Partnering and partnering contracts presentation
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Transcript of Partnering and partnering contracts presentation
Partnering and Partnering Forms of Contract
Kim Newman In excess of 18 years experience of
consultancy services Partnering Advisor to number of local
authorities Post graduate diploma in Procurement Chartered Member of CIPS Seeking Fellowship of CIPS Regular presenter in relation to
partnering
Background to Partnering
‘Win-win’ relationships are not a new idea Initially developed in the early 1990’s Egan – Rethinking Construction Practices developed and refined over the
past decade Now we know a lot about building
partnering relationships The concept is simple, the practice is
more involved
What is Partnering? Partnering exists where two, or more,
organisations develop a close and, generally, long-term relationship to work together as partners
Other names for this have included ‘Partnership Sourcing’, ‘Proactive Purchasing’, ‘Co-makership’ and others
It isn’t philanthropy: the aim is to secure the best possible advantageous position for both parties.
The principle is that teamwork is better than combat
A Partnering relationship works because the parties have an interest in each other’s success
What is Partnering? There is no standard model There are a number of interpretations of the
basic idea Partners regard themselves as part of the same
team with the same aim: to ensure that the end client is delighted
Even if the size of the Partners differ, they each have rights and responsibilities in making the Partnering relationship work
Partnering is not an end in itself or a panacea, but a means of strategically and continuously managing the business relationship to mutual advantage
Strategic Partnering Strategic Partnering means sharing:
Knowledge and information Challenges and solutions Risks and rewards Visions Resources and/or facilities
And requires teamwork, also Mutual trust Understanding
Cultural Adaptation Benefits of the Partnering Contract
Achieve best practice and quality standards
Increase flexibility Reduce administration costs Plan more effectively Opportunities for innovation Transform a supply chain into a
value chain
Cultural Adaptation Embracing the Contract
For Partnering to work a cultural change is required, as well as a change in mindset of those involved
Partnering is not a one-off solution but a culture that is applied continuously
Risk and reward Team work Developing a ‘no blame’ culture Knowledge management Output focus
Cultural Adaptation Overcoming Cultural difficulties
Scepticism will be rife – inside your own organisation as well as your suppliers
It might be generated by: Incomprehension Unwillingness to change the status quo General fears of the unknown Specific concerns about an individuals future
role Or a mixture of several of the above
Change is rarely welcomed, although it is fundamental to survival
Commitment from the top is therefore imperative
Partnering Advisor Partnering Advisor
An independent party owing a duty of care to all Partnering Team members to provide fair and constructive advice on all aspects of the Partnering Contract
Selection of partnering team members, team building and review of Specialist Contractors
Preparation of Project Partnering Agreement and any Partnering Charter
Preparation of any Joining Agreements, Pre-Possession Agreement and Commencement Agreement
Provision of fair and constructive advice for the benefit of the Partnering Contract
Facilitation of the partnering relationship Attendance at Core Group and Partnering Team meetings Assistance in Dispute Avoidance and Resolution
Define what you want from the Partnering relationship Agree the style of the relationship
Result – A committed and open approach to Partnering
Agree tangible objectives Result – Defined and agreed objectives for the
Partnering Relationship Agree continuous improvement
Result - Agreed targets and mechanisms for measuring performance
Exit strategy Result – A mutually agreed exit strategy
Commit to a Partnering relationship Result – Legal contract
Partnering – Cause and Effect
CollaborativePartnering
Behaviours Attitudes
Processes TimeMetrics
Mutual respect
Committed
Open/sharing
Trust
Focus on mutual gains
People involvement
Devolved authority
Pro active
Prevention driven
Relationship positioning
Self regulation
Frequent feedback
Shared success
Shared design
Mutual investment
Learning organisations
Team based
Single sourcing
High switching cost
Infrequent re-sourcing
Partnering Contracts Bespoke forms Strategic Partnering Agreements PPC2000/TPC2005 ECC Partnering Option X12 ICE Partnering Addendum Public Sector Partnering Contract Be collaborative contract JCT98 non-binding Partnering Charter JCT Constructing Excellence Contract
PPC2000 First standard form of partnering contract Only binding form Foundation and route map for the partnering
process Project/programme focus Can be applied to any partnered contract Multi party contract Specialist project partnering contract available Integrated relationships and processes Mutually enforceable rights and remedies Most widely used form
TPC2005 Term Partnering version of
PPC2000 Focused on tasks and high volume
activities
ECC Partnering Option X12 Option is supplement to the
standard contract Separate contracts for each team
member Non binding Form being used for the olympics
ICE Partnering Addendum
Works in similar way the Partnering Option X12
Non binding Schedules provided for Partners re
Core Group Members, Partnering Objectives, Partnering Documents, Risk Management and KPI’s/Incentives
Public Sector Partnering Contract Uncomplicated Sets out basic rights and obligations Clearly defines risk allocation Ethos is one of simplicity All parties sign the agreement Partnering Agreement has 10 options Contains very few procedures Used on Perform 21 projects
Be Collaborative Contract For construction related services
only Aims to provide a framework
underpinning collaborative working Contractually binding Based on a purchase order and
collaborative construction terms
JCT Contracts JCT98 with partnering charter
Option is supplement to the standard contract Separate contracts for each team member Non binding
JCT Constructing Excellence Contract – NEW, March 07
The aim of the new contract is to promote collaborative and integrated working. It seeks to provide a single contract form to regulate all the relationships involved in a project. The joint mission of the entire project team is to deliver the project.
