legal update ––––– march 201 projects and … update ––––– march 201 7 projects...
TRANSCRIPT
Legal update ––––– March 2017
Projects and Construction Framework Alliance Agreement
———— Pioneering ———— Bahrain ———— Construction ———— Public sector ———— Energy ———— Real estate ———— London ———— Tax ———— IT ———— Dubai ———— Manchester ————
Connecting ———— Knowledge ———— Pragmatic ———— Malaysia ———— Exeter ———— Thought leadership ———— Housing ———— Agile ———— Creative ———— Connecting ———— Private equity
Local government ———— Manchester ———— Environment ———— Focused ———— Islamic finance ———— Projects ———— Abu Dhabi ———— Corporate finance ———— Passionate ————
—— Employment ———— Regulation ———— Procurement ———— Expertise ———— Specialist ———— Planning ———— Investment ———— Committed ———— Delivery ———— IT ———— Governance
——— IP ———— Corporate ———— Infrastructure ———— Value ———— Development ———— Private wealth ———— Oman ———— Governance ———— Birmingham ———— Corporate finance ————
—— Dynamic ———— Pensions ———— Dispute resolution ———— Insight ———— Banking and finance ———— Arbitration ———— Diverse ———— Regeneration ———— Care ———— Communication
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 multi-
alliance 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 sub-
contractors;
• 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.
Source: Fotolia
Why Alliancing?
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
Published by
Trowers & Hamlins
Trowers & Hamlins LLP
3 Bunhill Row
London
EC1Y 8YZ
t +44 (0)20 7423 8000
f +44 (0)20 7423 8001
www.trowers.com
Trowers & Hamlins LLP is a
limited liability partnership
registered in England and
Wales with registered number
OC337852 whose registered
office is at 3 Bunhill Row,
London EC1Y 8YZ. Trowers
& Hamlins LLP is authorised
and regulated by the Solicitors
Regulation Authority. The
word "partner" is used to refer
to a member of Trowers &
Hamlins LLP or an employee
or consultant with equivalent
standing and qualifications or
an individual with equivalent
status in one of Trowers &
Hamlins LLP's affiliated
undertakings. A list of the
members of Trowers &
Hamlins LLP together with
those non-members who are
designated as partners is
open to inspection at the
registered office.
Trowers & Hamlins LLP has
taken all reasonable
precautions to ensure that
information contained in this
document is accurate but
stresses that the content is not
intended to be legally
comprehensive.
Trowers & Hamlins LLP
recommends that no action be
taken on matters covered in
this document without taking
full legal advice.
Projects and Construction Legal update March 201
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.
Source: Fotolia
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.
Projects and Construction Legal update March 201
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:
• JCT/NEC/PPC/ICC/CIoB/FIDIC; and
• CIC/RIBA/ACA/ACE/RICS/FIDIC.
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.
March 2017 © Trowers & Hamlins
For more information please contact
Katharine Saunders
Partner
t +44 (0)161 838 2071
Alan Tate
Partner
t +44 (0)1392 612330
Rebecca Rees
Partner
t +44 (0)20 7423 8021
Mark Robinson
Managing Associate
t +44 (0) 121 214 8824
John Forde
Senior Associate
t +44 (0)20 7423 8353