Consultants for Construction and Property Asset Management
CALL US +44 (0)114 243 0900

Frequently Asked Questions

This page contains answers to some commonly-asked questions about Stradia and the construction industry.

If there is a question that you would like answering that is not displayed, please call us on 0114 243 0900. Alternatively you can submit your question via the Enquiry Form.


Q:

Does Stradia provide free initial consultations?

A:

With the increasing daily demands involved in running a business, it can be a challenge to take time-out to consider the help your teams need to achieve their objectives and the business' objectives, and stay ahead of the competition.

Stradia provides a free no obligation consultation service. We like to get a thorough understanding of your business and the real issues that you face. We can then suggest bespoke solutions that will make a real difference to you.

For further information, or to book a consultation, please contact us on 0114 243 0900 or complete an Enquiry Form

Q:

What is the most suitable contract to use for our project?

A:

Choosing the most suitable construction contract for your project can be a very confusing task as there are many different options and suites of contract on the market (e.g. JCT, NEC, Public Sector Partnering Contract, PPC2000, ICE, etc). Selecting the wrong form of contract could be very costly.

The primary job of the contract is to provide a warranty that the executed project will be delivered:

      • To an agreed time table 
      • To an agreed price or cost and how the compensation will be distributed
      • To an agreed standard and quality
      • To meet all current legislation 


The standard forms of construction contract are usually defined by the way risk is allocated and managed.

Lump Sum Contract
This type of contract involves a lump sum price for all construction related activities. Lump sum contracts can include incentives or benefits for early completion, or can also have penalties, often called liquidated damages, for a late completion. Lump Sum contracts are preferred when a clear scope and a defined schedule of work has been agreed upon.

Cost Reimbursable Contracts
This type of contract involves payment of the actual costs incurred, purchases or other expenses generated directly from the construction activity. Cost reimbursable contracts must contain specific details of the contractor overhead and profit margin (usually expressed as a percentage). Costs must be detailed and should be classified as direct or indirect costs. There are multiple arrangements for cost reimbursable contracts and the most common are:

      • Cost plus a Fixed Percentage
      • Target Price
      • Target Price with a Guaranteed Maximum Price 


Schedule of Rates or Term Contract

Schedule of Rates or Term Contracts are usually preferred if:

      • Scope of the project is not clear
      • The scope project has not been defined
      • The nature of the work is on a ‘call off basis’ such as responsive repairs


The client and the contractor must establish a basis for payment which may include:

      • An agreed hourly or daily rate, including additional expenses that could arise in the construction process
      • All-in measured rates and prices 


The various suites of standard forms of contract mostly all cater for the contracting options described above.

If you would like assistance on the choice of contract for your project please call us on 0114 243 0900 or complete an Enquiry Form

Q:

What is collaborative working?

A:

Collaborative working is the combining of parts into a whole. In construction, this means bringing together everyone involved in the delivery of a project so that they work in unison towards a common objectives. The outcome is improved performance and enhanced competitiveness in response to the changing environment in construction.

Collaborative working has been at the very heart of the work delivered by Stradia since its inception. Collaborative working gives demonstrably better result than traditional procurement.

The key aspects of successful collaborative working are:

      • Mutual objectives
      • Leadership – clear roles and responsibilities
      • Early involvement
      • Focus on value for money
      • Common processes, tools and techniques
      • Measurement and management of performance
      • Long-term relationships
      • Transparent commercial arrangements


For further information please visit Partnering and Procurement.

Alternatively please call us on 0114 243 0900 or complete an Enquiry Form

Q:

What is early contractor involvement?

A:

Disagreements between clients, contractors and professionals during the construction phase of a project are not only detrimental to productivity but can be costly as well. As in any relationship, communication is the most important aspect and making sure that everyone is on the same page will go a long way towards the smooth flow of operations.

Mutual respect is equally important for getting the job done without costly interruptions and blame shifting. By having clear roles and responsibilities for each member of the team, the relationship can be strengthened by complementing each other`s strengths and working together on any weaknesses.

Since the client, designer and contractor have their own distinct roles to fulfil in the building process it is important that they work together right from the start. This will prevent any confusion and avoid costly changes to the plans later on in the project. The contractor will also have enough time to point out to the designer what aspects of the design might turn out to be impractical or impossible to implement.

Early Contractor Involvement (ECI) involves the client, contractor (including key specialist sub-contractors) and designer working as an integrated team during the design development stages which greatly assists in identifying buildability issues earlier in the design process. This leads to shorter construction periods and reduced problems during the construction phase.

For further information please visit Partnering

Alternatively, please call us on 0114 243 0900 or complete an Enquiry Form

Q:

What is value engineering?

A:

Value Engineering (VE) is a systematic and function-based approach to improving the value of products, projects, or processes.

VE involves a facilitated workshop with a team of people following a structured process. The process helps team members communicate across boundaries, understand different perspectives, innovate, and analyse options.

Good value is achieved when the required performance can be accurately defined and delivered at the lowest life cycle cost.

What does Value Engineering do?
Value Engineering improves value. On construction projects, improvements to value might include reducing the life cycle cost of building components, enhancing safety in a design, or reducing costs by shortening the duration of a construction project.

Value Engineering uses a combination of creative and analytical techniques to identify alternative ways to achieve objectives. The use of Function Analysis differentiates Value Engineering from other problem solving approaches.

