As a council officer, you are tasked with fulfilling (and usually resolving) the expectations of the many stakeholders in construction projects. And you think a framework agreement will help?
This first stage is about assessing your construction needs and, if a framework agreement is the right procurement strategy, informing, consulting and (in some instances) persuading all the stakeholders.
Background Knowledge
Procurement essentials is a quick reference guide for local government officers, produced by the Improvement and Development Agency (I&DeA). It describes the essential features of modern procurement practice in local government.
The National Procurement Strategy for Local Government, from the Local Government Association, will help councils recognise the potential of effective and innovative procurement to improve service delivery.
Achieving excellence in construction, from the Office of Government Commerce (OGC), sets out a route map with challenging targets for performance under four headings – management, measurement, standardisation and integration. Targets included the use of partnering and development of long-term relationships, the reduction of financial and decision-making approval chains, improved skills development and empowerment, the adoption of performance measurement indicators and the use of tools such as value and risk management and whole life costing. Regarding Frameworking, look in particular at:
- Achieving sustainability in construction procurement
- Guide 6: Procurement and contract strategies
- Guide 11: Sustainability
Get familiar with the Successful Delivery Toolkit, also from OGC, which explains the Gateway Review Process and provides an abundance of well signposted guidance on how to procure successfully.
Sustainable development is the over-arching goal of government policy in the United Kingdom. The UK government’s definition is simple: sustainable development is about ensuring a better quality of life for everyone, now and the generations to come.
When setting up a framework, you need to consider the skills needed and how this can be designed to meet sustainability objectives for your community.
- What sort of communities are we trying to create, and how should we measure achievement?
- What are the most effective delivery processes, and who is responsible for these?
- What skills are needed to make the processes work effectively?
- How do we bridge the gap between our current skills base and the skills we want?
Learn from past projects
Let’s assume you’re looking at programme to replace schools. Start by looking at your council’s school projects in recent years. What were the desired outcomes and how well were these achieved? See Strategic Issue 4. Once your framework goes into production, you will continuously improve by learning from the successes and failures of each project. See Operational issue 5.
Past performance project review
Ideally, there were post-completion reviews but, if not, you can still do a quick assessment in consultation with staff who took over the school (the customers) and the education authority (the client). The fundamental question is whether the building provides the service and ‘experience’ it was built for. Look for specific needs of the teachers, pupils and the community and any unusual site constraints.
You will also find it useful to have some tangible measures of achievement that you can use to compare projects and also as a baseline to see when improvements occur in the future. The Construction Industry Key Performance Indicators (KPIs) are the best tools for getting this quantitative assessment, particularly as you can use the industry KPIs to compare with other councils. See www.KPIzone.com. The Design Quality Indicators a measure the effectiveness of the design, which can be somewhat subjective! See www.dqi.org.uk.
The questions to ask include:
- Rate the customers’ and clients’ satisfaction with the quality of the product they received and the service along the way.
- How did the project team perform? Use the checklist in Appendix 13.
- How did the constructor perform? Use the checklist in Appendix 12.
- Were the customers and client satisfied with the quality of the product received and the service along the way?
- Was the school delivered on time?
- Was it finished within budget?
- What did the project team learn and did they apply the lessons in the next project?
- What are the transaction costs for a single-project process?
When you have done this for a sample of recent projects you will know the relative strengths and weaknesses of you existing procurement method. If you are dissatisfied with the results, you now have evidence to justify a change and benchmarks for setting future performance targets.
Analyse the Portfolio
Frameworking is not appropriate for every situation. Keeping with the schools example, it may not be the answer if you are planning to build only a few schools. Here’s where the Portfolio Analysis tool helps you to decide. It is based on observations of which procurement methods have been best for different portfolios of construction work. This table shows how the relationship between risk and spend influences choice of procurement strategy.
So it’s your higher risk, bigger spend, multi-project programmes and maintenance programmes that are likely to give best results with framework agreements.
You could also look at those programmes already in place. Is there a case for wrapping them into larger programmes and see whether the risk/spend analysis changes?
Apply the 10 Golden Rules for Establishing a Framework
You’ve got this far and decided frameworking is for you. Here are 10 rules that will help you make a success of it. These come from Appendix 1.
- Spend plenty of time planning.
- Clarify what is important to you.
- Benchmark current performance
- Ensure everybody is ready and able to respond.
- Establish a ‘focus group’ or ‘framework board’.
- Compile robust evaluation methods for selecting partners based on quality.
- Establish mutual objectives with your partners.
- Hold partnering workshops regularly.
- Monitor and review progress.
- Learn from the process and above all else, enjoy it!
Get the whole team on board
Before you get carried away with new ideas, remember your colleagues may need some convincing – council members, regulatory officers in finance and audit, those who will use what you will construct, and those who operate and maintain it. And, of course, you will need to help the supply chain to adapt.
The rest of this first stage is about putting your leadership skills to work in demonstrating to everyone else that your council needs to adopt frameworking. Only then will you go to the second stage of seeking approval.
This toolkit makes frequent use of extracts from “Rethinking Construction in Local Government”. It has three sections:
Guidance
- Five strategic issues
- Strategic issue 1 – Ensure your corporate procurement structure enables your authority to strategically consider and implement Rethinking Construction principles
- Strategic issue 2 – Encourage innovation, efficiency and effectiveness by involving all those who can contribute to the success of a project from the earliest possible stage
- Strategic issue 3 – Develop a ‘Respect for People’ culture by ensuring that all involved have the necessary skills and are working in a safe and healthy environment
- Strategic issue 4 – Focus on the desired outcomes from your projects and the extent to which they are achieved
- Strategic issue 5 – Establish a strategy that each project and communicate this to all members of the team
- Five operational issues
- Operational issue 1 – Appoint members to the team using a quality based selection process
- Operational issue 2 – Consider a whole-life procurement by focusing on the long-term effectiveness of your buildings
- Operational issue 3 – Share risks and rewards with all of the team and provide them with incentives for achieving/improving on the project objectives
- Operational issue 4 – Encourage and use new technology where it has been demonstrated to be of potential benefit
- Operational issue 5 – Learn from the experience
- Supporting information and example documents
- Appendix 1 – 10 golden rules for establishing a partnering agreement
- Appendix 2 – Example skills/training matrix
- Appendix 3 – Essentials of a brief
- Appendix 4 – Business case template
- Appendix 5 – Assembling the team: project appointments
- Appendix 6 – Role of the project sponsor
- Appendix 7 – Example radar chart
- Appendix 8 – Proposed risk matrix (tender invitation)
- Appendix 9 – Illustrative reward strategy
- Appendix 10 – Illustrative quality/price assessment and recording methodology
- Appendix 11 – The Prudential code: brief outline of key issues
- Appendix 12 – Performance of the contractor
- Appendix 13 – Performance of the project team.
