Clients and Contractors - Construction Economics: A New Approach - page 89

ranging from as low as two per cent to as much as 30 per cent depending on the
type of partnership. They found that project partnering , which is based on a client
and contractor working openly on single project, produced cost savings of around
2-10 per cent. Strategic partnering , which involves the client and contractor
working on a series of construction projects, was regarded as capable of delivering
savings of up to 30 per cent. In addition, Bennett and Jayes (1995) specifically claim
that partnering delivers better designs, makes construction safer, enables deadlines
to be met with ease and provides all parties with increased profits. Some current
examples of partnering will be dealt with in the following two sections to see how
these possibilities can develop.
Prime Contracting
Prime contracting is a good example of partnering since it involves the integration of
design, construction and maintenance under the leadership of one main contractor.
The prime contractor takes on responsibility for everything from the selection of the
subcontractors through to the delivery of the product. Consequently the client has
only one point of contact, and the prime contractor strives to look after the client's
interests and assure that quality, budgets and delivery targets improve.
Prime contractors are presently looking after estates run by the Ministry
of Defence and new supermarkets being built on behalf of J. Sainsbury plc. Such
contracts are usually continued for a number of years - on a repeat business basis.
Accordingly, both parties seem to gain a greater opportunity to learn what is needed.
Private Finance Initiative (PFI)
This form of partnering has a far higher profile, since it involves the public
and private sectors collaborating over some of the biggest projects in
construction. These projects include highways, hospitals, prisons, schools and
government offices. Since its launch in November 1992, more than 650 PFI
contracts have come into force representing future commitments of around
£260 billion (HM Treasury 2011). Similar arrangements, such as public private
partnerships (sometimes referred to as 3P), are a growing phenomenon worldwide.
A project procured under the private finance initiative is based on a distinctive
kind of relationship between a public sector client and the private sector. The
general procedure is as follows: private firms operating in a consortium agree to
design, build, finance and manage a facility traditionally provided by the public
sector. (Finance and manage are italicised to emphasise that a distinguishing
characteristic of these schemes is that under PFI arrangements the private sector is
expected to raise the initial finance to fund the project and thereafter manage its
operation.) In return, the public sector client agrees to pay annual charges (called
a unitary charge) during the life of the contract and/or allows the private sector to
reap any profits that can be made for a specified period. The contracts usually run
for 25 to 30 years or more. In this way, both sectors can be seen to be specialising in
what they do best: with the public sector client initiating the development, specifying
the requirements and vetting the tenders, and the private sector taking the risks and
determining the best way to deliver the service.