International Construction Law Review Volume 34, Part 4, October 2017- “The Origins and Purposes of the FAC-1 Framework Alliance Contract”
AFFARITALIANI 20.06.17 The State University (“La Statale”) of Milan tries out FAC-1 standard contract.
“A project for a new approach to contracts and procurement was launched at the Faculty of Jurisprudence of the State University of Milan. A closed meeting took place at the Faculty to discuss the future of standard contracts and procurement. A new way to conceive of contracts: no longer a place for ambiguities and dangers of interpretation but a collaborative open book.
This meeting continued the debate on Legal BIM started last December: academics, institutions, public bodies, firms and associations met up to talk about [FAC-1] the first model of a collaborative contract to be tried out in Italy.
This interdisciplinary work group, instigated by Professors Sara Valaguzza, Giuseppe Di Giuda and Angelo Ciribini, has translated, studied and adapted to the national context a standard multilateral contract for the management of public and private contracts, created by the Director of the Centre of Construction Law at King’s College London, Professor David Mosey.
In the United Kingdom, less than a year after its creation, this standard contract has been applied successfully to projects worth more than £9.5 billion. The idea is to experiment, in Italy too, with a standard contract which regulates in detail the collaboration between the various professions involved in a specific project and rewards the added value of collaboration, while facilitating in parallel the spontaneous use of BIM, as observed by engineers..
“The way we see it”, says Professor Sara Valaguzza, “this will reward, immediately and at market prices, the good faith of the contractors and their promised performance, thus reducing any advantage from disputes or from obstructing the demands and objectives of the overall project.”
A handbook containing the basic rules of collaboration as an antidote to extra costs and to the protracted time of realising public works – what the representatives of public administrations wish for. At the meeting were present representatives of the Ministry of Infrastructure, the Municipality of Milan, Assimpredil, ANCE, the Milan Chamber of Commerce, Digicamere, the Sardinia Region, ANAS, Tar Milano and members of the Ministerial Commission for the BIM Decree, Italferr, EAPPP (European Association of Public and Private Partnership). They applauded the initiative, recognising the benefits that collaboration would logically bring to their contracts.
Unimi offered to launch a pilot project. The Municipality of Milan, ever ready to experiment with transparent and innovative methods in the field of public contracts, has volunteered to study the project in depth together with the Ministry, which has agreed to participate in the working group.”
Building Magazine article 19.05.17 “Forming Frameworks”- “Clients are more familiar with JCT, NEC or FIDIC than with PPC2000, but none of these single project contracts can create the links needed for a team to learn from one project to another”
RESOLEX newsletter 04.05.17 – http://www.resolex.com/fac-1-and-the-future-of-collaborative-procurement/
Stephen Woodward, Guest Editor of Construction Law January/February 2017, noted that “in case studies testing the new FAC-1 standard form framework alliance contract…potential disputes have been averted through joint working under a collaborative governance system”.
“Explaining the FAC-1 Framework Alliance Contract- what is it all about?” , blog by David Mosey for LexisNexis
Stephanie Canham, “In the frame” in Building magazine “At its heart FAC-1 provides a collaborative approach to improve value in the procurement of any type of works, services or supplies”
Tony Bingham, “The book group” in Building magazine “So this FAC-1 is a standard form basis unlike any other, creating a basis for awarding and integrating any of the framework works, services and supplies”
Christopher Pedder, “Alliancing revolution: New contract targets better relationships” in Construction News 11.07.16 “FAC-1 can also be used for ‘additional clients’. This is a significant benefit for the public sector, where lead authorities seek to act as central purchasing bodies for other public sector authorities”.
Francis Ho, Head of Construction at Olswang, “A Frame of Mind” on FAC-1 in Building magazine 18.03.16 : “It will take an effort to shift developers off their beloved custom frameworks but at least there’s now a convincing alternative for those with the desire to explore more meaningful collaborations”.
