Framework Alliance Contract used on construction projects totalling £9.5 billion

Major construction and engineering projects the world over face the challenge of bringing multiple consultants, contractors and specialists together to integrate their work, services and supplies. Each stakeholder will bring with them their own viewpoint, policies and procedures to manage their involvement with a construction project, with the risk of clashes and misunderstandings that lead to disputes. There are great opportunities not only to reduce disputes but also to improve economic and social value through new contract relationships that integrate team members and that embed learning from one project to another.

In response to these challenges, experts in the Centre of Construction Law and Dispute Resolution at King’s College London consulted with over 120 organisations and developed the FAC-1Framework Alliance Contract, the first multi-party contract of its kind in the field of construction. Since its launch in June 2016, FAC-1 has transformed the way in which multi-party relationships are agreed and managed, and has already been adopted on public and private sector procurements worth a total of over £9.5 billion.

The FAC-1 Framework Alliance Contract is set up between one or more Clients and a group of other Alliance Members, comprising any combination of contractors, consultants and specialists in relation to any one or more projects. An Alliance Manager leads agreed procedures and makes sure that FAC-1 is adhered to by all parties.

Having this framework in place means that when people or companies come together, they have a set of agreed activities and a timetable that go beyond their individual appointments and that enable them to work together for the benefit of the projects and the programme as a whole.

The benefits of using FAC-1 include:

• Savings and other improved value in procurement and delivery, generated by joint design reviews and supply chain reviews that have led to agreed cost reductions, extended warranties, community benefits, employment and skills commitments and new sustainability initiatives
• Significant reductions in the cost and time spent by clients and bidders in drafting and reading bespoke documents and in establishing links between their appointments
• Clear mutual commitments of Alliance Members through a shared system of objectives, success, measures, targets and incentives
• Effective risk management through the FAC-1 Risk Register
• The support of a Core Group which acts as a forum through which Alliance Members can raise issues with each other and resolve problems before they become disputes
• Flexibility for use alongside any standard form contracts governing individual projects.

Professor David Mosey, who wrote FAC-1 said: ‘This is the first ever strategic alliancing contract in a standard form and is unlike anything else available in the construction industry. FAC-1 fulfils the role of a multi-party framework and a binding alliance that creates important links between multiple two-party consultant appointments and building contracts. We have also separated out any legal and special terms so that the contract can work internationally as well as in the UK.’

FAC-1 provides the means for Alliance Members to obtain improved value through Building Information Modelling, and its drafting was influenced by the Centre for Construction Law and Dispute Resolution's industry research and subsequent report Enabling BIM Through Procurement and Contracts.

‘The successful culture of any alliance relationship depends on motivating people by offering them clear guidelines, common objectives and fair rewards’, says Professor Mosey. FAC-1 is an invaluable tool in helping to set a positive culture for multi-stakeholder construction projects.

‘Providing an agreed framework alliance helps to reduce issues caused by team members coming at a project or programme of work from different angles depending on their different backgrounds.'

FAC-1 was launched by the Association Consultant Architects (ACA) last year and has already been used in the UK by central government and local councils, by the Football Foundation and Sport England, by several housing associations on new build and refurbishment programmes, and by the developers of Graven Hill, the largest self-build programme in the country. The first published FAC-1 case study has shown how Futures Housing Group used the contract to integrate the work of 23 SME businesses, to achieve over 9% agreed savings and to provide local employment and training support as well as improved cashflow.

Internationally, FAC-1 is being translated into Italian, German, Bulgarian and Portuguese and has been approved for piloting by the European Bank for Reconstruction and Development.

FAC-1 also led to the launch this year of the Term Alliance Contract TAC-1, a framework agreement for self-contained, multi-party term contract.

You can find out more about the Framework Alliance Contract FAC-1 from the Centre of Construction Law webpages and the Association of Consultant Architects website.