NEW FORMS OF CONTRACTING
32. In the private sector, longer term collaborative
relationships or partnering between clients and contractors are
now more widely used. The benefits can include client and contractor
working together to improve building design, minimise the need
for design changes, identify ways of driving out inefficiency
in the construction process, replicate good practice learned on
earlier projects and minimise the risk of costly disputes. In
the private sector, reported savings from different forms of partnering
are between two per cent and 30 per cent in the cost of constructing
buildings. The cost of partnering —
setting it up and monitoring —
is assessed as adding about one per cent to project costs.[29]
33. The Office of Government Commerce are encouraging
departments to establish longer-term collaborative relationships
and partnering for their construction programmes where there is
good potential to improve value for money. We asked the Office
of Government Commerce how they were taking precautions against
the risk of unduly close relationships with contractors, thus
increasing the risk of impropriety and malpractice. They advised
that, in establishing partnering arrangements, departments were
required to appoint partners competitively, to set and agree with
the contractor clearly measurable targets for improving building
quality, delivery times and achieving cost reductions, and to
have reasonable access to contractors'
financial records and cost information to verify improvements
in efficiency and performance claimed by contractors. The Office
of Government Commerce added that those requirements were set
out in guidance issued to departments by the Treasury. The guidance
emphasised the importance of benchmarking to test that the partnership
is delivering value for money by comparing performance against
other contracts, and the need to recompete the partnership contract
after a given interval. The Office said that they intended to
update the guidance later this year .[30]
Conclusion
34. There is scope for benefits in terms of quality,
faster construction times and financial savings through contractors
and their clients working more closely together in longer-term
relationships (partnering). Subject to appropriate safeguards,
such productive relationships deserve to be promoted in public
sector construction. These include the appointment of partners
through competition; periodically re-tendering; agreeing clear,
measurable targets for continuous improvements in quality, delivery
time and cost reductions; establishing payment arrangements to
give contractors incentives to be innovative and cost effective;
and securing reasonable access to contractors'
financial records and cost information to check that agreed improvements
in efficiency and performance are being achieved.
29 C&AG's report HC 87 (2000—2001), paras 7 and
2.3—2.4 Back
30 Qs
11—12, 45, 72 and Evidence, Appendix 1, pp 11—18 Back
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