Notwithstanding the efforts of J. Sainsbury Ltd, the majority of partnering activity
within construction falls into the category of strategic partnering or long-term
partnering.
“Long-term partnering covers a broad range of strategic co-operative relationships between organisations or between different departments in
the same organisation.” Barlow, et al (1997:6)
Long-term partnering involves the selection of a partner on criteria normally other
than price alone^°. Choosing a construction partner is a complex issue and like staff
recruitment or the selection of any other type o f partner, individuals have personal preferences at to the best approach to making the selection. BAA chose a rigorous
and personal approach to the selection of partners for its Genesis project; these
partners were to be used on the development of Heathrow Terminal 5. The process is dealt with in some detail in Chapter 4; the process included presentations by prospective contractors to an audience that included competitors, and the setting of a problem solving exercise to be dealt with during an intensive 24 hour period between interviews. This process gave a strong advantage to firms with good presentational skills and the ability to problem-solve and be innovative. The process of selection and monitoring of partners is documented in an elaborate portfolio of information available to staff involved in partnering activities. There is evidence that certain staff in BAA are responsible for the development and maintenance of the manual on partnering (BAA, 1997).
The Latham Report recommended that the partner should be selected initially through a competitive tendering process and for a specific period o f time. The case studies carried out for this thesis suggest that price is rarely as significant factor when selecting partners. Service buyers indicated that other factors such as reliability, familiarity and ability to innovate were o f more significance than initial costs. This issue is referred to later, in the consideration o f the case studies.
Cook and Hancher (1990:74) suggest the following criteria for selection of partners
□ Seek high quality, experienced firms
□ Relationship building for all levels of management
□ Identification of potential partners strengths and weaknesses in terms of resources and abilities
□ Identify cultural and other differences between service buyer and provider
The research of Barlow et al (1997) revealed that organisations that have been partnering as service buyers, for some time, exhibit a wide range of approaches. Whilst BP and NatWest have developed “rigorous procedures” for selection of partners, the approach adopted by Safeway has been more evolutionary; contractors started by carrying out small packages of work and their involvement increased over a period of perhaps five or six years (Barlow, 1997:26).
3.10 Features and operation of partnering
The function of this chapter is not to enter into a descriptive discourse on the implementation of partnering in practice. A number of texts cover this aspect of partnering in some detail; see, for example, Bennet and Jayes (1998), Baden Hellard (1995), CII (1991), Cook and Hancher (1990), ECU (1997) and NEDC (1991).
Barlow (1997:1) observed that “there are probably as many definitions of partnering as there are firms engaged in it”. It follows, if there is a lack o f consensus on definition and purpose, that there must be a wide variety of approaches to the implementation of partnering.
Cox and Townsend (1998) provide a useful summary of the attributes of partnering according to the main texts. These essential attributes are, in summary
□ Mutual objectives (risks and rewards)
□ Agreed method for early problem resolution
□ Continuous measurable improvement
□ Equality in relationships
□ Open (no-blame) culture^*
□ Management and stakeholder commitment
There is consensus amongst the texts on the points above, if we accept the slightly different definition proposed by each author. The following points are put forward by a minority of those writing on the subject of partnering:-
□ Customer focus
□ Long-term commitment emphasis
□ Innovation
□ Team Approach
I am not entirely convinced by the definition here. Openness tends to manifest itself in extensive and non-hierarchical communications and a lack o f secrecy surrounding profit margins and costs. A
The approach to implementation clearly will reflect the bias that the manager has in relation to the essential attributes listed. Arguably one of the most structured approaches to partnering implementation is that adopted by British Airport Authorities. As Winch (2000:148) observed, the privatisation of former public utilities such as BAA has enabled these organisations to be amongst the most
innovative in their use of partnering. Clearly, considerable resources, over a
substantial period of time, have been committed to partnering by BAA. BAA’s substantial Framework Pack (1997) deals with process of entering into a contract
with one of BAA’s framework contractors in some detail. Initial selection of
partners involves the written presentation by the prospective partner of an extensive company profile. This is followed by a visit from BAA officials and some type of project-based test for the team. BAA’s policies on partnering represent amongst the most highly structured and well-developed of approaches within the UK construction industry. Those adopting less exemplary practices are slightly more
difficult to document accurately. Research into the use of partnering in UK
construction and the extent to which the partnering culture and its processes were “cascaded” down the project hierarchies to small subcontractors and suppliers, makes sobering reading. The partnering principles are frequently only applied to the consultants and the first tier of the constructor’s team, thereby excluding small
subcontractors and self-employed actors (Flaherty, 1999). In its worse form,
partnering is very often no more than one or two fairly insignificant symbolic gestures (project team lunch-time meeting, for example), followed by an overture on the part o f the client to share any savings created with the client, rather than letting them “lie where they fall”, as would be the case on traditional projects.
