Partnering – An Overview

Partnering

The term partnering refers to both a procurement route and also a tender process. Partnering attempts to develop a trusting relationship between members of the whole project team including the Employer, design team, Contractor and Sub-contractors who will become partners. The aims of partnering are to promote better design and construction; lower risks; reduce waste; and avoid disputes. (Please also refer to Alliancing Article by MALCONLAW)

It has been suggested that partnering should allow formal contracts to be dispensed with, however this is not really the case, if anything partnering can involve a larger number of agreements and undertakings between the parties than many of the other options we have covered above. Partnering has not been adopted by Employers in the mainstream, with the oil and gas sector being the only notable exception at this time.

The aim of the partnering approach is to develop a high level of trust between the parties or partners to the agreement. All the partners need to enter into a partnering agreement on the same page which is to say they need to have a common goal in respect to completion of the project and treat the other partners with fairness and develop relationships based on mutual trust. This approach is not limited to just the Employer and Contractor but must include subcontractors, suppliers design team members and the Employers representatives in all their dealings.

There is no standard contract form in Malaysia for partnering however there are a number that have been developed in the UK and US specifically tailored to the partnering approach to construction and these standard forms can be adapted to suit Malaysia. One such standard form would be the PPC International – ACA Standard Form of Contract for Project Partnering Overseas which was published by the Association of Consultant Architects in the UK.

One of the advantages often stated in the favour of the partnering route is that it allows projects to start earlier than would be the case if more traditional procurement processes were adopted

Risk Management is an essential to successful partnering and it is normally the case that the Employer will engage a partnering advisor whose role amongst others is to ensure the parties maintain relationships and ensure that the parties maintain and regularly review a project specific risk register. Any partnering advisor should be independent needs to act impartially to help resolve any issues that arise.

There are a number of documents which together detail the obligations and responsibilities of the parties under a partnering arrangement and these would normally consist of the following:

  1. Project Partnering Agreement

This document details generally the obligations of the partners to the Agreement for the early design development and pre-construction activities stage of the project. This document is normally executed at an early stage to facilitate commencement.

  1. Partnering Terms

These will include partnering terms, the project brief, the project proposal, known costs at the time, key performance indicators, preliminaries costs and a partnering charter.

  1. Joining Agreements

Joining agreements take the place sub-contract forms in the partnering arrangement where subcontractors are partners and may join with the Contractor as the project progresses. There are no rules preventing partners joining as the scheme progresses and there is no requirement for them to be a partner Partners can join at any time.

  1. Pre Possession Agreement

This document provides the partners with the ability to start execution of work such as surveys, ground investigation, planning and similar approvals together with production of plans, method statements and necessary documentation such as environmental and health and safety compliance submissions and approvals.

  1. Commencement Agreement

This document includes an express confirmation by all the partnering team members that to the best of their knowledge the project is ready to start on site.  It will include an agreed maximum price which should not be confused with a guaranteed maximum price, the design, and details of supply packages with their associated drawings, the project execution schedule, agreed key performance indicators and incentives, together with surveys and other investigations and documents executed or undertaken under the Pre-Possession Agreement.

  1. The Partnering Charter

This is an agreed statement made by the partnering team members including those party to any Joining Agreements in which they clearly record their commitment to the values, agreed goals and resolve to accomplish the project.

  1. The Project Brief

This document details the scope works that is the subject of the partnering agreement as understood between the parties or partners and the basis on which the Employer has entered into the arrangement. It is one of the documents which is detailed within the Partnering Terms.

  1. Project Proposal

This document specifies what has been proposed and subsequently agreed between the parties in respect of the execution of the works.

  1. Pricing Framework

In this document the parties confirm the basis for payment in respect of the works executed which meets the project brief and project proposals. It will include the method of payment and timing for payments under the partnering arrangement.

  1. The Consultant Service Schedule

This schedule outlines the services and delivery schedule of the various design and other associated consultants which form the design team members and any other consultant who are partners in the project.

  1. Consultant Payment Terms

As the name suggests in this agreement the payment terms under which the design team partners are to be paid are detailed together with any bonuses and incentives for performing their design or associated works.

  1. Key Project Indicators

This agreement defines how the parties’ measure and judge the performance and quality of service rendered thus providing a baseline for assessment of the parties’ strengths and weaknesses whilst also acting as a tool to facilitate continuous monitoring together with enabling them to develop a more beneficial mode of execution to create financial incentives to perform.

Perceived Advantages of Partnering:

A Improved Employer satisfaction
B Returns better value for money
C Projects benefit from the improved co-ordination and consistency of the members of the design and construction teams
D Increased predictability of project costs and time. In a majority of partnering projects they are constructed defect free within budget and on time.
F Better design with build-a-bility incorporated
G Improved quality with fewer defects
H Reduced costs in procurement and administrative
I Less likelihood of disputes
J Improved construction safety
K More efficient use of  management resources

Perceived Disadvantages of Partnering:

A The Employer must stay interested and active as a partnering team member; otherwise apathy can spread amongst all other members.
B Team members must be committed to the partnering concept to prevent undermining effective partnering.
C Parties not agreeing a partnering timetable which can lead to delays in pre-construction activities and a breakdown in relation in the partnering members.
D Unclear or incomplete Project Brief, Brief Proposals and the Consultant Services Schedule creating a risk of omissions or gaps in activities and later disputes.
E Key Performance Indications must be agreed prior to execution of the commencement agreement to maintain motivation within the team.
F Joint risk management is overlooked with risks in effect being passed on to the contractor rather than being managed by the team members.
G Failure to appoint an experienced adviser can result in the team losing focus on the project and lacking confidence in the advisor.