Much has been said and written recently on the expressed intention of some employers, in both the public and private sectors, to abandon framework agreements in favour of lowest price
There has been a great deal of hand-wringing and prophecies of a return to the bad old days of litigious contractors.
Few can deny the benefits of collaborative working, but it is important to appreciate why contracts with a cost-reimbursable payment system tied to a target price see fewer disputes than the lowest-bid method.
Those responsible for procurement using collaborative working will usually ensure that there is a contingency of anything from 10% to 20% of the target price included in the risk register and a similar contingency of time to provide for employers’ risk items. The traditional system rarely provided for these contingencies and each time a risk item arose, such as bad ground conditions, the employer was requested to find more money and expect late completion. Claims for more cost and time were strongly resisted and the system got a bad name. Employers drifting back to lowest price should ensure there are adequate contingencies in the price and construction period before giving it approval. Fewer claims will be received.
Roger Knowles, chairman, Baqus and president, QSi