1.Partnering and Partnering Forms of Contract

2. 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

3. Background to Partnering

Win-win relationships are not a new idea

Initially developed in the early 1990s

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

4. 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 isnt 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 others success

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. Partnering Cause and Effect 13. 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

14. 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

15. TPC2005

Term Partnering version of PPC2000

Focused on tasks and high volume activities

16. 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

17. 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 KPIs/Incentives

18. 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

19. 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

20. 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.

21. 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

22. Advisers

PPC2000 Client Representative and Partnering Advisor

TPC2005 Client Representative and Partnering Adviser

ECC Project Manager and Employer

PSPC Contract Administrator

Be Purchasers Representative

23. 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

24. Partnering Obligations

PPC2000/TPC2005 Objectives defined within the Partnering Agreement

ECC Option X12

PSPC Defined in the partnering agreement

Be Overriding principles listed only

25. 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

26. 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

27. KPIs and Continuous Improvement

PPC2000/TPC2005 KPIs 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 KPIs

PSPC Obligation to agree KPIs and monitor/review them thereafter

Be - Obligation to agree KPIs and monitor/review them thereafter

28. Partnering Team Meetings

PPC2000/TPC2005 Specific reference in partnering agreement

ECC Early warning meetings only

PSPC No specific reference

Be Regular progress meetings required

29. 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

30. 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

31. 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?

32. 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

33. 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

34. Potential Difficulties

Impatience

Arrogance

Different cultures

Unrealistic aspirations

Complacency

Reluctance

Openness/confidentiality

Fear of the unknown

35. 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

36. 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!!

37.

Questions