The process o f selecting partners under the BAA framework agreement is complex and requires the submission of a large volume of data relating to payroll and policy statements. It is also reported (Knutt, 1996:18) that the process involves day-long visits of eight-strong BAA assessment teams. Not surprisingly, those who have been subject to this selection process and when unsuccessful, have complained bitterly about the abortive costs involved.
Costs of up to £50,000 per application have been mooted (Knutt, 1996:18), which must be daunting even with the possibility of a secure five-year workload and a share of an annual programme of around £500M. BAA would normally allocate work to a framework contractor over a five-year period, at which point the
framework would be reviewed^^. Once framework agreements are operating
smoothly, there should be savings in transaction costs (Winch, 2000:148); these must, however, be set against a potential increase in transaction costs rising at the beginning of the partnering period. This investment might include, for example, research related to innovation in systems or materials, which might only provide a return over a number of projects.
3.11 A Summary o f points on partnering
We have reviewed the history of partnering from early thoughts on serial contracting by Banwell and the informal arrangements between Bovis and Marks and Spencer, to the renewed interest in the subject arising through the Latham and Egan reports; we have also acknowledged the important contribution to partnering practice made by the privatised utilities; BAA was a prime example and has provided the subject for a case study which follows.
Later in the chapter, we reviewed the wide range of definitions that exist for partnering. Barlow (1997:1) suggests that there are as many definitions as there are firms and I would suggest that each individual firm’s definition is a function of history, their aspirations and a number of contextual or external factors. We have tried to define partnering in institutional terms and touched briefly on the importance of trust and the move away from contractual forms of governance.
The process is very similar to the process o f administering list o f approved contractors, commonly used by local authorities and other public sector bodies. The framework process has more rigorous and extensive barriers to entry, however.
We have looked at some of the general principles of partnering that appear to be common to the majority of definitions; a brief bibliography was given for texts dealing with the operational aspects of partnering. Some participants appear to take the view that partnering is a prerequisite for a range of collaborative activities'^. Partnering itself does not necessarily change the substance of the relationship between the actors, it can be applied in the context of otherwise traditional relationships (Winch, 2000:149). Others feel that partnering is a form of alliance that evolves out of fundamentally re-engineered processes. Bresnen has identified the issue of relative balance of power between formal contractual conditions and informal partnering (Bresnen, 1997) and their effects on problem solving, team configurations (Bresnen, 2000a and 2000c). The effects of financial incentives and their relationship with other forms of project governance are critically reviewed in Bresnen (2000b). Much of the research carried out in the area of partnering and financial incentives is regarded as “descriptive and anecdotal” (Bresnen, 2000c: 819).
The change in roles effectively requires a different basis for the relationship (see, for example, Howell, 1996, referred to above). An example of such a re-engineered relationship might be supply chain management. We shall now consider this topic.
I would suggest that the approaches adopted by Sainsbury and McDonalds , for example, fall into this category. The process o f partnering adopted are closely related to a simple serial contracting, or perhaps what Barlow et al refer to as extended enterprise (Barlow et al 1997:Ch.2) approach. This relationship provides a context within which to negotiate shorter work programmes and to reduce construction costs.