2007 Terry

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)
paulterry@rlpsurveyors.co.uk
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.
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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 RSLs 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.
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Contents
Contents Title Page Acknowledgements Abstract 1.0 1.1 1.2 1.3 1.4 2.0 3.0 3.1 3.2 3.3 4.0 4.1 4.2 4.3 4.4 4.5 4.6 5.0 5.1 5.2 6.0 Introduction Rationale for the Research Research Goals Outline Methodology of the Research Dissertation Contents Basic Procurement Systems Traditional RSL Procurement Practice Competitive Tendering Advantages of Competitive Tendering Disadvantages of Competitive Tendering More Recent RSL Procurement Practice General Industry Initiatives Partnering Advantages of Partnering Disadvantages of Partnering Performance Measurement Informal RSL Partnering Agreements Current RSL Procurement Practice The EC Procurement Rules OJEU Framework Agreements Summary of the Literature Review i ii iii 1 1 2 3 4 5 6 6 8 8 10 10 15 18 18 19 20 22 22 26 29
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Contents
7.0 7.1 7.2 7.3 7.4 8.0 8.1 8.2 9.0
Questionnaire Design & Research Methodology Research Aim Rationale for the Research Questionnaire The Research Sample Method of Analysis Analysis of Results Descriptive Analysis Statistical Analysis Conclusion
30 30 30 34 37 39 39 47 53 59 59 61 63
10.0 References & Bibliography 10.1 References 10.2 Bibliography 11.0 Acronyms & Abbreviations List of Figures 1 2 3 4 5 6 7 8 9 10 11 Chronology of Key Reports and Initiatives in Construction Better Construction Performance The Original Partnering Model EC Procurement Rule Thresholds Research Sample Professional Experience (Type) Sample Mean Opinion Scores: Questions 1-10 Sample Mean Opinion Scores: Questions 11-20 Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered Projects Perceived Overall Performance of OJEU Framework Projects compared with Partnered Projects Components of the Traditional Procurement System Components of the Design and Build Procurement System
12 14 16 23 36 40 44 48 50 65 67
Contents
12 13 14
Components of the Management Procurement System Summary of Constructing the Team (1994) Summary of Rethinking Construction (1998)
69 71 72
List of Tables 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Research Sample: Number and Rate of Response Research Sample Professional Experience (Years) Sample Mean Opinion Scores: Questions 1-10 Sample Mean Opinion Scores: Questions 11-20 Raw Data: Questions 1-10 Raw Data: Questions 11-20 Raw Data: Qualitative Responses t-Test 1 Results t-Test 2 Results t-Test 3 Results t-Test 4 Results t-Test 5 Results t-Test 6 Results t-Test 7 Results 34 35 40 44 75 76 77 80 80 81 81 82 82 83
List of Appendices 1 2 3 4 5 Basic Procurement Systems Summary of the Latham & Egan Reports The Research Questionnaire Raw Data Collected from the Research Questionnaire Results of the Statistical Analysis 64 71 73 75 80
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Introduction
1.0 1.1
Introduction Rationale for the Research
Registered Social Landlords (RSLs) 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 RSLs, with the largest having construction programmes valued at over 270M [Jenkins, 2004: p. 7]. RSLs 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. RSLs 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 RSLs 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 RSLs 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, RSLs have amended their procurement practices accordingly.
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.
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.
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.
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 RSLs. 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.
Traditional RSL Procurement Practice
3.0
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 subcontractors 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 contractors estimate that forms a benchmark from which client satisfaction will be measured.
The contractors 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 companys 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].
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 contractors 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.
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 contractors 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].
More Recent RSL Procurement Practice
4.0
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).
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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 cooperation. 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 RSLs. 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].
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Figure 1 Chronology of Key Reports and Initiatives in Construction [The Comptroller and Auditor General, 2001: p. 19]. Lathams 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.
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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.
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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].
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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 participants 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.
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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].
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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].
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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 RSLs as being:
4.4
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. 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.
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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:
4.5
Dangers of developing too close an arrangement. Longer term possibilities of exploitation of the relationship. Costs of preparing complex partnership agreements. Performance Measurement
RSLs 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 RSLs 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 (KPIs). KPIs 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.
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Time where actual project programme is measured against the agreed contract programme.
KPIs 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 Egans 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 RSLs 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 RSLs 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.
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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, RSLs 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 KPIs. 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.
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Current RSL Procurement Practice
5.0
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 Commissions 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 RSLs 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 RSLs 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 ECs 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 RSLs to follow the ECs 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 RSLs have had to become familiar with the EC procurement directives as RSLs 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)
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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. RSLs 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].
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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 twostage competitive tendering.
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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 RSLs 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 RSLs, 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).
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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 RSLs 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 RSLs HC funding conditions [Birkby, 2004]. 5.2 OJEU Framework Agreements
Compliance with the EC procurement directives has affected RSLs 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, RSLs must use the restricted procedure discussed previously. Through the restricted procedure, RSLs 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.
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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 1990s. 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].
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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 RSLs 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 longterm 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 RSLs 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 RSLs through partnering arrangements [Rawlinson, 2006]. Another limitation of framework agreements for RSLs 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.
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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 1990s, 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. RSLs 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 RSLs were no longer exempt from the EC public procurement directives and therefore had to comply. The bureaucratic rules meant that in order for RSLs 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.
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Questionnaire Design & Research Methodology
7.0
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).
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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
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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.
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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.
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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 RSLs. 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 Sample Category Clients Consultants Contractors Total Number 20 20 20 60 Sample % 33% 33% 33% 100%
Questionnaires Received Number 10 17 9 36 Sample % 28% 47% 25% 100%
% Response Rate 50% 85% 45% 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.
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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 subsample 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) Over 20 Sample Category 10-15 15-20 5-10 0-5 Total
% of Respondents (Experience in Years) Over 20 20% 53% 44% 42%