VE focuses on delivering the product or service at the best price by incorporating those value characteristics deemed most important by the customer.

How does Value Engineering work?
VE follows a structured thought process to evaluate options. Every VE workshop goes through a number of stages:
1. Gather information - What is being done now?
2. Measure Performance - How will the alternatives be measured?
3. Analyse Functions - What must be done? What does it Cost?
4. Generate Ideas (Brainstorming) - What else will do the job?
5. Evaluate and Rank Ideas - Which ideas are the best?
6. Develop and Expand Ideas - What are the impacts? What is the cost? What is the performance?
7. Present Ideas - Sell Alternatives

What are the benefits of Value Engineering?
VE is a tool that will improve your ability to manage projects, solve problems, innovate, and communicate. A VE program in your organisation will provide your staff with a definitive tool to improve value in any product, project or process.

Cost savings, risk reduction, schedule improvements, improved designs and better collaboration have been the outcomes of Stradia's VE workshops.

Typical VE involves a multi-disciplinary team at a workshop lasting 1 to 5 days. The payback from the investment in VE normally exceeds 10:1.

For more information on Value Engineering, please call us on 0114 243 0900 or complete an Enquiry Form 

Q:

How do you ensure value for money in project or service delivery?

A:

An organisation embarking on outsourcing project or service will often identify cost reduction and value for money as the critical success factors. Service providers will therefore usually promote their value for money offer in their bids and proposals.

But in practice, organisations often discover that, although they may be happy with the price that was originally quoted during the initial tender exercise, keeping aligned with the value for money promise is more difficult.

So what mechanisms can be built into a post contract relationship to help maintain value for money and a competitive edge over the life of the contract, once the leverage of the tender process has disappeared?

Here is a list of five common mechanisms that can be used to focus on keeping continued value for money at the heart of the outsourcing relationship.

1. Benchmarking
It is essential to measure performance in construction projects to determine whether planned improvements in the efficiency and quality of facilities are being achieved, and to learn lessons for future projects. Improving performance requires more than learning from the client’s own projects – it includes learning from the experiences of others.

Benchmarking provisions in the contract typically give the client a right to require regular information and data on key aspects of project or service delivery. In long-term services this can include regular comparisons of prices with independently published market cost data.

The likely success of benchmarking as a tool to achieve value for money depends on the degree of complexity in the project or services being delivered (i.e. effective benchmarking is harder for more customer focused services). For that reason, in large programmes of work clients often choose to break down the services into distinct service lines and institute a rolling programme of benchmarking over, say, 2 year cycles.
Benchmarking only really works in longer term relationships. In contracts of less than 2 years duration, many organisations feel that there is little point in benchmarking.

The contract should, of course, detail the benchmarking mechanism. For example, the parties should consider very carefully which organisations should form the performance improvement team to avoid any disagreements later on. The contract should also be clear as to what the consequences of any benchmark will be. In order for the benchmarking to have teeth, the customer would typically seek a remedy for unacceptable performance which ultimately lead to a right to terminate the contract

2. Incentives
Pain/Gain share mechanisms come in a number of different forms. At its simplest, a pain/ gain share clause will ensure that economies or improvements made by the service provider are passed on (or, at the very least, shared) with the customer. Pain/gain share clauses can work around reimbursement of actual cost compared to target prices.

Whatever the agreed triggers, well constructed incentive mechanisms are a powerful way to motivate service providers to make improvements and to share the benefits of those improvements.

3. Right to Market Test
Companies ought to consider carefully their rights to market test individual service line elements at any point in time if they have concerns at the on-going value for money of the outsourcing charges.

Service providers will argue that this is inconsistent with the exclusive nature of a long-term relationship. Organisations should make provision to market test existing services periodically if they choose.

4. Indexation
The client must carefully consider whether to agree to any form of indexation mechanisms.

5. Value for Money Report
The client may require the service provider to prepare an annual value for money report which involves the service provider reviewing the service charges and service levels against market comparators, and comparing the actual market position of the services charges and service levels against the agreed market position. The report would then trigger discussions between the parties through the governance process as to what steps (if any) should be taken by the parties in response to the report findings.

Conclusion
Clients may take it as read that outsourcing will bring them immediate cost savings and on-going cost efficiencies over the contract term. However, the contract must include the right mechanisms and the client must ensure it is firm in its contract management of the service provider, to ensure that those cost savings can be realised. Most project or service delivery contracts recognise that there’s no single magic bullet and therefore contain a mix of different mechanisms – including those set out above - designed to ensure continuing value for money.

For further information on achieving value for money, please call us on 0114 243 0900 or complete an Enquiry Form 

Find out more

Please contact us to ask any questions or to discuss your situation in total confidence

Call +44 (0)114 243 0900

Case Study

Procurement of a single Contractor to deliver a seven year Planned Maintenance and Responsive Repairs Contract

    Latest News

    8 November 2017

    African outpost for Stradia

    Always looking for new ways to use our business skills and create sustainable success for customers, Cleo Bowen, Bid Director is currently volunteering for...

    18 September 2017

    Stradia Wins Prestigious Award

    Stradia has recently won the CIPS Supply Management Awards 2017 Best Procurement Consultancy Project in conjunction with our partners, Northampton...

Our website uses cookies so that we can provide a better browsing experience. Continue to use the site as normal if you're happy with this, or find out how to manage cookies.