Framework

Question 1

How does a framework work?

Answer 1

“A Frameworks are appropriate for clients with a lot of projects over time.
The process starts with the initial tender being sent out on basis of prelims, OH&P and schedule of rates of all conceivable types of works. The framework agreement is entered into between client and contractor that if and when projects come to fruition then the chosen contractor from the framework would do it on previously agreed prelims, OH&P and rates. PQS and Contractors QS number crunch. Contractor appointed. Frameworks encourage a partnering approach and if there are many on the framework then KPI on performance chosen.”

Question 2

How is a framework agreement awarded?

Answer 2

When the Project comes to fruition, it is awarded on the basis of prelims, OH&P and rates of all concievable types of work tendered previously.

Question 3

What do we mean by a process of call-off?

Answer 3

Where a contractor is selected on the framework for a project based on pre agreed fees / rates. Without the need for re - tendering

Question 4

What is advantage and disadvantage of Framework?

Answer 4

“Advantages
Overall time: The time period for frameworks are usually short. Preliminary enquiry, invitation to tender and the tender analysis for which tenderer to appointed as framework contractor will have already taken place, therefore works can start onsite immediately for each independent project. Certainty of time is gained at tender stage. Works can effectively start on site the next day given that all rates have been agreed beforehand.
Overall cost: Original Framework tender in competition but the subsequent use of pre agreed prelims, OH&P and rates dependant on marketplace can do it cheaper or not i.e. book or recession. Certainty of cost is gained at tender stage
Overall quality of workmanship: The Client will have chosen specifically to enter partnering ethos on long term basis working. Part of the framework for contractor to input on buildability

Disadvantages
Overall time: No Disadvantage
Overall cost: No Disadvantage
Overall quality of workmanship: No Disadvantage”

Question 5

Is framework competitive?

Answer 5

Yes, the original framework is tendered on competition but the subsequent use of preagreed prelims, OH&P and rates are dependent on marketplace. Could now be cheaper or could be a ressession etc

Question 6

What is your opinion on framework agreements?

Answer 6

only good for clients if they have a large amount of continuous work to complete. Probably not viable over a prolonged period of time due to market conditions etc

Question 7

What do you know about Private Finance Initiatives / Public Private Partnerships (PFIs / PPPs)?

Answer 7

“Private Finance Inititative (PFI) are public sector projects financd through the private sector. The private finance company handles the upfront cost of the project and then is leased back to the public under government authirity who make payments to the private company usually over a period of 30 years.
Public Private Partnerships (PPP) are a collaboartive partnership between the government and private sector companied to finance /build / operate projects. the private sector may be interested in the profits post completion of the project in exchange for the funding. “

Question 8

Give some examples of PFI / PPP schemes that have been used in the UK

Answer 8

Hospitals / Highways / schools / Prisons / Rail / water / Private Roads

Question 9

Explain how PFIs / PPPs are fundamentally different to more conventional developments?

Answer 9

PFI / PPPs are set up on a different structure and contractural basis. The process involves additonal parties, substantially different risk matrix and more complex responsibility for the management of risk. The projects are generally more onerous over a longer period of time ( 30 years )

Question 10

Explain the structural basis of a PFI / PPP.

Answer 10

The Private investor would set up a new type of legal company (SPC / SPV) who then employ a construction company to build the project and then an operation and maintence company to maintain and operate the project for up to 30 years before handing back to the governement

Question 11

Explain the contractual basis of a PFI / PPP.

Answer 11

Formal contracts are required to ensure that all parties understand their legal responsbilites and held accountable to deliver to the specific requirements and performance criteria. The Company will have a contract with the contractor for the building of the project itself (Contractor responsible for upto 12years (DLP))and there will be a separate contract for the O&M Company who will maintain and operate the building for a very long period of time (upto 30 years)

Question 12

What do we mean by an SPC / SPV company in relation to PFIs / PPPs?

Answer 12

Special service companies (SPC) / Special Service Vehicles (SPV) are a type of legal company created to allow investment and effective risk transfer to safeguard the private investors. These companies became responsible for the construction of the specific project but had to operate the facility for a long period.

Question 13

Explain the concept of risk transfer in a PFI / PPP.

Answer 13

Risks are identified and allocated to the party best able to understand properly manage them

Question 14

Who pays for a PFI scheme?

Answer 14

The private sector initally and then leased to the governement over a long period

Question 15

How is it privately funded?

Answer 15

A private investor pays for the works and make money back from leasing and interest over a long period

Question 16

How is the developer recompensed / how does he make his money?

Answer 16

Long term payments and interest from the government

Question 17

When does he get paid / Is there a time period for payment?

Answer 17

Private investor pays for the project upfront . on completion of the project, the private investor leases the project back to the governement who pay anually over a long period