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London South Bank University
Faculty of Engineering, Science and the Built Environment
Department of Property, Surveying and Construction
“Has compliance with the EC procurement rules had a detrimental effect on the
partnering practices of Registered Social Landlord Construction Industry Clients?”
2007
Paul Terry
MSc Quantity Surveying
LPD-M-040 Dissertation Title Page
“Has compliance with the EC procurement rules had a detrimental effect on the
partnering practices of Registered Social Landlord Construction Industry Clients?”
Submitted by Paul James Terry
For the M.Sc. in Quantity Surveying of
Faculty of Engineering, Science and the Built Environment
Department of Property, Surveying & Construction
2007
This dissertation may be made available for consultation within the South Bank
University and may be photocopied or lent to other libraries for the purposes of
consultation.
I declare that this dissertation is my own unaided work except where specifically
referenced to the work of others.
………………………………………………………………………………………………..
Paul Terry BSc (Hons)
LPD-M-040 Dissertation Acknowledgements
Acknowledgements
I dedicate this dissertation to my girlfriend Natalie, my family and my friends, in
recognition of their support throughout my studies at the London South Bank
University. I would not have been able to do this without them and I thank them all.
I give special thanks to my project supervisor Dr. Atkinson for providing me with
useful guidance throughout the production of this thesis.
I would also like to extend special thanks to Bob Lombardelli for sponsoring my
studies at LSBU and thank all of the staff at RLP for their support and
encouragement.
LPD-M-040 Dissertation Abstract
Abstract
This dissertation is about determining whether compliance with the European
Commissions (EC) procurement rules is detrimental to the partnering practices of
Registered Social Landlord (RSL) construction industry clients. A critical review of
the literature assesses the evolution of RSL procurement practice. It explains why
RSL’s moved away from traditional competitive tendering towards partnering and
how they have had to recently revise their partnering practices in order to comply
with the EC procurement rules. A research sample of 10 clients, 17 consultants
and 9 contractors was assessed to determine how these fundamental changes to
RSL procurement practice have affected overall project performance. Overall
project performance was assessed in relation to ten key performance factors
identified in the literature review. The survey indicated that the research sample
agreed that project performance is improved through partnering when compared
with traditional competitive tendering and that partnered project performance is
reduced through compliance with the EC rules. Statistical analysis of the survey
results confirmed that RSL partnered projects performed significantly better before
compliance with the EC procurement rules. This has been attributed to increased
bureaucracy within the procurement process conflicting with the philosophies of
partnering.
LPD-M-040 Dissertation Contents
Contents
Title Page i
Acknowledgements ii
Abstract
iii
1.0 Introduction 1
1.1 Rationale for the Research 1
1.2 Research Goals 2
1.3 Outline Methodology of the Research 3
1.4 Dissertation Contents
4
2.0 Basic Procurement Systems
5
3.0 Traditional RSL Procurement Practice 6
3.1 Competitive Tendering 6
3.2 Advantages of Competitive Tendering 8
3.3 Disadvantages of Competitive Tendering
8
4.0 More Recent RSL Procurement Practice 10
4.1 General Industry Initiatives 10
4.2 Partnering 15
4.3 Advantages of Partnering 18
4.4 Disadvantages of Partnering 18
4.5 Performance Measurement 19
4.6 Informal RSL Partnering Agreements
20
5.0 Current RSL Procurement Practice 22
5.1 The EC Procurement Rules 22
5.2 OJEU Framework Agreements
26
6.0 Summary of the Literature Review
29
LPD-M-040 Dissertation Contents
7.0 Questionnaire Design & Research Methodology 30
7.1 Research Aim 30
7.2 Rationale for the Research Questionnaire 30
7.3 The Research Sample 34
7.4 Method of Analysis
37
8.0 Analysis of Results 39
8.1 Descriptive Analysis 39
8.2 Statistical Analysis
47
9.0 Conclusion
53
10.0 References & Bibliography 59
10.1 References 59
10.2 Bibliography
61
11.0 Acronyms & Abbreviations 63
List of Figures
1 Chronology of Key Reports and Initiatives in Construction 12
2 Better Construction Performance 14
3 The Original Partnering Model 16
4 EC Procurement Rule Thresholds 23
5 Research Sample Professional Experience (Type) 36
6 Sample Mean Opinion Scores: Questions 1-10 40
7 Sample Mean Opinion Scores: Questions 11-20 44
8 Perceived Overall Performance of Partnered Projects compared
with Traditional Competitively Tendered Projects
48
9 Perceived Overall Performance of OJEU Framework Projects
compared with Partnered Projects
50
10 Components of the Traditional Procurement System 65
11 Components of the Design and Build Procurement System 67
LPD-M-040 Dissertation Contents
12 Components of the Management Procurement System 69
13 Summary of Constructing the Team (1994) 71
14 Summary of Rethinking Construction (1998) 72
List of Tables
1 Research Sample: Number and Rate of Response 34
2 Research Sample Professional Experience (Years) 35
3 Sample Mean Opinion Scores: Questions 1-10 40
4 Sample Mean Opinion Scores: Questions 11-20 44
5 Raw Data: Questions 1-10 75
6 Raw Data: Questions 11-20 76
7 Raw Data: Qualitative Responses 77
8 t-Test 1 Results 80
9 t-Test 2 Results 80
10 t-Test 3 Results 81
11 t-Test 4 Results 81
12 t-Test 5 Results 82
13 t-Test 6 Results 82
14 t-Test 7 Results 83
List of Appendices
1 Basic Procurement Systems 64
2 Summary of the Latham & Egan Reports 71
3 The Research Questionnaire 73
4 Raw Data Collected from the Research Questionnaire 75
5 Results of the Statistical Analysis 80
LPD-M-040 Dissertation Introduction
1.0 Introduction
1.1 Rationale for the Research
Registered Social Landlords (RSL’s) are publicly funded organisations formerly
known as Housing Associations that can be defined as ‘not for profit’ companies
registered by the Housing Corporation (HC) to provide social housing. There are
2,500 registered RSL’s, with the largest having construction programmes valued at
over £270M [Jenkins, 2004: p. 7].
RSL’s were pioneers in the housing construction market in the adoption of
partnering philosophies recommended by Constructing the Team (1994) and
Rethinking Construction (1998). These reports were published in response to
growing client dissatisfaction with UK construction projects being delivered both
late and over budget. Both confirmed that the industry was underperforming and
identified traditional competitive tendering methods as being problematic. They
recommended the adoption of partnering philosophies to encourage longer-term
working relationships, involving all key members of the construction process from
the inception stage of the project. RSL’s were quick to adopt the partnering
method and were soon reporting improvements in project performance.
As from 10 September 2004, all RSL contracts have had to comply with the
European Commission (EC) procurement rules embodied in the EC public
procurement directives. The basis of this legislation is to ensure that there is equal
opportunity amongst companies based within the EU member states, to bid for all
publicly funded construction contracts over a certain value. In essence, the
legislation made it compulsory for RSL’s to revert back to the competitive
tendering process that they had moved away from for the vast majority of their
construction projects. This resulted in a degree of confusion amongst RSL’s and
the firms that they employ, as to what effect the introduction of EC procurement
rules would have on their existing partnering practices and the procurement
process as a whole. With the threat of legal action being taken against those who
failed to comply, RSL’s have amended their procurement practices accordingly.
LPD-M-040 Dissertation Introduction
1.2 Research Goals
The aim of the study was to establish whether compliance with the EC
procurement rules has been detrimental to RSL partnering practices.
The aim of the study required the following objectives to be achieved;
1. To review the procurement practices of RSL construction industry clients.
2. To asses whether the adoption of partnering methods has improved RSL
project performance.
3. To identify how compliance with the EC procurement rules affects RSL
procurement practices.
4. To asses how compliance with the EC procurement rules affects the
performance of RSL partnered projects.
5. To identify whether the introduction of the EC procurement rules is
detrimental to RSL partnering practices
Integral to the aim of the study were two key research questions;
1. Does partnering improve RSL construction project performance?
2. Does compliance with the EC procurement rules reduce the performance of
RSL partnered construction projects?
The study assumed that the adoption of the partnering method has improved the
performance of RSL construction projects to be able to assess whether the
introduction of the EC procurement rules has been detrimental. Therefore, the first
research question needed to be answered to confirm that this assumption was
correct, before the second research question could be answered in relation to the
context of the study. It was anticipated that the answer to the first question would
be that partnering does improve RSL construction performance and it was
anticipated that the answer to the second question would be that compliance with
the EC procurement rules would reduce the performance of RSL partnered
projects.
LPD-M-040 Dissertation Introduction
1.3 Outline Methodology of the Research
In order to achieve the dissertation objectives a variety of research, data collection
and data analysis methods were employed.
The first stage of the research consisted of a comprehensive review of the relevant
literature. The literature reviewed consisted of primary and some secondary
sources. Primary sources consisted of government and key industry organisation
publications. The secondary sources consisted of textbooks and journals. The
literature review was used to achieve objectives 1 and 3 of the study.
The second stage of the research consisted of data collection through the use of a
postal questionnaire. The research population was identified as people working
within RSL organisations and the firms that work with them through partnering
agreements. The research sample was drawn from this population. The research
questionnaire comprised 4 sections. The first section was designed to collect
general respondent characteristics data that could be used to validate assess
experience in relation to the study topic. The second section was designed to
collect opinion data in relation to the performance of partnered projects compared
with traditional competitively tendered projects to achieve objective 2 of the study.
The third section was designed to collect opinion data in relation to the
performance of OJEU framework projects compared with partnered projects to
achieve objective 4 of the study. The fourth section was designed to collect more
general qualitative data in relation to the study that might not have been captured
in sections 2 and 3.
The third stage of the research consisted of analysis of the raw data collected in
the questionnaire. Both descriptive and statistical methods have been
incorporated. The descriptive method was used to assess the results visually in
order to form conclusions that could be tested for significance as hypotheses in
the statistical analysis. The student t-Test was used to assess the significance of
difference between the results obtained in sections 2 and 3 of the questionnaire in
order to achieve objective 5 of the study.
LPD-M-040 Dissertation Introduction
1.4 Dissertation Contents
The main body of the dissertation consists of eight chapters. Chapters’ two to six
comprise the literature review. The literature review is a chronological appraisal of
RSL procurement practices from traditional methods through to current methods.
Chapter six is a brief summary of the previous four chapters.
Chapter seven discusses the questionnaire design and research methodology.
This is an expansion of the previous section where the questionnaire and the
methodology used to analyse the data are discussed in more detail. The
characteristics of the research sample are also analysed in detail.
Chapter eight discusses the data analysis. The results obtained from the research
questionnaire and the conclusions that can be drawn from them are discussed in
detail. It also includes the statistical testing for significance of the results.
Chapter ten is the conclusion. The conclusion discusses the results in context with
the aims and objectives identified earlier in this chapter. It also discusses the
limitations of the study in relation to the data collected and the methods of analysis
used. Further areas of research are identified and discussed.
The conclusion is followed by the references and bibliography, a list of acronyms
and abbreviations and the appendices.
LPD-M-040 Dissertation Basic Procurement Systems
2.0 Basic Procurement Systems
A number of procurement options can be used on any development or
maintenance contract. The traditional procurement method is still in regular use.
This system separates the activities of design and construction through the use of
bills of quantities and competitive tendering. However, it has become increasingly
common for other forms of procurement to be considered. When selecting a
system to use, the advantages and disadvantages of each route should be
considered and the decision-making process which informs the preferred option
needs to be robust.
The three main procurement options are;
• Traditional (Lump Sum)
• Design and Build
• Management Contracts
The traditional and design and build systems apply to both development and
maintenance contracts, but management contracts are generally applicable only to
more complicated development works and therefore not commonly used by RSL’s.
The selection of the procurement route should be a result of collective debate or a
workshop involving the client and the consultant team. The strategic brief issued to
the consultants at the selection stage may refer to procurement preferences, but in
most cases a system is not selected until it can be the focus of a procurement
workshop involving the design team and the client. An analysis of the
characteristics of each procurement option should be undertaken in the context of
the objectives of the brief to identify the procurement route most likely to meet the
identified time, cost and quality criteria. When seeking fees from short-listed
consultants, the client should be aware of any adjustment that might be applied
should an alternative form of procurement be adopted, therefore avoiding the risk
of a claim for additional fees when the appropriate procurement route is agreed
and implemented [Communities Scotland, 2004]. The characteristics of each of the
procurement systems are described in appendix 1.
LPD-M-040 Dissertation Traditional RSL Procurement Practice
3.0 Traditional RSL Procurement Practice
The majority of RSL construction projects in the UK have been carried out under
the traditional procurement method whereby the client engages a contractor and a
professional team of design consultants. The contractor employs the various sub-
contractors to undertake significant (or all) elements of the work. The most
common variation to this approach is the use of the Design and Build system. The
standard form of contract used for these procurement methods are the Joint
Contract Tribunal (JCT) suite of contracts. These include the JCT Minor,
Intermediate or Major Works variations for use with the traditional lump sum
method and the JCT Design and Build version for use with the design and build
method. These contracts have been revised periodically with the most recent
revisions forming the 2005 edition [Lewis et al, 2004].
Whichever form of procurement or contract adopted by the RSL, the process for
selecting the contractor has generally been through competitive tendering.
Traditionally, the tendering process has been focused solely on the contractor
although the more recent diversified contractual market has seen the tendering
process applied to the selection of consultants and the appointment of suppliers
and sub-contractors alike.
3.1 Competitive Tendering
The approach to tendering can vary due to the value or complexity of a project but
primarily due to the choice of contract and procurement route adopted. In the
traditional system, the client will appoint a team of consultants through a process
of selection. The project team will comprise of an architect, quantity surveyor,
project manager, services and structural engineers. It is their job to produce
documentation to the required level of detail for a contractor to produce an
accurate estimate which will form the basis of their tender. This is a crucial stage
of any project as the contractors bid will be based upon this information alone. The
accuracy of this information will determine the accuracy of the contractor’s
estimate that forms a benchmark from which client satisfaction will be measured.
LPD-M-040 Dissertation Traditional RSL Procurement Practice
“The contractor’s tender is the price for which he offers to carry out and complete,
in accordance with the conditions of the contract, the work shown on the drawings
and described in the bill(s) of quantities and/or specifications.” [NJCC, 1990: 2.3].
