A contemporary examination of framework agreements

The purpose of this paper is to examine the future role of client-contractor Framework Agreements in the wake of an unprecedented downturn in construction activity. The research is based on a review of literature and selected interviews with senior industry practitioners. The Royal Institute of Chartered Surveyors (RICS) publication, Contracts in Use: a Survey of Building Contracts in Use during 2007 is used to highlight a growing trend for collaborative working arrangements. The logic is that in buoyant market conditions the repeat construction client is trying to secure a number of key business objectives namely; value for money (VfM), predictability and protection of construction supply. In the event of a recession the commercial relationships understandably become fraught. Previous research evidence suggests that market dynamics dictate the management of contractual relations. While contractors continue to secure work via non-binding Framework Agreements clients may be persuaded that traditional procurement arrangements offer better business opportunities. Preliminary results of the investigation demonstrate a number of private sector clients rejecting Framework Agreements in favour of traditional competitive procurement routes. Public sector investment continues to sponsor collaborative working practices via Framework Agreements but there have been an increasing number of clients demanding ‘more for less’. The paper will serve as a timely examination of the cause and effect market dynamics can have on client-contractor behaviour and the discernable shift in commercial leverage that will accompany fluctuating levels of construction activity. As a consequence Framework Agreements allied with opportunities for improved supply chain integration may fall victim of the current market cycle.