Essay Title - Project Team Business
Partnering the Public Sector
Contract bidding is an expensive process for both clients and contractors, especially when many bidders are involved. To the clients, the costs beget in screening and analyzing the bids tendered, whereas to the contractors, the costs beget in bid preparation and submission. Bidders have to recover the costs associated with every unsuccessful bid through the increase of subsequent bid prices, for contracts are awarded to only one contractor normally.
Every organisation will have its own ideas on the structure and philosophy behind the bid strategy and the way manage bids, and almost every organisations goes through stages where it either needs to improve existing business processes or introduce new ones.
In many ways, what a better approach should concerns is the continual improvement without having to make widespread and radical changes in your opinion (Domberger, Hensher and Wedd, 2003, 45).
During the decade of the 1990's saw the advent of a new attitude in Government contracting. After witnessing several high-profile success stories such as constructing the Atlanta Olympic Park, the Government embraced the concept of Partnering as a primary method of contract administration.
The private sector consistently demonstrated an ability to contract for services while realizing a marked decrease in claims and litigation costs with Partnering. Their success was founded in the building of trust within the project team by creating a common bond between previously dissociated parties.
This was achieved by each party developing a mutual understanding of the other parties' interests and goals in the project while maintaining a team focus on an ultimate goal of a successful contract. The Government espied Partnering as a way to improve their relationships with contractors and reduce the volume of litigation that seemed to only be increasing in the industry.
The Government began a paradigm shift by instilling a new attitude of openness and communication with contractors as well as implementing several contract administration changes. (Macbeth and Ferguson, 1994, 162)
The bid process in the business projects defines the set of tasks that takes the bid organisations from first receiving information, through some linked actions onto delivery of the bid and beyond. For the bidding organisations, according to Tweedley, in beginning the redesign you need to establish some baseline objectives.
First, you have to decide what it is you are trying to achieve by reorganising or setting up a bid process. Then you need to understand the way in which your organisation does things now. Only then can you look at ways to improve or carry out an effective bid management process. In the meantime, Tweedley believed that the principal aims for the bid process will centre on ways of improving how things are done in the bid organisation (Hughes, 2003, 25).
"Partnering involves two or more organisations working together to improve performance through agreeing mutual objectives, devising a way for resolving any disputes and committing themselves to continuous improvements, measuring progress and sharing the gains” - Sir John Egan
Partnering comes in many forms, to some it is the ‘re-badging’ of an existing relationship, the contractor or subcontractor ‘nailing’ down a partner to pass on any benefits to their client. Possibly a ‘strategic alliance’ exists and is used as an umbrella for partnering.
However true partnering is no longer a catch phrase but a tool to reduce costs in many areas, make the most of efficient skills, innovations, resources and substantially improve competitivity, quality and communications. (Barlow, Cohen, Jashapara andSimpson, 1997, 224) True partnering exists where the client leads.
In order to prevent wasted effort in preparing bids and to avoid the consequent potential risk, it is common practice to select and invite some useful and effective management strategy and approach for a project. Under this circumstances, best value and partnering as very effective management strategy and approaches were introduced and widely used in the bid process.
In response to criticism of competition based solely on price, the Procurement Policy Guidelines stipulate that all public procurement of goods and services, including works, is to be based on value for money, having due regard to propriety and regularity. The guidelines define 'value for money' as the optimum combination of whole-life cost and quality (or fitness for purpose) to meet the user's requirement.
Best value procurements focus on the selecting contractor with the offer "most advantageous to the government, price and other factors considered". (Bennet and Jayes, 1995, 13) The factors other than price can vary, but they typically include technical merits, managerial merits, financial health, and past performance. The goal for a best value selection is to obtain an optimum combination of price and technical solution for the public.
A best value selection rewards those who propose innovative concepts that enhance product quality or lower the price for providing quality. When used incorrectly, however, owners may add cost to the procurement.
Many research papers have discussed the definition and meaning of partnering. The fundamental principles of partnering - commitment, trust, respect, communication, and equity - are designed to include proper consideration of the interests of all parties at every level. The building of trust among the interested parties to a contract helps avoid problems with the project that, in recent times, more often than not lead to litigation.
