Collaborative procurement using FAC-1, TAC-1 and PPC2000
We were preoccupied with many challenges during 2020 but at the same time we saw the adoption of ACA collaborative contracts on many projects and in many jurisdictions. We saw how Central Bedfordshire Council, Engie and Savills used the TAC-1 ‘Core Group’ to agree actions in response to Covid-19, including help for vulnerable residents during lockdown. We saw the Arcadis 2020 Global Construction Disputes report recommending PPC2000 and FAC-1 as providing ways to avoid conflict. We also saw online launches of the Russian and Spanish versions of FAC-1, the latter discussed at webinars in Spain, Peru and Chile, plus the first adoption of FAC-1 by Enel Green Power on a wind farm project in Spain. More information can be found at allianceforms.co.uk.
This article looks at three other developments , firstly the recommendation of FAC-1 and TAC-1 in the ‘Blueprint for Housing Industrial Strategy’, secondly the use of PPC2000 by the award-winning MMC alliance at HMP Wellingborough and thirdly the UK Government endorsement of FAC-1 in its new ‘Construction Playbook’.
Blueprint for Housing Industrial Strategy recommends FAC-1 and TAC-1
In September 2020 a new report was published by Mike De’Ath and Mark Farmer: ‘Build Homes, Build Jobs, Build Innovation – A Blueprint for a Housing Industrial Strategy’. It can be downloaded at https://www.hta.co.uk/storage/app/media/build-homes-build-jobs-build-innovation.pdf.
Mike De’Ath and Mark Farmer offer a range of progressive and persuasive recommendations for the ‘demand led transformation’ that is necessary to deliver the homes we need. These include proposals as to how construction contracts need to change so as to enable improved efficiency, improved value and reduced risk, and so as to attract investment in modern methods of construction. In recommending strategic procurement using the ‘FAC-1 Framework Alliance Contract’ and/or the ‘TAC-1 Term Alliance Contract’, De’Ath and Farmer report that:
- ‘Choosing a contract form which engenders collaboration is critical when adopting modern methods of construction.’
- ‘Law firm Trowers and Hamlins LLP supported the CLC Building Innovation work stream alongside King’s College London to examine these new relationships and how to adapt standard forms.’
- ‘These more innovative and progressive contracts reflect earlier and closer engagement with manufacturers, for instance the ACA Framework Alliance Contract (FAC 1) for long-term strategic relationships enabling one or more clients to integrate housing programmes that are delivered through smart construction linked to separate design, construction and operation contracts.’
- ‘For developers that do not want to aggregate programmes with other housing providers, but do want to collaborate with their supply chain on a series of modular and off-site projects, the Term Alliance Contract (TAC -1) is an option and we note that the London Borough of Greenwich, in its recently announced strategic agreement with Ideal Modular, is using the TAC-1 contract.’
Award-winning MMC alliance at HMP Wellingborough used PPC2000
In November 2020 the Ministry of Justice alliance team delivering HMP Wellingborough were recognised at the 2020 British Construction Industry Awards. By combining MMC with a cutting-edge digital approach, this resettlement mega-prison project led to Kier receiving the ‘Productivity in Construction Initiative of the Year Award’ for what the judges described as ‘a superb demonstration of productivity in construction that should be adopted as the blueprint for delivery across the industry, particularly for social infrastructure projects’. Kier were also highly commended for this project in the ‘Digital Initiative of the Year Award’.
The Ministry of Justice developed the designs, costs and programming of this £253 million project using the two stage, multi-party PPC2000 Project Partnering Contract. They brought together team members procured under their bespoke overarching strategic alliance which enabled them to apply systems of continuous improvement and lessons learned on other prison projects. The success of the Ministry of Justice strategic alliance contract provided the basis for the published FAC-1 Framework Alliance Contract.