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10-15 30% 6% 22% 17%
Clients Consultants Contractors Total
3 4 0 7
1 2 1 4
3 1 2 6
1 1 2 4
2 9 4 15
10 17 9 36
30% 24% 0% 19%
10% 12% 11% 11%
10% 6% 22% 11%
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.
15-20
5-10
0-5
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 RSLs 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 subsamples, 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
100% 90% 80% Clients Consultants Contractors Total Sample
% of Respondents
70% 60% 50% 40% 30% 20% 10% 0% All All All All N one Very Little N one Very Little N one Very Little N one Very Little N one Very Little A Lot A Lot A Lot A Lot Some Some Some Some Some A Lot All
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Traditional Tendering
Project Specific Partnering
Long Term Partnering Partnering with the Supply Chain
OJEU Framework
Area/Amount of Experience
Figure 5 Research Sample Professional Experience (Type)
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%).
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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.
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Analysis of the Results
8.0
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.
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Question Number Sample Clients Consultants Contractors Total Sample 1 3.6 3.7 3.4 3.6 2 3.7 3.6 3.9 3.7 3 3.4 3.6 3.8 3.6 4 3.6 3.4 3.8 3.5 5 3.9 3.7 3.8 3.8 6 4.0 4.1 4.7 4.2 7 4.1 3.7 4.3 4.0 8 3.9 3.9 4.3 4.0 9 3.3 2.4 2.6 2.7 10 3.7 3.4 4.2 3.7
Mean Total Score (Q 1-10) 3.7 3.5 3.9 3.7
Table 3 Sample Mean Opinion Scores: Questions 1-10
Sample Mean Opinion Scores for Questions 1-10

5.0 4.5 4.0 Sample Mean Opinion Score 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1 2 3 4 5 6 7 8 9 10 Question Number 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.
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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. RSLs must demonstrate VFM in order to qualify for Housing Corporation grants which fund the majority of their construction projects. This is essentially why RSLs 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.
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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.
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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.
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Question Number Sample Clients Consultants Contractors Total Sample 11 2.1 1.9 2.4 2.1 12 2.1 2.0 2.4 2.1 13 2.6 2.4 2.9 2.6 14 3.0 2.4 2.9 2.7 15 3.2 2.7 2.9 2.9 16 3.2 2.8 2.8 2.9 17 3.4 2.6 2.6 2.8 18 3.1 2.9 2.6 2.9 19 3.1 3.2 3.2 3.2 20 3.3 2.5 3.1 2.9
Mean Total Score (Q 11-20) 2.9 2.5 2.8 2.7
Table 4 Sample Mean Opinion Scores: Questions 11-20
Sample Mean Opinion Scores for Questions 11-20