Numerous definitions of partnering have been derived from past studies. Among them, Franks defines partnering as: ...a concept where organisations agree to work together for a period of time, perhaps unspecified, on a basis of mutual trust and with common objectives thereby optimizing each partner's strengths (Ives, 2003, 24).
And the definition developed by the Construction Industry Institute in Austin, Texas, is the most widely cited, The CII (UK) defined partnering as:
... a long term commitment between two or more organisations for the purpose of achieving specific business objectives by maximizing the effectiveness of each partner's resources. This requires changing traditional relationships to a shared culture without regard to organisational boundaries. The relationship is based upon trust, dedication to common goals, and an understanding of each other's individual expectations and value. Expected benefits include improved efficiency and cost effectiveness, increased opportunity for innovation, and the continuous improvement of quality products and services. (Bresnen and Marshall, 2000a, 229))
Much of Britain's east coast is at risk of serious flooding because of inadequate sea defences, according to a recent report by UK insurance broker Willis Corroon. From the insurer's point of view, the threat is compounding by the willingness of planning authorities to approve development in low lying areas behind these deficient protective barriers (Laffin, 2005, 24).
"Partnering is a set of strategic actions, which embody the mutual objectives of a number of firms achieved by co-operative decision making aimed at using feedback to continuously improve their joint performance".
"The Seven Pillars of Partnering" and how they inter-relate.
The seven pillars of partnering can be described as:
Strategy - developing the client’s objectives and how the consultants and contractors can meet them on the basis of feedback.
Membership - identifying the firms that need to be involved to ensure all necessary skills are developed and available.
Equity - ensuring everyone is rewarded for their work on the basis of fair prices and fair profits.
Integration - improving the way the firms involved work together by encouraging co-operation and building trust.
Benchmarks - setting measured targets that lead to continuous improvements in performance from project to project.
Project processes - establishing standards and procedures that embody best practice based on process engineering.
Feedback - capturing lessons from projects and creating task forces to guide the development of the strategy (Mellors, 2003, 2).
This framework, we believe, provides a basis for individual projects to be carried out, enabling teams to search for ways to improve designs and working practices over a number of projects. Efficiency and innovation are therefore the key to our partnering philosophy.
The report says substantially increased investment is necessary to make the defences effective while, in fact, public refurbishment grants have been decreasing in real terms. This has thrown reliance onto private sector involvement, which does not guarantee adequate funding.
The greatest risk is in England between the. River Humber and the Thames Estuary. It was in this area that flooding on the night of 31 January 1953 flooded 24,000 homes and drowned 300 people. Many defences were constructed or refurbished in the 1950s following this disaster.
Many are now reaching the end of their design life or were built to design parameters now obsolete in the face of rising main sea levels, increasing storminess and a sinking land mass.
There has been no major inundation in Britain since 1953 but, according to the report, the risk of extreme high water is rising with global sea levels. (Cheng, Li and Love, 2000, 84-92) The International Panel on Climate Change estimates that these are rising by about 6cm every decade because of thermal expansion of the oceans.
The British Government's Department of Transport and Environment says development of coastal areas is subject to a policy designed to miniraise the risk of flooding to homes and limit the need for expensive engineering works. Said policy is not always in evidence.
When DPC visited the ongoing Jaywick to Colne Point Seawick Defences project recently, the approach by road was through an endlessly sprawling complex of holiday caravans, chalets and shops running to the very base of a vast concrete seawall. Spray blasted over the parapet, driven by a strong onshore wind. This was one of the major breech points in the 1953 flooding and 37 local people died. (Rahman and Kumaraswamy, 2002, 155)
Fortunately, the fields of fragile aluminium boxes behind us were not as vulnerable to the consequences of neglect and decay as may threaten elsewhere along this coastline. Although the standard of protection at Seawick had deteriorated over the years due to gradual erosion of the beach, this was one location at which the British Government's Environment Agency was determined to hold the line.
