Select Committee on Public Accounts Minutes of Evidence



  Partnering has been shown to yield significant savings in time and cost. Longer-term strategic partnering arrangements have been shown to yield the greatest benefits with costs savings of up to 40 per cent.

  Commitment and clear leadership by example and involvement are required from senior management for teamworking and partnering to succeed. Ultimately, the success of a project comes down to people. It is the enthusiasm, commitment and desire for a successful outcome by every individual involved in the project that contributes to its success. Change management and behavioural management specialists can help to accelerate the culture change process.

  Teamworking should be a core requirement for every element of every project. Partnering arrangements should be adopted as far as possible on all new and existing contracts.

  Partnering arrangements, whether project specific or longer term do not replace the need for competition at the outset of the contract. The competition should be on the basis of value for money over the life of the facility and not on cost alone. It will need to address each organisation's culture and commitment to work in a collaborative manner to drive down unnecessary costs whilst delivering the required quality.

  Incentives should be included in contracts or in partnering arrangements, to encourage designers, constructors and/or other suppliers to provide benefits to the client significantly beyond those contracted for (eg by using innovation or different working practices to deliver the same or better service whilst yielding cost savings). Incentives should not be awarded just for doing a good job.

  It is intended that the Government Construction Clients' Panel (GCCP) Internet web site at will include a library of case studies showing how incentives and partnering have been used with the aim of encouraging continuous improvement.


    1.  Introduction
    2.  Scope
    3.  People
    4.  Teamworking
    5.  Partnering
    6.  Incentives
    7.  The EC Procurement Rules
    Annex A—Menu of teamworking and partnering activities


  1.1  This guidance explains the concept of teamworking, partnering and incentives and describes how they may be incorporated into works projects to improve performance and reduce wasteful activities.

  1.2  This is the fourth in a series of nine guidance documents that translate the recommendations made in the Efficiency Unit Report on Construction Procurement by Government into practical proposals for implementation. It addresses the recommendations made in the University of Bath School of Management Agile Construction Initiative report "The Government Client Improvement Study" (ISBN 0947819614) and the recommendations made in the Construction Taskforce report "Rethinking Construction" (ISBN 1 85112 0947).

  1.3  Figure 1 below shows the inter relationship of works projects guidances and illustrates how this one fits within the structure. Reference should be made to the other documents in the series, as necessary, rather than relying on any single document.

Figure 1: Structure of guidance notes relevant to works projects

  1.4  The National Audit Office and the Northern Ireland Audit Office recognise that active management of works contracts is essential to achieving value for money. The auditors endorse the general principles and good practices within these guides and might examine how such principles were applied in practice in any future examination.

  1.5  This guidance has been kept brief to allow the key points to be identified easily. It avoids being unnecessarily detailed or prescriptive in this rapidly developing area. It is intended that a library of case studies showing how the teamworking, partnering and incentives have been used in practice will be built up on the GCCP web site.

  1.6  This guidance extends the advice given in CUP Guidance No 57 "Strategic Partnering in Government" and No 58 "Incentivisation" specifically for works projects. It builds on the following codes of practice and other guidance published by the Construction Industry Board (CIB) and other bodies and tailors them for use by government departments. The intention is to avoid duplicating advice available elsewhere. Users may wish to refer to the publications lists below but should always place precedence on the advice given in this guidance:

    —  Partnering in the team—Construction Industry Board (ISBN 0 7277 2551 3)

    —  Partnering in the Public Sector, A Toolkit for the Implementation of post award, project specific partnering on construction projects—European Construction Institute (ISBN 1 873844 34 4)

    —  Constructing Improvement, The Clients' Pact with the Industry—Construction Clients' Forum

    —  The Seven Pillars of Partnering—Reading Construction Forum (ISBN 0 7277 2690 0)

    —  Trusting the Team—Reading Construction Forum (ISBN 0 7049 0503 5)

    —  Partnering Arrangements Between the Ministry of Defence and its Suppliers—A Practical Guide to Creation Agreement Management—Ministry of Defence (E-mail [email protected])

  1.7  Failure to identify risks and inappropriate allocation of risks are often cited as reasons for disputes arising in construction projects. To assist teamworking, partnering and incentive processes to result in a successful project, all parties should make their risk registers and risk management plans explicit so that everybody involved in the construction process is aware of the risks, how they are being managed and how they are allocated. For further information on risk management, see Procurement Guidance No 2 "Value for Money in Construction Procurement".

