Frameworks agreements are important tools in procurement, but what are they? What are the key advantages of framework agreements, and do they come with any drawbacks? Find out more about the importance of framework agreements and the pros and cons of using them below.
What Are Framework Agreements?
So, what are framework agreements? Essentially, framework agreements are an agreement between the framework provider (for example, Procure Partnerships Framework), and the supplier.
The framework helps to determine numerous conditions for contracts over a set period. In terms of construction, framework agreements are a set of specific terms and conditions for making purchases, also known as call-offs.
In contrast, delivery contracts, such as a JCT or NEC contract, are an agreement between the buyer (for example, a public sector body), and the successfully appointed supplier.
Open Tender vs Framework Agreements
While open tenders allow for open competition, frameworks offer time and cost savings – a great benefit to many government bodies. But what are the key differences between the two, and which is the better option to utilise?
Open Tender
An open tender, typically known as competitive bidding, involves offering invites to potential suppliers or contractors who want to provide services or materials for your upcoming projects.
The open tender pipeline varies, depending on the project itself. Typically, the process involves advertising the available opportunity, and then inviting parties who are interested in the opportunity to bid for the work.
Unlike closed tendering, which takes the alternative route of inviting selected people or organisations, the invitation to bid for work is open to all parties who are both fully eligible and qualified.
However, an open tender has its flaws. The process can be laborious and time-consuming for public sector bodies. When planning projects and managing public resources, government agencies and departments may struggle with the volume of tenders that come forward. This can lead to administrative burdens and even delays in project timelines.
Each tender needs to be fully evaluated, and feedback must be given to each supplier, which undoubtedly takes time. In many cases, open tender attracts bids from inexperienced suppliers, which can increase risk and costs associated with outsourcing compliance-checking.
It’s important to find suppliers who meet specific criteria and compliance standards – open tender is likely to make this process more time-consuming.
For example, with increased legislation around procurement, many construction companies and suppliers now need to prove that they’re dedicated to achieving net zero targets by providing evidence.
As open tender allows a large selection of suppliers to come forward, it could mean having to check each individual organisation to ensure they’re both compliant and committed to such achievements.
Framework Agreements
Framework agreements promote communication and transparency, but they also streamline the procurement process, helping to ensure projects are delivered on time and within the set budget.
As the construction industry is high risk, it is vital that suppliers hold the necessary accreditations, experience and compliance standards to work on a public sector construction project. By using a reliable framework, clients can feel confident that each supplier has been vetted as part of the initial bidding process undertaken to be on the framework.
In addition, framework agreements act as a vehicle for effective performance management. Terms and conditions are set within framework agreements to protect clients and uphold high standards in project delivery.
With a framework agreement in place, stakeholders can mitigate potential risks while making informed decisions throughout the entire project lifestyle. It’s easy for ongoing construction projects to lead to cost overruns and delays – by utilising an effective framework, you can help prevent such issues from occurring.
Framework agreements help in establishing long-term relationships, allowing frameworks and their suppliers to negotiate more easily and encourage open communication. Typically, frameworks are a much quicker alternative to open tender – with frameworks, you can access a pre-approved list of suppliers or contractors.
The Advantages of Frameworks in Construction
Using a framework in construction comes with numerous benefits. From streamlining the procurement process to reducing costs, there are many reasons why frameworks are favoured by those operating in the construction industry.
Stability and Predictability
Frameworks in construction provide a stable platform for both clients and suppliers alike. With stability and predictability comes better long-term planning and resource allocation. Frameworks have transparent, set terms and conditions, helping to ensure contract stability and uphold compliance and quality standards with chosen contractors.
Procure Partnerships Framework ensures every contractor on the framework is subject to a rigorous vetting process, though the compliance-checking doesn’t stop there. All contractors on the framework are monitored on their policies, insurances and financial stability in real time, to ensure no slippages in regulatory standards.
Streamlined Procurement
One of the key benefits of framework agreements is the streamlined process that it has to offer. Using a framework agreement helps save resources – all pre-qualified parties involved in the process won’t need to repeat the tendering process.
Having a streamlined procurement process allows suppliers to focus on delivering quality goods and services, whilst saving clients time and money that may be involved in repeating the pre-qualification process.
Quality Assurance
Typically, suppliers are selected based on both their:
- Capability
- Track record
Selecting suppliers based on these criteria helps ensure that projects are awarded to those who have proved their experience and ability to deliver high-quality results while complying with set standards. Awards based on quality assurance increase the likelihood of project success.
Cost Savings
Many organisations find using frameworks can help to reduce costs. A recent construction industry forecast from BCIS has predicted that building costs will increase by 15% over the next five years, and tender prices will rise by 17% during the same time period.
So, it’s more important than ever for public sector buyers to choose routes that provide cost-savings and value for money. Frameworks provide freedom to award contracts without having to re-advertise – this helps save substantial time and cost of repeat bidding. Ultimately, using a framework means that you can handle your budgets more effectively and save time overall.
At Procure Partnerships Framework, we deliver value for money for our clients through a best-in-class support package. We know that clients can experience time constraints and are often juggling many tasks. Our tender support team takes care of managing clarifications, organising site visits, providing feedback on unsuccessful bids, and much more.
Through selecting experienced, quality contractors, coupled with our post-procurement support offering, over 92% of Procure Partnerships projects are delivered on time.
Potential Drawbacks of Frameworks in Construction
Although using framework agreements comes with many advantages, there are some potential drawbacks, too. Some organisations believe that using frameworks in construction reduces competition and increases the risk of dependency, to name a few – but is this true?
Reduced Competition
Although framework agreements are great for saving time and costs, some believe they reduce competition. Frameworks have a limited set of contractors who can bid on projects within each lot, which in turn can reduce competition.
However, framework agreements increase market visibility and provide opportunities to acquire contracts from multiple organisations. This increased visibility can help promote healthy competition across the construction sector.
Flexibility Limitations for Suppliers
In some cases, suppliers can struggle with flexibility while using framework agreements. Some might perceive the terms and conditions in framework agreements as challenging, which is thought to limit flexibility for suppliers – but this isn’t always the case. Framework agreements can actually provide great flexibility for multiple call-off methods.
Risk of Dependency
Some clients could potentially become overly reliant on a small pool of suppliers within a framework agreement. If this occurs, it could lead to a lack of diversity and possible long-term dependency issues.
At Procure Partnerships Framework, we have 87 contractors across 4 different frameworks, offering a high level of diversity. We’ve expanded our portfolio to cater for the growing needs of the industry, ensuring clients can access the most suitable contractors for their projects.
Are Frameworks Right for Your Next Project?
So, is a framework right for your project? We believe so. Frameworks provide a compliant route to market, supporting public sector organisations in finding the highest quality contractors available.
At Procure Partnerships Framework, we help organisations find compliant contractors within 9 regions across the UK. We have five PCR15-compliant frameworks, all of which are managed by a trusted team of professionals who remain on hand to support, advise, and guide you from the beginning of the tender process until the end of project completion. Our five frameworks cover:
- Construction
- Professional services
- Infrastructure
- Decarbonisation and retrofit
- Demolition
Our construction framework can support both new build and refurbishment projects. The framework has been structured to provide clients with the flexibility of choosing between four contractor call-off methods, including:
- Two-stage
- Single-stage
- Two-stage express
- Direct award
Our invaluable team of specialists are here to help find the most suitable procurement route for you. We encourage you to get in touch with us today to find out more.
If you have a specific project in mind, you can book an appointment with our regional key account manager. We look forward to hearing from you soon.