Compulsory Competitive Tendering (CCT) was introduced in the UK by the
Conservative Government through the Local Government Planning and Land Act
(1980), in an attempt to bring greater efficiency to local government and health
services through the use of competition. Housing Associations were covered by
this legislation and had to comply. Frederick (2004) states that “whilst it was
generally recognised that strong incentives were needed to stimulate reform,
compulsion resulted in resistance by Local Authorities and Health Trusts, an
immature market and poorly-conducted procurements which focused on price at
the expense of quality and employment conditions”.
The contractor produces a financial estimate for the specified works based upon a
set of unit rates incorporating the cost of labour, plant, materials and the
company’s overheads and profits. They will also submit an estimate for the
preliminary cost of conducting all work on site. The overall package will include a
construction programme and a building strategy explaining the method of
construction to be employed. This can soon amount to a substantially sized
submission that is consuming both financially and in terms of human resource.
The number of tenders that the client is recommended to request will depend upon
the anticipated value of the project. It generally varies somewhere between three
and eight whatever building standards are adhered to. This number is reduced on
more specialist engineering contracts where the cost of producing a tender can be
much higher. The tender list is made up of firms with a proven track record who
possess the necessary skills and resource to construct the project in question.
“The object of selection is to make a list of firms, any one of which could be
entrusted with the job. If this is achieved, then the final choice of contractor will be
simple – the firm offering the lowest tender. Only the most exceptional cases
justify departure form this general recommendation.” [NJCC, 1990: 3.4].
LPD-M-040 Dissertation Traditional RSL Procurement Practice
3.2 Advantages of Competitive Tendering
The use of competitive tendering provides RSL clients with a key advantage. They
are able to easily demonstrate Value for Money (VFM) through appointment of the
contractor who submits the lowest bid. Achieving VFM is central to qualification for
Housing Corporation (HC) development grants which fund the majority of RSL
construction projects. Selecting the contractor on the basis of lowest price not only
achieves this but also satisfies the RSL that they are acquiring a product at the
true market value.
Another and more theoretical advantage of competitive tendering is that it can
increase quality. Contractors can only compete so far on price alone, as if each
contractor submitted a bid that equated to the true minimum market cost for
delivering the project, all bids submitted would be the same. This means that
contractors theoretically need to compete on more than tender price alone in order
to maintain a competitive advantage. Therefore contractors may focus on the
quality of the product or process that they can deliver within the pre-determined
market price which opens up another front of competition based on quality. In
theory this will not affect the overall tender price because as soon as the increased
quality affects the tender price they are at a disadvantage. The result is the client
acquiring a higher quality product for the pre-determined fixed market price.
3.3 Disadvantages of Competitive Tendering
Whatever the number of tenders submitted, the contractor’s chances of winning a
job through the competitive tendering process are not high. General industry
statistics state that they have a one in six chance of being successful [Pearson,
2005]. This can create a problem during a market down-turn when a contractor is
in need of work. They may estimate the cost of the job and submit a low bid below
the true project value in order to try and win work by undercutting their immediate
competitors. An under priced tender can result in an under resourced project
which can lead to delays, shortfalls in quality and claims for additional finance.
This invariably results in the dissatisfaction of the end user or the client.
LPD-M-040 Dissertation Traditional RSL Procurement Practice
The fact that a contractor is likely to be successful on only one in six tenders
creates another problem in terms of resource wasted on unsuccessful bids. “It
should be appreciated that the costing of preparing tenders the larger the lists
become the greater the cost of abortive tendering, and this must be reflected in
building prices.” [NJCC, 1990: 2.5]. In other words, the abortive cost of
unsuccessful tenders is indirectly filtered down to building costs through the
commercial costs incorporated in a contractor’s overheads and profit margins.
Potential shortfalls with the competitive tendering process are also exposed within
a strong construction market. During such times successful contractors can be
working on several projects at once, close to or at the maximum capacity of their
resources. If under these circumstances they are asked to tender for another job,
they will often submit a bid that they consider too high to win rather than decline
the offer and risk loosing a relationship with a potential client. If however they are
selected, the result can be an end product delivered at a price above current
market value as well as the potential problems associated with under resource.
This can again lead to client dissatisfaction [Pearson, 2005].
LPD-M-040 Dissertation More Recent RSL Procurement Practice
4.0 More Recent RSL Procurement Practice
Since the introduction of CCT, many construction industry clients were reporting
increasing dissatisfaction with the quality of their end products and the frequent
delivery of projects both late and over budget. During this period, the construction
industry had developed a reputation for being stubborn and reluctant to change
which resulted in such problems being acquitted to the unique nature of buildings
and the high degree of unpredictability associated with the construction process.
However, this was not the case. “Up to 80% of inputs into buildings are repeated”
[The Construction Task Force, 1998: 4.69].
Over the same period of time other UK industries had seen substantial
improvements in performance through the implementation of innovative
management techniques and production processes – primarily car manufacturing,
steel making, grocery retailing and off-shore engineering. The Scottish Executive
(2002) argues that “without developments in procurement practice, including
greater use of consortia to deliver economies of scale and a strategic approach to
demand and to the supply side, there is a significant risk that increased
expenditure in capital works will be absorbed by, and in some cases contribute to,
higher costs rather than increased and improved output”.
4.1 General Industry Initiatives
In response to the reports of growing dissatisfaction and underperformance within
the industry, in 1993 the House of Commons announced the joint review of
procurement and contractual arrangements in the UK construction industry. A
series of reports were then commissioned and published by HM government and
other leading industry organisations. The aim was to identify problems linked with
under performance and to propose practical researched solutions. A chronological
list of these reports and initiatives can be seen in figure 1. Perhaps the most
significant of these reports in relation to changes in RSL procurement practice are
Constructing the Team (1994), The Levene Efficiency Scrutiny into Construction
Procurement by Government (1995) and Rethinking Construction (1998).
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Constructing the Team (1994) was written by Sir Michael Latham. This was the
final report of a government/industry review of procurement and contractual
arrangements in the UK construction industry. The central message of this report
was that the client should be at the core of the construction process. The general
route recommended to achieve client satisfaction was through team work and co-
operation. The Latham report suggested that partnering could overcome many of
the problems associated with traditionally procured construction projects making
particular reference to the public sector including RSL’s.
“Specific advice should be given to public authorities so that they can experiment
with partnering arrangements where appropriate long-term relationships can be
built up. But the partner must initially be sought through a competitive tendering
process, and for a specific period of time. Any partnering arrangements should
include mutually agreed and measurable targets for productivity improvements.”
Recommendation 19 of Constructing the Team [Latham, 1994: p. 62].
Following the Latham Report, the Cabinet Office initiated an Efficiency Scrutiny
into Government procurement of construction. The Levene Efficiency Scrutiny into
Construction Procurement by Government (1995) concluded that departments and
agencies were partly to blame for the poor performance of the industry. The
scrutiny found that departments were: often unrealistic about budgets or
timetables; had an over simplistic view of competition; often failed to understand
and manage risks; and were not organised so that industry had a single contact
with whom they could discuss and resolve common problems across a number of
departments and agencies [The Comptroller and Auditor General, 2001].
The scrutiny made a number of recommendations to improve the procurement and
management of construction projects. This included better communication with the
construction industry to reduce conflict; adoption of a more commercial approach;
negotiation of deals justified on value for money grounds; and increased training of
civil servants on procurement and risk management. The Office of Government
Commerce assumed responsibility for coordinating construction procurement
policy across government [The Comptroller and Auditor General, 2001].
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Figure 1 – Chronology of Key Reports and Initiatives in Construction [The
Comptroller and Auditor General, 2001: p. 19].
Latham’s message was strongly reinforced by the Construction Task Force in
Rethinking Construction (1998). Chaired by Sir John Egan, the Task Force report
showed that effective projects required a clear process of which partnering was a
vital part. In reference to adopting lean manufacturing principles such as
standardisation and pre-assembled components, the report stated that “creative
design is important for a fine project, but a well run process, stripping out waste
and inefficiency, is necessary to deliver the client's aspiration for a harmonious
building or civil engineering project which also actually works”.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
The report championed the advantages of long-term partnering relationships.
“Partnering on a series of projects is a powerful tool increasingly being used in
construction to deliver valuable performance improvements. We are proposing that
the industry now goes a stage further and develops long-term alliances that
include all those involved in the whole process of delivering the product, from
identification of client need to fulfilment of that need” [The Construction Task
Force, 1998: 4.68].
The Task Force reported that the most immediately accessible savings from
partnering come from a reduced requirement for tendering. Whilst this went
against CCT best value practice in the public sector, it was considered vital that
the process was modified so that tendering could be reduced. In order for clients
to be satisfied that they are getting value for money, the report recommended
comparison between suppliers and rigorous measurement of their performance
(see section 4.5). “With quantitative performance targets and open book
accounting, together with demanding arrangements for selecting partners, the
Task Force believes that value for money can be adequately demonstrated and
properly audited. We invite the Treasury, with DETR, to consider the appropriate
mechanisms further and give guidance to public bodies” [The Construction Task
Force, 1998: 4.68].
With regard to competitive tendering, Egan also argued that too many clients were
undiscriminating and equated price with cost, selecting designers and constructors
almost exclusively on the basis of tendered price. This tendency was seen as one
of the greatest barriers to improvement and the public sectors requirement for
financial accountability was viewed as a major culprit in this respect. The industry
needed to educate and help its clients to differentiate between best value and
lowest price. By using lowest price as the primary selection criteria, competition
became too intense resulting in unsustainably low prices being offered due to
commercial pressures. This created a new culture of problems leading to poor
quality and under performance. The industry had a low and unreliable rate of
profitability. Margins were too low to sustain development and those companies
who served their clients well should have been making much better returns.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
As a result, too little was being invested in research and development and in
capital. Between 1981 and 1998 in-house research and development had fallen by
80% and capital investment was a third of what it had been 20 years previously.
This lack of investment was said to be damaging the construction industry's ability
to keep abreast of innovation in processes and technology as experienced in other
major UK industries [The Construction Task Force, 1998: 4.64].
The Task Force believed that the main opportunities for improvements in house
building performance existed within the social housing sector for the simple reason
that most social housing is commissioned by a few major clients. However, they
anticipated that improved practice in developing social housing would affect
expectations and activity in the wider housing market. “Consequently we see much
scope for cross-fertilisation of innovation between the public and private sectors”
[The Construction Task Force, 1998: 4.65].
Figure 2 – Better Construction Performance [The Comptroller and Auditor General,
2001: p. 5].
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Figure 2 identifies the key criteria for better construction project performance and
summarises the good practice recommendations made by both the Constructing
the Team and Rethinking Construction reports. A more detailed summary of each
of the reports findings and recommendations can be seen in appendix 2.
In 2000 the Local Government Act (1999) replaced mandatory CCT with the
criteria of Best Value, thus enabling Public Authorities to adopt the partnering
approach. Part 1 of The Local Government Act (1999) states that ”a best value
authority must make arrangements to secure continuous improvement in the way
in which its functions are exercised, having regard to a combination of economy,
efficiency and effectiveness.”
4.2 Partnering
Partnering is both an attitude of mind and a series of procedures which commit the
parties involved with a construction project to focus on creative cooperation and to
work to avoid confrontation. Its essential component is trust. The Reading
Construction Forum defined it as “a managerial approach used by two or more
organisations to achieve specific business objectives by maximising the
effectiveness of each participant’s resources. The approach is based on mutual
objectives, an agreed method of problem resolution and an active search for
continuous measurable improvement” [Bennett & Pearce, 2006].
Partnering is a generic term that embraces a range of practices with varying
degrees of formality designed to promote more co-operative working between
contracting parties and can be categorised as follows:
• Long Term Partnering where arrangements are for a period of time rather
than a single project.
• Project-Specific Partnering where arrangements are for the duration of an
individual project and the contract may be awarded competitively.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Both of these alternatives are widely practised in the private sector. However, a
variation of the latter more suited to the public sector is the following:
• Post Award Project Specific Partnering where the contract is subject to the
normal competitive processes. As the name suggests, the partnering
arrangement is entered into after the contract has been awarded. However,
the intent to partner should be part of the award process criteria.
Whatever the form of partnering, the objective is to align and unite the parties with
a shared goal of completing the project or scope of work in a cost effective and
timely manner which is mutually satisfactory and beneficial. Once objectives which
are shared by all have been established, working relationships between the parties
can be built upon a basis of mutual respect, trust and integrity. In such an
atmosphere, disputes can be avoided or speedily resolved and resorting to
litigation may be unnecessary [Roe & Jenkins, 2003].
Figure 3 – The Original Partnering Model [Bennett & Jayes, 1998: p. 3].
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Partnering has made great strides in recent years. The fastest growth has come in
the Housing Association movement and some other parts of the public sector. The
response from private commercial clients has been mixed although some private
firms have led the way in best practice [The Construction Task Force, 1998: 4.69].
Some private sector clients have preferred traditional procurement routes. The
Comptroller and Auditor General (2001) argues that this is because many clients
still do not understand that fiercely competitive tenders and accepting the lowest
bid do not produce best value for money in construction. Lowest price tenders may
well contain no profit margin for the contractor, whose commercial response is to
then try to claw back the margin which was not in the tender through variations,
claims and auctioning of subcontractors and suppliers. Such adversarial
approaches have disfigured the construction industry over many years. They have
produced high levels of litigation and conflict, low investment, inadequate research
and development, negligible margins and a poor perception of the industry by the
public in general and graduates or school leavers in particular.
Partnering turns this process around. It assumes a win-win scenario for all parties
where reasonable margins are built up by the whole team on an open book basis.
All parties are signed up to mutual objectives through a partnering charter
designed specifically for and by the partnership. All agree on effective decision
making procedures and problems are resolved collaboratively by the entire team.
Continuous improvement and benchmarking is crucial (see section 4.5). In order to
facilitate the use of partnering on construction contracts, the bodies responsible for
issuing standard form construction and engineering documents have developed
various forms of partnering agreements and contracts. Those most applicable to
RSL use are the JCT Partnering Charter, the New Engineering Contract (NEC)
Partnering Option and the Project Partnering Contract (PPC) 2000 Standard Form
of Contract for Partnering. Perhaps the most significant of these in terms of
contract development is the PPC2000 as it is intended that the client, the
constructor, all consultants and key specialist sub-contractors sign a single
partnering contract as opposed to a series of stand alone partnering agreements
[Lewis et al, 2004].
