The Benefits of Construction Project Partnering
Despite the origins of formal construction partnering beginning over 25 years ago, the concept is just as relevant today. In this blog, Robbie Blackhurst, Procure Partnerships Director, explores the ever-growing and evolving concept of partnering and discusses the benefits it can brings to the entire project team.
By their very nature, construction projects rely on the input of a wide range of professionals and trades, and as such can present a huge challenge to coordinate and control. To deal with an industry that can appear chaotic and inconsistent, customers have traditionally used competitive tenders and tough contracts in order to protect their own interests and to reduce risk. This behaviour was also echoed by the contractor, who historically tried to claw back money using tactics which were not in the customers best interest, but which were seen as necessary to help alleviate tight profit margins. Designers, contractors and suppliers were selected almost exclusively on account of the lowest tendered price, meaning the focus remained on lowest cost rather than highest quality. Customers and contractors were trapped in a cycle of behaviour which lost sight of the overall project objectives and prevented either party from achieving real value.
It was time to ‘Rethink Construction’
In 1994, John Latham published a report commissioned by the UK government titled; ‘Constructing the Team’. The report recognised the change required in the construction industry in order to shift the focus away from cost alone and deliver value for the customer. A Partnering approach was presented as a method of establishing long-term customer / supplier relationships which could help to deliver mutual benefits. The concept relied upon teamwork between both the contractor and the customer, and also between the contractor and their suppliers, in a process of total continuous improvement. This required an openness between all parties and a willingness to accept new ideas, trust each other and collaborate.
The ideas in this is report were explored further in the subsequent 1998 report ‘Rethinking Construction’, prepared by the government-initiated Construction Task Force. This report expressed a deep concern that the construction industry was under-achieving, with low profitability, limited research and development and falling levels of training. It described the industry’s customers as being dissatisfied with its overall performance and expressed the need for radical change to deliver improvements in quality and efficiency. This report led to the Movement for Innovation, which promoted an ‘open, co-operative, no-blame, non-adversarial, team approach’ to construction projects and sought to facilitate performance efficiencies and improved results for customers.
The cumulative effect of these reports had a significant impact on the construction industry, and they are widely acknowledged as being the catalyst for a cultural shift which is still delivering positive effects today.
What is Project Partnering and is it still relevant in today’s construction industry?
In their 1995 guide to partnering in construction, The Reading Construction Forum (which later merged with other organisations to become Construction Excellence) described partnering as, “a management approach used by two or more organisations to achieve specific business objectives by maximising the effectiveness of each participant’s resources. It requires that the parties work together in an open and trusting relationship based on mutual objectives, an agreed method of problem resolution and an active search for continuous measurable improvements.”
This definition of partnering is still just as relevant and important today, perhaps increasingly relevant in our current economic climate. The Government Construction Strategy 2016-2020 highlights a desire to improve overall productivity in the industry whilst also addressing challenging issues such as the skills gap, climate change and the implementation of emerging technologies such a s BIM. The need to formally integrate the project team has never been more important and successful team integration goes hand in hand with overall project success.
Partnering is not a ‘soft option’, it requires considerable effort to set up and hard work and commitment to maintain. The project partnering team must include the customer together with consultants, constructor/construction manager, key specialists, and key suppliers. The team members form a ‘virtual company’ with mutually agreed goals and objectives and will make all key decisions in a cooperative and in a blame-free environment. The effects of this will be to collectively raise overall performance and facilitate more efficient working.
What are the different types of Partnering?
Project Partnering: Project Partnering is usually used for short term or one-off projects and is used to deliver specific objectives.
Strategic Partnering: Strategic Partnering describes long term alliances that span across multiple projects.
Framework Agreements: Framework Agreements establish specific terms for several individual projects usually within a similar category, a supplier will be selected from a number of prime contractors.
Partnering charters are generally intended to be nonbinding statements which reflect the participants’ commitment to partnering principles. There are various forms of contract which incorporate partnering principles and clauses, including the NEC Partnering Option, PPC 2000 Partnering Agreement and the ICE Partnering Addendum, and these contracts define the arrangements for the allocation of risk and incentives for reward or penalty.
How can formal partnership agreements benefit private and public sector customers?
Partnering contracts are designed to provide the customer with a greater certainty over cost and programme outcomes. Contracts are often managed on a cost-reimbursable, target-cost and open-book basis which includes both incentives and penalties for contractors. This close monitoring of cost and constant communication provides greater control for the customer and more predictability over financial outcomes. Continuous evaluation of project progress also means tighter control of the project schedule and a chance to quickly resolve issues to get the programme back on track.
A formal partnering agreement is highly beneficial on design and build contracts where there are additional challenges involved with the co-ordination and integration of a great deal of complex information, procedures and systems. Early engagement and integration of the design and construction team allows for optimal focus on the end users’ ultimate requirements. An early review of buildability and a team focus on value engineering opportunities, allows greater scope for innovation and efficiencies in the building process. By setting mutual goals in the early stages of a project, the entire team understand what is required and are not distracted by adversarial relationships.
Through early collaboration, project partnering means contractors are better prepared to build a high-quality building that achieves the customers’ expectations, is delivered within the predicted timeframe and at the expected cost.
Bringing together a diverse group of professional disciplines also allows other important issues to be better addressed and managed, such as environmental performance, the potential to deliver social value or opportunities for training and development.
Essential factors to consider for a successful partnering relationship.
Early engagement: in order to take full advantage of each participants expertise, they should be brought into the process at the earliest appropriate opportunity. The full team must be in place from concept to completion in order to be totally focused on the needs of the client and users.
Workshops and team building: partnering workshops are useful to ensure the partnering culture is understood by all and to begin the process of integration. Activities to assist in breaking down barriers between organisation and to build trust are helpful, as are joint training opportunities or the co-location of offices in order to help create the right environment.
Mutual objectives: clearly defined and achievable objectives that meet the aims of each party are essential in successful partnering relationships, as is a structured process for effective issue resolution. Mutual objectives can cover both hard and soft issues but must also include the alignment of important commercial objectives, such as fair reward mechanisms.
Measurement and benchmarking: Measuring performance will drive continuous improvement and lead to greater efficiencies and competitive advantage. Relevant performance indicators must be established early on order to demonstrate results.
Underpinning successful project partnering is a top-level commitment to drive forward a new project culture. If the team is only willing to play lip service, the partnering arrangement will not succeed, however, if there is real buy-in, the potential to achieve value for all members of the team is unlimited.