Under a $3 million contract awarded to Van Oord ACZ Ltd, the Seawick Defence Project was well underway. The work was being carried out under a post-award Partnering Charter between the Environment Agency, Van Oord, consultants Posford Duvivier, stone supplier Stema Shipping (UK) Ltd, contractors May Gurney (Construction) Ltd and the nearby Harwich Haven Authority (Scollay, 2003, 21).
Partnering is a concept which provides a framework for the establishment of mutual objectives among the building team with an attempt to reach an agreed dispute resolution procedure as well as encouraging the principle of continuous improvement. This framework enthuses trust, co-operation and teamwork into a fragmented process which enables the combined effort of the participants of the industry to focus upon project objectives.
Partnering has grown out of the development of strategic alliances in order to manage the supply chain in a particular process such as construction. This concept was first originated in Japan, USA and Australia. (Rahman and Kumaraswamy, 2002, 155) It evolved out of the failure of the traditional procurement methods to meet client criteria and to achieve project objectives due to ever increasing project size and complexity. Its foundation in Japan may well be advocated to the Japanese management revolution ‘Kaizen’ which focuses upon Total Quality Management (TQM). However, unlike other systematic approach to management, partnering focuses upon the importance that all parties have to play in the construction process as opposed to the ‘top down’ approach. (Rahman and Kumaraswamy, 2002, 155)
Since its introduction into the UK some 10–15 years ago, support for the concept has been clear. Client organisations such as the British Airports Authority, Railtrack, Tesco and National Westminster Bank PLC all reported positive, measurable and identifiable results.
However, the concept of partnering can be rather confusing as to what it is and what it is supposed to achieve. This conceptual paper provides an overview of the principle of partnering and presents some examples of cost benefits and efficiency. It unfolds the findings of various reports and research projects in the field of partnering in an attempt to present the advantages, disadvantages and applicability (Child and David, 2004, 14).
The UK public sector has for almost a century, been analysed and observed by a number of reports, mainly from the sector. The underlying concern of these reports has proved to be the inefficiency of the public sector as compared with others together with culture and working practices.
Root causes for the reasons for economic inefficiency have over the years been directed to the fragmented nature of the industry, the uniqueness of construction as a product, the divorce between design and construction, the role of the consultants, and procurement methods. Whilst responses to all these criticisms have been made they have not by and large resulted in greater productivity or customer satisfaction. (Spekman, Forbes, Isabella, and Macavoy, 1998, 749)
More recent reports have focused upon client needs and perceptions. Undoubtedly, both private and public sector clients have concluded that the public sector needs to reflect the best practices of manufacturing industry to provide a satisfactory product. Indeed it is suggested by Egan that the UK public sector languishes in the same unfavorable condition of that of the 1960s UK automobile industry (Doz , Hamel and Alliance, 2004, 25).
During the last decade, many reports and commentators have indicated that there is a need for a change in the fundamental culture of the construction team. Perhaps the Latham report has proved to be the most significant milestone, in that it indicates for the first time that the public sector should change procedures and methods to incorporate the concept of “partnering” used so successfully in the USA, Australia and Japan. Indeed, the USA and Australia are used as the main point of reference, to have instigated suitable procedures for the selection of subcontractors, in public sector contracts. (Olsson and Еspling, 2003, 77)
Specific advice should be given to public authorities so that they can experiment with partnering arrangements where appropriate long-term relationships can be built up. But the partner must initially be sought through a competitive tendering process, and for a specific period of time. Any partnering arrangements should include mutually agreed and measurable targets for productivity improvements (Droli, 2007, 44).
Whilst Latham identified the major problems of the construction team and made recommendations, there remained a critical mass of large private sector clients that remained unconvinced that yet another report would lead to change. This culminated in the new Labour Government of 1997 teaming with the private sector and the publication of the Egan .
This report represents the views and findings of major clients such as British airport authority (BAA), Railtrack, major supermarket chains and similar organisations. (Olsson and Еspling, 2003, 77) Egan, representing predominantly private sector interests, accepts, perhaps surprisingly, that the lowest price should not be the only criteria used for selection and that other factors must be considered.
