Framework Alliance Agreement
In June 2016, the Association of Consulting Architects published a standard form "Framework Alliance Contract" (FAC-1) that works as a combined framework and alliancing agreement and caters for multialliance members.
Authored by the Centre of Construction Law at Kings College, London, FAC-1 is based on best practice guidance set out in the Infrastructure Client Group Alliancing Code of Practice 2015 and from the successful frameworks and alliance projects that were used to support the UK Government Trial Projects programme.
The programme was an integral part of the Government Construction Strategy 2011-2015 and recommended three "New Models of Construction procurement": "Two Stage Open Book", "Cost Led procurement" and "Integrated Project Insurance". The Trial Projects programme highlighted that savings of between 14-20% were achieved using these new models and the frameworks and alliances of which they formed part of.
The frameworks and alliances used in the Trial Project programme included the following:
- SCMG Hackney Homes and Homes for Haringey Alliance;
- Ministry of Justice National and Regional Framework Alliances;
- Surrey County Council Project Horizon Highways Alliance; and
- Connect Plus M25 Framework.
Trowers & Hamlins advised the parties on each of these projects as to how to use frameworks and alliancing to achieve stated objectives and added value.
Why a new framework agreement?
FAC-1 provides the basis for alliancing by contractors, consultants and suppliers working on complementary or related projects.
Although the reputation of frameworks ebbs and flows, and it is true that some frameworks are simply "static" with no guarantee of work and of little benefit to the client if the supply chain is not incentivised, the Government Construction Task Group`s report "Effectiveness of Frameworks" (July 2012), highlighted that there is evidence of benefits from effective frameworks such as
- delivering sustainable efficiency savings;
- reduction in consultancy and construction costs;
- delivery of projects closer to target cost and time;
- reduction of disputes, claims and litigation;
- high client satisfaction rates;
- high proportion of work undertaken by small and medium-sized enterprises;
- high proportion of local labour and subcontractors;
- high take-up of government in initiatives such as fair payment, apprenticeships ;
- high proportion of waste diverted from landfill;
- good health and safety performance against national average; and
- acting as a key enabler to integration of the supply team.
Alliancing has long been seen as an opportunity that allows clients and the supply chain to develop long-term relationships against a pipeline of projects. Alliancing through multi-party arrangements with shared goals should be a feature of every framework.
However, there has been no standard published form to guide clients on how to put together alliancing relationships and how to obtain value from them. Consequently this makes it difficult for clients to develop integrated teams.
FAC-1 creates a single multi-party framework alliance between the Client, Alliance Manager and all other Alliance Members so that they are enabled and required to work more effectively in direct relationships with each other.
FAC-1 is designed to provide an accessible and versatile basis for any framework and alliance, enabling preparatory and procedures for the award of projects; better procurement with reduced drafting costs and bid costs and improved framework and alliance practices based on a common foundation.
How does it work?
- a standard form framework agreement under which a Client (and potentially Additional Clients) can enter into Project Contracts for works, services or supplies through the implementation by an Alliance Manager of a Direct Award Procedure and/or Competitive Award Procedure; • appoints all Alliance Members, including the Alliance Manager, under a single multi-party contract;
- provides a contractual system for the Client to issue early Orders instructing works, services or supplies in advance of award of a Project Contract, without the cost or risk involved in bespoke letters of intent, to allow early involvement of tier 1 and tier 2/3 contractors; and
- creates a collaborative Alliance between the Client , the Alliance Manager and all contractors, consultants or suppliers appointed as Alliance Members so that they work can together to achieve greater efficiency, cost savings and other Improved Value.
How does it achieve improved value?
Improved Value can be created at a strategic level using collaborative systems that precede the award of individual Project Contracts.
Achievement of Improved Value is linked to performance of "Alliance Activities" backed by "Objectives", "Success Measures" and "Incentives", prescribed by the parties, and by a "timetable" which sets out the nature, sequence and duration of an agreed activity for each Alliance Member.
FAC-1 uses Supply Chain Collaboration to enable engagement with tier 2/3 sub-contractors, manufacturers and suppliers. This has led to demonstration of Improved Value through:
- greater engagement of local and regional businesses;
- new local and regional employment and skills initiatives;
- recycling and other Sustainability initiatives; and
- positive feedback from Users and Stakeholders.
Key provisions include:
- shared Objectives, Success Measures, Targets and Incentives among the Client and all other Alliance Members;
- a Core Group to review new proposals and undertake non-adversarial dispute resolution;
- a Direct Award Procedure and/or Competitive Award Procedure, each leading to Project Contracts based on a set of agreed Template Project Documents;
- links to Building Information Modelling (BIM) in the Framework Documents and Template Project Documents;
- links to the UK Government’s recommended Supply Chain Collaboration system to achieve Improved Value among Alliance Members, each within agreed timescales;
- a shared Framework Brief with separate confidential agreement of each Alliance Member’s Framework Prices and Framework Proposals;
- joint Risk Management using a shared Risk Register;
- provision for expansion of the Alliance to include Additional Clients and other Additional Alliance Members under a standard form Joining Agreement; and
- a separate schedule for any Special Terms required by a Client.
What project contract can I use?
FAC-1 is compatible with any project procurement model under its Direct Award Procedure and Competitive Award Procedure. For example it can support:
- traditional or design and build or construction management procurement models, with any level or combination of contributions from design consultants, tier 1 contractors and tier 2/3 sub-contractors/suppliers;
- integration of contributions under an alliance comprising different specialists working under related Project Contracts; and
- integration of the capital and operational phases of each Project.
FAC-1 is designed for use with any one or more Project Contract forms. It is compatible with all and any combination of the following standard form project contracts:
Does it provide for BIM procurement?
FAC-1 provides the option for Building Information Modelling (BIM) to underpin the agreed approaches to design, supply chain engagement, costing, Risk Management and programming that are set out:
- in relation to the Framework Programme in the Framework Documents; and
- in relation to each Project in the Template Project Documents.
How has Trowers & Hamlins been involved in FAC-1?
FAC-1 was subject to extensive industry consultation in the UK and abroad. Members of the construction group took part in this consultation and reviewed in detail the terms of FAC-1 just ahead of publishing. In addition a draft FAC-1 was trialled by Futures Housing Group advised by the Trowers & Hamlins construction group. Futures Housing wanted to procure a framework alliance of SME contractors to carry out a range of maintenance works to its housing stock. The attractiveness of FAC-1 to Futures Housing was the ability to directly engage with SMEs and for Futures Housing to assist sustainability of the local market through collaboration with the alliance members.