Clash points

Apart from PFI, the two procurement routes favoured by the government are design and build and prime contracting. The keenest exponent of prime contracting is Defence Estates, the property arm of the Ministry of Defence, which has imported the experience from the manufacture of weaponry. It believes that prime contracting is the most effective way of harnessing and integrating the supply chain.

The prime contractor has overall responsibility for delivering the project, through co-ordinating and integrating the activities of the supply chain to meet the overall specification, efficiently, economically and to time. The prime contractor is expected to manage the whole process, from the earliest stages of concept development to design development, and from construction to facilities management.

The response to prime contracting from the Construction Confederation has been less than enthusiastic. Much of the debate has focused on Defence Estates's insistence that it will require evidence that the prime contractor has paid its suppliers before it can expect to receive payment itself. The response has been that the only way that the large UK contractors can survive as prime contractors is to demand bigger retentions and huge discounts from their suppliers; hardly a good start.

But, Defence Estates expects prime contracting to operate an open-book approach. Prime contractors (and, indeed, their suppliers) will be expected to demonstrate that they have incurred the costs claimed. Therefore, a prime contractor will need to be well-resourced. And rightly so. Generating a positive cash flow at the expense of others in the supply chain has nothing to do with the culture of prime contracting.

But there are other issues. The prime contractor is expected to assemble its key suppliers – designers, contractors, facility managers – at the outset. How is it going to select its team? If, as is likely, it is going to do it by competitive selection, will it operate a fair and open procedure? Will lowest price rather than value for money be the preferred option? A team that has been bruised and battered through the selection process cannot be considered a team for the purposes of prime contracting.

Once selected, what are the contracts to be issued to members of the team? Are we to persist in the use of adversarial documents such as DOM/1 or DOM/2 or, indeed, any other DOM? Again, these will hardly be conducive to promoting mutually supportive relationships between members of the team.

Defence Estates' vision is that it will deliver the longed-for integration of all the elements in the construction process, particularly design and construction. The prime contractor will be required to demonstrate that it has taken steps to ensure that each member of the supply chain will be effectively engaged in delivering value throughout the process.

The $64m question is whether Clare's major members can measure up to this challenge.