LPD-M-040 Dissertation More Recent RSL Procurement Practice
4.3 Advantages of Partnering
Generally, the benefits of partnering are perceived to include improved cash flow
and reduced overheads with greater efficiency and cost effectiveness. Partnering
allows for increased investment in research and development creating greater
opportunity for innovation, continuous improvement of quality services, reduced
delivery time and increased safety. In theory, partnering should eliminate disputes
and lead to stronger relationships with key suppliers, resulting in the opportunity
for future work [Bennett & Jayes, 1995]. This is supported by evidence from a
series of demonstration projects as discussed in section 4.5. ECI (2000)
summarises the advantages of partnering arrangements to RSL’s as being:
• Reduced capital cost.
• Reduced construction time.
• Elimination of defects (and reduced waste).
• Increasing out-turn predictability.
• Standardisation of components.
• Extending effective participation through the supply chain.
• Stakeholder involvement.
• Technical innovation (including increased use of IT).
• Increased customer satisfaction.
• Reduced opportunity for conflict or a claims culture.
• Positive working together to achieve a common goal.
4.4 Disadvantages of Partnering
In order to be successful, partnering arrangements require very careful planning at
the contract formation stage before the parties undertake the partnering exercise.
Projects involving partnering need clear parameters, such as the clear allocation of
rights, responsibilities and risk, and realistic budgeting. Therefore, partnering may
involve increased bureaucracy and a disproportionate amount of time spent in
meetings.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Bennett and Jayes (1995) argues that critics dismiss the idea of partnering as
being inconsistent with the realities of commercial contracting, or believe it to be
just management rhetoric which does not adequately acknowledge the complex
commercial issues encountered on a day to day basis. Another disadvantage is
that partnering may prevent a client from considering other opportunities.
Partnering marks a shift away from competitive tendering to an emphasis on
quality and therefore employers need to have the means of assessing whether
they are receiving best value of money. Clients also need to ensure that
contractual documentation is comprehensive and consistent and that there is no
divergence between the partnering arrangement and the works contract.
Disadvantages of partnering arrangements can be summarised as:
• Dangers of developing too close an arrangement.
• Longer term possibilities of exploitation of the relationship.
• Costs of preparing complex partnership agreements.
4.5 Performance Measurement
RSL’s are required to achieve Value for Money (VFM) in order to satisfy HC grant
regulations and qualify their project for funding. This requirement was easily
satisfied when adopting the CCT process, through appointment of the lowest
tender. When adopting the partnering process HC grant regulations require RSL’s
to achieve best value which considers quality as well as price. They have been
able to achieve this through the use of Key Performance Indicators (KPI’s). KPI’s
are objective measurement tools for comparing project performance in key areas
determined as being integral to project success. These may include;
• Cost – where actual project cost is measured against budget cost.
• Quality – where project quality can be assessed by measuring the number
of defects at handover with a pre-determined acceptable limit.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
• Time – where actual project programme is measured against the agreed
contract programme.
KPI’s were developed by the Construction Industry Board (CIB) in response to the
Rethinking Construction report (1998) and are revised annually. They provide a
benchmark score for best practice industry performance in key project areas (such
as those listed above), against which individual project performance can be
compared. The differences between these figures are the recordable KPI scores.
Another more general attribute of performance measurement is the ability to
identify best practice which can then be disseminated back to the industry through
knowledge sharing initiatives. The Department of the Environment, Transport and
Regions (DETR) issued grants to help fund Egan’s initial target of £500 million
pounds worth of demonstration projects to enable this process to be developed.
Details of the results from the demonstration projects are freely accessible on a
central internet database provided by the Housing Forum. Examples of best
practice achieved through innovation are promoted as targets for others and
negative experiences are shared in an attempt to prevent repeating errors. There
are several examples of RSL demonstration projects providing conclusive
evidence of best practice being achieved through the use of partnering.
4.6 Informal RSL Partnering Agreements
Public sector construction clients have lead the industry in terms of implementing
partnering in recent years, with RSL’s leading the way in the housing market. As
one of the few public sector clients within the UK that were not, until relatively
recently, subjected to bureaucratic European procurement regulations, they were
able to fully utilise the theoretical model of partnering and develop much longer
term and relatively informal partnering agreements. This enabled RSL’s to further
develop innovations like Modern Methods of Construction (MMC) to achieve better
project value and to develop sustainable construction methods aimed at
minimising the environmental impact of the built environment, both of which are
integral to RSL HC grant qualification.
LPD-M-040 Dissertation More Recent RSL Procurement Practice
Longer term arrangements provide the necessary investment and accumulation of
knowledge to develop MMC products like pre-fabricated building components and
to address sustainability issues like production of renewable energy on site.
Without longer term partnerships it is far more difficult to generate the level of skill
required to design, or the level of investment required to develop such innovations
to an economically viable state.
As a result, RSL’s developed long term relationships with contractors (and
consultants alike) on their approved lists of contractors. The approved lists of
contractors comprise those firms who have been selected initially through CCT
and retained on the basis of their good performance measured through the KPI’s.
The result is a pool of proven contractors that can be selected for single stage
tenders or even negotiated contracts so long as they maintain good project
performance.
LPD-M-040 Dissertation Current RSL Procurement Practice
5.0 Current RSL Procurement Practice
In December 2003, the European Commission (EC) opened infraction proceedings
against the UK for its failure to apply the EC procurement Directives to RSL's. This
culminated in the Commission’s announcement that it would be commencing
proceedings against the UK through the European Court of Justice (ECJ). For
many years the UK government had argued that RSL’s were not covered by the
rules. However, under the threat of proceedings by the EC the UK Government
conceded. On 10 September 2004, the Office of the Deputy Prime Minister
(ODPM) announced that the UK government had accepted that the EC was
correct in its view that RSL’s fall within the definition of Bodies Governed by Public
Law (BGPL) as defined in the EC procurement directives and must therefore
comply with them. This decision prevented ECJ proceedings against the UK which
would have been likely to rule in favour of the EC’s arguments, especially given
ECJ case law where the EC was successful with similar infraction proceedings
taken against France in 1999 [www.tendersdirect.com/news].
Since 10 September 2004, the HC has required all RSL’s to follow the EC’s rules
for all procurements to which those rules apply as part of their funding conditions.
As a result, officers responsible for all forms of procurement within RSL’s have had
to become familiar with the EC procurement directives as RSL’s are responsible
for ensuring that their own procurement processes comply with the rules.
5.1 The EC Procurement Rules
The purpose of the EC procurement rules is to open up the public procurement
market and to ensure the free movement of goods and services within the EU. The
EC procurement rules have been brought into force in UK law by three sets of
regulations;
• The Public Works Contracts Regulations (1991)
• The Public Services Contracts Regulations (1993)
• The Public Supply Contracts Regulations (1995)
LPD-M-040 Dissertation Current RSL Procurement Practice
The EU public procurement rules consist of Treaty of Rome obligations which
prohibit discrimination between suppliers, contractors or service providers and
require open and transparent procurement procedures. The Treaty obligations
apply to all procurement activity, irrespective of value. However, the EC
procurement directives only apply to contracts above certain value thresholds
which are listed in figure 4. Adjustments are made to the thresholds every two
years to take account of exchange rate variations.
Public Contracts Regulations 2006 - from 31 January 2006
Supplies Services Works
£93,738
(€137,000)
£93,738
(€137,000)
£3,611,319
(€5,278,227)
Figure 4 – EC Procurement Rule Thresholds [www.tendersdirect.com/infoCentre]
A single contract that does not have a value exceeding the relevant threshold may
also be subject to the EC procurement rules. This occurs where there is a single
requirement for services and a number of contracts are to be entered into to fulfil
that requirement. In that event, it is necessary to assume that each contract has
the value of the aggregate of all the contracts. This is common in respect of
professional fees on capital projects (new build and refurbishment) where the
value of the services of each individual member of the project team may have to
be aggregated to calculate its relationship to the threshold. Where there is a series
of works contracts to be let or where contracts are renewable, the value of all such
contracts must be aggregated. Where a contract is concluded for an indefinite
period (i.e. is simply ongoing with no definite end date) it is necessary to assume
that it will endure for four years in arriving at the value for threshold purposes.
Splitting contracts in order to bring them below the thresholds as a way of avoiding
the rules is prohibited. This situation is known as aggregation and would apply to
long-term (multiple-project) partnering agreements. RSL’s are strongly advised to
apply EU rules for the award of a feasibility study if the value of the project is likely
to meet or exceed the relevant thresholds [Scottish Executive, 2002].
LPD-M-040 Dissertation Current RSL Procurement Practice
Where the EC procurement directives do apply, contracts must be advertised in
the Official Journal of the European Union (OJEU), in accordance with certain
procedural requirements. There are currently three basic procedures provided for
under the EU rules which are;
• Open procedure
• Restricted procedure
• Negotiated procedure
All contracts regardless of the procedure adopted must be advertised through an
OJEU notice, which is a standard web based electronic advertisement document
designed to invite tenders from all interested parties within the EU member states.
Open procedure contracts are only appropriate for simple contracts where
specifications and terms of supply can be stated in the advert or follow up
document. Clients must allow tenderers 52 days to submit tenders from the date
when the OJEU notice is advertised. This can be reduced where a relevant Prior
Information Notice (PIN) has been published, but that period must be no shorter
than 22 days. The open procedure is similar to traditional single-stage competitive
tendering.
The restricted procedure is a two stage procedure. The purpose of the first stage
is to identify tenderers who satisfy the minimum criteria laid down by the client in
terms of their technical capability, or their economic and financial standing. This is
known as a Pre-Qualification Questionnaire (PQQ). The minimum period for
submission of the PQQ is 37 days. The client then selects a limited number of
suppliers which it will invite to submit tenders as part of the second stage on the
basis of the information submitted in the PQQ. After the client has selected those
firms it wants to invite to tender, it must allow all successful applicants at least 40
days from the date of acceptance to submit their tenders. This is likely to involve a
number of stages where quality based consultant selection procedures are used
as opposed to minimum price. The restricted process is similar to traditional two-
stage competitive tendering.
LPD-M-040 Dissertation Current RSL Procurement Practice
Negotiated contracts are negotiated with several suppliers chosen by the client. In
very limited circumstances contracts can be negotiated without any advertising.
The negotiated procedures can only be used where there is exceptional
justification for doing so, such as where no tenders or only irregular tenders have
been submitted in a previous open or restricted procedure and the original terms
of the contract are not substantially altered. The minimum period for submission of
interest through a PQQ is 37 days [Scottish Executive, 2002].
Trowers & Hamlins (2004) states that “RSL’s are advised that restricted
procedures are most appropriate for development and maintenance works, as
calls for expressions of interest in the negotiated procedure can typically result in
fifty or more PQQ submissions” .
There are rules on the standards which can be used in an OJEU notice. Technical
standards used for contracts should be European standards, but if no European
standards exist, international standards should be used. Goods or services
meeting equivalent standards must be accepted. No reference may be made in
specifications to goods or services of a specific make, source or brand name, or
made from a particular process where this has the effect of favouring certain
suppliers. It may be permissible to refer to a brand name or source in certain
limited circumstances but the words ‘or equivalent’ should always be added to the
reference [Trowers & Hamlins, 2004].
The Regulations provide a limited number of specific exclusions. Importantly for
RSL’s, these exclusions include contracts for the acquisition of land or any interest
in land. For example, this exclusion will apply in circumstances where the RSL is
entering into a contract to purchase an interest in land and newly completed or
existing dwellings [Achilles & Bevan-Brittan, 2005]. When the rules apply, they are
mandatory and failure to comply can result in:
• Suspension or cancellation of a tender procedure by the ECJ.
• A liability to pay damages.
• Loss of sources of public funding (HC grant).
LPD-M-040 Dissertation Current RSL Procurement Practice
Inevitably, there will be occasions when an RSL does not fully comply with EU
procurement rules. These could be minor failings (such as failing to include EU
technical specifications) or major failings (such as using the negotiated procedure
when circumstances do not justify it). When this occurs, the RSL will need to
undertake a risk assessment of whether to continue with or abort the procurement.
While purchasing policies of RSL’s may wish to favour local producers or suppliers
over cheaper or more efficient providers, under EU law this may be construed as
being at the expense of providers or suppliers of goods or services from other EU
member states. A fundamental rule of EU law (derived from the Treaty of Rome) is
the prohibition of discrimination on grounds of nationality (or discrimination in
favour of one nationality). This rule applies to any value of contract and may
conflict with policies aimed at enhancing sustainability which form part of RSL’s
HC funding conditions [Birkby, 2004].
5.2 OJEU Framework Agreements
Compliance with the EC procurement directives has affected RSL’s approach to
partnering, particularly the more informal partnering arrangements discussed in
section 4.6. In order to form partnerships that comply with the EU rules, RSL’s
must use the restricted procedure discussed previously.
Through the restricted procedure, RSL’s are able to use the first stage (PQQ) to
form framework agreements (similar to what they would previously have called a
list of approved contractors). Lewis et al (2004) defines the framework agreement
as “a flexible arrangement between the parties stating that works, services or
supplies of a specified nature will be undertaken or provided in accordance with
agreed terms and conditions, when purchased (‘called off’) for a particular need”.
The framework agreement provides the client with a short-list of pre-selected
service providers who can then be called-off to submit a formal tender for the
contract works. Essentially, it limits the number of tenderers that may respond to
an open procedure OJEU notice reducing the time taken to assess bids and issue
the contract award notice.
LPD-M-040 Dissertation Current RSL Procurement Practice
“Entry into such a framework does not guarantee that contracts will in fact be
awarded to any of those involved, since the contract is formed only when the a
call-off is awarded under the agreement” [Lewis et al, 2004: F1.81].
Due to its characteristics, a framework agreement is similar to what has
traditionally been referred to as two-stage competitive tendering. In this system, an
initial bid is sought from contractors based upon preliminary design information
(first stage), before a more detailed and accurate revised bid is submitted based
upon detailed design information (second stage). The successful bidders tender
then forms the basis of the contract sum.
Framework agreements have been successfully established in other industry
sectors by public authority clients who have been governed by the EC
procurement directives since their introduction in the early 1990’s. The most
prestigious of these are Procure 21 and Local Infrastructure Finance Trusts (LIFT).
The procure 21 initiative is the creation of National Health Service (NHS) Estates,
developed in response to the need to save time and costs in the procurement of
infrastructure works by and on behalf of the NHS. It is intended to apply to any
construction project falling between the capital values of £1M and £25M for Private
Finance Initiative (PFI) projects and £1M and above for traditional construction
projects.