5.0 4.5 4.0 Sam ple M ean Opinion Score 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 11 12 13 14 15 16 17 18 19 20 Question Number 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.
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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.
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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.
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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.
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Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered Projects
4.0 3.9 Sample Mean Score 3.8 3.7 3.6 3.5 3.4 3.3 Clients Consultants Sample Sub-Group Contractors
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.
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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.
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Perceived Overall Performance of OJEU Framework Projects compared with Partnered Projects
3.0 2.9 Sample Mean Score 2.8 2.7 2.6 2.5 2.4 2.3 Clients Consultants Sample Sub-Group Contractors
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 subsample 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.
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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.
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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.
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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, RSLs 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, RSLs 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, RSLs 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.
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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 RSLs 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 RSLs, 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.
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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.
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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 RSLs 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 RSLs 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 RSLs 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.
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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.
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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.
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References & Bibliography
10.0 10.1
References & Bibliography References
Achilles & Bevan-Brittan (2005) EC Procurement Regulations A Brief Guide for RSLs 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: ButterworthHeinemann 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
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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 RSLs, 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
paulterry@rlpsurveyors.co.uk 60
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 RSLs, 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
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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
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Acronyms & Abbreviations
11.0 BGPL CCT CIB DETR EC ECJ EU HC JCT KPI LIFT MMC M4I NAO NHS NJCC
Acronyms & Abbreviations Bodies Governed by Public Law Compulsory Competitive Tendering Construction Industry Board Department of the Environment, Transport and Regions European Commission European Court of Justice European Union Housing Corporation Joint Contract Tribunal Key Performance Indicators Local Infrastructure Finance Trusts Modern Methods of Construction Movement for Innovation National Audit Office National Health Service National Joint Consultative Committee for Building Office of the Deputy Prime Minister Official Journal of the European Union Probability Private Finance Initiative Prior Information Notice Project Partnering Contract Pre-Qualification Questionnaire Principal Supply Chain Partner Registered Social Landlord Value for Money
ODPM OJEU P PFI PIN PPC PQQ PSCP RSL VFM
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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.
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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 buildability, 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.
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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 (ERs) can be almost fully established at the outset of the project and can be issued to contractors for tendering purposes. ERs are generally prepared by a quantity surveyor acting as an Employers 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 RSLs 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.
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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.
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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 ERs 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.
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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.
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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 surveyors cost plan and the design teams 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].
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Appendix 2
Appendix 2 Summary of the Latham & Egan Reports
Figure 13 Summary of Constructing the Team (1994) [The Auditor and Comptroller General, 2000]
71
Appendix 2
Figure 14 Summary of Rethinking Construction (1998) [The Auditor and Comptroller General, 2000]
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Appendix 3
Appendix 3 The Research Questionnaire
73
Appendix 3
74
Appendix 4
Appendix 4 Raw Data Collected from the Research Questionnaire