…to summarise, the Taskforce wishes to emphasise that we are not inviting UK construction to look at what it does and do it better; we are asking the industry and Government to join with major clients to do it entirely differently. What we are proposing is a radical change in the way in which we build. We wish to see, within five years, the public sector deliver its product to its customers in the same way as the best consumer-led manufacturing and service industries. To achieve the dramatic increases in efficiency and quality that are both possible and necessary, we must rethink construction. (Egan 1998, 4)
Much of the UK public sector is governed by the culture of competition and this is most prevalent within the public sector. The public sector (whose volume has been much reduced in recent years), is still the largest client of the UK public sector, spending some $20 billion per annum. It relies mostly upon traditional methods of selecting construction contractors, using a price-based competitive tendering process (i.e. a number of bidders are given a clear specification of the work to be carried out and are required to submit a price for doing so, with the contract almost invariably being awarded to the lowest bidder; ).
Whilst it would be wrong to attribute all of the failings of the UK public sector to this process, it undoubtedly has a number of serious disadvantages for the industry and its clients. Namely and including:
- It appears that in some cases the lowest bid is often flawed (i.e. estimator errors of measurement and/or price) This combined with management decisions to exclude profit and even overheads when desperate to win a tender results in contractors pursuing claims and ad-measurement to recover losses.
- A lack of vision on behalf of the client to take account of factors other than price, such as the caliber of the resources to be employed, methods to be adopted to achieve quality (which will affect operating and running costs), contribution of supply chain alliances, plus safety issues and the treatment of the environment.
- A lack of value management and innovation in design, in methods of construction, in products, in sub-contractor and supplier procurement, when bidders are restricted to pricing a pre-determined solution with specified products.
- Lip service is paid to the cost effect of time. Most Public Sector projects are judged on their ability to hit cost targets .
And as Bromilow was first to note over 30 years ago,
- An inability to benchmark project performance to client costs. (Durkheim, 2006, 5)
Whilst the concept of lowest cost tendering as best value for money appears to be in decline the UK, there is considerable evidence to suggest that European clients still do not trust their suppliers enough to disband the practice .
This then is the context in which this paper is written. Partnering has seemingly evolved, partly in response to client demand linked to the knowledge that some countries would appear to obtain better value for money than others . There also appears to be evidence that both the public and private sector have accepted the notion of partnering as a mechanism to achieve better results.
But what then is partnering and is there evidence that it is satisfying the construction client’s needs and expectations? (Boddy, Macbeth, Charles, and Fraser-Kraus, 1998, 148) Until now the problems of fragmentation have been considered to be a management problem that might be resolved by different procurement techniques.
However the latter address methods of production and have mostly failed to address the problems of integrating the entire construction team into the construction process. Indeed most procurement systems are adversarial by design and still rely much on contractually explicit procedures rather than on mutually agreed methods to achieve financially sound objectives for all the team.
Partnering appears to be a device that encourages greater integration of the project team and create competitive advantages to all that participate in the project. It is believed that the concept originates from Japan and the UK from the early 1980s where team building, cooperation and equality, rather than the single-sided relationship of adversaries to a project, were encouraged. (Doz, 1996, 59) It is perhaps from southeast Asia that the “win–win” buzzword, so prevalent in Chinese/Japanese culture, emanates.
In the UK, partnering has steadily gained popularity from the early 1990s and the present British Government has supported radical changes in the way that the Public sector performs and provides services to customers, particularly those in the public sector. This has, as previously stated, received support from both the private and public sectors in the UK. (Faulkner, 1995, 211)
One of the key features of the Egan report is the recommendation that clients and the public sector rely less on competitive tendering and formal construction contracts and move to a “supply chain” system of construction production more commonly found in manufacturing industry e.g. car manufacture. This, it is suggested, improves productivity and profits.
