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

Thesis Keith Gale 2013CHAPTER 2: IMPACT OF FRAMEWORK AGREEMENT APPROACH2.1 Historical reference of framework arrangements and development offramework agreementsPrivate sector arrangements between suppliers and those of a supply chain are amatter of commercial privilege and therefore not subject to regulation or publication.Provided arrangements are not anti-competitive and comply with other legalrequirements, they make take whatever form the parties decide. Earliest forms ofprivate sector framework arrangements are detected within manufacturing industries,where chains of component suppliers are engaged over long time scales. As part ofthis arrangement, suppliers commit to continuous improvement of their products inorder to remain with the manufacturer. Examples of such arrangements are availablewith the automotive sector and these have been analysed in detail (Porter, 1980).In 1994, British Airports Authority (BAA) plc embarked on a significant programmeof expansion of its major airports, and conscious of the reputation of the constructionindustry together with previous poor project outcomes, decided to embark upon anew strategy of supplier engagement. Instead of separating projects into elementswhich were tendered discretely using a large number of suppliers, BAA took thedecision to work with a small number of contractors engaged for specific timeperiods (usually five years terms) with payment on a ‘cost plus’ basis (Davies et al,2009). In return for commitment from the client, suppliers were guaranteed a level ofreturn on net costs, with the client retaining most risks associated with theconstruction process (Potts, 2007).In the same year (1994), publication of Constructing the Team by the UKgovernment reviewed procurement and contractual relationships within the industry.Recommendations made by Latham (1994) focussed upon use of collaborativemethods rather than adversarial contracts. Earliest forms of collaboration werestructured through partnering arrangements between parties in additional tocontractual considerations. Partnering arrangements evolved into frameworkarrangements where memorandums of understanding between a client and a numberof suppliers defined objectives of the parties in addition to contractual requirementsincluded by the specification and drawings. Another example of frameworkarrangement in the private sector is the programme of refurbishment executed by31