NHS Estates entered into framework agreements with a limited number of
integrated supply chains. The private sector supply chain is known as a Principal
Supply Chain Partner (PSCP) that comprises contractors, facilities maintenance
contractors, management contractors, suppliers, designers, financial and legal
advisers. Arguably, this is the sort of team that the private sector would assemble
when tendering for a public works contract. The procure 21 initiative seeks to
formalise this process and benefit from creating a team that will then work together
on a number of projects over a significant period of time. Initially, two pilot
schemes were chosen in the North West and the results were considered to be
successful. As a result, the initiative was rolled out across the remainder of the UK
[www.nhs-procure21.gov.uk].
LPD-M-040 Dissertation Current RSL Procurement Practice
LIFT is a similar initiative that was formed as a result of the NHS White Paper
published in 1997 which recognised the need to supply an increased demand for
primary healthcare facilities in the UK. Six initial test areas were used to try out
LIFT schemes that were proven to be successful. As a result, LIFT schemes are
now being rolled out across the UK [www.partnershipsuk.org.uk].
The main problem experienced by RSL’s in adopting the frameworks is that they
are more bureaucratic (and therefore time consuming) than the partnering
approach with which they have become accustomed. The sudden enforced
change of culture resulting from compliance with the EC procurement rules has
meant that many have had to outsource the PQQ process to enable their in-house
resources to focus on business continuity. As discussed previously, the PQQ is
limited (by the EC Directives) to collecting information with regard to only technical
capability, or economic and financial standing of applicants. This does not take
into consideration relationships that have been built up through successful long-
term partnering arrangements and as a result may dissolve such relationships,
especially with regard to smaller firms that may not score as highly in the criteria
covered by the PQQ [Rabbetts, 2007].
Outsourcing can also prove to be an expensive option for RSL’s meaning that
many of the smaller organisations have had to form framework consortiums in
order to efficiently finance the process. This has potentially reduced the number of
firms that are able to work with RSL’s through partnering arrangements
[Rawlinson, 2006].
Another limitation of framework agreements for RSL’s is that the maximum
duration allowed by the rules is only 4 years. In a market where sustainability
issues and product/process improvement are central to HC funding conditions, this
does not allow sufficient time to efficiently deliver the benefits that can be derived
and developed through much longer term relationships. Effectively, the framework
only has time to work together on a few medium sized social housing projects
before it is dissolved and the RSL has to issue an OJEU notice for a new
framework, which there is no guarantee will include the same partner firms.
LPD-M-040 Dissertation Summary of the Literature Review
6.0 Summary of the Literature Review
The majority of RSL construction projects have been procured through the
traditional lump sum and design and build procurement systems. Traditionally, the
client has appointed the design team consultants through the process of selection
and principal the principal contractor through the competitive tendering process.
Although this method ensured that the lowest price was obtained for the work,
intense competition resulted in reduced profitability and diminishing margins for
the contractor. This reduced the opportunity for research and development
restricting innovation. The separation of design and construction also fragmented
the project process leading to inefficiencies and conflict. The result was increasing
numbers of projects being delivered both late and over budget, which in turn lead
to reduced client satisfaction.
Throughout the mid to late 1990’s, a series of government initiatives were
developed to critically appraise the construction industry and investigate the
potential for performance improvement. As a result, the Constructing the Team
(1994) and Rethinking Construction (1998) reports were published. Both confirmed
that the industry was underperforming and identified traditional procurement
methods as inefficient. They recommended the adoption of partnering
philosophies to encourage longer-term working relationships, involving all key
members of the construction process from inception of the project. Experience in
other major UK industries had shown that by reducing fragmentation and avoiding
adversarial relationships, performance could be improved resulting in a more
efficient process capable of delivering products on time and at a reduced cost.
RSL’s were quick to adopt the partnering method and were soon reporting
improvements in project performance in terms of time, cost and quality.
On 10 September 2004, the ODPM announced that RSL’s were no longer exempt
from the EC public procurement directives and therefore had to comply. The
bureaucratic rules meant that in order for RSL’s to continue partnering they had to
use the restricted procedure to form framework agreements which ultimately revert
back to a more traditional two-stage competitive tendering approach.
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
7.0 Questionnaire Design & Research Methodology
This section of the report re-states the aim of the study and discusses the rationale
for the research questionnaire, a copy of which is contained in appendix 3. The
method used to select the research sample is discussed and the characteristics of
the research sample are examined. The methods used to analyse the data
collected from the questionnaire are also identified and explained.
7.1 Research Aim
The aim of the study is to establish whether compliance with the EC procurement
rules has been detrimental to RSL partnering practices.
In order to achieve the aim of the study a research questionnaire was developed
to collect primary data that would provide answers to the key research questions;
1. Does partnering improve RSL construction project performance?
2. Does compliance with the EC procurement rules reduce the performance of
RSL partnered construction projects?
The research questionnaire was formulated as a result of the findings in the initial
literature review conducted in the research proposal. Its purpose was to collect
primary data that could be analysed to establish whether the adoption of
partnering theories identified in chapter 4 improved RSL construction project
performance (research question 1) and whether compliance with the EC
procurement rules has reduced RSL partnered project performance (research
question 2).
7.2 Rationale of the Research Questionnaire
The research questionnaire was structured in 4 sections. The first section was a
‘general data’ section designed to identify the characteristics and suitability of the
research sample (see section 7.3).
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
The second section of the research questionnaire consisted of 10 questions
designed to identify respondent opinion of RSL construction project performance
when comparing partnered projects with traditional competitively tendered
projects. Each of the 10 questions asked respondents to indicate their level of
agreement/disagreement with statements made about key performance factors
using an ordinal ranking scale of 1 to 5 where 1 equalled strongly disagree, 3
equalled indifferent and 5 equalled strongly agree. Each statement was worded in
such a way as to imply that project performance is improved through partnering.
Therefore, if a respondent gave an opinion score above the indifference score of 3
for any question, it would imply that they agreed that partnering improved that
factor of project performance when compared with traditional competitive
tendering. By calculating mean opinion scores for each of the samples, it was
possible to assess overall levels of agreement/disagreement with each of the key
performance factor statements. If the sample generated a mean opinion score
above the indifference score of 3 for any question, it would imply that the sample
agreed with the corresponding statement.
The statements incorporated within each of the 10 questions relate to key project
performance factors that when combined determine overall project performance.
These were identified in the literature review chapters as being;
1. Procurement Time
2. Procurement Cost
3. Project Time
4. Project Cost
5. Project Quality
6. Working Relationships (reduced litigation)
7. Research and Development (investment)
8. Sustained Improvement (innovation)
9. Formality of Contract
10. Balance of Risk
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
Each of the 10 questions asked were assumed to carry equal weighting in terms of
overall project performance. This enabled an opinion score to be generated for the
overall performance of partnered projects compared with traditional competitively
tendered projects by calculating the mean of the scores recorded for questions 1
to 10. If the mean opinion score generated for a respondent was above the
indifference score of 3, it would imply that they agreed overall project performance
is improved through partnering when compared with traditional competitive
tendering. By calculating the mean of the sample mean scores already calculated
for questions 1 to 10, the samples mean opinion score could be generated for
overall performance of partnered projects compared with traditional competitively
tendered projects. If the sample generated a mean opinion score for overall project
performance above the indifference score of 3, it would imply that the sample
agreed overall project performance is improved through partnering when
compared with traditional competitive tendering.
The third section of the research questionnaire was designed to identify
respondent opinion of whether the introduction of the EC procurement rules has
affected the performance of RSL partnered projects. This section incorporated the
same set of 10 questions used in section 2 of the questionnaire, but the wording
was changed to ask respondents to indicate their level of agreement/disagreement
with the key performance statements when comparing an OJEU framework
construction project with a partnered construction project. Each statement was
worded in such a way as to imply that partnered project performance is improved
through compliance with the EC procurement rules (OJEU framework projects).
The same ordinal ranking scale was applied to each of the questions as in section
2 of the questionnaire. This meant that if a respondent gave an opinion score
above the indifference score of 3 for any question, it would imply that they agreed
that compliance with the EC procurement rules improved that key factor of
partnered project performance. By calculating mean opinion scores for each of the
samples, it was possible to assess overall levels of agreement/disagreement with
each of the key performance factor statements. If the sample generated a mean
opinion score above the indifference score of 3 for any question, it would imply
that the sample agreed with the corresponding statement.
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
As in section 2 of the questionnaire, each of the 10 questions asked were
assumed to carry equal weighting in terms of overall project performance. This
enabled an opinion score to be generated for the overall performance of OJEU
framework projects compared with partnered projects by calculating the mean of
the scores recorded for questions 11 to 20. If the mean opinion score generated
for a respondent was above the indifference score of 3, it would imply that they
agreed overall partnered project performance is improved through the introduction
of the EC procurement rules. By calculating the mean of the sample mean scores
already calculated for questions 11 to 20, the samples mean opinion score could
be generated for overall performance of OJEU framework projects compared with
partnered projects. If the sample generated a mean opinion score for overall
project performance above the indifference score of 3, it would imply that the
sample agreed overall partnered project performance is improved through the
introduction of the EC procurement rules.
It should be noted that the wording and the ordinal ranking scale were reversed in
questions 9 and 19 to provide a check that the answers given by each respondent
were considered and not systematically generated. This was done by changing the
wording of the statements to a negative context and awarding the maximum score
of 5 to strongly disagree and the minimum score of 1 to strongly agree
accordingly.
Section 4 of the research questionnaire was designed to collect more general
qualitative data in relation to the study that might not have been captured in
sections 2 and 3. The specific aim of this section was to establish why the
respondents answered the questions in the way that they did and obtain
information about causation with particular regard to the affect of the introduction
of the EC procurement rules on overall partnered project performance. In other
words, if the results indicated that OJEU framework projects performed worse than
partnered projects, why? Inevitably, some respondents within the sample were
likely to have more experience of this topic than others. This enabled such
respondents to provide qualitative opinion data that is not currently available from
secondary sources to be incorporated within discussion of the data analysis.
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
7.3 The Research Sample
The population that the research sample was drawn from incorporated clients,
consultants and contractors working within the RSL construction market. The
method used to select the sample consisted of identifying organisations within this
population that had experience of partnering. This was achieved by contacting
RSL clients and developing a short-list of suitable contacts who met these criteria.
It was assumed that by drawing a sample from those with experience of partnering
most would have at least limited experience with traditional procurement methods
(i.e. CCT) and the EC procurement rules recently applied to RSL’s. By analysing
the ‘general data’ in section 1 of the questionnaire, it was possible to discount any
respondents that had insufficient experience in the areas required.
A total of 60 questionnaires were issued; 20 to each sub-sample consisting of
clients, consultants and contractors. A total sample of 36 suitable responses was
collected with an overall response rate of 60%. The highest response rate was
from consultants at 85% (giving a sub-sample of 17) and the lowest response rate
was from contractors at 45% (giving a sub-sample of 9). The response rate of the
research sample is detailed in table 1.
Questionnaires Issued Questionnaires Received
Sample Category Number
Sample %
Number Sample %
% Response
Rate
Clients 20 33% 10 28% 50%
Consultants 20 33% 17 47% 85%
Contractors 20 33% 9 25% 45%
Total 60 100% 36 100% 60%
Table 1 – Research Sample: Number and Rate of Response [Naoum, 2004].
Information about the characteristics of the research sample was collected in
section 1 of the questionnaire where 2 questions were asked with categorised
answers in relation to length and type of experience relevant to the study. This
was used to assess whether the respondents level of experience was deemed
sufficient to give meaningful answers to the questionnaire suitable for analysis.
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
The first question asked respondents to categorise their years of experience
between 0-5, 5-10, 10-15, 15-20 and over 20 years. The results indicate that the
consultants are the most experienced sub-sample with 53% of respondents having
over 20 years experience. The clients appear to be the least experienced sub-
sample with 30% of respondents having less than 5 years experience. The total
sample can be considered highly experienced with 42% having over 20 years
experience. The length of experience of the research sample is detailed in table 2.
Number of Respondents (Experience in Years)
% of Respondents (Experience in Years)
Sample Category
0-5
5-1
0
10-1
5
15-2
0
Over
20
To
tal
0-5
5-1
0
10-1
5
15-2
0
Over
20
Clients 3 1 3 1 2 10 30% 10% 30% 10% 20%
Consultants 4 2 1 1 9 17 24% 12% 6% 6% 53%
Contractors 0 1 2 2 4 9 0% 11% 22% 22% 44%
Total 7 4 6 4 15 36 19% 11% 17% 11% 42%
Table 2 – Research Sample Professional Experience (Years)
The second question asked respondents to indicate their level of partnering
experience within the fields relevant to this study consisting of non-partnering
(CCT), project specific partnering, long term partnering, partnering with the supply
chain and OJEU framework agreements. The results indicate that the sample has
most experience in traditional tendering with 87% of respondents having some or
a lot of experience. Contractors have the most experience with 100% of
respondents in the same categories. Clients have the least experience with 70%
having some or very little experience.
All respondents indicated a high level of project specific partnering experience with
78% having some or a lot of experience. These results are reflected within the
sub-samples. Again, the total sample indicate a high level of experience with long
term partnering with 62% having some or a lot of experience. Consultants have
the most experience with 71% of respondents in the same category. Clients have
the least experience with 50% having some or very little experience.
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
The sample has least experience in the remaining categories of partnering with the
supply chain and OJEU framework agreements. This is not surprising as
partnering with the supply chain is generally focused on the contractor and it has
not been compulsory for RSL’s to comply with EC procurement rules until
relatively recently (see chapter 5). The results indicate that 51% the total sample
has none or very little experience with partnering the supply chain and 64% have
none or very little experience with OJEU framework agreements. Out of the sub-
samples, contractors have the most experience of partnering with the supply chain
with 88% of respondents having some or a lot of experience and clients have the
most experience of OJEU framework agreements with 40% of respondents having
some experience. The type and amount of experience of the research sample is
displayed in figure 5. Generally, the characteristics of the sample show that the
majority of respondents have sufficient levels of experience to be able to treat the
data obtained from the structured questionnaire as being from a normal population
and therefore suitable for more detailed analysis.
