Select Committee on Public Accounts Second Report


32. In the private sector, longer term collaborative relationships or partnering between clients and contractors are now more widely used. The benefits can include client and contractor working together to improve building design, minimise the need for design changes, identify ways of driving out inefficiency in the construction process, replicate good practice learned on earlier projects and minimise the risk of costly disputes. In the private sector, reported savings from different forms of partnering are between two per cent and 30 per cent in the cost of constructing buildings. The cost of partnering — setting it up and monitoring — is assessed as adding about one per cent to project costs.[29]

33. The Office of Government Commerce are encouraging departments to establish longer-term collaborative relationships and partnering for their construction programmes where there is good potential to improve value for money. We asked the Office of Government Commerce how they were taking precautions against the risk of unduly close relationships with contractors, thus increasing the risk of impropriety and malpractice. They advised that, in establishing partnering arrangements, departments were required to appoint partners competitively, to set and agree with the contractor clearly measurable targets for improving building quality, delivery times and achieving cost reductions, and to have reasonable access to contractors' financial records and cost information to verify improvements in efficiency and performance claimed by contractors. The Office of Government Commerce added that those requirements were set out in guidance issued to departments by the Treasury. The guidance emphasised the importance of benchmarking to test that the partnership is delivering value for money by comparing performance against other contracts, and the need to recompete the partnership contract after a given interval. The Office said that they intended to update the guidance later this year .[30]


34. There is scope for benefits in terms of quality, faster construction times and financial savings through contractors and their clients working more closely together in longer-term relationships (partnering). Subject to appropriate safeguards, such productive relationships deserve to be promoted in public sector construction. These include the appointment of partners through competition; periodically re-tendering; agreeing clear, measurable targets for continuous improvements in quality, delivery time and cost reductions; establishing payment arrangements to give contractors incentives to be innovative and cost effective; and securing reasonable access to contractors' financial records and cost information to check that agreed improvements in efficiency and performance are being achieved.

29  C&AG's report HC 87 (2000—2001), paras 7 and 2.3—2.4 Back

30  Qs 11—12, 45, 72 and Evidence, Appendix 1, pp 11—18 Back

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Prepared 5 December 2001