These features are consistent with the ethos of the partnering process, which attempts to steer parties towards trust and cooperation to eliminate formal contractual and inevitable adversarial positions, and simultaneously eliminate price as the major mechanism of selection.
Client organisations including those such as the British Airports Authority, Railtrack, banks and supermarket chains have all carried out projects using the partnering process. (Faulkner, 1995, 211) In general terms all report that results are extremely positive with large savings in terms of cost and time claimed .
The principle of partnering is reviewed in various reports and research projects. In reviewing the literature, there appear to be more similarities than differences in opinions concerning the definition of partnering. Perhaps this is in part due to evolution. Indeed one major research publication claims that partnering has witnessed three generations of development, each of which are different in concept and design and therefore also different in terms of definition.
The National Economic Development Council (1991) provides a working definition of partnering as: a long term commitment between two or more organisations for the purpose of achieving specific business objectives by maximizing the effectiveness of each of the participants.
In comparison, other researchers, define partnering in terms of the notional benefits on offer to the individuals participating in the process. These benefits focus around the development of long-term relationships between the participants that are based upon mutual trust.
This concerns the implementation of abstract concepts that relate to mutually agreed objectives, agreed dispute resolution procedures and continuous improvement for all the participants. (Faulkner, 1995, 211) To this end, partnering might be considered as a concept or a notional set of abstract ideas applied to the construction process to achieve efficiency and mutual satisfaction.
Partnering is also considered a “philosophy” which has a particular system of beliefs. The abstract nature of the process, especially in the earlier times of partnering developments, most certainly supports this view. Hellard accentuates this theory and expresses partnering as:
The master key that will unlock the techniques and principle of Total Quality Management (TQM) in providing customer satisfaction on construction projects. He goes on to describe partnering as an ability to transform contractual relationships into a cohesive team with a set of common goals and established procedures for resolving disputes.
This view is consistent with others, RICS . Barlow et al. advances the view that there are two essential prerequisites to partnering. Mutually beneficial goals and a high level of inter-organisational trust. This must be supported by a mechanism that allows for dispute resolution and performance benchmarking. But they emphasise that partnering is essentially linked to the management of people across organisational boundaries.
This has echoes in systems theory thinking used frequently in the 1960s and 1970s to analyse industry Whilst this is not a new concept to the public sector, the manner of the “partnering-management” process, is. (Spekman, Forbes, Isabella, and Macavoy, 1998, 747)
Chan and Tam consider partnering from both the technical implications and benefits, within the project management framework. They conclude that partnering can be considered to be a project management process, which seeks to create a “win–win” solution for two or more organisations in the construction project. (Bresnen and Marshall, N. 2000b, 587) Walker concurs, stating that the management technique is aimed at greater integration of the project team. advocate management theory, in which they describe partnering as a management approach, with emphasis on the ability of the process to achieve business objectives.
However, whilst positive support for partnering as a management approach is noted, there appear to be fundamental differences relating to team work as opposed to business objectives. (Bresnen and Marshall, N. 2000b, 587)
Whilst many definitions are given for partnering, as already stated definitions change with the evolution of the process. However, there appears to be consensus, that there are some defining features of “successful partnering”. These may be listed as follows:
- mutually agreed objectives and goals;
- inter-organisational trust;
- mechanism for problem resolution; and
- continuous improvement related to benchmarking process.
Barlow et al. (1997) have succinctly argued that, to achieve mutual trust, organisations must ensure that individual goals are not placed ahead of the team alliance. He argues that understanding each other’s objectives is the all-important factor but these should be aligned to the needs of the team. He also supports the idea of “gain-sharing” which effectively relates improvements back to all the participants.
Hellard cites the Latham Report’s recommendation that adjudication should be the normal method of dispute resolution. Whilst this can hardly be held as an unbiased opinion (Hellard has advocated dispute resolution for some 25 years) there is substance in the acceptance that there will always be disputes in construction projects. (Spekman, Forbes, Isabella, and Macavoy, 1998, 747)Nevertheless, there is general support that, successful partnering arrangements should provide for a pre-resolved dispute resolution process.