Table 5 Raw Data Questions 1-10 Respondent 1 Respondent 2 Respondent 3 Respondent 4 Clients Respondent 5 Respondent 6 Respondent 7 Respondent 8 Respondent 9 Respondent 10 Respondent 11 Respondent 12 Respondent 13 Respondent 14 Respondent 15 Respondent 16 Consultants Respondent 17 Respondent 18 Respondent 19 Respondent 20 Respondent 21 Respondent 22 Respondent 23 Respondent 24 Respondent 25 Respondent 26 Respondent 27 Respondent 28 Respondent 29 Contractors Respondent 30 Respondent 31 Respondent 32 Respondent 33 Respondent 34 Respondent 35 Respondent 36 Mean Scores Clients Consultants Contractors Total Sample Question Number 1 5 4 5 4 4 3 2 4 3 2 2 3 4 4 4 4 4 5 2 2 4 3 4 5 5 4 4 4 3 4 3 3 3 3 5 3 3.6 3.7 3.4 3.6 2 5 4 5 4 4 4 2 4 3 2 2 2 4 4 4 4 4 4 4 2 4 3 4 4 4 4 4 5 4 5 3 3 4 3 5 3 3.7 3.6 3.9 3.7 3 5 3 4 3 4 3 3 4 3 2 4 3 3 4 4 4 3 4 2 3 3 3 4 4 4 4 5 5 4 5 2 3 4 3 4 4 3.4 3.6 3.8 3.6 4 5 3 4 4 4 4 3 4 3 2 4 2 3 4 3 4 3 4 2 3 3 3 3 4 4 3 5 4 4 4 4 3 4 3 4 4 3.6 3.4 3.8 3.5 5 5 4 4 3 4 5 4 4 4 2 4 3 3 4 4 5 3 4 4 3 3 3 4 4 4 3 5 5 3 4 5 3 3 3 4 4 3.9 3.7 3.8 3.8 6 5 4 4 4 4 4 4 4 4 3 4 3 4 3 4 5 4 5 4 4 4 4 4 4 5 4 4 5 5 5 5 4 5 4 4 5 4.0 4.1 4.7 4.2 7 5 4 4 4 4 5 4 4 4 3 4 4 3 3 4 5 3 4 4 4 3 3 4 4 4 2 5 5 4 5 4 4 4 4 4 5 4.1 3.7 4.3 4.0 8 5 4 4 4 4 5 5 4 2 2 4 4 2 4 4 5 4 5 4 3 2 4 4 4 4 4 5 5 4 5 4 4 4 4 4 5 3.9 3.9 4.3 4.0 9 4 3 1 3 4 4 3 4 4 3 2 2 3 2 2 2 2 2 4 3 3 3 2 2 1 2 3 4 3 4 1 2 3 2 2 2 3.3 2.4 2.6 2.7 10 5 4 4 4 4 3 4 4 3 2 4 3 3 3 4 4 3 4 2 3 3 3 4 3 4 4 3 5 4 5 4 4 4 3 5 4 3.7 3.4 4.2 3.7 Mean Total Score (Q 1-10) 4.9 3.7 3.9 3.7 4.0 4.0 3.4 4.0 3.3 2.3 3.4 2.9 3.2 3.5 3.7 4.2 3.3 4.1 3.2 3.0 3.2 3.2 3.7 3.8 3.9 3.4 4.3 4.7 3.8 4.6 3.5 3.3 3.8 3.2 4.1 3.9 3.7 3.5 3.9 3.7
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Appendix 4
Table 6 Raw Data Questions 11-20 Respondent 1 Respondent 2 Respondent 3 Respondent 4 Clients Respondent 5 Respondent 6 Respondent 7 Respondent 8 Respondent 9 Respondent 10 Respondent 11 Respondent 12 Respondent 13 Respondent 14 Respondent 15 Respondent 16 Consultants Respondent 17 Respondent 18 Respondent 19 Respondent 20 Respondent 21 Respondent 22 Respondent 23 Respondent 24 Respondent 25 Respondent 26 Respondent 27 Respondent 28 Respondent 29 Contractors Respondent 30 Respondent 31 Respondent 32 Respondent 33 Respondent 34 Respondent 35 Respondent 36 Mean Scores Clients Consultants Contractors Total Sample
Question Number 11 3 1 2 4 2 1 1 2 3 2 1 2 2 2 2 2 1 1 2 2 2 3 2 1 2 3 2 2 3 3 2 2 2 3 3 2 2.1 1.9 2.4 2.1 12 3 1 2 4 2 1 1 2 3 2 2 1 2 2 2 2 1 1 4 2 2 3 2 1 2 3 2 2 3 3 2 2 2 3 3 2 2.1 2.0 2.4 2.1 13 3 2 3 4 3 1 2 3 3 2 3 2 2 3 3 2 1 2 2 3 2 3 3 2 3 2 2 3 3 3 3 2 3 3 4 2 2.6 2.4 2.9 2.6 14 3 3 3 4 4 1 3 4 3 2 3 1 2 3 3 2 2 2 2 3 2 3 3 2 3 3 2 3 3 3 3 2 3 3 4 2 3.0 2.4 2.9 2.7 15 3 4 3 4 4 2 3 4 3 2 3 2 1 4 4 3 2 3 4 3 1 3 4 2 3 3 1 3 3 3 3 2 3 3 4 2 3.2 2.7 2.9 2.9 16 3 3 3 4 4 3 2 4 3 3 3 2 1 4 4 3 1 3 4 4 1 4 4 2 3 3 1 2 3 3 3 2 4 4 2 2 3.2 2.8 2.8 2.9 17 3 3 3 4 4 3 4 4 3 3 3 3 1 4 4 3 1 2 4 4 1 3 4 2 3 2 1 1 3 2 3 2 4 4 2 2 3.4 2.6 2.6 2.8 18 4 3 3 4 4 2 2 4 3 2 3 3 2 4 4 3 1 2 4 3 2 4 4 2 3 3 2 1 3 2 3 2 4 4 2 2 3.1 2.9 2.6 2.9 19 3 4 3 2 3 3 4 3 3 3 3 3 5 3 3 4 1 4 4 3 5 2 3 3 4 2 3 5 3 4 3 3 3 2 3 3 3.1 3.2 3.2 3.2 20 3 3 4 4 4 3 3 4 3 2 3 2 1 4 4 3 2 2 2 3 1 3 4 2 3 3 1 4 3 4 3 3 3 3 3 2 3.3 2.5 3.1 2.9
Mean Total Score (Q11-20) 3.1 2.7 2.9 3.8 3.4 2.0 2.5 3.4 3.0 2.3 2.7 2.1 1.9 3.3 3.3 2.7 1.3 2.2 3.2 3.0 1.9 3.1 3.3 1.9 2.9 2.7 1.7 2.6 3.0 3.0 2.8 2.2 3.1 3.2 3.0 2.1 2.9 2.5 2.8 2.7
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Appendix 4
Table 7 Raw Data: Qualitative Responses
77
Appendix 4
78
Appendix 4
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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 Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Contractors) 3.877777778 0.274444444 9 0.361856209 0 17 0.570850354 0.287785087 1.739606432 0.575570174 2.109818524 Variable 2 (Clients) 3.72 0.439555556 10
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 Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Clients) 3.72 0.439555556 10 0.271651765 0 25 0.917555625 0.183809618 1.708140189 0.367619236 2.05953711 Variable 2 (Consultants) 3.529411765 0.177205882 17
Clients agree no more than consultants that overall project performance is improved through partnering when compared with traditional competitive tendering.
paulterry@rlpsurveyors.co.uk 80
Appendix 5
Table 10 t-Test 3 Results Perceived Overall Performance of Partnered Projects compared with Traditional Competitively Tendered Projects Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Contractors) 3.877777778 0.274444444 9 0.209618736 0 24 1.845779296 0.038648164 1.710882316 0.077296329 2.063898137 Variable 2 (Consultants) 3.529411765 0.177205882 17
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 Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Clients) 2.91 0.303222222 10 0.376407059 0 25 1.50845486 0.07198655 1.708140189 0.1439731 2.05953711 Variable 2 (Consultants) 2.541176471 0.417573529 17
Clients disagree no less than consultants that overall partnered project performance is improved through introduction of the EC procurement rules.
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Appendix 5
Table 12 t-Test 5 Results Perceived Overall Performance of OJEU Framework Projects compared with Partnered Projects Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Clients) 2.91 0.303222222 10 0.234385621 0 17 0.594406327 0.280034352 1.739606432 0.560068704 2.109818524 Variable 2 (Contractors) 2.777777778 0.156944444 9
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 Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail Variable 1 (Contractors) 2.777777778 0.156944444 9 0.330697168 0 24 0.998069866 0.164101355 1.710882316 0.32820271 2.063898137 Variable 2 (Consultants) 2.541176471 0.417573529 17
Contractors disagree no less than consultants that overall partnered project performance is improved through introduction of the EC procurement rules.
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Appendix 5
Table 14 t-Test 7 Results Variable 1 - Perceived Performance of Partnered Projects compared with Traditional Competitively Tendered Projects 3.669444444 0.27818254 36 0.30465873 0 70 7.430297144 1.01959E-10 1.666915068 2.03918E-10 1.994435479 Variable 2 - Perceived Performance of OJEU Framework Projects compared with Partnered Projects 2.702777778 0.331134921 36
Total Sample
Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail
Partnered projects compared with traditional competitively tendered projects perform better than OJEU framework projects compared with partnered projects.
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London South Bank University Faculty of Engineering, Science and the Built Environment Department of Property, Surveying and