Professional Experience
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
ne
Ve
ry L
ittle
So
me
A L
ot
All
No
ne
Ve
ry L
ittle
So
me
A L
ot
All
No
ne
Ve
ry L
ittle
So
me
A L
ot
All
No
ne
Ve
ry L
ittle
So
me
A L
ot
All
No
ne
Ve
ry L
ittle
So
me
A L
ot
All
Traditional Tendering Project Specific
Partnering
Long Term Partnering Partnering with the
Supply Chain
OJEU Framework
Area/Amount of Experience
% o
f R
es
po
nd
en
ts
Clients
Consultants
Contractors
Total Sample
Figure 5 – Research Sample Professional Experience (Type)
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
7.4 Method of Analysis
Sections 2 and 3 of the research questionnaire were designed to obtain ordinal
level data that could be analysed using both the descriptive and statistical
methods. The descriptive method was used to make visual observations of both
individual respondent and sample opinions on key performance factors and overall
project performance. Statistical analysis was used to test the significance of the
results observed using the descriptive method.
The descriptive method of analysis was used on the raw data collected in section
2 of the questionnaire to assess opinion on performance of partnered projects
compared with traditional competitively tendered projects in each of the key
performance factors. By analysing the mean opinion scores calculated for
questions 1 to 10, it was possible to assess opinion on overall performance for
both individual respondents and the sample. The descriptive method of analysis
was used on the raw data collected in section 3 of the questionnaire to assess
opinion on performance of partnered projects compared before and after the
introduction of the EC procurement rules in each of the key performance factors.
By assessing the mean opinion scores calculated for questions 11 to 20, it was
possible to assess opinion on overall performance of partnered projects compared
with traditional competitively tendered projects for both individual respondents and
the sample.
Statistical analysis could then be used to assess the significance of the results
observed in the descriptive analysis. If results are considered to be significant it
means that the difference observed is unlikely to have occurred by chance
[Coolican, 1995]. The student t-Test was used to compare the variance in the
means of the sample opinion scores calculated for overall project performance. By
stating the conclusions drawn from the descriptive analysis as hypothesis and the
opposites of the conclusions as null hypothesis, the significance of each
conclusion could be tested. Coolican (1995) states that the general level of
probability at which social scientists reject their null hypothesis is when the
differences occurring by chance alone is <0.05 (less than 5%).
LPD-M-040 Dissertation Questionnaire Design & Research Methodology
By analysing the raw data obtained in section 2 of the research questionnaire and
testing the significance of the conclusions drawn from the descriptive analysis, it
was possible to achieve objective 2 of the study which was to asses whether the
adoption of partnering methods has improved RSL project performance. Chapter 4
identified that adoption of partnering methods would help to improve RSL
construction project performance in key areas such as time, cost and quality
through the reduction of CCT.
By analysing the raw data obtained in section 3 of the research questionnaire and
testing the significance of the conclusions drawn from the descriptive analysis, it
was possible to achieve objective 4 of the study which was to asses how
compliance with the EC procurement rules affects the performance of RSL
partnered projects. Chapter 5 suggested that the introduction of EC procurement
rules would make RSL partnering practices more bureaucratic and possibly reduce
the performance of partnered projects.
The t-Test was also used to assess the significance of the difference between the
mean opinion scores calculated for overall project performance in section 2 of the
research questionnaire and the mean opinion scores calculated for overall project
performance in section 3 of the research questionnaire. This analysis was used to
identify whether the performance of partnered projects compared with traditional
competitively tendered projects was better than the performance of OJEU
framework projects compared with partnered projects. This analysis was used to
achieve objective 5 of the study which was to identify whether the introduction of
the EC procurement rules is detrimental to RSL partnering practices.
LPD-M-040 Dissertation Analysis of the Results
8.0 Analysis of the Results
The raw data collected consists of ordinal ranking opinion scores allocated by
each of the respondents to all of the questions in the research questionnaire. The
scores represent the level of agreement/disagreement with each of the statements
relating to key project performance factors when comparing RSL projects procured
through the methods under investigated. The raw data collected from the
questionnaire is displayed as a table in appendix 4.
In order to analyse the results obtained from the research questionnaire, the mean
ordinal ranking score of responses was calculated for each of the questions asked.
By calculating the mean score for each sample, it was possible to analyse not only
overall sample opinion but also how opinion varied between the sub-samples. The
mean comparison method was chosen as it was felt that this gave a more
accurate interpretation of the results than percentage analysis. Although the
sample size of 36 is a reasonable size for analytical purposes, the sub-samples
are much smaller. The contractor and client sub-samples contain only 10 and 9
respondents respectively. If percentage analysis was used on such a small sample
the results could be distorted as 1 respondents opinion would equate to 10% of
the sample.
8.1 Descriptive Analysis
The results obtained from section 2 of the research questionnaire (questions 1 to
10) can be seen in table 3 and are displayed in figure 6. The results are very
positive and show that the sample generally agreed with all of the statements
made in relation to improved project performance when comparing partnered
projects with traditional competitively tendered projects. All except one question
recorded a mean sample opinion score above the indifference score of 3. With
regard to overall project performance, the sample generated a mean opinion score
of 3.7 which is above the indifference score of 3. This result implies that the
sample agreed that overall project performance is improved through partnering
when compared with traditional competitive tendering.
LPD-M-040 Dissertation Analysis of the Results
Question Number
Sample 1 2 3 4 5 6 7 8 9 10
Mean Total Score
(Q 1-10)
Clients 3.6 3.7 3.4 3.6 3.9 4.0 4.1 3.9 3.3 3.7 3.7
Consultants 3.7 3.6 3.6 3.4 3.7 4.1 3.7 3.9 2.4 3.4 3.5
Contractors 3.4 3.9 3.8 3.8 3.8 4.7 4.3 4.3 2.6 4.2 3.9
Total Sample 3.6 3.7 3.6 3.5 3.8 4.2 4.0 4.0 2.7 3.7 3.7
Table 3 – Sample Mean Opinion Scores: Questions 1-10
Sample Mean Opinion Scores for Questions 1-10
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1 2 3 4 5 6 7 8 9 10
Question Number
Sam
ple
Mean
Op
inio
n S
co
re
Clients
Consultants
Contractors
Total Sample
Figure 6 – Sample Mean Opinion Scores: Questions 1-10
The highest sample mean opinion score of 4.2 was recorded against question 6
which stated that working relationships are improved through partnering resulting
in less litigation/fewer claims (when compared with traditional competitive
tendering). This result implies that there is a very high level of agreement with this
statement and that better working relationships is the most improved key project
performance factor when comparing partnered projects with traditional
competitively tendered projects.
LPD-M-040 Dissertation Analysis of the Results
This result reflects the theory behind partnering discussed in chapter 4 which
stated that in order for project performance to be improved, the project team
needed to form less adversarial relationships adopting a culture of trust and
openness with agreed methods for problem resolution.
The second highest sample mean opinion score of 4.0 was recorded against both
questions 7 and 8. Question 7 stated that there is increased opportunity for
research and development though partnering and question 8 stated that there is
increased scope for continuous project by project performance improvement
through partnering (when compared with traditional competitive tendering).
Perhaps not surprisingly, both statements are closely related. Rethinking
Construction (1998) stated that in order to achieve sustained performance
improvement there needed to be much higher investment in research and
development to enable innovation in products and processes. In other words,
these two key project performance factors are exponentially linked. Both results
imply that there is a very high level of agreement with each statement.
The third highest sample mean opinion score of 3.8 was recorded against question
5 which stated that better project quality is achieved in terms of end user/client
satisfaction through partnering (when compared with traditional competitive
tendering). Quality is a term that can also be defined as Value for Money (VFM)
which is integral to RSL project performance. RSL’s must demonstrate VFM in
order to qualify for Housing Corporation grants which fund the majority of their
construction projects. This is essentially why RSL’s have become industry leaders
in terms partnering. Partnering enables improvement in quality through better
working relationships, increased investment in research and development and
continued project by project improvement. All of these factors contribute to the
production of an improved product through an improved project process.
The lowest sample mean opinion score of 2.7 was recorded against question 9
which stated that informality of the partnering agreement caused concern or
created problems (when compared with traditional competitive tendering). This is
an interesting result for two reasons.
LPD-M-040 Dissertation Analysis of the Results
Firstly, it is the only sample mean opinion score recorded in section 2 of the
research questionnaire that falls below the indifference score of 3, therefore
implying a reduction in project performance. Secondly, as discussed in section 7.2,
question 9 was deliberately worded in a negative context and the ordinal ranking
scale was reversed accordingly in order to provide a check that the answers given
by each respondent were considered and not systematically generated. Therefore,
a sample mean score above the indifference score of 3 is still required to imply
improvement for this key project performance factor when comparing partnered
projects with traditional competitively tendered projects. This result actually implies
that the majority of respondents agree with the negatively worded statement,
implying a reduction in project performance. It could also be construed to imply
that the results for this question were systematically generated as opposed to
considered. However, there is also a noticeable difference in the mean opinion
scores recorded between the sub-samples. Whilst the consultant and contractor
samples recorded mean scores of 2.4 and 2.6 respectively (below the indifference
score of 3), the client sub-sample recorded a mean score of 3.3 implying that they
disagreed with this statement. An explanation for this result could be that
consultants and contractors feel more exposed by the relative ‘contractual
informality’ of partnering discussed in chapter 4. Clients take much more of a lead
role through partnering meaning that they are more involved with the project
process than they would be using traditional methods. They may therefore see the
partnering method as more formal due to their own increased involvement.
One of the key arguments for partnering in Constructing the Team (1994) and
Rethinking Construction (1998) was that traditional procurement methods
frequently delivered projects both late and over budget. This was attributed to
fragmentation of the project team and the construction process through CCT.
Question 3 stated that better project time performance is achieved in terms of
programme through partnering (when compared with traditional competitive
tendering) and a total sample mean score of 3.6 was recorded with little variance
between the sub-samples. This result implies that the sample agrees that
partnering improves overall project performance in terms of time when compared
with traditional competitive tendering.
LPD-M-040 Dissertation Analysis of the Results
Question 4 stated that better project value is achieved in terms of cost through
partnering (when compared with traditional competitive tendering) and a sample
mean opinion score of 3.5 was recorded. This result implies that the sample
agrees that partnering improves overall project performance in terms of cost when
compared with traditional competitive tendering.
Overall, the results obtained from the raw data collected in section 2 of the
research questionnaire are very positive and indicate that the sample agrees that
project performance is improved through partnering when compared with
traditional competitive tendering. The total sample and the sub-sample results all
indicate a strong level of agreement with all of the key performance factor
statements except for question 9. These results are supported by the mean
opinion score calculated for overall project performance (mean of the sample
mean scores calculated for questions 1 to 10). The total sample mean opinion
score for overall project performance is 3.7 when comparing partnered projects
with traditional competitively tendered projects. The client, consultant and
contractor sub-samples scored 3.7, 3.5 and 3.9 respectively. All are clearly above
the indifference score of 3 and closer to the agree value of 4. However, these
results also imply that out of the sub-samples contractors agree the most that
overall project performance is improved through partnering (when compared with
traditional competitive tendering), clients the second most and consultants the
least. These sub-sample results possibly go against the grain of the theory
discussed in chapter 4 which suggested that partnering is a client led initiative to
improve project performance and product quality. We would therefore have
expected to see the clients agree most that project performance is improved
through partnering as opposed to the contractors.
The results obtained from section 3 of the research questionnaire (questions 11 to
20) can be seen in table 4 and are displayed in figure 7. The results are clearly
very different to those obtained in section 2 in that they show a far more negative
trend. The sample generally disagreed with all of the statements made in relation
to improved project performance when comparing OJEU framework projects with
partnered projects.
LPD-M-040 Dissertation Analysis of the Results
Question Number Sample
11 12 13 14 15 16 17 18 19 20
Mean Total Score
(Q 11-20)
Clients 2.1 2.1 2.6 3.0 3.2 3.2 3.4 3.1 3.1 3.3 2.9
Consultants 1.9 2.0 2.4 2.4 2.7 2.8 2.6 2.9 3.2 2.5 2.5
Contractors 2.4 2.4 2.9 2.9 2.9 2.8 2.6 2.6 3.2 3.1 2.8
Total Sample 2.1 2.1 2.6 2.7 2.9 2.9 2.8 2.9 3.2 2.9 2.7
Table 4 – Sample Mean Opinion Scores: Questions 11-20
Sample Mean Opinion Scores for Questions 11-20
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
11 12 13 14 15 16 17 18 19 20
Question Number
Sa
mp
le M
ea
n O
pin
ion
Sc
ore
Clients
Consultants
Contractors
Total Sample
Figure 7 – Sample Mean Opinion Scores: Questions 11-20
All except one question recorded a mean sample opinion score below the
indifference score of 3. With regard to overall project performance, the sample
generated a mean opinion score of 2.7 which is again below the indifference score
of 3. This result implies that the sample disagreed that overall project performance
is improved when comparing OJEU framework projects with partnered projects.
LPD-M-040 Dissertation Analysis of the Results
The highest sample mean opinion score of 3.2 was recorded against question 19
which stated that informality of the OJEU process caused concern or created
problems (when compared with partnered projects). As with question 9 in section 2
of the research questionnaire, this is an interesting result for two reasons. Firstly, it
is the only sample mean opinion score recorded in section 3 of the research
questionnaire that falls above the indifference score of 3, therefore implying an
improvement in project performance. Secondly, as discussed in section 7.2,
question 19 was deliberately worded in a negative context and the ordinal ranking
scale was reversed accordingly. This was done in order to provide a check that the
answers given by each respondent were considered and not systematically
generated. As with question 9 in section 2 of the research questionnaire, this result
could also be construed to imply that the results for this question were
systematically generated as opposed to considered. The total sample opinion was
also reflected in the mean opinion scores recorded for the sub-samples. All
recorded a mean opinion score above the indifference score of 3, implying that
they disagreed with the statement. An explanation for this result could be that
compliance with the EC procurement rules increases the formality of the partnered
project process. This would support the result recorded for question 9 of the
research questionnaire which implied that informality of the partnering agreement
caused concern or created problems (when compared with traditional competitive
tendering).
The lowest sample mean opinion score of 2.1 was recorded against both
questions 11 and 12. Question 11 stated that the duration of the procurement/
tendering programme is reduced through the OJEU process and question 12
stated that the cost of the procurement/tendering programme is reduced through
the OJEU process (when compared with partnered projects). Both results imply
that there is a high level of disagreement with each statement which supports the
findings in chapter 5 of the report. The literature reviewed suggested that the EC
procurement rules made the RSL partnering process more bureaucratic through
increased CCT. Arguably, the PQQ process restricts the more flexible
procurement approach encouraged in partnered projects enforcing a more
traditional two-staged competitive tendering approach.
