Vital Procurement Processes in a Collaborative Framework

Engineer meeting

Procurement processes in a collaborative framework are recommended by the The UK Government Construction Strategy Committee.  They recommend that public projects adopt, design and build private finance initiative or prime-type contract procurement routes, as these are considered to be more collaborative. They also suggest adoption of the NEC3 form of contract which they believe encourages collaboration more effectively than some other more traditional contracts which can be seen as adversarial.

Other forms of collaborative procurement processes include partnering and alliancing, which are broad terms used to describe a management approach that encourages openness and trust between the parties to a contract. The parties become dependent on one another for success and this requires a change in culture, attitude and procedures throughout the supply chain. It is most commonly used on large, long-term or high-risk contracts. Where a partnering relationship is for a specific project, it is known as ‘project partnering’. Where it is a multi-project relationship the arrangement is known as ‘strategic partnering’.

Partnering contracts are often arranged on a cost-reimbursable, target-cost, open-book basis including both incentives, and penalties. Partnering agreements include the project partnering contract PPC2000 (UK), and more often, the NEC partnering agreement and the ICE Partnering Addendum and more recently the NEC4 Alliancing Contract.

Organisational working practices that encourage collaboration might include:

  • Clear lines of communication and authority, this should be in place as part of effective management processes.
  • Protocols for the preparation and dissemination of information; again this should be a standard.
  • Co-location of team members with respect to project requirements.
  • Appointment of a project sponsor or independent facilitator.
  • Financial motivation (such as tying the consultant team and the contractor into a common target cost for which there is joint ‘pain’ or ‘gain’). NEC provides adequately for this.  For multi-contractor / consultant projects this could also include terminal bonuses if the team collectively achieve the Client’s objectives which they helped the Client to define at the outset of the project.
  • Rewarding initiative. This can be particularly important for members of the client team, whose careers are likely to be assessed solely on the basis of their ‘normal’ activities, rather than their involvement in a project. Recognising the work, they put into a project and rewarding them for this is important if they are to remain committed. In particular project completion incentives are important to ensure key team members remain involved until project completion.
  • Regular workshops and team meetings – with transparent team ethos and visible transparent dashboard reporting.
  • Problem resolution procedures, which should be based on solutions not blame.
  • Procedures to ensure continuous improvement. This might require continual benchmarking, target setting, assessment, feed-back loops and adaptation. Independent facilitation is also an innovative addition to this process, utilising questionnaires, survey’s, town hall meetings etc to encourage dialogue on problems / solutions and lessons learned.
  • Effective early warning and risk mitigation procedures.
  • Effective team building activities.

The NEC’s aim is to ‘promote and facilitate global best practice in collaborative procurement processes and project management’. This supports both public and private sector organizations and professionals to achieve world-class standards in their contracting and relationship management process and skills.

NEC contracts include fair and equitable procedures for the management of risk – in a way that is very clear and very flexible. NEC achieves its aims with a series of related and very similar contracts for supply, projects and physical and professional services.

NEC3 form of contract

NEC contracts