Construction Playbook Principles for Successful Framework Contracts

Components of a Gold Standard for Framework Contracts

An outcome-based strategic brief that drives economic, social and environmental value with strategic supplier proposals for delivering that brief.

See also the Gold Standard for:

■ Construction Playbook policies, safety, net zero carbon, Compact with Industry (Section 3)

■ Framework leadership, management and integration (Section 6)

■ Frameworks, SMEs and social value (Section 7)

■ Frameworks and commercial pipelines (Section 8)

■ Framework market health and capability assessments (Section 9)

■ Framework portfolios and longer-term contracting (Section 10)

■ Harmonising, digitising and rationalising framework demand (Section 11)

■ Further embedding digital technologies through frameworks (Section 12)

■ Framework ESI and Supply Chain collaboration (Section 13)

■ Outcome-based approaches to frameworks and call-offs (Section 14)

■ Delivery model assessments for frameworks and framework projects (Section 15)

■ Effective framework contracting (Section 17)

■ Evaluating frameworks and call-offs (Section 21)

Provide an outcome-based framework brief that explains the framework strategy and the required and desired outcomes, including the framework provider's and clients' technical, management and other commercial requirements in relation to the framework programme, their approaches to design, costing, risk management, programming, MMC, digital technologies and ESI and their commitments to the delivery of net zero carbon, social value and all other expected outcomes.

State the committed and planned pipelines of work and any minimum value or type of project contracts that will be awarded to suppliers so that they have a clear picture as to the level of certainty in the flow of work.

State any exclusivity granted to suppliers and any adjustment of exclusivity according to achievement of agreed targets.

Provide commercial protections for suppliers in respect of exchanges of information by means of mutual intellectual property rights, confidentiality and data security in respect of shared information and the use of digital technologies.

State which proposals and other information provided by a supplier are the exclusive property of that supplier and which can be used for the benefit of the framework

State the rights and obligations of the framework provider, clients, manager and suppliers to use:

■ The outputs from Supply Chain Collaboration and other framework activities

■ Lessons learned on other projects.

Provide flexibility for clients to reflect their specific requirements.

Multi-party relationships that align objectives, success measures, targets and incentives with commitments to joint work on improving value and reducing risks

The Playbook recommends that a successful framework 'should be based around principles that align objectives, success measures, targets and incentives so as to enable joint work on improving value and reducing risk' (p.42).

See also the Gold Standard for:

■ Construction Playbook policies, safety, net zero carbon, Compact with Industry (Section 3)

■ Framework leadership, management and integration (Section 6)

■ Frameworks, SMEs and social value (Section 7)

■ Section 8 (Frameworks and commercial pipelines)

■ Framework market health and capability assessments (Section 9)

■ Framework portfolios and longer-term contracting (Section 10)

■ Further embedding digital technologies through frameworks (Section 12)

■ Framework ESI and Supply Chain collaboration (Section 13)

■ Outcome-based approaches to frameworks and call-offs (Section 14)

■ Delivery model assessments for frameworks and framework projects (Section 15)

■ Effective framework contracting (Section 17)

■ Framework risk management and allocation (Section 18)

■ Framework mechanisms for payment and pricing (Section 19)

■ Framework relationship management (Section 23).

State the commitments of the framework provider, clients, manager and suppliers to aligned objectives, success measures, targets and incentives, and consider how a multi-party framework alliance contract can support this alignment.

State the commitments of the framework provider, clients, manager and suppliers to implement joint work on improving value and reducing risk, to a timetable of agreed actions, to a shared risk register and to a joint decision-making forum, and consider how a multi-party framework alliance contract can support these systems.

Integrate the relationships and commitments of the framework provider, clients, manager and suppliers, with the facility to add additional clients and suppliers by agreement at any time.

State the scope and duration of the framework, the clients who will use it, the commercial pipelines of work it will govern, the range and types of work within its scope and how that work will be awarded.

State:

■ The objectives for which the framework is created and a system of early warning, consultation and action plans if the objectives are not fulfilled

■ The outcome-based success measures/ KPIs which determine the success of the framework and are used to measure the performance

■ The agreed targets for each success measure/KPI, the method of recording relevant data, the party responsible for measuring against that data and the system for reporting to other clients and suppliers.

Include a shared risk register recording the commitment of the framework provider, clients, manager and suppliers to risk management actions and setting out:

■ The nature of each risk, its likelihood and impact on the framework programme, on achievement of the agreed objectives and success measures and on the progress of agreed value improvement activities, including any anticipated financial impact

■ The framework provider, clients, manager and suppliers responsible for each risk management action

■ The agreed risk management actions, including actions to reduce the likelihood of each risk and to reduce its financial and other impact

■ The agreed periods or deadlines for completing those actions.