LPD-M-040 Dissertation Analysis of the Results
This will understandably increase the duration and cost of the procurement
process when compared with the theoretical model of partnering which identifies
the reduction of CCT as key to improving overall project and industry performance.
The results imply that the sample agree that compliance with the EC procurement
rules reduces the performance of OJEU framework projects when compared to
partnered projects most in relation to the procurement time and cost.
Questions 13, 14 and 15 were related to the key performance factors of time, cost
and quality. Question 13 stated that better project time performance is achieved in
terms of programme through the OJEU process, question 12 stated that better
project value is achieved in terms of cost through the OJEU process and question
15 stated that better project quality is achieved in terms of end user/client
satisfaction through the OJEU process (when compared with partnered projects).
All of these questions recorded sample mean opinion scores below the
indifference score of 3 which implies that the sample disagree with the statements
and believe that these key performance factors are not improved when comparing
OJEU framework projects with partnered projects. Each question scored 2.6, 2.7
and 2.9 respectively.
.
The most noticeable difference in the mean opinion scores recorded between the
sub-samples in section 3 was that clients recorded scores equal to or above the
indifference score of 3 for questions 14 and 15 discussed above generating mean
opinion scores of 3.0 and 3.2 respectively. They also recorded mean opinion
scores above the indifference score of 3 for questions 16, 17, 18 and 20 which
related to the key performance factors of better working relationships, increased
research and development, sustained project by project improvement and fairer
balance of risk, generating mean opinion scores of 3.2, 3.4, 3.1 and 3.3
respectively. These results imply that clients agree that project performance is
actually improved when comparing OJEU framework projects with partnered
projects in many of the key performance factors. However, the client mean opinion
score for overall project performance of 2.9 is below the indifference score of 3
which implies that overall they do not agree that project performance is improved
when comparing OJEU framework projects with partnered projects.
LPD-M-040 Dissertation Analysis of the Results
Overall, the results obtained from the data collected in section 3 of the research
questionnaire are negative and indicate that the sample disagrees that partnered
project performance is improved through compliance with the EC procurement
rules (OJEU framework projects). The total sample results imply disagreement
with all of the key performance factor statements except for question 19. These
results are supported by the mean opinion score calculated for the overall
performance of OJEU framework projects compared with partnered projects. The
total sample mean opinion score for overall project performance produces a figure
of 2.7 implies that the sample disagrees that overall partnered project performance
is improved through compliance with the EC procurement rules.
8.2 Statistical Analysis
Statistical analysis was used to assess the significance of the conclusions drawn
from the results observed in the descriptive analysis. The student t-Test was used
to compare the variance in the means of the sample opinion scores calculated for
overall project performance. This was done by using the t-Test (two-sample
assuming equal variances) option in the Microsoft excel package. The assumed
hypothesised mean difference was 0 which represents the probability of obtaining
the results by chance if there is no difference between the means. In each case a
two-tailed test was assumed, where the direction of the test is not specified.
The main conclusion drawn from the descriptive analysis of the results obtained in
section 2 of the research questionnaire is that overall project performance is
improved through partnering when compared with traditional competitive
tendering. This was implied by the total sample generating a mean opinion score
of 3.7 for overall partnered project performance which is clearly above the
indifference score of 3. The differences between the sub-sample mean opinion
scores for overall project performance is shown in figure 8. The purpose of the
statistical testing was to establish whether the observed differences in opinion
between the sub-samples were significant. In order to do this a series of
hypotheses were formulated for testing which comprised conclusions drawn from
the results observed in the descriptive analysis.
LPD-M-040 Dissertation Analysis of the Results
Perceived Overall Performance of Partnered Projects compared with
Traditional Competitively Tendered Projects
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4.0
Clients Consultants Contractors
Sample Sub-Group
Sam
ple
Mean
Sco
re
Figure 8 – Perceived Overall Performance of Partnered Projects compared with
Traditional Competitively Tendered Projects
As discussed in section 8.1, the mean opinion scores for the sub-samples go
against the grain of the theory discussed in chapter 4, which suggested that the
client sub-sample would agree the most that overall project performance is
improved through partnering.
The hypotheses tested in relation to section 2 of the research questionnaire were;
1. Contractors agree more than clients that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
2. Contractors agree more than consultants that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
3. Clients agree more than consultants that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
LPD-M-040 Dissertation Analysis of the Results
The corresponding null hypotheses were;
1. Contractors agree no more than clients that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
2. Clients agree no more than consultants that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
3. Contractors agree no more than consultants that overall project
performance is improved through partnering when compared with traditional
competitive tendering.
The results for each t-Test are displayed as tables in appendix 5. In each case the
t-Test generated a t-value with a corresponding probability score of >0.05 when
compared with the two-tail critical value of t. This meant that the null hypotheses
had to be accepted for each test. These results imply that although there is overall
agreement that performance of partnered projects is improved when compared
with traditional competitively tendered projects, there is no significant difference in
the level of agreement between the sub-samples. This confirms that the mean
opinion score generated for the overall performance of partnered projects can be
considered to be from a normal population as there is no significant difference of
opinion between the sub-samples.
The main conclusion drawn from the descriptive analysis of the results obtained in
section 3 of the research questionnaire is that overall partnered project
performance is reduced through compliance with the EC procurement rules. This
was implied by the total sample generating a mean opinion score of 2.7 for overall
OJEU framework project performance compared with partnered project
performance which is clearly below the indifference score of 3. The differences
between the sub-sample mean opinion scores for overall project performance is
shown in figure 9. The purpose of the statistical testing was again to establish
whether the observed differences in opinion between the sub-samples were
significant.
LPD-M-040 Dissertation Analysis of the Results
Perceived Overall Performance of OJEU Framework Projects
compared with Partnered Projects
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.0
Clients Consultants Contractors
Sample Sub-Group
Sam
ple
Mean
Sco
re
Figure 9 – Perceived Overall Performance of OJEU Framework Projects
compared with Partnered Projects
In order to do this a series of hypotheses were formulated for testing which
comprised conclusions drawn from the results observed in the descriptive
analysis. The mean opinion scores for the sub-samples imply that the client sub-
sample disagree the least that overall performance of OJEU framework projects is
improved when compared with partnered projects. Chapter 5 suggested that RSL
clients were likely to disagree most of the sub-samples, as compliance with the EC
procurement rules can restrict the advantages to be gained through partnering.
The hypotheses tested in relation to section 3 of the research questionnaire were;
4. Clients disagree less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
5. Clients disagree less than contractors that overall partnered project
performance is improved through introduction of the EC procurement rules.
6. Contractors disagree less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
LPD-M-040 Dissertation Analysis of the Results
The corresponding null hypotheses were;
4. Clients disagree no less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
5. Clients disagree no less than contractors that overall partnered project
performance is improved through introduction of the EC procurement rules.
6. Contractors disagree no less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
The results for each t-Test are displayed as tables in appendix 5. In each case the
t-Test generated a t-value with a corresponding probability score of >0.05 when
compared with the two-tail critical value of t. This meant that the null hypotheses
had to be accepted for each test. These results imply that although there is overall
disagreement that performance of OJEU framework projects is improved when
compared with partnered projects, there is no significant difference in the level of
disagreement between the sub-samples. Again, the results confirm that the mean
opinion score generated for the overall performance of partnered projects can be
considered to be from a normal population as there is no significant difference of
opinion between the sub-samples.
With the previous tests confirming that overall opinion of the total sample can be
considered as being from a normal population, a further t-Test was used to assess
the significance of the difference between the mean opinion score calculated for
overall performance of partnered projects (3.7) and the mean opinion score
calculated for overall performance of OJEU framework projects (2.7). This analysis
was used to identify whether the performance of partnered projects compared with
traditional competitively tendered projects was better than the performance of
OJEU framework projects compared with partnered projects. In order to do this the
following hypothesis was formulated;
7. Partnered projects compared with traditional competitively tendered
projects perform better than OJEU framework projects compared with
partnered projects.
LPD-M-040 Dissertation Analysis of the Results
The corresponding null hypothesis was;
7. Partnered projects compared with traditional competitively tendered
projects perform the same as OJEU framework projects compared with
partnered projects.
The results for this t-Test are also displayed as a table in appendix 5. On this
occasion, the t-Test generated a t-value with a corresponding probability score of
<0.05 when compared with the two-tail critical value of t. This meant that the
hypothesis could be accepted. Therefore, the statement that partnered projects
compared with traditional competitively tendered projects perform better than
OJEU framework projects compared with partnered projects is significant at the P
<0.05 level.
The purpose of this statistical test was to determine whether the introduction of the
EC procurement rules has had a significantly detrimental effect on RSL partnered
project performance by comparing the perceived performance of partnered
projects with the perceived performance of OJEU framework projects. In essence,
the result of this test goes some way to achieving this objective. What it tells us is
that the performance of partnered projects (compared with traditional competitively
tendered projects) is significantly better than the performance of OJEU framework
projects (compared with partnered projects). Unfortunately, what this test does not
tell us is how significant the difference in performance of partnered projects is
compared directly with OJEU framework projects, as the variables between the
two means being tested are not constant.
LPD-M-040 Dissertation Conclusion
9.0 Conclusion
The aim of the study was to establish whether compliance with the EC
procurement rules has been detrimental to RSL partnering practices.
The first objective was to review the procurement practices of RSL construction
industry clients. By reviewing relevant literature, a chronological appraisal of RSL
procurement practice was produced. This concluded that RSL procurement
practices have evolved over the last 20 years. Traditionally, RSL’s had procured
construction work through traditional lump-sum or design and build methods,
appointing consultants through the process of selection and contractors through
the process of competitive tendering, made compulsory through the Local
Government Planning and Land Act (1980). More recently, RSL’s were
encouraged to adopt a partnering approach to procurement in response to the
recommendations of the Latham and Egan reports, which identified the
competitive tendering process as detrimental to overall project performance. In
2000 the Local Government Act (1999) replaced mandatory CCT with the criteria
of Best Value, thus enabling Public Authorities to adopt the partnering approach.
Since 10 September 2004, RSL’s have had to comply with the EC public
procurement directives and in order to continue partnering have had to form
framework agreements through the restricted procedure, which ultimately reverts
back to a more traditional two-stage competitive tendering approach.
The second objective was to asses whether the adoption of partnering methods
has improved RSL project performance (as implied by the conclusions drawn from
the literature review). The research questionnaire collected ordinal level opinion
data from the research sample in relation to key performance statements when
comparing the performance of partnered projects with traditional competitively
tendered projects. The results imply that the sample agrees that overall
performance is improved through partnering and there is no significant difference
in the level of agreement between the sub-samples. More detailed analysis of the
results implies that the most improved key performance factor is better working
relationships.
LPD-M-040 Dissertation Conclusion
The third objective was to identify how compliance with the EC procurement rules
affects RSL procurement practices. This was achieved through the review of
current literature in relation to the subject, identifying what changes RSL’s would
have to make to their current procurement practices in order to comply with the
rules. The conclusion drawn from the review was that compliance with the rules
would change the culture of RSL’s, particularly with regard to partnering. The rules
make open competition between the EU member states mandatory for publicly
funded contracts exceeding certain value thresholds determined by the EC. All
RSL contracts exceeding the value thresholds must be advertised through a
standard form OJEU notice which appears to be bureaucratic, increasing the time
and cost of the procurement process. Partnering can only be achieved through
formation of an OJEU framework agreement, procured through the restricted
procedure which requires a two-stage competitive tender approach. The selection
criteria of the first stage (PQQ) is limited to company profile information more
suited to large, well established firms meaning that smaller firms with existing
successful partnering relationships may not be considered.
The fourth objective was to asses how compliance with the EC procurement rules
affects the performance of RSL partnered projects. The conclusion drawn from the
literature review was that performance of partnered projects would be reduced.
The research questionnaire collected ordinal level opinion data from the research
sample in relation to key performance statements when comparing the
performance of OJEU framework projects with partnered projects. The results
imply that the sample disagreed that overall performance of OJEU framework
projects is improved when compared with partnered projects and there is no
significant difference in the level of disagreement between the sub-samples. By
disagreeing that performance is improved, the result implies that partnered project
performance is reduced through compliance with the EC procurement rules. More
detailed analysis of the results implies that the most reduced factors of partnered
project performance are the time and cost of the procurement/tendering process.
However, the results also implied that partnered project performance is actually
improved through compliance with the EC procurement rules in the key
performance factor of contract formality.
LPD-M-040 Dissertation Conclusion
The fifth objective was to identify whether the introduction of the EC procurement
rules is detrimental to RSL partnering practices. The conclusions drawn from the
literature review and analysis of the data collected in section 3 of the research
questionnaire implied that the introduction of the EC procurement rules has been
detrimental to RSL partnering practices. A further statistical test was conducted to
establish whether there was a significant difference in the research samples
opinion of the performance of partnered projects compared with OJEU framework
projects. This concluded that partnered projects (compared with traditional
competitively tendered projects) perform better than OJEU framework projects
(compared with partnered projects) at a significance level of P <0.05. Had the
performance of OJEU framework projects been the same or better than partnered
projects we would have expected to see no significance in this result. Therefore,
the conclusion that can be drawn is that the introduction of the EC procurement
rules is detrimental to RSL partnering practices in terms of overall project
performance.
Integral to achieving the aim of the research study were two key research
questions which were; does partnering improve RSL construction project
performance? and does compliance with the EC procurement rules reduce the
performance of RSL partnered construction projects?
It was anticipated that the answer to the first question would be that partnering
does improve RSL construction performance. The conclusions drawn from the
study support this statement. This question needed to be answered in order to be
able to use partnering as a benchmark of best practice against which the
performance of OJEU framework projects could be compared.
It was anticipated that the answer to the second question would be that
compliance with the EC procurement rules would reduce the performance of RSL
partnered projects. The conclusions drawn from the study also support this
statement. More detailed analysis of the results identifies how performance is
affected in each of the key performance factors.