At a research workshop hosted by the King’s College London Centre of Construction Law, Rebecca Wade of Kier reviewed challenges faced during the pre-construction phase of HMP Wellingborough where collaborative working, product innovation and a pioneering approach to offsite manufacture and digital technologies informed on-site delivery and provided a blueprint for the Ministry of Justice’s future 10,000 prison places programme. Some key features of this alliance project included:
- Strategic procurement by the Ministry of Justice using a PPC2000 contract that encourages collaborative behaviours, improved performance, improved value, joint risk management and dispute avoidance
- Early Supply Chain Involvement under an integrated preconstruction phase and construction phase, using the Government’s recommended procurement model of Two Stage Open Book
- Effective offsite manufacture facilitating a national ‘levelling up’ agenda, with the predominance of manufacturing facilities in former industrial hinterlands and more deprived areas of England
- Effective use of BIM digital integration for virtual planning and real-time data management, so as to integrate the work of Kier, HLM Architects, MZA Consulting Engineers, Pick Everard and Arup, plus over 70 other contributors to the Project Information Model
- Productivity benefits such as 80% design standardisation, 22% faster on-site delivery and digital tools preventing approximately £7 million of remedial works
- Client benefits from the integrated alliance approach such as 70% increased energy efficiency compared to a Victorian prison, 95% of waste diverted from landfill, increased accessibility, smaller and smarter prison communities, improved cell doors and product innovations such as barless windows.
- Social value including 100 new jobs (25% of them for ex-offenders), 50 apprenticeships, 25% local employment, 30% SME spend and 20% local spend.
The analysis of HMP Wellingborough by King’s College London forms part of our research for CDBB and Innovate UK, working with the Cambridge University Laing O’Rourke Centre to examine how high-performing collaborative teams are using new contractual models and new approaches to digital technology. An emerging output from this research is a ‘Collaborative BIM Protocol’ based on a populated version of FAC-1, which is due to be trialled by the Ministry of Justice on the procurement of their 10,000 prison places programme.
UK Government Construction Playbook mandates effective contracting and endorses FAC-1
On 8th December 2020 the Government launched its ‘Construction Playbook’https://www.gov.uk/government/publications/the-construction-playbook, providing new guidance on sourcing and contracting public works projects and programmes. This guidance is designed to improve safety, to focus on whole life carbon reduction and to promote social value in ways that can tackle economic inequality, promote equal opportunities and help communities to recover from Covid-19.
The Construction Playbook sets out a total of 14 progressive procurement policies that have been developed in consultation with the construction industry in order to deliver ‘better, faster and greener solutions’, and these policies are mandated on a ‘comply or explain’ basis. They include longer-term contracting for portfolios of work, harmonising and digitising demand, embedding BIM, procurement using early supply chain involvement, outcome-based performance measurement, benchmarking for better understanding of costs, and effective contracts that are structured to support exchange of data, to drive collaboration, to improve value and to manage risk.
The Construction Playbook promotes the use of frameworks as an efficient procurement method but emphasises that a ‘successful framework contract should be based around principles that align objectives, success measures, targets and incentives so as to enable joint work on improving value and reducing risk’. It goes on to say that the ‘FAC-1 framework is a good example of a standard form framework contract that can achieve this and many of the ambitions set out in this Playbook’.
FAC-1 creates a framework alliance that offers collaborative systems to integrate the activities of team members engaged on one or more projects or programmes of work. It has been adopted by Crown Commercial Service as the basis for all their national and regional frameworks with consultants, contractors and modular suppliers. FAC-1 is being used by the Ministry of Justice on its New Prisons programme, a pathfinder for implementation of the Construction Playbook, to create an alliance that integrates the work of contractors, sub-contractors and offsite manufacturers, and that operates as a collaborative BIM Protocol compliant with ISO 19650..
There is a lot to think about in the Construction Playbook, and significant industry buy-in as a result of the consultative approach. Signatories to the Playbook’s Compact with Industry comprise Bam Nuttall, CECA, Costain, Kier, Tideway, Osborne, Rider Levett Bucknall, UK BIM Alliance, Federation of Master Builders, Project 13, King’s College London , Mixergy, CIC, Skanska, ACE, Bryden Wood, Imperial College London, Bam Construct, Builders Merchants Federation, Laing O’ Rourke, Home Builders Federation, Willmott Dixon, Taylor Woodrow, CIH, Balfour Beatty, Beard, Mott MacDonald, Mace, British Property Federation, Graham, St Gobain, ICE, UK Power Networks, Amey, Construction Products Association, National Federation of Builders, Atkins, Hack, Speller Metcalfe, CITB, HSE, Lendlease, Arcadis, Wates, Electrical Contractors’ Association, Build UK, Keltbray and Turner & Townsend. A short video is available at https://www.linkedin.com/posts/cabinet-office_public-sector-projects-will-be-delivered-activity-6742023887996903424-7tcG,