Why use a framework agreement?

If you are in the driving seat for the procurement for construction services and products, you may be considering a ‘framework agreement’. When you are procuring over a period of time, a framework can deliver many benefits, such as:

  • reduced transaction costs
  • continuous improvement within long-term relationships
  • better value and greater community wealth
  • solutions that delight customers.

A framework can help you achieve Gershon’s 2½% annual improvement target. And it’s the kind of systematic and strategic approach to the market that Kelly calls for.

Frameworking should be viewed as a long term relationship with the community whereby you are working together to deliver sustained ongoing improvement. It is about applying the principles of Rethinking Construction to reach the achievable target of 10% improvement in productivity each year. It’s not just about procurement through quality based selection (QBS). Think of QBS as the enabler to build local capacity that can meet the authority’s needs.

Sustainable Local Supply Chain

From the client’s viewpoint, a framework is essentially a means of procuring products and services over a period of time (up to four years now) for a number of projects or schemes. But the implications for the local supply chain can be adverse if local suppliers are excluded in favour of larger companies with little interest in local firms. This is a genuine concern of many contracting authorities and the SME community.

The process, which Constructing Excellence has mapped, promotes sustainable markets local to the contracting authority. This process is in accordance with OGC guidance and meets all other local government obligations. By applying this process your council should become a beacon for others to see how to sustain the local construction community and economy.

Strategic Partnering

Frameworks should be used when the contracting authority needs to develop a strategic relationship with the supply chain over a long period. These are the high-risk, high-spend construction programmes, often found in housing, education and highways.

Constructing Excellence

This matrix sets frameworking in the context of other procurement methods. Frameworks give you the opportunity to communicate with all the stakeholders – clients and users, the framework service delivery team, council members, regulatory officers and the supply chain – on what the authority is doing and why. If you do this at the outset, the local industry can develop to meet your needs.

Constructing Excellence But beware, frameworking is not a ‘one size fits all’ solution. Consider the scale of projects; what is small/low risk for one authority may be large/high risk for another.

Frameworks have been in use and tested for more than ten years in the private sector and, more recently, in some local authorities. Many case studies have demonstrated that frameworking delivers better value, year on year.

Out go short-term procurement policies that cause endless uncertainty for suppliers. Framework agreements are long-term relationships with suppliers, which create a commercial environment that is more conducive to sustainable investment and employment in local construction businesses, and cuts waste in processes and physical resources.

Performance measurement systems – designed to encourage continuous improvement – assist auditors and members to verify that public money is being used wisely.

What you can expect

One practical effect of a framework agreement is the freedom to award contracts without the need to re-advertise and re-apply the selection and award criteria. This alone will lead to all parties saving the substantial time and cost of repeat bidding.

More importantly, frameworking is about having a long-term partnership between the supplier, client and other stakeholders that creates the working environment needed to support continuous improvement.

Continuous improvement requires a system for establishing objectives and targets and monitoring performance. Frameworks offer the structure needed to measure and improve performance during a project and to compare successive projects to see that lessons are transferredfrom project to project. Keeping the team together is a major contributing factor in continuous improvement over time.

The key to continuous improvement over the life of the framework is examining the processes, step by step, to achieve targets set in the report Rethinking Construction.

A common problem, for public sector clients, is having big construction programmes but gaps in specialist expertise. A framework permits you to fill these critical and difficult to recruit vacancies without taking on a direct employee. The same principle applies to contracting out whole design packages to a framework team.

The up-front work needed to establish a framework is more than for tendering and awarding a single major contract. But the down-stream benefits will far outweigh this. Many clients with framework agreements have achieved 10% year-on-year improvements in the time and cost of delivery.

Continuity of Work and Continuous Improvement

Constructing Excellence Clients who see frameworking as just a convenient way of short cutting the procurement process will not reap any of the continuous improvement benefits. A stop-start workload can not promote the right environment for continuous improvement.