The 'collaborative' future of construction and infrastructure procurement By Michael Weatherall and Lisa Curran Framework Contracting, that is well planned from the outset, can be an effective tool to deliver an entire programme of infrastructure with benefits for all sides. While it is simply one way to address resource constraints and the need for fair apportionment of risk in the evolving construction sector landscape, Framework Contracting is increasingly being used to good effect - especially by local authorities and Council Controlled Organisations. In summary - What you need to know • Clients are having to re-consider traditional procurement approaches to attract a market that is resource constrained and more risk adverse than it was a few years ago • Framework Contracting is a move away from more traditional models, that procured a programme of works one project at a time. Instead, its objective and focus is to deliver an entire programme of works as efficiently and quickly as possible • The benefits of this type of model include faster delivery times due to efficient procurement processes, and increased quality and innovation - contractors can invest in the development of staff and subcontractors as they have a pipeline of work on the horizon. Background - sector issues created need for change There is no doubt that the New Zealand construction industry is facing many challenges today. New Zealand is in the unenviable position of being both in a construction boom, but not having the necessary resources to meet demand. The New Zealand construction market is not alone, Australia is facing very similar issues with some of its main contractor market challenging the markets historical risk profile and announcing that lower risk profiles must be implemented.1 Why have so many contractors been placed into liquidation, when the New Zealand infrastructure market is screaming out for more experienced contractors? High profile struggles and failures within the sector have drawn attention to the previous risky (and now unpopular) practice of contractors increasing competitiveness at tender stage by accepting risks that they could not control. This practice resulted in underpriced contracts that essentially funded construction for the client and imperiled the contactor’s operations and ability to complete active projects. Both clients and contractors are now forced to re-consider previous procurement contracting strategies to respond to the change in the contractor market appetite for risk and the shortage in the industry of resources. Changing attitudes to risk We all know that risk should lie with the party best placed to control, manage and mitigate risk, however this is not always reflected in the contracts we have seen coming out of the sector. The common stance that ‘the contractor can price the risk’, needs to be interrogated. Does the contractor have the necessary information to price