to measure and judge performance and service quality; to assess strengths and weaknesses and to act as an aid to continuous improvement; to create a financial incentive to perform well in key areas; to indicate the local social and economic impact of the construction phase of a project; and for benchmarking purposes.

Since PPC 2000 was first published, many other standard forms have followed.

advantages:


  • Increased client satisfaction
  • Creates better value for money
  • Projects benefit from the inherent consistency of the design / construction teams
  • Improved predictability of out-turn costs and time - in most cases partnering projects are completed on time and within target cost and moreover handed over defect free.
  • Better resource planning with a faster start on site
  • Better design
  • Higher quality construction with fewer defectsand whole life value
  • More effective procurement and administrative procedures
  • Fewer disputes and more respect for people
  • Reduced accidents
  • Better use of resources, including Improved supply chain management
  • Using construction work to gain social and economic benefit
  • Can incorporate Design and Build and Performance Specified works if required

disadvantages:


  • The following list notes some problems that have been encountered by Partnering teams:
  • The client must stay interested and actively involved as a partnering team member, otherwise the lack of interest and support has a tendency to encourage cynicism and apathy in team members; and a belief that ideas for innovation or early warnings will not reach the client.
  • Partnering team members must be committed to changing their way of working – partnering is a major departure from familiar ways of working and an uncommitted attitude is likely to undermine effective partnering and furthermore create the problems that partnering is intended to prevent.
  • Failure to complete the partnering timetable – means that there is a serious risk that pre-construction activities will be delayed; particularly if members cannot rely on each other to meet deadlines and in turn relationships may suffer.
  • Failure to clarify and integrate the Project Brief, Brief Proposals and the consultant services schedule – this creates a Risk of gaps in agreed activities and potential later disputes; and duplication in agreed activities wasting money and causing confusion.
  • Failure to read and understand the Contract – this obviously affects understanding and may lead to traditional adversarial alternatives being put into practice.

suitability:


Partnering is a major departure from familiar ways of working. It is a new way of working to many of us.

Professionals and constructors need to be:

  • Enthusiastic
  • Working to the same goal
  • Co–operative and effective communicators
  • Flexible
  • Willing to manage the process

Partnering is about being fair and challenging about value and performance, it is not just about being friendly.

The design professionals are required be proactive and assertive during the project. A strong, determined, value/performance driven and professional stance is essential.

The constructor only has guaranteed work provided value for money; quality and performance are being achieved.

Underperformance must be tackled by an assertive, (not an aggressive) approach.

the NEC/ECC contract:


It is appropriate here to also mention the New Engineering Contract (referred to above), which was introduced in 1993. Published by the Institute of Civil Engineers it was intended to respond to:

  • Client dissatisfaction with existing forms - too many, too adversarial
  • The inflexibility of existing contracts
  • Disputes - too many, too expensive, too long to settle
  • Management of contracts seen as more important than legal niceties
  • UK as a member of national distinctions disappearing
  • Clients looking to seek alternative procurement strategies

The Latham report of 1994 recommended that the NEC contract should become a national standard contract across the whole of the construction industry. In response, the ICE introduced various changes as recommended in the Report, creating the second edition, re-named as “The Engineering and Construction Contract“ (ECC). It requires the parties to work “in a spirit of mutual trust and co-operation”.

The ECC was followed by the Construction Act and as a combination then sought to reduce confrontation and to encourage all concerned to “get on with the job”.

As a contract it:

  • Is intended to be suitable for all the needs of the construction industry and allows a wide range of tender procurement methods
  • Provides for a variety of approaches to risk allocation.
  • Can be adapted for partial design, full design or no design responsibility, and for all current contract options including target, management and cost reimbursable contracts
  • Creates a stimulus for good management

There are six main methods for seeking tendered works under a ECC partnering contract:

  1. A Lump sum with activity schedule
  2. Priced contract with Bill of Quantities (Note - the bill is used only for interim payments, not for valuation of compensation events)
  3. Target contract with activity schedule (lump sum quoted by tenderer as target)
  4. Target contract with Bill of Quantities (subject to re-measurement)
  5. Cost reimbursable style (or Prime-Cost) contract
  6. Management style contract (by involvement of a management contractor)

In addition Construction Management can also be used.   It is therefore extremely flexible.   Indeed it provides a contract to enable good management and a broad set of contract procurement Guide which goes well beyond the scope of this section.