Why is a new framework contract needed?
Frameworks are an established means for the delivery of multiple construction projects, and a framework contract can describe:
- Systems by which successive projects will be planned, designed and built
- Investments and rewards expected by the parties
- 'Agreed measures of the parties’ performance
- Machinery for the parties to review and improve what they provide.
While a well-integrated team can achieve good value and avoid disputes on a single project, the same team can generate stronger relationships and achieve greater long-term benefits on multiple projects. A framework creates more scope for improved value to be achieved on multiple projects because it attracts increased personal commitment and investment, because framework members can plan with a clearer understanding of potential additional work, and because framework members can be expected to learn from project to project. This overcomes the ‘Groundhog Day’ of lost learning from one project to the next.
However, framework contracts have often been neglected as vehicles for integrating teams and improving value. Instead, they have often been used cynically as short cuts to market and as a means to attract lower prices by exaggerating the potential pipeline of work. For example, without clear contractual relationships and processes that govern the fair award of work and the measurement of value, a framework can quickly break down and give rise to disillusionment and distrust.
What is different about FAC-1?
The FAC-1 Framework Alliance Contract (‘FAC-1’) integrates the activities of consultants, contractors, suppliers and other industry organisations engaged on a project or a programme of works, services or supplies of any size or type, and it aligns their interests with the interests of clients. It creates a multi-party umbrella that sets out agreed processes for planning, value improvement, contract award, performance review, problem-solving and shared learning. FAC-1 describes a range of systems designed to achieve value improvement, risk management and net zero carbon targets in any sector and any jurisdiction.
FAC-1 addresses the tendency to compartmentalise the skills applied to the strategy, procurement, contracting and management stages of a complex project or programme of works, which can lead to the loss of valuable information acquired at each stage. FAC-1 connects all these stages through a transparent multi-party structure that integrates all contributors and provides a consistent basis for collaborative practices and exchanges of experience.
FAC-1 was developed by King’s Centre of Construction Law & Dispute Resolution and the Association of Consultant Architects through consultation with 120 organisations in 14 jurisdictions and was published in 2016. It has been used by private and public sector organisations on projects and programmes of works, services and supplies ranging in value from £5 million to £30 billion.
Further information in relation to FAC-1 can be accessed in The FAC-1 Framework Alliance Contract: A Handbook which was published by LPP in 2023.
Is FAC-1 recognised?
Over the eight years to 2024, FAC-1 has been adopted on procurements with a total value of over £100 billion. It has attracted widespread recognition in the UK and internationally because it creates clear commercial systems that reach beyond the traditional role of contracts and that enhance the work of individual team members.
Since 2020 FAC-1 has been recognised in the UK Government ‘Construction Playbook’ as ‘a good example of a standard form framework contract that can achieve …many of the ambitions set out in this Playbook’, supported by the 50 industry signatories to that Playbook.
In 2024 the European Bank for Reconstruction and Development published guidance recommending the use of FAC-1 as an integrator for multiple FIDIC project contracts.
Also, in 2024 the NEC (New Engineering Contract) published guidance recommending the use of FAC-1 as an integrator for multiple NEC project contracts.
How does FAC-1 work?
FAC-1 is a multi-party umbrella contract that is designed to be used in conjunction with any number of consultancy agreements, construction contracts and specialist appointments and that describes the relationships and processes that these other contracts are not designed to cover.
The FAC-1 defined terms are shown in quotation marks in this blog and it describes a range of tested contractual systems for:
- Integrating the roles of 'Alliance Members' through shared 'Objectives, Success Measures and Targets' linked to agreed 'Incentives'
- Awarding any number or range of 'Project Contracts' for works, services or supplies comprising the 'Framework Programme'
- Planning the early engagement of 'Alliance Members' and of wider 'Supply Chain' members in advance of each 'Project' commencing on site
- Programming a 'Timetable of Supply Chain Collaboration' and other 'Alliance Activities' designed to achieve 'Improved Value'
- Capturing learning and improvement from one 'Project' to another
- Managing risks through a shared 'Risk Register' and avoiding disputes through shared preparatory measures and through 'Early Warning' referred to a 'Core Group' of individuals who seek agreed solutions.
FAC-1 enables the agreement and sharing of improvements in quality, safety and net zero carbon while protecting the 'Intellectual Property Rights' and other commercial interests of 'Alliance Members'. It clarifies the relationships between 'Alliance Members' and wider 'Supply Chain' members, and it helps to accelerate progress through the learning gained from exchanges of experience.