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Partnering and Partnering Forms of Contract

Partnering and partnering contracts presentation

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  • 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!!


  • Questions