Highway maintenance: impact of framework agreements on contractor performance

Abstract

Purpose – The construction industry in the UK has a history of client dissatisfaction. A potential solution for improvement is through use of a framework agreement, where long-term relationships between parties may focus upon performance. The purpose of this paper is to assess whether use of framework agreements for highway maintenance projects can result in significant improvement for performance when compared with engagement of contractors through traditional discrete methods. Design/methodology/approach – A single-case study approach is used to investigate outcomes set within the context of a major county council in the UK. Quantitative data compiled from 164 civil engineering highway maintenance projects are separated into two groups – one represents those procured using traditional discrete methods and the other within a framework agreement. Findings – Results from independent-samples t-tests identified significant improvements in overall performance and in time (finish on time), cost (payment accuracy) and quality (defects and health and safety) resulted from the framework agreements. Research limitations/implications – The results of this study are derived from one unique and typical case, but they form a baseline upon which further research can build to test their significance in many other settings for construction and maintenance programme, especially in housing, education and highways. This research does not cover the impact of framework agreements on production and transaction costs which should be treated as a separate area for further research. Practical implications – Councils have a statutory duty to provide and maintain a wide range of local services and facilities, including transportation and road network. Conclusions from this study support use of framework agreements within a public sector environment, leading to improvement for contractor performance due to longer term relationship with clients. This in turn enhances quality of works and hence value for money from the councils’ highway budgets. Originality/value – Construction frameworks are a relatively new idea. Although a number of frameworks have been concluded, there is very little analysis regarding performance outcomes. This research tested and confirmed the validity of impact of this new approach on contractor performance.

A Procurement Performance Model for Construction Frameworks

“…Results from the posteriori procurement performance model have been incorporated into a second generation collaborative framework set within the South East Region of the UK. An examination of project outcomes indicate that data compiled as of June 2014 displays performance improvement effect comparable to results included in research conducted by Lam and Gale (2014). The deduction, by inference, is that provided elements of the model in this paper are included in collaborative procurement systems, such results can be expected to continue.…”

“…The operational construct relied upon use of key performance indicators to measure project outcomes where successful projects could place suppliers for selection of a future project by use of a marginal incentive system related to price and quality assessment. Operation of the construct gave a measurable improvement in project performance outcomes on the projects contained in the case study and this investigation formed a separate research paper (Lam and Gale, 2014). The operational construct of the performance model operates in the manner proposed and in the sequence anticipated.…”

“…Research into project management of performance outcomes of collaborative and partnering long term contracts is limited in terms of what and how quality, time and cost benefits can be achieved (Meng, 2012). A recent paper established, through a localised regional UK public sector based case study, that significant improvements are possible through the use of framework agreements (Lam and Gale, 2014). These include quality (lower defects upon completion and higher health and safety standards during construction), time (substantial number of projects finished on time) and cost (significant number of interim payments agreed within 5% of value and without excessive claims).…”

Performance of Framework Contract Projects in South Africa

“…Lam and Gale [17,18] reported significant cost savings and contractors performance. Also, in a study examining the procurement of pumps via FC in the UK, Holden [19] reported a reduction of 90% in the number of suppliers used and 10-30% reduction in price. Balcik and Ak [20] in their study on supplier selection in relief organizations, demonstrated that the use of FC delivered a 28% increase in response capacity, 13% decrease in delivery delays and 7-14% cost reduction of relief supplies by the international federation of red cross and red crescent societies in 2012.…”

Prediction of performance outcomes for procurement of public-sector construction consultants for property management

“…Through research into highways maintenance projects undertaken by a county council, Lam and Gale (2014) identified five critical success factors that measured the success of public sector projects. These factors can be categorised into time: start on time (ratio of days late starting against contract period) and finish on time (ratio of day finished late against contract period); cost: accuracy of payment (interim payments, including claims, certified within 5 per cent of contractor's application); quality: right first time (project completed without remedial works) and health and safety inspection (percentage of inspection passed).…”