The council's approach to value for money in framework
We seek to demonstrate robust value for money benefits from our partnering. This relies on understanding the ways in which partnering assesses risk. All pricing is based on actual costs and open book accounting methods rather than a fixed price as in tendering. Target costs are intensively negotiated based on previous projects and comparative tender prices.
- Ensuring there is a strong quantity surveying client side negotiator on the job to agree a good value target cost with the contractor.
- Pricing and allocating risk to reduce costs and minimise risk to the council.
- Getting the contractor involved in value engineering meetings.
- Tendering the overheads and profit as above during the framework tendering exercise.
- Linking the contractor's profit to key performance indicators.
- Knowing at the outset what a competitive tendered cost would be.
- Gain share.
- Seeking at the tender stage to get the contractor to commit to creating opportunities for local people and using local supply chains.
Value reviews during the design and construction process involving the construction partners help to reduce the target cost. In addition, former tendering time is now channelled to improving value on the project e.g. identifying and reducing risk and cost of bearing that risk. Low tendered overhead levels were put forward by the framework bidders during a highly competitive tendering process.
The council pays actual costs of labour, plant and materials plus tendered overheads and profit.
This page was last updated on 19 October 2011