Perhaps this is the inevitable first phase of partnering. It is difficult to eliminate the adversarial nature of the partners until a culture of mutual trust and shared gains, is established.
The public sector board has identified the principles of an agreed dispute resolution process as being a systematic approach to problem solving based upon the “win–win” philosophy inherent in the partnering process i.e. how can we solve this problem and mutually benefit?
Thus by bringing the parties to the project in a framework of trust and cooperation, the principle of partnering encourages all parties to consider continuous improvement to the work process. This has been termed “Strategic Partnering”.
As the growth in the use of partnering has increased, many researchers have investigated the benefits achieved by the partnering process. Some such as Baker have carried out research to measure the potential benefits of partnering. (Lendrum, 1997, 62) Whilst he and others, notably Bennett et al. (1995), Smit and Hellard (in (Spekman, Forbes, Isabella, and Macavoy, 1998) cite many projects and successful partnering ventures.
These claim to savings and benefits are hardly yet related to an objective system of benchmarking against a set of norms. Undoubtedly, savings are perceived to be achieved by the construction client but these are often cited in terms of cost and time. The benefit to the team players is more difficult to assess.
Of the few critics that have emerged, notably Bingham has rightly identified that Egan represents the customer and that in his experience, the customer often becomes greedy and sometimes a bully.
Bingham notes that the corporate client needs to exert power over suppliers and consultants, and hints that partnering may simply be a tool of monopolistic organisations. (Huxham, 1996, 314) However, it has to be stated that most research points away from this view, to satisfactory partnering relationships.
Many companies have reported radical successes with partnering arrangements. Rover Group and SDC Builders alliance resulted in a long-term relationship from 1990 onwards with over £80 million of work by value being carried out without a formal contract. (Lendrum, 1997, 55) Bennett et al. (1995) holds Sainsbury (a major supermarket chain producing some 25 stores per annum) as an outstanding example of success in partnering.
They cite tremendous savings in time and cost and the narrowing down of the supply team to mutual satisfaction. Some claim that partnering is now the major basis of their turnover. Costain (UK contractor) states for example that 85% of all the company’s work can now be considered to be “partnering” ((Lendrum, 1997, 59).
However, Barlow et al. (1997) make no claims to successful partnering in their research and indicate that by and large the public sector is only beginning to come to terms with the concepts of partnering. When assessing the future of partnering Barlow states that: the potential benefits of partnering for improving performance at the macro level can be hinted at, their implications cannot be fully assessed.
Thus there is emerging and broad consensus of the concepts and definitions of partnering. Simultaneously, organisations of all sizes and structures have experienced some form of partnering. Much of the literature reviewed has listed success in terms of cost savings and incentive arrangements of partnership. These are now briefly examined.
It does appear that some projects have established benchmarks to claim substantial savings. On individual projects up to 10% of the original project budget has been achieved, while over the longer term, some suggest that partnering can result in savings of up to 30%. (Spekman, Forbes, Isabella, and Macavoy, 1998, 756)
However it is unclear in many cases how the benchmarking was established or that traditional methods of saving costs could not have equally resulted in similar savings, i.e. in the recent past value engineering was held to produce savings of a similar nature. Nevertheless there appears to be evidence that major clients are satisfied with results and have in some cases achieved continuous improvements (e.g. supermarket chains, Sainsbury, Asda, and food outlets such as Macdonald’s).
A similar outcome was experience with the Nepean’s (£12 million) Hospital extension in western Sydney, Australia, where the project was competed early and below budget under the partnering concept. There was no time lost through industrial disputes and the site’s safety record was well above the industry average (Lendrum, 1997, 55).
The Dispute Avoidance and Resolution Task Force (DART) is a primary advocate of partnering in the UK. DART’s declared intent is to “change the culture of the public sector” by “restoring the spirit of co-operation and teamwork which used to characterise the construction process.” (Macbeth, 1998, 355)
The most successful partnering arrangements have looked to integrate not only consultants and main contractors, but also key suppliers. This has led to some radical changes in procurement methods involving a new approach to risk apportionment . Some clients are even seeking to adopt forward-looking incentive arrangements, linking the success of all parties to their business objectives.