Paul Terry MSc Quantity Surveying

Submitted by Paul James Terry For the M.Sc. in Quantity Surveying of

.. Paul Terry BSc (Hons)

7.0 7.1 7.2 7.3 7.4 8.0 8.1 8.2 9.0

Introduction Rationale for the Research

Outline Methodology of the Research

Basic Procurement Systems

Basic Procurement Systems

Traditional (Lump Sum) Design and Build Management Contracts

Traditional RSL Procurement Practice

Traditional RSL Procurement Practice

Traditional RSL Procurement Practice

Traditional RSL Procurement Practice

Advantages of Competitive Tendering

Traditional RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

General Industry Initiatives

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

More Recent RSL Procurement Practice

Current RSL Procurement Practice

Current RSL Procurement Practice

Current RSL Procurement Practice

Current RSL Procurement Practice

Open procedure Restricted procedure Negotiated procedure

Current RSL Procurement Practice

Current RSL Procurement Practice

Current RSL Procurement Practice

Current RSL Procurement Practice

Summary of the Literature Review

Summary of the Literature Review

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

The Research Sample

Questionnaires Received Number 10 17 9 36 Sample % 28% 47% 25% 100%

% Response Rate 50% 85% 45% 60%

Questionnaire Design & Research Methodology

% of Respondents (Experience in Years) Over 20 20% 53% 44% 42%

10-15 30% 6% 22% 17%

Clients Consultants Contractors Total

30% 24% 0% 19%

10% 12% 11% 11%

10% 6% 22% 11%

Questionnaire Design & Research Methodology

Project Specific Partnering

Long Term Partnering Partnering with the Supply Chain

Figure 5 Research Sample Professional Experience (Type)

Questionnaire Design & Research Methodology

Questionnaire Design & Research Methodology

Analysis of the Results