“A First for Frameworks” ,Construction Law, Aug/Sept 2016 “Bid costs have been reduced significantly using a pilot version of the new [FAC-1] contract”.
David Mosey and Deirdre Ni Flhoinn interviewed by RTE Radio, Ireland 10.16
RADAR Roundtable “Building Collaboration within Frameworks” 09.16
“An engaging presentation on FAC-1 as the workflow of a framework with the benefits of an alliance highlighted the fundamental question of “Why if you want collaboration would you use an adversarial contract?”. From this examples abounded of where frameworks go wrong culminating in the hypothesis of “Can alliancing rely on good faith?”
In answer to the questions of “Why do we need a framework alliance contract?” And “Why is FAC-1 significant?” it emerged that good frameworks and good alliances leave a gap in the market for a new standard form of multiparty contract linking stakeholders and supply chain to the client as alliance members managed by an alliance manager. An essential of a framework alliance is that of making the parts into a greater whole so that what you do together improves the value. A major component is new ways of engaging the supply chain.The exemplar Surrey County Council Project Horizon was quoted as a pilot for testing much of the thinking behind the contract.
Key factors are the addressing of sustainability, governance, early warning and alternative dispute resolution options.
The philosophy behind the new contract is given in the RADAR Talk https://youtu.be/9qgZIwqF9bI
FAC-1 is not a project contract and is the result of collective endeavour. It works across cultures on the basis that empowering away from client and project manager to a group increases collaboration and increases motivation.
Can collaborative working be defined? Is it a set of values? Is the measure of collaboration in the machinery of good faith? Can good faith be evidenced?
A good early warning system is essential. There can be an undermining of contracts and workshops if contracts encourage silos.”
“Framework forces competitor collaboration” posted by Andrew Allen 10 .08. 16
Back left to right: John Thornhill, John Forde (senior associate, Trowers and Hamlins), Ian Skipp (group finance director, Futures) and Martin Sherman (executive director of finance, Futures). Front: Professor David Mosey
“A housing association in the East Midlands is the first to use a new framework contract that connects competitors and encourages them to work together. Futures Housing Group has adopted the Framework Contract Alliance (FAC-1), which not only makes it easier for small businesses to bid for deals, it sets shared objectives for those on the framework.
Professor David Mosey of King’s College London was commissioned in 2015 by the Association of Consultant Architects to create new forms of framework alliance.
He said of FAC-1: “The benefits are that you combine the pipeline of work under a framework using the shared objectives of an alliance.
“In other words, you’re connecting people who think they are competitors and saying ‘there’s a pipeline of work from us and there are ways of working together for your benefit and ours’. It uses the throughput of work to make people more innovative and collaborative.”
Alliance members are expected to work together to improve value, share information on suppliers, review and compare prices and tender or renegotiate subcontracts. Mosey originally drafted PPC2000 and has since worked closely with the UK government on trial projects to analyse the savings and other benefits of the ‘two stage open book’ procurement and delivery process. The results of these trials were included in guidance launched by Sir Vince Cable in July 2014.
Futures Housing Group, which manages more than 9,000 homes, said the impact of the framework alliance could be clearly seen in its latest process. Head of procurement John Thornhill, said: “The first contract we’ve put out under these new rules, for planned maintenance works, has seen around 90 businesses bid – which is unprecedented. The changes to the law have put us in touch with smaller businesses that previously weren’t able to afford to work with us, for example due to cash flow constraints if they took up a works programme.”
The new contract, which was launched on 2 June, combined with the latest procurement rules has enabled SMEs to tender for parts of bigger overall frameworks with Futures, creating healthier competition in the market and giving the organisation more resources to draw on. The approach is designed to be easy to understand and to help improve legal compliance as well as better value for money.
Mosey said of Futures: “This is the first not only for the housing sector, but in any sector in terms of the use of the contract – there’ll be a lot of people coming behind.”
The guidance says it fills a major gap in the market and can also be used with JCT, NEC, FIDIC and any other standard form construction contract.”