Contractors fear end of frameworks
CONTRACTORS BELIEVE single-stage tendering could return in the water industry to replace framework agreements. The decision by British Airports Authority earlier this year to abandon framework agreements has led many to fear that other major clients, including water companies, will follow suit in the face of pressure to reduce costs.
Single-stage tendering has been characterised by short, confrontational relationships between clients and contractors as companies seek the surest way to get the lowest price.
Some water companies have asked contractors to re-assess charges, even when fee structures have been agreed as part of the framework. The frameworks were supposed to reduce procurement costs and improve quality by encouraging long-term partnerships between clients and contractors.
Paul Mullord, UK director at British Water, said: “Some companies may adopt a more adversarial way of working as the best way to achieve results; others will expand their partnering arrangements. I expect that we will see every reaction between the two extremes.”
Colin Davis, director of supply chain at United Utilities, said the trend in the water industry is for greater partnering within frameworks that will also involve tier two and three contractors. “There is a place for partnering type arrangements or alliance type arrangements where we can clearly define the targets and what the measures are,” he said.
Paul Goddard, Severn Trent Water commercial manager, purchasing and supply chain management, said: “We have been working ever more closely with our supply chain. We talk about things like working together, and recently, good supply chain management, which to us is the elimination of waste, either of time or money.”
Goddard added: “It’s a case of the whole supply chain recognising that in the current times we have to work together to increase that efficiency, reduce that waste: to survive, quite simply.”