6CN008 CQS (Management)

Collaborative Procurement and

OGC Gateways model (1)
1
Understand the term construction procurement
Explore the different options for achieving collaborative
procurement
Examine the relevance of the Gateways approach
Procurement concerns...
Activities
Design
Demolition
Managing the
project
Leasing or managing
facilities
Financing
Commissioning
Construction
Land acquisition /
selection
Context of Construction Procurement
3
Employer
Contractor
Contract Administrator (CA)
Consulting Engineers
Quantity Surveyor
Designers
Named Specialist Sub-contractors
Sub-contractor
Suppliers
Suppliers
Suppliers
Tenant
Funder
Principal
Contractor
(CDM)
CDM
Co-ordinator
Principal
Contractor
(Waste)
Public Utilities (Water/gas etc)



Designer/Sub-contractors
Employers
Representative ?
[admin]
Pre-Appointed
Consultants
Purchaser
Impact of multiple stakeholders
Sir Michael Latham: Constructing the Team
(1994)
Aims: Concerning construction practice
Reduce conflict & litigation
Improve productivity & competitiveness

Main call was for integration of the supply
chain
and collaborative working between the
supply chain partners
Sir Michael Latham: Constructing the Team
(1994)
Partnering relationships are also beneficial between
firms. Some main contractors have developed long term
relationships with subcontractors. That is welcome.
Such arrangements should be the principle objective in
improving performance and reducing costs for clients.
They should not be cosy. The construction process
exists to satisfy clients. Good relations based on mutual
trust benefit clients
This recommendation and its subsequent adoption
marked the beginnings of collaborative procurement
Treasury Procurement Guidance (1997)
Wishes of Government:
Consultants & Contractors to be appointed on the
basis of:
VFM over whole life (not lowest price alone)
Robust mechanisms to ensure quality and price
(whole life cost) components on each bid
Partnering and teamworking
Teamworking - Core requirement for each project
Partnering, if possible
On all contracts
To achieve up to 40% cost savings

After Latham Rethinking
Construction by Sir John Egan (1998)

The Egan strategy also advocated:
Partnering
Benchmarking
Supply chain management
Improved product development
Improved component Production
New delivery mechanisms CBPP and M4I
(Construction Best Practice Programme. Movement for Innovation)

Rethinking Construction by Sir John
Egan
A team that does not stay together has no
learning capability, the concept of alliance is
therefore fundamental to our view of how
efficiency & quality can be improved
Reinforcing Lathams call for collaborative
procurement
What does collaborative
procurement mean, practically?
Partnering
The Key To partnering!
Partnering - A definition
a structured management approach to
facilitate teamworking across contractual
boundaries
can be used by two or more organisations to
achieve specific business objectives by
maximising the effectiveness of each
participants resources.
Bennett and Jayes (1998)
COLLABORATION is the key!
Types of partnering
Project-specific partnering
(a one-off collaboration)

Strategic partnering
(long term relationship over a number of
projects)
All are involved in the
partnering process
Main
Contractor
Specialist
Contractors &
Suppliers

Client

Partnering
Partnering
Partnering
Partnering
Partnering
Professional
Team
Partnering - Relationships (1)
Back-to-back partnering
agreement
Specialist
Contractors
Client
Service Provider
Partnering
Partnering
Partnering Relationships (2)
Parties in partnering
Constructor:
single point responsibility for the design,
supply, and construction
Must complete the project on a fitness for
purpose basis.
Specialists
A Partnering Adviser
Three Essential Features of Partnering
Partnering
Cornerstones
From Partnering in the Team, Construction Industry Board (1997)
Mutual
Objectives
Continuous
Improvement
Problem
Resolution
Partnering
Keys to successful partnering
Proper planning of mutual objectives
Charter to which all adhere
Workshops so ALL value the whole project
Open book throughout supply chain
Gain (or pain) share
Collective decision making
Real benchmarking for improvement
Project bank account???
The Seven Pillars of Partnering
Strategy
Developing the
clients objectives.
How the team can
meet these on the
basis of feedback.
Equity
Ensure everyone
is rewarded for
their work on the
basis of fair
prices and fair
profits.
Membership
Making sure all
the right firms
are involved to
ensure all
necessary skills
are available.
Processes
Establishing
standards and
procedures that
embody best
practice.
Integration
Improving the
way in which
firms work
together by using
co-operation and
building trust.
Feedback
Capturing
lessons learned
from experience
and others to
enable future
improvement.
Benchmarks
Setting
measurable targets
that lead to
continuous
improvements in
performance.
Source: (Bennett and Jayes, 1998)
Partnering Contracts
JCT PPC (Project Partnering Contract) 2000
Maps out the whole partnering procurement process from
initial design through to final completion.
PPC 2000 is a single multi-party contract (Project
Partnering Agreement)
The project comes first
All members of the Partnering Team sign up to the
Project Partnering Agreement
Contract based on Agreed Maximum Price (AMP)
Parties share the risks of each team member
NEC3 Engineering and Construction Contract
JCT Constructing Excellence Contract
Upsides of partnering
Decent margin for all
Satisfied customers and end users
Repeat business
Enhanced reputations all round
Improvement in the business planning process
Enables businesses to set tough stretching targets
Continually building a more robust industry
Improved Communication
Fewer disputes
Promotes innovation
Reduced costs and better project quality
This is more like it !
Some staff cant / wont do it
Some teams collapse when problems come ~
Were they ever partnering?
Margins may be less than good jobs
But much better than bad ones
Overhead recovery may take longer
Downsides of partnering