A timetable of strategic systems to improve integration and outcomes, for example using MMC, digital technologies, ESI and Supply Chain Collaboration

See also the Gold Standard for:

■ Construction Playbook policies, safety, net zero carbon, Compact with Industry (Section 3)

■ Creating a Gold Standard action plan (Section 5)

■ Framework leadership, management and integration (Section 6)

■ Frameworks, SMEs and social value (Section 7)

■ Harmonising, digitising and rationalising framework demand (Section 11)

■ Further embedding digital technologies through frameworks (Section 12)

■ Framework ESI and Supply Chain collaboration (Section 13)

■ Effective framework contracting (Section 17)

■ Framework risk management and allocation (Section 18)

■ Framework mechanisms for payment and pricing (Section 19)

■ Framework relationship management (Section 23).

Include a shared timetable setting out how and when the framework provider, clients, manager and suppliers will seek improved value and stating:

■ Agreed deadlines, gateways and milestones for achieving framework objectives and success measures

■ Agreed deadlines, gateways and milestones for value improvement activities, including Supply Chain Collaboration

■ Timescales for the contributions of the framework provider, clients, manager and suppliers to value improvement activities, including the nature, sequence and duration of the agreed actions of each party and any consents or approvals that are pre-conditions to subsequent actions.

Framework pricing systems and incentives that provide a fair return for suppliers and that drive value rather than a race to the bottom

See also the Gold Standard for:

■ Construction Playbook policies, safety, net zero carbon, Compact with Industry (Section 3)

■ Framework leadership, management and integration (Section 6)

■ Frameworks, SMEs and social value (Section 7)

■ Framework ESI and Supply Chain collaboration (Section 13)

■ Framework benchmarking and Should Cost Models (Section 16)

■ Effective framework contracting (Section 17)

■ Framework mechanisms for payment and pricing (Section 19)

Provide for framework prices and proposals to be submitted confidentially by each supplier in response to the framework brief, on the basis that these are binding only between the framework provider, clients, manager and the supplier who submits them.

State the system for agreeing project prices, for the use of Should Cost Models and for agreeing costs established through framework activities.

Include options for framework prices to state the fees, profit and overheads of suppliers and to state separately the net costs comprising the framework prices and the agreed prices for each project.

State prompt payment commitments and requirements at all levels of the supply chain.

Transparent performance measurement and work allocation procedures

The Playbook recommends that a successful framework should provide 'transparent performance measurement and work allocation procedures' (p.42).

See also the Gold Standard for:

■ Framework leadership, management and integration (Section 6)

■ Frameworks and commercial pipelines (Section 8)

■ Framework market health and capability assessments (Section 9)

■ Framework portfolios and longer-term contracting (Section 10)

■ Outcome-based approaches to frameworks and call-offs (Section 14)

■ Delivery model assessments for frameworks and framework projects (Section 15)

■ Framework benchmarking and Should Cost Models (Section 16)

■ Effective framework contracting (Section 17)

■ Evaluating frameworks and call-offs (Section 21)

State the links between work allocation procedures and performance incentives.

Consider how a multi-party framework alliance contract can improve the transparency of performance measurement and work allocation procedures.

State a shared system of open performance measurement and rewards.

Set out the procedures for awarding contracts for projects and programmes of work.

State the template project documents to be used in each award procedure and make clear:

■ The standard form JCT2016, NEC3, NEC4 or PPC2000/TAC-1 contract conditions to be used for call-off

■ The structure and standard components of each project brief

■ Proportionate requirements in respect of insurances and securities

■ Processes and procedures for managing communication, performance, quality, design, supply chain engagement, costs, payment, time, change, risk, health and safety, in each case including the required approaches to MMC, digital information and ESI

■ Requirements in respect of net zero carbon, social value, operation of the completed project and engagement with stakeholders and users

■ The required structure and content of agreed prices and other project proposals forming part of each project contract

Management systems that support collaboration and avoid disputes

See also the Gold Standard for:

■ Framework leadership, management and integration (Section 6)

■ Effective framework contracting (Section 17)

■ Framework risk management and allocation (Section 18)

■ Framework mechanisms for payment and pricing (Section 19)

■ Resolution planning through frameworks (Section 22)

■ Framework relationship management (Section 23)

Describe the role of an in-house or external framework manager who integrates the work of the framework provider, clients and suppliers and who:

■ Implements the project award procedures

■ Monitors and supports achievement of agreed objectives, success measures and targets

■ Monitors and supports achievement of deadlines in a shared timetable and prepares updates of the timetable for approval by the framework provider, clients and suppliers

■ Organises meetings of the core group or the equivalent joint decision-making forum

■ Organises, supports and monitors Supply Chain Collaboration and other value improvement activities

Provide for consensus-based governance by a core group or equivalent joint decision-making forum made up of named individuals representing the framework provider, clients, manager and suppliers.

State the terms of reference for the core group in terms of how it meets and makes decisions.

Provide for the core group to be used by the framework provider, clients, manager and suppliers to consider and agree proposals for improved value, to raise early warning of issues, to resolve problems before they become disputes and to consider options for resolution planning in the event of supplier distress.