6.3  Using ESI supply chain collaboration to optimise specialist contributions

Whether specialist contractors, manufacturers, suppliers and operators are selected and appointed by a Client or a Principal Contractor, their contributions to improved safety and other improved value need to be built into pre-construction phase planning. Using ESI, these supply chain contributions can be provided:

■  Speculatively prior to selection, if potential supply chain members recognise that this gives them a better chance of being appointed by the Client or by a Principal Contractor who is already appointed

■  Speculatively during selection, if potential supply chain members recognise that their proposals are part of an early selection process and if they are submitted for consideration by a Principal Contractor who is already appointed, with participation by the Client and Principal Designer and other consultants

■  After selection, through 'Supply Chain Collaboration' under early conditional pre-construction phase appointments of supply chain members who are appointed back- to-back with the early appointment of a Principal Contractor.

'Supply Chain Collaboration' is recognised in 2014 Cabinet Office guidance as a set of collaborative contractual processes that enable a Client to explore improved value and reduced risk with subcontracted supply chain members through a sequence of agreed activities led by one or more contractors. Where subcontracted supply chain members have contributed to the costs and qualitative proposals submitted and assessed when a main contractor is selected, it is possible to improve on these proposals by reconsidering and agreeing new ways to engage with these supply chain members. For example, identifying a clear period of time and an agreed process can:

■  Enable the Principal Contractor and its preselected subcontractors and suppliers to engage with the Client, the Principal Designer and other consultants in order to check whether they have the same understanding of designs and of the ways in which those designs will be completed and constructed

■  Create opportunities for the Principal Contractor to agree improved working arrangements with its preselected subcontractors, suppliers, manufacturers and operators that lead to improved prices and proposals

■  Create opportunities for the Principal Contractor and Client to consider whether improved value and improved performance can be offered by alternative subcontractors, suppliers, manufacturers and operators.

Where a long-term contract is established as a 'framework alliance' or 'term alliance,' (considered further in Sections 10.2 and 10.3,) it is possible for one or more Clients to undertake Supply Chain Collaboration with one or more Principal Contractors and Principal Designers in order to share supply chain contributions that improve safety and quality and that reduce risks. The basic structure of Supply Chain Collaboration is illustrated below, and feedback from government Trial Projects highlights the improved value achieved.

Public sector clients can reconcile Supply Chain Collaboration with the constraints of the current Public Contracts Regulations considered in Section 5.6, as it provides a means for them to explore with a Principal Contractor, after its appointment, whether local or regional businesses offer better value than the contractor's intended supply chain members. This system enables Clients and their teams to enhance the opportunities for local and regional businesses to prove their worth and to win additional work.

Supply Chain Collaboration can be led by a Principal Contractor (whether this is a general contractor or specialist) so as to avoid Client involvement being categorised as 'nomination' or 'naming' and so as to avoid compromising the Principal Contractor's control of and responsibility for its supply chain members. Details of the participation by the Client, the Principal Designer and other consultants in reviewing documents and attending meetings should be agreed in advance, and the choice of supply chain members invited to participate in the processes should be approved both by the Principal Contractor and by the Client. It is important to embed Supply Chain Collaboration from the beginning of the procurement process and to include clear contractual machinery that describes when and how:

■  A shortlist of prospective supply chain members will be agreed

■  Prospective supply chain members will be briefed and invited to put forward proposals

■  Supply chain members will be selected and appointed.