Sector - Consultancy
No compare – why framework comparison is a risky business
At a time when the framework market is more competitive than ever, it can be tempting for public sector organisations to shop around for one that ostensibly gives the lowest cost and – in their view – best ‘value for money’. However, Jason Stapley, chief executive at Pagabo, warns that while this may seem a prudent approach in a difficult financial environment, pitting frameworks against each other is like comparing apples to oranges.
Frameworks have long provided a mutually beneficial for clients and suppliers alike, and the flexibility, variety and competition that they provide have been huge drivers for sustained growth in the market in recent years.
While this exponential growth can create healthy competition – something that is always good providing it is driving up overall standards – it can create a mindset for clients where they play various frameworks off against each other to see where the best offer lies.
There is nothing wrong with public sector organisations taking an approach where they assess the broad market of frameworks available and make an informed decision – the reality is that every penny saved on procurement is another one to reinvest in the project itself.
However, the danger of a surface-level comparison is that it doesn’t give due credence to the complexities of the respective frameworks, and may end up costing the client in the long run.
Avoid the trap
At Pagabo, we often find organisations coming to us requesting information on a relevant framework, with the caveat that they are also looking at other providers for the purposes of comparison.
The crux of the issue with that approach is that no two frameworks are exactly the same. Each provider – and therefore, each individual framework – will be structured differently in its terms of reference and where the risk lies at different stages in the process.
The other area in which comparison is particularly futile is with fees. It is the easiest thing in the world for organisations to take a rudimentary look at fees on frameworks and simply plump for the lowest, but the reality is that providers structure their fees in entirely different ways.
Many framework providers will eschew a standard cost and claim to be “no fee”, but what that typically means is that they will cover that amount in the overhead and profit percentages they charge, meaning the client is in no better position than they would be with an up-front fee.
Service above all
Another key area in which comparison can be challenging is the service that is offered by framework providers themselves, and the subsequent added value for money this can provide.
The ongoing expansion of the market means that there are ever-increasing numbers of providers out there that simply act as procurement portals, pushing out frameworks with little consideration for market need and without the added support for clients during the process.
This not only creates a false economy, but damages the perception of framework providers in general.
In the vast majority of cases, those organisations looking to use frameworks are in need of the additional support of procurement professionals that are experts in their particular field. In that sense, paying what on the surface may seem like a higher fee is actually worth its weight in gold over the lifecycle of the project, as you have access to ongoing resource and support that may not have been there had they opted for a framework that was ostensibly the cheaper option.
Setting the standard
The Construction Playbook and the ‘Constructing the Gold Standard’ report have both called for greater standards to be placed on frameworks, something which has been a long time coming.
Even though the ‘gold standard’ is still falling short in many areas, the multitude of benefits of framework working mean that it is very much here to stay, and the better framework providers are consistently engaging with the market to identify what its needs are.
However, if clients are taking an approach of playing these providers and their services off against each other, we as an industry will find ourselves in the kind of race to the bottom that frameworks are supposed to protect against.
By choosing a framework on its individual merits rather than a false comparison, you are much more likely to find one that works for your requirements in the short term and builds strong relationships for the long term.
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