These extend from the existence of a simple charter with no legal status but which encapsulates their aims and aspirations, to numerous contractual methods for aligning motivations.
Some common examples of motivators are:
- Target cost contracts, where a target cost is agreed and the contractor is reimbursed his costs, plus a fee. However, any over-run or under-run is shared in pre-agreed proportions. This gives transparency and aligns the client’s and contractors motivations.
- An alliance, where the profitability of each party contributing to a project is governed by the overall success of the project and not their individual contract. Thus it is in everybody’s interests to co-operate.
- Fee at risk principle, where a consultant ties a certain proportion of his fee to the success of the overall project. If it is not successful he earns less than his normal fee. If it is a success, then his additional fee is financed by some of the overall savings. (Bresnen and Marshall, N. 2000b, 587)
It appears that incentives can be used to stimulate the team to consider the importance of time rather than concentrate upon lowest cost. If this is correct then it could be said that clients and design teams have crossed the rubicund.
It is established in some cases that it may be more appropriate to use incentives to stimulate better performance in the use of an asset, particularly where running and maintenance costs outweigh the capital cost, and the contract is let using a performance contract.
Indeed analysis of two recent pilot projects for the Ministry of Defense (Leisure facilities) show that reduction of capital costs (as per Latham’s 30% suggestion) is difficult to achieve. However, quality improvements that affect running costs are easier to achieve . Site safety and impact on the environment are two other incentives that have been successfully utilised. (Kogut, 1988, 320)
Numerous types of incentive exist for motivating time, cost and performance, all of which have their advantages and disadvantages. (Bresnen and Marshall, N. 2000b, 587) However, the real skill lies in combining these incentives to properly reflect both the clients’ objectives for the project and the distribution of profit for the contractor, in such a manner that he pursues the client’s objectives in a balanced way. One of the benefits of carrying out this process is that the client’s objectives are analysed and become very clearly defined and prioritised (Porter, 2005, 145).
This has emanated from large construction clients at the international and national level in the UK in response to continued dissatisfaction with UK performance. It would appear that many within the industry have accepted the challenge and have entered into partnership arrangements. These arrangements are said to still be in the stage of evolution and can only be achieved through experience. There is a growing consensus that partnership is based in whole or in part on the following:
- Value-based procurement: it is stated that value can only be truly assessed by the client. Thus the clients principal criteria must be setout in the bid documents together with their relative emphasis or ranking, to enable transparency and engender trust. (This criteria may be based on non-price factors also, such as life cycle performance, organisational “fit”, safety, environment and sustainability considerations.)
- Single point responsibility: it is suggested that the fragmentation of design and construction is removed and replaced by teamwork [design build and public finance initiative (PFI)].
- Inter-organisational partnership. A partnership between organisations to achieve common goals is essential to success.
- Means of dispute or issue resolution. Whilst clients and researchers alike are not entirely unanimous on this issue, it appears that in the short term (perhaps as this is a culture issue) most agree that there should be a predetermined method of resolving problems which is non adversarial.
- All partnerships should have continuous improvement.
- Longer-term relationships instead of project by project. Dealing with a customer over medium to long term, has greater benefits (e.g. Asda, Sainsbury, etc.) due to shared experience and knowledge.
- Mutual gains for all participants to the process. i.e. win–win culture. (Huxham, 1996, 312)
And in the public sector new methods of procurement to be employed to create a “deal making/negotiation” culture. PFI is the best-publicised example.
It is too early yet to evaluate the various claims to cost savings and benchmarking. Motivators, to stimulate the team not only into cost savings but also more importantly, timesavings are slowly emerging. (Bresnen and Marshall, N. 2000b, 587)
The concept of total project costs and whole life costing are also being considered within the partnership process. Finally, we must reason that if client and team claims for successful partnering arrangements continue to grow, then it should be possible to measure the success in terms of better productivity figures and more widely accepted forms of benchmarking success.
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