  1.8  Teamworking, partnering and incentives are not soft options that create a cosy environment to work within. They are hard-nosed management techniques that deliver the aspects that are of value to the client by minimising or eliminating wasteful activities not directly contributing towards those aspects of value. They require leadership, commitment and continued involvement from the top down.


  2.1  This guidance should be read by investment decision makers, project owners, project sponsors and project managers as well as procurement, finance and internal audit staff in departments involved in works projects.

  2.2  The concepts contained within this guidance should be applied to all new projects. There are also likely to be benefits in applying the concepts to existing projects.


  3.1  Ultimately the success of a project comes down to people. It is the enthusiasm, commitment and desire for a successful outcome by every individual involved in the project that contributes to its success. Particular attributes required of individuals include:

    —  continuously searching for improvement;

    —  actively listening to and learning from others;

    —  identifying what personal attributes we each need to improve, to allow us to work better with others.

  3.2  Change management and behavioural management specialists can accelerate the process of culture change by providing personal coaching and team coaching to help the parties work together in the most effective manner.

  3.3  Those individuals that do not have the necessary attributes and who are unwilling or unable to change to acquire them, can intentionally or unintentionally undermine those that do have them and prevent a project from having a successful outcome.

  3.4  When selecting project team members, either from in-house or from external organisations, the personal attributes of the individuals should be taken account of. Where it appears that even with training, an individual is unlikely to be able to work constructively as part of the team, that person should not be selected.

  3.5  To prevent confusion and the potential for misunderstandings, the roles and responsibilities of each individual should be clearly set down at the outset and made know to the other members of the team.


  4.1  For the purposes of this guidance, teamworking is defined as working together as a team for the mutual benefit of all by achieving the common goals whilst minimising wasteful activities and duplication of effort. When problems or difficulties are encountered, all parties should work together as a team to overcome those problems rather than blaming each other.

  4.2  Teamworking is simply common sense. It is the starting point on which relationships with other parties should be based and applies just as much to the internal relationships between the members of the client's in-house project team as to the working relationship between members of the client organisation and those of the supply side.

  4.3  Teamworking does not replace proper and appropriate management structures and procedures. It is a pragmatic manner of working together to find ways of delivering the project to the required quality within budget and within programme. It should promote greater openness and encourage earlier involvement by the supply side.

  4.4  The benefits of teamworking include the following:

    —  understanding each other's objectives;

    —  use of collective brain power to find solutions;

    —  reduced numbers of personnel required to monitor progress and prepare or counteract claims;

    —  reduction in correspondence and thereby unnecessary cost;

    —  reduction in duplication of effort;

    —  elimination of "man to man" marking (only one person should do each task and it should be on behalf of all parties);

    —  improved working environment where the focus is on co-operation rather than conflict;

    —  enhanced reputation of individual when associated with successful projects;

    —  reduction in litigation, arbitration and dispute resolution and thereby unnecessary cost;

    —  enhanced reputation of client and supply side organisations when associated with successful projects.

  4.5  A teamworking culture depends on the commitment and effort of each individual member of the team. Teamworking can be encouraged or enhanced by holding project specific teamworking workshops with the team members (including members from consultants, contractors and other suppliers) and by arranging for the team members to undergo teambuilding training. Anybody subsequently joining the project would attend an induction course on the project and in particular, on the principles and workings of teamworking.

  4.6  Teamworking can also be encouraged by co-locating all the members of a project team, whether in-house or external. Where that is not practicable, members of a team should be connected together through the same computer network or through the Internet or an Intranet.

