Strategic And Framework Partnering Agreements Construction Essay

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Several standard form partnering agreements are now available for Project and strategic partnering. An example of the former type is the ACA standard form of project partnering PPC 2000. Here, the key stake holders of a project sign only one single integrated contract (no other contracts are needed). Other standard forms for partnering, such as x12 of NEC 3, do not create a muti-party contract. Strategic partnering in contrast, involves developing long-term commitments from both parties in the contract. The aim is to move the focus of attention away from getting the cheapest or quickest solution for a particular job, and towards developing a longer term understanding of the purposes of the project, and understanding from both parties about what each other what's to get out of the project. These polices have their roots in widespread business practice where long term relationships enables buyers and sellers avoid litigious disputes because the relationship becomes an important part of the process. The essential feature of strategic partnering is that it provides a method of for selecting a contractor (or other supplier) other than the more traditional approaches of competitive tendering. Examples of a standard -form arrangement for strategic partnering are the JCT FA 05), NEC 3 framework Contract and the ICE Partnering Addendum. (Murdoch, 2007)

Any contract used should be of partnering bias, most standard contracts don't facilitate for the idea of partnering, traditional contracts require terms that need negotiating this often destroys partnering attitudes.

Even so many firms require the protection a contract gives, if this is the case it's reasonably well established that the project partnering contract (ppc2000) and the NEC engineering and construction contract with the partnering are the best options (Bennet, J. and Peace, S. 2006).

Framework

Framework agreements are used by major clients; they provide a resource pool of competent consultants, contractors and specialist. They establish a foundation for negotiations over future contracts with a limited number of firms. These are standing offers that remain valid over the life time of the agreements (OGC 2006).

Framework agreements can take a variety of forms; they don't have to be binding and don't hold the promise of work for the firms in the pool. The offers can be terminated at any time but contractual agreements must be completed for any individual project already undertaken. If a contract has been entered to purchase a volume of goods or provide a service over a period of time then this must be honoured (OGC 2006)

Advantages

Establish long-term relationships (advantageous for partnering)

Allows specialist buyers to negotiate best value for money on goods that can be used over a number of projects, but used any time

Gives firms better buying power

Reduces time spent on procurement and tendering

Makes reliable after-sales more likely (Bennet, J. and Peace, S. 2006).

Disadvantages

FW agreements can be unresponsive to change, there may be a better solution developed after the agreement was set up. Often can be a one size fits all approach, however most FW agreements don't place any obligation on any parties so if there is a better deal to be had then there is nothing to stop them. This in turn can be another drawback as there is no guarantee of business so a lot of money may be wasted getting a company into the resource pool of the framework (Bresnen, M and Marshall, N 2000).

When the comparison of a partnering agreement and a framework is made a FW Agreement is a step toward partnering but no work is guaranteed it's more of a root to secure a pool of reliable resources that are likely to gel once in a partnering agreement, this makes the tendering process faster giving more access.

Conclusion

Partnering and framework agreements can be used in conjunction with each other, with strategic partnering being of the greater benefit. These can be a cost effective techniques to help secure contracts and develop good working relationships with all involved in projects. Provided all parties are willing to take advantage of workshops, develop and maintain learning curves in order to progress on future projects (OGC 2006).

This can massively reduce costs involved in construction, eliminate litigation of contract claims and improve on quality, yet still bring in various complex contracts in on time and under budget. Though this must be done through cooperation and hard-work from all parties, and contracts can become a very complex balance between trust and assurance (Bennet, J. and Peace, S. 2006, OGC 2006; Murdoch, 2007).

Abstract

This paper provides an overview of the cost, benefits and the potential drawbacks of partnering, also describing and comparing the three types of partnering which are Project Partnering (one project), Strategic partnering (Multiple projects) and framework agreements. The fact that partnering has become so popular in recent years, construction has seen a variety of new contracts emerge and some expansions on the more traditional ones to accommodated partnering, this paper will also look into these, backed up by academic opinion provide advice on what contracts best suit partnering. Cases studies and figures gathered by leading academics (Bennet, J. and Peace) illustrating how partnering can effect each project, these figures also shows if the rules of partnering are adhered to though out numerous projects then what the cumulative results can be.