Partnering and partnering contracts presentation

37
Partnering and Partnering Forms of Contract

Transcript of Partnering and partnering contracts presentation

Page 1: Partnering and partnering contracts presentation

Partnering and Partnering Forms of Contract

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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TPC2005 Term Partnering version of

PPC2000 Focused on tasks and high volume

activities

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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

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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

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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

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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

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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.

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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

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Advisers PPC2000 – Client Representative

and Partnering Advisor TPC2005 – Client Representative

and Partnering Adviser ECC – Project Manager and

Employer PSPC – Contract Administrator Be – Purchasers Representative

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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

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Partnering Obligations PPC2000/TPC2005 – Objectives

defined within the Partnering Agreement

ECC – Option X12 PSPC – Defined in the partnering

agreement Be – Overriding principles listed

only

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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

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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

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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

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Partnering Team Meetings

PPC2000/TPC2005 – Specific reference in partnering agreement

ECC – Early warning meetings only PSPC – No specific reference Be – Regular progress meetings

required

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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

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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

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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?

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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

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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

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Potential Difficulties Impatience Arrogance Different cultures Unrealistic aspirations Complacency Reluctance Openness/confidentiality Fear of the unknown

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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

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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!!

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Questions………