  4.7  Teamworking should be a core requirement for every element of every project. The commitment of an organisation to work constructively as part of a team could be included amongst the stated evaluation criteria, where relevant under the EC procurement rules.

  4.8  Good clear records must be maintained to demonstrate how the parties have worked together to reach decisions, how best value has accrued to the department and that probity and propriety have been maintained. It is essential to be able to demonstrate proper accountability.

  4.9  Teamwork does not develop to its full potential until all of the parties, including individuals, have been open about their expectations and returns, the objectives of each are truly aligned and there is mutual benefit from the agreed outcome. This is where teamworking moves into partnering.

  4.10  The Construction Industry Board's Model Project Pact is one of several practical tools for teambuilding and greater collaboration at project level. Where the EC procurement rules apply, users of such tools must ensure that the rules are complied with.


  5.1  For the purposes of this guidance, partnering extends the definition of teamworking by adding the need for a more formal structure to be agreed by the parties which:

    —  identifies the common goals for success;

    —  sets out a common resolution ladder for reaching decisions and solving problems;

    —  identifies the targets that provide continuous measurable improvements in performance;

    —  sets out gain share and pain share arrangements (incentives) where these are not included within the formal contract.

  These are normally set down in a partnering charter which is signed by all of the individuals who are a party to the partnering arrangement. Annex A lists a number of activities that are commonly included in partnering arrangements. Some of these activities are appropriate to teamworking.

  5.2  The partnering arrangement and charter do not replace the need for a formal contract. Although there might be a number of fairly standard separate contracts between each supplier and the client, there might be a single partnering arrangement developed and agreed by all of the parties. A partnering arrangement developed in this manner is more likely to be appropriate to the specific circumstances and drawn up in a form that the parties to it are happy to sign up to. The alternative of adopting "off the peg" partnering arrangements to fit over each of the more formal works contracts in a prescriptive manner is less likely to result in success.

  5.3  The resolution ladder should require problems to be resolved and decisions reached by individuals at the lowest possible level within the respective organisations. It should set a time period by which a decision must be reached at that level before the issue is moved up to individuals at the next level in the respective organisations and so on up to the most senior levels.

  5.4  For partnering arrangements to be successful, they need the full and visible support from very senior management of each organisation. Partnering is not just a bolt-on extra that delivers results through one partnering workshop. It is a continuous process that needs sustained effort by all of the parties to deliver measurable benefits. Partnering arrangements are likely to fail if efforts to contribute to their success are not sustained.

  5.5  An important goal of partnering is finding ways of doing things differently by accessing the know how of all of the people and companies involved in the project to deliver improved performance. This requires flexibility, leadership and significant management skills.

  5.6  The parties to some of the more successful partnering arrangements have retained an independent coach/facilitator to help them form and then work together with the partnering arrangement. The coach, who might be an individual or an organisation, is available on call at all times. The coach may be reimbursed in part through a success fee.

  5.7  Two key types of partnering arrangement exist:

    —  strategic partnering (longer-term partnering for agreements involving more than one project);

    —  project specific partnering.

  5.8  Strategic partnering arrangements can be included in one or other of the following:

    —  framework agreements (covers both binding contracts and non-binding agreements);

    —  contracts specifically written to cover a number of projects.

  5.9  The Reading Construction Forum report "The Seven Pillars of Partnering" notes that Strategic Partnering has been known to deliver cost savings of 40 per cent and time savings of more than 50 per cent. In comparison, the cost savings for post award project specific partnering lie in the range 2 per cent to 10 per cent.

  5.10  The greater benefits from strategic partnering arrangements arise because the lessons learnt from one project can be applied to further similar projects through a process of continuous improvement. Strategic partnering arrangements should be adopted in preference to project specific partnering arrangements wherever possible.

  5.11  An important aspect in keeping together teams successful at delivering projects with ever increasing value improvements, is continuity of work. This is particularly relevant to strategic partnering. It takes considerable planning on the client side to smooth out the peaks and troughs in work load.

  5.12  Project specific partnering is described in detail in the publication "Partnering in the public sector, a took kit for post award project specific partnering" by the European Construction Institute.

