In order to be sustainable, a collaborative procurement model needs to reward all team members, taking into account the view expressed by Sir John Armitt at the 2016 launch of FAC-1 that 'as the demand for construction and infrastructure services increases, procurers and suppliers are looking at delivery structures which will provide not only sustainable, long term value to the procurers but also, more consistent, better margins for contractors, supply chain members and professional teams'.
Clients and their advisers, in line with the 'Two Stage Open Book' guidance, should use the 'maximum opportunities to learn in detail what matters most to the tier 1 contractor and to each tier 2 or 3 subcontractor and supplier in how they go about their work, and what steps can be taken to improve the ordering and organisation of this work so as to maximise the opportunities for savings and other improved value.'
For example, the early review and validation of designs and costs by contractors and subcontractors can significantly reduce the design risks for consultants, leading to the safety, quality and buildability of those designs being signed off by all team members. In 2016, the Civil Engineering Contractors Association reported that 'the widespread adoption of early contractor involvement by clients would drive down costs for both clients and contractors.' Proven contractor benefits from collaborative procurement, cited in Two Stage Open Book guidance, also include:
■ 'Early appointment ... that creates a stable basis for pre-construction phase activities leading up to authority for the project to commence on site'
■ 'Open Book costing combined with prior agreement of . fees/profit/overheads to ensure that agreed cost savings do not erode margins'
■ Joint working during the pre-construction phase that enables the tier 1 contractor to influence robust programming and early risk management activities, so that the project proceeds to the construction phase on an agreed basis supported by maximum information'
■ 'Creation of an environment in which ...contractors can demonstrate savings and other improved added value in order to obtain additional work, contract extensions and other agreed incentives such as shared savings'.
Sir Michael Latham commented in 2010 that collaborative ESI 'motivates the team to drive down cost in a systematic way. It also helps identify carbon reduction and energy efficiency measures, as well as opportunities for employment and skills during the conditional pre-construction phase. These can be properly costed and jointly assessed with key subcontractors and manufacturers at a time when all team members have the same objective, namely to finalise a brief within budget so that work can proceed on site'.