LPD-M-040 Dissertation Conclusion
Through achieving the objectives and answering the key research questions the
aim of the study has been met. The report is able to conclude that compliance with
the EC procurement rules has been detrimental to RSL partnering practices. The
rules increase the bureaucracy of the procurement process, particularly with
regard to partnering which can only be achieved through formation of an OJEU
framework agreement. The EU directives require such frameworks to be formed
through the restricted procedure similar to the more traditional two-stage
competitive tendering approach. This enforced change of culture has been
detrimental to RSL partnering practice in terms of overall project performance and
more specifically in the time and cost of the procurement/tendering process.
Through conducting the study, issues were identified that need to be addressed in
order for RSL’s to be able to continue partnering in a practical manner that still
abides with EU law. Firstly, the restricted procurement process needs to be made
less bureaucratic for the formation of OJEU framework agreements. There is
evidence to suggest that the restricted process goes against the Latham and Egan
principles and restricts the benefits that partnering can offer. Unless this issue is
addressed, it may become less practical for RSL’s to partner the majority of their
construction contracts, which may lead them back to more traditional methods that
have been proven to be less effective in terms of performance. This problem is
emphasised by the maximum duration of the OJEU framework agreement being
only 4 years. If this was doubled to a more realistic long-term duration of 8 years,
the partnership would have a more realistic amount of time to deliver sustained
project by project improvement that would off-set the short-term disadvantages
associated with the bureaucratic procurement process.
Another negative aspect in relation to existing RSL partnering practice is the rule
of aggregation. These rules are most likely to apply to smaller firms who
successfully partner with RSL’s on several smaller contracts. Aggregation rules
require all such firms with a total value of work exceeding the value thresholds to
be selected in accordance with the EC directives (i.e. be part of an OJEU
framework agreement). Due to the limitations of the data that can be collected
through the PQQ, selection tends to favour larger, more established firms.
LPD-M-040 Dissertation Conclusion
Existing relationships cannot be taken into consideration as this may be construed
as discrimination, meaning that these smaller firms are less likely to be selected
despite their proven track record. The PQQ should be able to recognise and
reward good practice, as this forms part of the essence of partnering
Although the study has produced some conclusive results, there are some
fundamental limitations with the data collected for the purposes of statistical
analysis. These limitations stem back to compilation of the research questionnaire
and the data that was collected from it.
The two main investigative sections of the research questionnaire provided for the
collection of opinion data relating to the performance of partnered projects and
OJEU framework projects, but it did not allow for the collection of data that could
be used to test these two variables directly. This could have been achieved by
changing the wording of the questions in section 3 to compare the performance of
OJEU framework projects with traditional competitively tendered projects (as
partnered projects were in section 2). This would have made traditional
competitively tendered projects a constant variable between the two sets of data
that would have provided a benchmark from which overall partnered and OJEU
framework project performance could have been measured. This would have
enabled more meaningful statistical analysis to be conducted to determine the
significance of the difference in performance between partnered and OJEU
framework projects.
Another limitation of the study is the type of statistical test that was used. The
student t-Test is designed for use with parametric (interval level) data where as the
data collected is non-parametric (ordinal level) data. The reasoning behind using
the parametric test is that it is more robust and even when used on data that do
not meet the assumptions of the test exactly, still give fairly accurate probability
estimates. They do not break down, or produce many errors in significance
decisions unless the assumptions are quite poorly met [Coolican, 1995]. Through
the course of the study alternative methods of statistical analysis were considered
and experimented with that were designed for use with ordinal data.
LPD-M-040 Dissertation Conclusion
However, when applying the tests to the data collected the results implied no level
of significance despite a clear visual difference between the means being tested.
The final and most obvious limitation of the research data is the size of the
research sample. The sample size of 36 respondents is small compared with the
total population and therefore might not represent an accurate reflection of the
population under consideration. This limitation is emphasised through the size of
the sub-samples. Because of this it has had to be accepted that some of the
results may not represent a true interpretation of overall industry opinion. With
more time and resource, the study could be enhanced through collection of a
larger research sample, possibly incorporating respondents from other countries
within the EU.
The primary conclusion drawn from the study is that compliance with the EC
procurement rules is detrimental to RSL partnering practices. This conclusion
invites further research in two key areas;
1. Quantitative measurement of the impact of the EC procurement rules.
2. Identification of how the EC procurement rules could be amended to
improve partnered project performance.
Quantitative measurement of construction costs and programmes could be used to
assess the actual difference in the overall performance of RSL partnered projects
compared with OJEU framework projects. The existing KPI system used in the UK
might provide an appropriate toolkit. Results from a quantitative measurement
study might provide evidence that would necessitate further study into how the EC
procurement rules could be amended to improve partnered project performance.
This would require careful analysis of the EC procurement directives in conjunction
with EU law to establish if this is possible within the current boundaries. If not, it
may also identify the need for amendments to be made to the directives
themselves.
LPD-M-040 Dissertation References & Bibliography
10.0 References & Bibliography
10.1 References
Achilles & Bevan-Brittan (2005) EC Procurement Regulations – A Brief Guide
for RSL’s London: Achilles & Bevan-Brittan
Ashworth, A. (2001) Contractual Procedures in the Construction Industry,
Oxford: Longman
Bennett, J. & Jayes, S. (1995) Trusting the Team: The best practice guide to
partnering in construction, London: Centre for Strategic Studies in Construction
Bennett, J. & Jayes, S. (1998) The Seven Pillars of Partnering: A Guide to
Second Generation Partnering, London: Thomas Telford
Bennett, J. & Pearce, S. (2006) Partnering in the Construction Industry: A
Code of Practice for Strategic Collaborative Working, Oxford: Butterworth-
Heinemann
Birkby, J. (2004) Buying into EU Procurement, Project, October 2004, 21
Burgess, G. (2005) BPG-M-523 Procurement & Management of Construction
Lecture Notes, London: South Bank University
Communities Scotland (2004) Building a Better Deal: Procurement Guide for
Registered Social Landlords, Edinburgh: Scottish Executive
Construction Task Force (1998) Rethinking Construction, London: HM
Stationery Office
Coolican, H. (1995) Introduction to Research Methods and Statistics in
Psychology, London: Hodder & Stoughton
LPD-M-040 Dissertation References & Bibliography
ECI (2000) Partnering in the Social Housing Sector: A Handbook, London:
Thomas Telford Ltd.
Frederick, D. (1994) Why Compulsory Competitive Tendering for Local
Government is Not as Good as Privatisation, London: Libertarian Alliance
Hornagold & Hills Management Consultants (1998) Procurement Routes
Seminar Pack, London: Overbury
Jenkins, C. (2004) Working with RSL’s, London: Paragon Strategies Social
Sector Solutions
Latham, M. (1994) Constructing the Team, London: HM Stationery Office
Lewis, S. et al (2004) Tolleys Guide to Construction Contracts: Volume 1,
Hampshire: LexisNexis UK
Naoum, S. (2004) Dissertation Research and Writing for Construction
Students, Oxford: Elsevier Butterworth-Heinemann
NJCC (1990) Code of Practice for Single Stage Selective Tendering, London:
RIBA
Pearson, S. (2005) BPG-M-504 Economics of the Construction Sector:
Structure of the Industry Lecture Notes, London: South Bank University
Rabbetts, B. (2007) Tell Us Where It Hurts, Building Magazine, 19 January 2007,
36
Rawlinson, S. (2006) Procurement: Public Sector Projects, Building Magazine,
24 November 2006, 52-56
Scottish Executive (2002) Building a Better Deal: Procurement Guide for
Registered Social Landlords, Edinburgh: Communities Scotland
LPD-M-040 Dissertation References & Bibliography
Scottish Homes (2000) Procurement and Partnering: Policy Advice Note,
Edinburg: Scottish Homes, The National Housing Agency
The Comptroller and Auditor General (2001) Modernising Construction, London:
The Stationery Office
Trowers & Hamlins (2004) Projects & Construction – EU Procurement Advice
for RSL’s, London: Trowers & Hamlins
Turner, A. (1990) Building Procurement, Basingstoke: Macmillan
http://www.nhs-procure21.gov.uk
http://www.partnershipsuk.org.uk
http://www.tendersdirect.com
10.2 Bibliography
Clegg, F. (1982) Simple Statistics: A Course Book for the Social Sciences,
Cambridge: Cambridge University Press
Cooke, B. & Williams, P. (1998) Construction Planning, Programming &
Control, Basingstoke: Palgrave
European Documentation (1989) Public Procurement and Construction –
Towards an Integrated Market, Luxembourg: Office for Official Publications of
the European Communities
Roe, S. & Jenkins, J. (2003) Partnering and Alliancing in Construction
Projects, London: Sweet & Maxwell
Thomas, G. & Thomas, M. (2005) Construction Partnering & Integrated
Teamworking, London: Blackwell Publishing
LPD-M-040 Dissertation References & Bibliography
http://www.constructingexcellence.org.uk
http://www.hm-treasury.gov.uk/pub/html/gccp
http://www.lsbu.ac.uk/lrc/
http://www.ogc.gov.uk/index
http://simap.eu.int
http://ted.publications.eu.int/official
LPD-M-040 Dissertation Acronyms & Abbreviations
11.0 Acronyms & Abbreviations
BGPL Bodies Governed by Public Law
CCT Compulsory Competitive Tendering
CIB Construction Industry Board
DETR Department of the Environment, Transport and Regions
EC European Commission
ECJ European Court of Justice
EU European Union
HC Housing Corporation
JCT Joint Contract Tribunal
KPI Key Performance Indicators
LIFT Local Infrastructure Finance Trusts
MMC Modern Methods of Construction
M4I Movement for Innovation
NAO National Audit Office
NHS National Health Service
NJCC National Joint Consultative Committee for Building
ODPM Office of the Deputy Prime Minister
OJEU Official Journal of the European Union
P Probability
PFI Private Finance Initiative
PIN Prior Information Notice
PPC Project Partnering Contract
PQQ Pre-Qualification Questionnaire
PSCP Principal Supply Chain Partner
RSL Registered Social Landlord
VFM Value for Money
LPD-M-040 Dissertation Appendix 1
Appendix 1 – Basic Procurement Systems
2.1 Traditional Procurement
Traditional procurement (or single stage competitive tendering) requires the
completion of full detailed design drawings and the preparation of bills of quantities
prior to inviting contractors to bid through selective competitive tendering. Figure
10 displays the main characteristics of the traditional system.
When the full design is completed before the tender documents are issued, the
traditional form of procurement offers the following advantages:
• fully co-ordinated and detailed trade interfaces prior to starting work on site.
• design solutions resolved in advance of works being implemented on site.
• post contract changes kept to a minimum reducing the likelihood of
variations resulting in additional costs.
• cost certainty achieved prior to construction with an accurate contract sum
established on the basis of a completed design.
The potential disadvantages of traditional procurement can include:
• increasing the time taken before works start on site as design and
construction are consecutive processes.
• little flexibility for introducing major variations and amending the programme
without generating claims for additional costs and/or delay [Burgess, 2005].
Alternative forms of the traditional procurement process can be used to achieve
such benefits as the early involvement of a contractor and/or the overlap of the
design and construction stages. Under a two stage selective competitive tender,
the main contractor is appointed on the basis of a tender which incorporates a
pricing document related to only preliminary design information. At this first stage,
there will inevitably be a large number of provisional sums. Cost certainty cannot
be achieved until the second stage tender is complete when a detailed design and
accurate quantities are available.
LPD-M-040 Dissertation Appendix 1
Figure 10 – Components of the traditional system [Turner, 1990: p. 49].
The sequence of the tender processes will be determined by the optimum timing
for the contractor to join the team and provide pre-construction advice on build-
ability, life cycle costs, sustainability, value engineering, risk management, etc. A
balance must be struck between early contractor appointment when limited
information is available for competitive pricing, but maximum build-ability advice
can be provided and later contractor appointment when the former criterion is
strengthened but the latter weakened.
LPD-M-040 Dissertation Appendix 1
If properly managed, two stage tendering provides most of the benefits of the
traditional procurement route, in addition to:
• early contractor advice on build-ability, programming, planning and
construction methodology.
• improving contractor, design team and client relationships using partnering
principles (see chapter 4) to allow early working relationships to be
established on a teamwork basis.
• contractor consultation on, and involvement in, the selection of specialist
contractors thereby overcoming the contractual disadvantages of using
nominated sub-contractors.
• giving the client greater flexibility, within limits, to introduce variations or
amend the brief later in the process with less risk of contractors’ claims.
• allowing some design decisions to be deferred until later in the programme
[Ashworth, 2001].
2.2 Design and Build
Design and Build (D&B) procurement provides single point responsibility where the
contractor is responsible for both the design and construction processes. These
can overlap to achieve an earlier completion date. This form of procurement is
generally accepted as appropriate for fairly simple building types where few
changes are anticipated during the design and construction stages. The
Employers Requirements (ER’s) can be almost fully established at the outset of
the project and can be issued to contractors for tendering purposes. ER’s are
generally prepared by a quantity surveyor acting as an Employer’s Agent, to
describe the conditions under which the design and build contract will be let.
D&B offers a guarantee on cost. However, this form of procurement can result in
the client having less control of the detail of the project and less control over time,
cost and quality if changes should be required. Many RSL’s are obliged to
consider the D&B procurement route when a contractor or developer owns all or
part of a proposed site for development [Hornagold & Hills Management
Consultants, 1998]. Figure 11 illustrates the Design and Build model.
LPD-M-040 Dissertation Appendix 1
Figure 11 – Components of the design and build system [Turner, 1990: p. 46].
A hybrid of the D&B route occurs when the client appoints a design team, with the
intention of transferring their contracts to a D&B contractor at a pre-determined
stage of the design process (usually Stage D: Scheme Design). Under this
arrangement the design team is novated from the client to the contractor, a
process which can involve insurance pitfalls. Another disadvantage can be the risk
of weakening the consultant/contractor relationship.
LPD-M-040 Dissertation Appendix 1
However, advantages to the client include control of design team selection and the
scheme design. Where there is a D&B agreement with design team novation, the
quantity surveyor appointed can subsequently assume the role of client
representative and, as such, be bound by the terms of the contract while the client
would be independent.
The most vulnerable aspect of D&B contracts is quality control. There can be an
incentive for the contractor to reduce design and/or build quality as there is only
limited input from the architect/contract administrator. There is often little control of
the changes made to a scheme on site due to a requirement to maintain a
Guaranteed Maximum Price (see section 2.5). The contractor may also seek to
maximise his profit on what may have been an excessively competitive tender. A
robust brief and clearly specified ER’s must accompany any D&B contract to
overcome these potential weaknesses [Ashworth, 2001].
