PhD Final Thesis April 2013.pdf - Anglia Ruskin Research Online

Thesis Keith Gale 2013costs could be lower than for traditional projects. A quantity surveyor (SG) stated‘The mechanisms in the framework allow efficient tendering due to standardisation….and to my mind that’s just incredibly efficient. Causation of such results may betherefore due to standardisation of procedures and documentation arising throughapplication of framework control systems.Hypothesis H5 proposed that no significant difference between performancemonitoring transaction costs would be detected between the two differentengagement methods. The theoretical basis of this assumption is through analysiswith studies undertaken into costs of quality experienced by the industry. Crosby(1979) asserted that ‘quality is free’ whilst Abdelsalam and Gad, (2009) revealed thatcost of quality to suppliers is around 2% of project value. Supervision of suchoutcomes should therefore be negligible and the hypothesis followed this basis.Results from the magnitude of the difference of means with performance monitoringcosts is small (0.029) supported by a mean difference in monitoring cost quotient(0.2236 – 0.1656) indicating that although collection of key performance indicatorsis required for a selection procedure within a framework agreement; this is no morefinancially demanding than those required by discrete projects. Correlation with theproposition of Hypothesis H5 is matched.8.11 Economic effects of limited competition through frameworksA significant question from practitioners and clients alike that concern use offrameworks is that of competition between suppliers. Economic theory regardingeffects of supply and demand is well established (Locke, 1691) and dictates thatoperation of a perfect market produces the lowest tender price; ergo restriction ofsuch a market should result in higher tender levels. Some practitioners extend thiseconomic argument and claim that framework agreements act as an artificialrestriction to open markets and result in higher prices. Morgan (2009) stated this withhis views upon restrictive competition and innovation. Similar concerns have beenvoiced through the Government Construction Strategy (Cabinet Office, 2011) whereprojects placed through a framework should be tested by application of a costbenchmarking process. Application of a suitable benchmark used for testing has notbeen specified, but the strategy suggests that any framework project which fails abenchmarking test in terms of value for money is removed from the framework and181