Picture the scene; you’ve been to the open day, networked with the potential client, had your internal meetings, completed the PQQ, been shortlisted and submitted your tender.
Finally after several months of agonising, you get the letter which announces that you’ve been successful and have been appointed to the client’s framework.
So happens next? This is at the heart of the utility of framework agreements.
Advocates of frameworks suggest that they drive up quality, save the client money and allow teams to work together, hence increasing efficiency and innovation from one project to next.
The partnering approach has worked reasonably well with some private sector companies and frameworks may have their uses in terms of allowing clients to react quickly and to achieve savings via economies of scale.
The trouble is that frameworks are an inefficient way of trying to manage a market. At a macro level, frameworks can struggle to react to changes in supply and demand, and the subsequent price elasticity.
One has to ask if it is sensible to rule out the majority of participants from a market for a set period. This certainly reduces room for manoeuvre; being locked into a framework cycle with uneconomic rates, either too high or too low, is in no-one’s interest.
At the operational level, the bidding process tends to be lengthy, is very expensive for bidders, and various stakeholders will want a say. Everyone recalls the furore around Building Schools for the Future, and that somehow it was the fault of contractors and consultants that the process and buildings were exorbitantly costly.
There’s also the problem of mismatched priorities between public sector clients that have a social agenda to implement often via private sector companies, and those same companies that have a fiduciary duty to their shareholders to maximise profitability. How do you match these competing and opposite ideas?
Further, most companies will have anecdotes about frameworks where no projects emerge; where the successful companies are expected to pay for and market the framework; frameworks where an apparent chosen few are selected each time and of course the silo mentality of public sector organisations who either won’t use or don’t know about each other’s frameworks.
A survey in summer 2010 by Constructionline suggested that around 27 per cent of local authorities were planning to scrap their frameworks to secure lower prices. This all undermines the argument that frameworks save money.
So if frameworks aren’t the answer then what is? For all its perceived faults, an open, fairly regulated market is the best way. The open market allows for new entrants, innovation, and keeps everyone on their toes.
This means companies understanding their competitive advantage, differentiating themselves from the competition, understanding local market conditions and providing customers with real benefits. In other words, using marketing to highlight how your company is better than your competitors.
Will any of this stop construction clients, particularly the public sector, from using frameworks? The answer is probably no; after all, bureaucracies are very good at inventing bureaucracy to manage.
David Mycock is the head of marketing for Shepherd Gilmour, an international engineering consultancy based in Manchester, a national committee member of CIMCIG, the Chartered Institute of Marketing’s Construction Industry Group, and a committee member of TARGET, a construction marketing organisation based in Leeds.