2.3 Management contracting
This form of procurement meets many of the criteria associated with early
contractor involvement. The overlap of design and construction activities can bring
earlier completion than traditional forms of procurement.
Management contractors’ tenders are fee based using a cost plan and a
description of works. The management contractor is employed directly by the
client and contracts with the works package contractors for the construction works.
The early appointment of the management contractor enables them to:
• provide construction knowledge to the design process with advice on
effective and economical building methods .
• work with the design consultants to select packages suitable for specialist
subcontractors.
• advise on programming.
• become part of the project team at an early stage avoiding adversarial
relationships and process fragmentation.
LPD-M-040 Dissertation Appendix 1
• continuously update the construction budget to account for variations as
each trade package is let. This provides flexibility by enabling amendment
of the work content in future packages to constantly adjust the cost plan in
line with the budget.
Figure 12 – Components of the Management System [Turner A, 1990: p. 54].
Advantages must be balanced against the potential disadvantages such as:
• management contracting can be more expensive.
LPD-M-040 Dissertation Appendix 1
• cost certainty is achieved later in the process as financial control relies on a
cost plan and the contract sum cannot be accurately predicted until the final
works package is awarded.
• if the management contractor has a financial interest in works contractors’
final accounts there may be a conflict of interest in acting effectively as a
consultant to the client.
• the management contractor may have no contractual liability for defects in
workmanship, only an obligation to use best endeavours to instruct works
contractors to remedy defects.
• a high level of knowledge and skill must be applied to the selection of the
right management contractor.
It is important that the design team has an understanding and experience of
meeting information flow requirements under a management contract route [Cooke
& Williams, 1998].
2.4 Construction Management
Construction management is a similar form of procurement to management
contracting, with the principal difference being that the construction manager has
similar professional status to the design team and each of the works package
contractors has direct contract with the client. The construction manager is
appointed on the basis of a competitive fee based on the quantity surveyor’s cost
plan and the design team’s description of works.
The advantages in employing this form of procurement are very similar to
management contracting (earlier site start, build-ability advice at design stage etc)
but the construction manager is more closely integrated with the design team.
The disadvantages are also similar to management contracting and there is a
larger administration and legal burden on the client due to the direct employment
of the potentially large number of works contractors. This also carries greater
commercial risk for the client [Ashworth, 2001].
LPD-M-040 Dissertation Appendix 2
Appendix 2 – Summary of the Latham & Egan Reports
Figure 13 – Summary of Constructing the Team (1994) [The Auditor and
Comptroller General, 2000]
LPD-M-040 Dissertation Appendix 2
Figure 14 – Summary of Rethinking Construction (1998) [The Auditor and
Comptroller General, 2000]
LPD-M-040 Dissertation Appendix 3
LPD-M-040 Dissertation Appendix 4
Appendix 4 – Raw Data Collected from the Research Questionnaire
Question Number Table 5 – Raw Data Questions 1-10 1 2 3 4 5 6 7 8 9 10
Mean Total Score
(Q 1-10)
Respondent 1 5 5 5 5 5 5 5 5 4 5 4.9
Respondent 2 4 4 3 3 4 4 4 4 3 4 3.7
Respondent 3 5 5 4 4 4 4 4 4 1 4 3.9
Respondent 4 4 4 3 4 3 4 4 4 3 4 3.7
Respondent 5 4 4 4 4 4 4 4 4 4 4 4.0
Respondent 6 3 4 3 4 5 4 5 5 4 3 4.0
Respondent 7 2 2 3 3 4 4 4 5 3 4 3.4
Respondent 8 4 4 4 4 4 4 4 4 4 4 4.0
Respondent 9 3 3 3 3 4 4 4 2 4 3 3.3
Clien
ts
Respondent 10 2 2 2 2 2 3 3 2 3 2 2.3
Respondent 11 2 2 4 4 4 4 4 4 2 4 3.4
Respondent 12 3 2 3 2 3 3 4 4 2 3 2.9
Respondent 13 4 4 3 3 3 4 3 2 3 3 3.2
Respondent 14 4 4 4 4 4 3 3 4 2 3 3.5
Respondent 15 4 4 4 3 4 4 4 4 2 4 3.7
Respondent 16 4 4 4 4 5 5 5 5 2 4 4.2
Respondent 17 4 4 3 3 3 4 3 4 2 3 3.3
Respondent 18 5 4 4 4 4 5 4 5 2 4 4.1
Respondent 19 2 4 2 2 4 4 4 4 4 2 3.2
Respondent 20 2 2 3 3 3 4 4 3 3 3 3.0
Respondent 21 4 4 3 3 3 4 3 2 3 3 3.2
Respondent 22 3 3 3 3 3 4 3 4 3 3 3.2
Respondent 23 4 4 4 3 4 4 4 4 2 4 3.7
Respondent 24 5 4 4 4 4 4 4 4 2 3 3.8
Respondent 25 5 4 4 4 4 5 4 4 1 4 3.9
Respondent 26 4 4 4 3 3 4 2 4 2 4 3.4
Co
nsu
ltan
ts
Respondent 27 4 4 5 5 5 4 5 5 3 3 4.3
Respondent 28 4 5 5 4 5 5 5 5 4 5 4.7
Respondent 29 3 4 4 4 3 5 4 4 3 4 3.8
Respondent 30 4 5 5 4 4 5 5 5 4 5 4.6
Respondent 31 3 3 2 4 5 5 4 4 1 4 3.5
Respondent 32 3 3 3 3 3 4 4 4 2 4 3.3
Respondent 33 3 4 4 4 3 5 4 4 3 4 3.8
Respondent 34 3 3 3 3 3 4 4 4 2 3 3.2
Respondent 35 5 5 4 4 4 4 4 4 2 5 4.1
Co
ntr
acto
rs
Respondent 36 3 3 4 4 4 5 5 5 2 4 3.9
Clients 3.6 3.7 3.4 3.6 3.9 4.0 4.1 3.9 3.3 3.7 3.7
Consultants 3.7 3.6 3.6 3.4 3.7 4.1 3.7 3.9 2.4 3.4 3.5
Contractors 3.4 3.9 3.8 3.8 3.8 4.7 4.3 4.3 2.6 4.2 3.9
Mean
Sco
res
Total Sample 3.6 3.7 3.6 3.5 3.8 4.2 4.0 4.0 2.7 3.7 3.7
LPD-M-040 Dissertation Appendix 4
Question Number Table 6 – Raw Data Questions 11-20 11 12 13 14 15 16 17 18 19 20
Mean Total Score
(Q11-20)
Respondent 1 3 3 3 3 3 3 3 4 3 3 3.1
Respondent 2 1 1 2 3 4 3 3 3 4 3 2.7
Respondent 3 2 2 3 3 3 3 3 3 3 4 2.9
Respondent 4 4 4 4 4 4 4 4 4 2 4 3.8
Respondent 5 2 2 3 4 4 4 4 4 3 4 3.4
Respondent 6 1 1 1 1 2 3 3 2 3 3 2.0
Respondent 7 1 1 2 3 3 2 4 2 4 3 2.5
Respondent 8 2 2 3 4 4 4 4 4 3 4 3.4
Respondent 9 3 3 3 3 3 3 3 3 3 3 3.0
Clien
ts
Respondent 10 2 2 2 2 2 3 3 2 3 2 2.3
Respondent 11 1 2 3 3 3 3 3 3 3 3 2.7
Respondent 12 2 1 2 1 2 2 3 3 3 2 2.1
Respondent 13 2 2 2 2 1 1 1 2 5 1 1.9
Respondent 14 2 2 3 3 4 4 4 4 3 4 3.3
Respondent 15 2 2 3 3 4 4 4 4 3 4 3.3
Respondent 16 2 2 2 2 3 3 3 3 4 3 2.7
Respondent 17 1 1 1 2 2 1 1 1 1 2 1.3
Respondent 18 1 1 2 2 3 3 2 2 4 2 2.2
Respondent 19 2 4 2 2 4 4 4 4 4 2 3.2
Respondent 20 2 2 3 3 3 4 4 3 3 3 3.0
Respondent 21 2 2 2 2 1 1 1 2 5 1 1.9
Respondent 22 3 3 3 3 3 4 3 4 2 3 3.1
Respondent 23 2 2 3 3 4 4 4 4 3 4 3.3
Respondent 24 1 1 2 2 2 2 2 2 3 2 1.9
Respondent 25 2 2 3 3 3 3 3 3 4 3 2.9
Respondent 26 3 3 2 3 3 3 2 3 2 3 2.7
Co
nsu
ltan
ts
Respondent 27 2 2 2 2 1 1 1 2 3 1 1.7
Respondent 28 2 2 3 3 3 2 1 1 5 4 2.6
Respondent 29 3 3 3 3 3 3 3 3 3 3 3.0
Respondent 30 3 3 3 3 3 3 2 2 4 4 3.0
Respondent 31 2 2 3 3 3 3 3 3 3 3 2.8
Respondent 32 2 2 2 2 2 2 2 2 3 3 2.2
Respondent 33 2 2 3 3 3 4 4 4 3 3 3.1
Respondent 34 3 3 3 3 3 4 4 4 2 3 3.2
Respondent 35 3 3 4 4 4 2 2 2 3 3 3.0
Co
ntr
acto
rs
Respondent 36 2 2 2 2 2 2 2 2 3 2 2.1
Clients 2.1 2.1 2.6 3.0 3.2 3.2 3.4 3.1 3.1 3.3 2.9
Consultants 1.9 2.0 2.4 2.4 2.7 2.8 2.6 2.9 3.2 2.5 2.5
Contractors 2.4 2.4 2.9 2.9 2.9 2.8 2.6 2.6 3.2 3.1 2.8
Mean
Sco
res
Total Sample 2.1 2.1 2.6 2.7 2.9 2.9 2.8 2.9 3.2 2.9 2.7
LPD-M-040 Dissertation Appendix 4
LPD-M-040 Dissertation Appendix 4
LPD-M-040 Dissertation Appendix 5
Appendix 5 – Results of the Statistical Analysis
Table 8 – t-Test 1 Results
Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered
Projects
Variable 1 (Contractors)
Variable 2 (Clients)
Mean 3.877777778 3.72
Variance 0.274444444 0.439555556
Observations 9 10
Pooled Variance 0.361856209
Hypothesized Mean Difference 0
df 17
t Stat 0.570850354
P(T<=t) one-tail 0.287785087
t Critical one-tail 1.739606432
P(T<=t) two-tail 0.575570174
t Critical two-tail 2.109818524
Contractors agree no more than clients that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
Table 9 – t-Test 2 Results
Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered
Projects
Variable 1 (Clients)
Variable 2 (Consultants)
Mean 3.72 3.529411765
Variance 0.439555556 0.177205882
Observations 10 17
Pooled Variance 0.271651765
Hypothesized Mean Difference 0
df 25
t Stat 0.917555625
P(T<=t) one-tail 0.183809618
t Critical one-tail 1.708140189
P(T<=t) two-tail 0.367619236
t Critical two-tail 2.05953711
Clients agree no more than consultants that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
LPD-M-040 Dissertation Appendix 5
Table 10 – t-Test 3 Results
Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered
Projects
Variable 1 (Contractors)
Variable 2 (Consultants)
Mean 3.877777778 3.529411765
Variance 0.274444444 0.177205882
Observations 9 17
Pooled Variance 0.209618736
Hypothesized Mean Difference 0
df 24
t Stat 1.845779296
P(T<=t) one-tail 0.038648164
t Critical one-tail 1.710882316
P(T<=t) two-tail 0.077296329
t Critical two-tail 2.063898137
Contractors agree no more than consultants that overall project performance is
improved through partnering when compared with traditional competitive
tendering.
Table 11 – t-Test 4 Results
Perceived Overall Performance of OJEU Framework Projects compared
with Partnered Projects
Variable 1 (Clients)
Variable 2 (Consultants)
Mean 2.91 2.541176471
Variance 0.303222222 0.417573529
Observations 10 17
Pooled Variance 0.376407059
Hypothesized Mean Difference 0
df 25
t Stat 1.50845486
P(T<=t) one-tail 0.07198655
t Critical one-tail 1.708140189
P(T<=t) two-tail 0.1439731
t Critical two-tail 2.05953711
Clients disagree no less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
LPD-M-040 Dissertation Appendix 5
Table 12 – t-Test 5 Results
Perceived Overall Performance of OJEU Framework Projects compared
with Partnered Projects
Variable 1 (Clients)
Variable 2 (Contractors)
Mean 2.91 2.777777778
Variance 0.303222222 0.156944444
Observations 10 9
Pooled Variance 0.234385621
Hypothesized Mean Difference 0
df 17
t Stat 0.594406327
P(T<=t) one-tail 0.280034352
t Critical one-tail 1.739606432
P(T<=t) two-tail 0.560068704
t Critical two-tail 2.109818524
Clients disagree no less than contractors that overall partnered project
performance is improved through introduction of the EC procurement rules.
Table 13 – t-Test 6 Results
Perceived Overall Performance of OJEU Framework Projects compared
with Partnered Projects
Variable 1 (Contractors)
Variable 2 (Consultants)
Mean 2.777777778 2.541176471
Variance 0.156944444 0.417573529
Observations 9 17
Pooled Variance 0.330697168
Hypothesized Mean Difference 0
df 24
t Stat 0.998069866
P(T<=t) one-tail 0.164101355
t Critical one-tail 1.710882316
P(T<=t) two-tail 0.32820271
t Critical two-tail 2.063898137
Contractors disagree no less than consultants that overall partnered project
performance is improved through introduction of the EC procurement rules.
LPD-M-040 Dissertation Appendix 5
Table 14 – t-Test 7 Results
Total Sample
Variable 1 - Perceived Performance of
Partnered Projects compared with
Traditional Competitively Tendered
Projects
Variable 2 - Perceived Performance of OJEU Framework Projects
compared with Partnered Projects
Mean 3.669444444 2.702777778
Variance 0.27818254 0.331134921
Observations 36 36
Pooled Variance 0.30465873
Hypothesized Mean Difference 0
df 70
t Stat 7.430297144
P(T<=t) one-tail 1.01959E-10
t Critical one-tail 1.666915068
P(T<=t) two-tail 2.03918E-10
t Critical two-tail 1.994435479
Partnered projects compared with traditional competitively tendered projects
perform better than OJEU framework projects compared with partnered projects.