Key Clause Comparison Parties to the contract
PPC2000 – Client Representative, Constructor, Specialists, multi party
TPC2005 – Client Representative, Service Provider, Specialists, multi party
ECC Option X12 – More than two parties ICE Addendum – Two parties or more PSPC – 9 out of 10 options are for 2 parties
only Be – Purchaser and Supplier on;y
Advisers PPC2000 – Client Representative
and Partnering Advisor TPC2005 – Client Representative
and Partnering Adviser ECC – Project Manager and
Employer PSPC – Contract Administrator Be – Purchasers Representative
Contract Documents PPC2000/TPC2005 – specified
within the contract ECC – standard content with each
option PSPC – Varies according to which
option has been selected Be – No documents specifically
referred to
Partnering Obligations PPC2000/TPC2005 – Objectives
defined within the Partnering Agreement
ECC – Option X12 PSPC – Defined in the partnering
agreement Be – Overriding principles listed
only
Allocation of Risk PPC2000/TPC2005 – Required in the
contract to work through risk and incorporate a risk register
ECC – No specific reference PSPC – No specific reference Be - Required in the contract for the
supplier to develop a risk register
Activities Undertaken Before a Contract is Concluded
PPC2000/TPC2005 – Pre-possession agreement and pre-commencement agreement
ECC – No specific reference PSPC – Pre start agreement in
option 10 only Be – No specific requirement
KPI’s and Continuous Improvement PPC2000/TPC2005 – KPI’s to be
completed prior to the finalisation of the partnering agreement or in accordance with the partnering timetable, obligation to provide information, obligation regarding continuous improvement and to review performance
ECC – Option provides for KPI’s PSPC – Obligation to agree KPI’s and
monitor/review them thereafter Be - Obligation to agree KPI’s and
monitor/review them thereafter
Partnering Team Meetings
PPC2000/TPC2005 – Specific reference in partnering agreement
ECC – Early warning meetings only PSPC – No specific reference Be – Regular progress meetings
required
Contract Price PPC2000/TPC2005 – Flexibility via a price
framework with emphasis on a agreed maximum price
ECC – Lump sum, cost reimbursement depending on option selected, no reference to a GMP
PSPC – Lump sum, Target cost with cost reimbursement, depending on option selected, GMP possible
Be – Target cost, Contract sum, GMP possible
Open book accounting available in every case
Problem Solving and Dispute Avoidance PPC2000/TPC2005 – Notice required,
problem solving hierarchy, guided by the partnering advisor, core group meeting, conciliation/mediation/ADR, adjudication
ECC – No reference PSPC – Agreed via a 2 day workshop Be – Negotiation by senior managers
Selecting Partners Generally governed by the OJEU procurement
process but issues to consider are: How important is the service? What does the end Client want and need?
Define the criteria for selecting partners Management style Company culture What experience do suppliers have? What has been the suppliers performance to
date? How important is your business to a supplier? Does the relationship offer the potential for
improvements and rewards?
Selecting Partners Cost vs price
Lowest price is never the sole measure Long term vs short term
The focus is on the long term Quality control vs quality checks
Promotes health rather than curing sickness Single sourcing vs multiple sourcing
Emphasis is on quality Partners Decisive factor is performance
Potential Difficulties There are no precise and universal rules The relationship must be tailor made to
the organisations in question Partners must clearly state what they
wish to achieve from the relationship, to do this they must understand their own requirements
Partners must establish both internal and external procedures in order to cope with the new philosophy
The relationship must be managed continuously
Potential Difficulties Impatience Arrogance Different cultures Unrealistic aspirations Complacency Reluctance Openness/confidentiality Fear of the unknown
Summary Partnering is 95% perspiration, 5%
inspiration. Partnering requires more time, not less Requires the full support of all involved Partnering places ‘value above price’ and
‘quality above quantity’ Focuses on continuous improvement Key principle is that the customer and
supplier is in the same business and should work together
Essential Ingredients The successful ingredients of a Partnering relationship are:
Commitment from senior management from both organisations
Recognition that Partnering requires effort from both parties A clear strategy that defines the aims, objectives and long
term goals Clear communication of these aims etc, to employees within
the Partnering organisations Clear measurable, value for money benefits Agreed, measurable, and realistic performance indicators Candid, frequent and open communication between all parties Effective mechanisms for dispute resolution An exit strategy that specifies under what circumstances each
party would want to withdraw from the Partnering relationship Above all TRUST!!
Questions………