  5.13  Project specific partnering arrangements have been entered into successfully at various stages of construction and even after the construction stage has been completed. Some notable successes have been achieved by the parties to a construction contract entering into a partnering arrangement when significant difficulties were encountered. It should be emphasised that the benefits of partnering will be maximised from commencing the process at an early stage in the project.

  5.14  The partnering arrangement and charter should not create a contract or a legal partnership and should contain an express provision making it clear that it is not intended to be legally enforceable. The charter normally includes a statement to the effect that the arrangement only remains operative so long as all parties to it wish it to remain in place.

  5.15  Strategic partnering is evolving at a rapid pace and detailed guidance written here could soon become out of date or might become unnecessarily restrictive. The Reading Construction Forum report "The Seven Pillars of Partnering" provides a number of case studies showing recent advances.

  5.16  Strategic partnering arrangements should be checked from time to time to ensure that they continue to provide value for money. Such checks might include:

    —  comparison of performance against other contracts (total value for money of outputs and not just initial tender price);

    —  clear demonstration of a regular increase in value for money from the start of the contract;

    —  rebidding the contract after a given interval.

  5.17  It is intended that the GCCP web site will include a library of case studies showing how strategic partnering and project specific partnering arrangements have been used.

  5.18  Irrespective of the type of partnering relationship that the client enters into with a primary supplier (such as the main contractor or main consultant), significant benefits (in achieving overall value for money) can be obtained where a primary supplier has entered into strategic partnering arrangements with secondary suppliers (such as sub-contractors or sub-consultants). Supply chain relationships of this type are essential to obtain the maximum benefits from partnering.

  5.19  When considering whether to enter into a partnering arrangement with a successful bidder, it might be appropriate to ask the organisation if there are any conditions that they would require before entering into a partnering arrangement. It might not be unreasonable for them to expect the client's Chief Executive/Permanent Secretary to be personally committed to the success of the partnering arrangement.

  5.20  It is important that everybody is rewarded when significant successes are achieved. This does not necessarily involve financial rewards but should include the public acknowledgement of teams.


  6.1  Incentives should encourage the parties to work together to eliminate wasteful activities that do not add value to the client and to identify and implement process improvements, alternative designs, working methods and other activities that result in added value. CUP Guidance No 58 "Incentivisation" was written for service contracts but much of its content is relevant to works projects.

  6.2  Incentives should not be given merely for doing a good job (ie meeting the contractual requirements) nor should they be made for improvements in performance that are of no value to the client (eg for completing a building contract three months early when the client is still committed to paying rent, rates and other charges on the existing premises).

  6.3  For every contract or partnering agreement for consultancy and construction work, consideration should be give to how incentive arrangements will deliver greater value for money. The presumption should be that incentives will be included unless there are exceptional circumstances where it is clearly apparent that they are not appropriate. It is intended that the GCCP web site will include a library of case studies showing how incentive arrangements have been used.

  6.4  Incentives can be built into the binding contract or into the non-binding partnering arrangements. Some of the greatest improvements have occurred where they were incorporated within the partnering arrangement.

  6.5  Incentives should be arranged as far as possible so that the party (eg sub-contractor or sub-consultant) primarily responsible for significant improvements in performance, is rewarded accordingly rather than the main contractor or main consultant.

  6.6  Performance targets on which incentives are based must be measurable. Departments will need to weigh up the benefits of proposed improvements, exercising appropriate judgement before agreeing to them. Quality must not suffer as a result of accepting proposed improvements.


  7.1  The EC procurement rules must be complied with. For further information on them please refer to:

    —  Procurement Guidance No 3 "Appointment of Consultants and Contractors".

    —  CUP Guidance 51 "Introduction to the EC Procurement Rules".

    —  CUP Guidance 57 "Strategic Partnering in Government".

    —  CUP Guidance 58 "Incentivisation".

    —  Your legal adviser for an interpretation of the rules.

    —  The Procurement Policy team at HM Treasury on 0207 270 1651.

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