What is a Framework Agreement in Construction?

If a construction buyer identifies a recurring need but may not yet be wholly clear about the full extent of what is required, it may publish a Framework Agreement.

We explore what a framework agreement in construction is below.

What is a framework agreement?

Framework agreements are commonly set up to cover the provision of goods, works and services required on a routine basis like construction and maintenance.

A framework agreement in construction is an agreement a buyer or group of buyers makes with multiple suppliers to establish terms of governing contracts that may be awarded during the lifetime of the framework. It is the terms and conditions agreed by the two parties for making specific purchases. A framework agreement in construction can be made around goods, works and services. Examples could include:

  • Goods – bricks and mortar required for a build
  • Services – consultancy/design
  • Works – the construction of a building

In most cases, a buying organisation would have one framework for each group, but that said, they may have a framework agreement with more than one supplier under each framework.

From a supplier’s perspective, being awarded a place on a framework is a sign to others that your business is a key player in the industry.

The difference between a framework agreement and a contract

Don’t get confused, a framework agreement is not a contract. At the end of the procurement process for a contract, the winning bidder(s) agrees to undertake the supply, works or services that the authority requires. At the end of the procurement process for a framework agreement, successful suppliers win a place on the framework agreement with no guarantee of future work.

A framework agreement is an agreement about the terms and conditions that would apply to any contract that would be awarded.

A buyer does not need to purchase from every or any supplier that wins a place on its framework agreement. Instead, the buyer runs mini competitions or ‘call off’ competitions among the suppliers on the framework agreement each time it has a requirement. The successful supplier fulfils the requirement. During the life of a framework agreement, the buyer may call off as many times as they need.

Why do construction buyers use frameworks?

It’s simple: framework agreements allow buyers to spend money wisely. They can encourage competition as Framework agreements in procurement encourage participation by private sector companies of all sizes and levels of experience. They can encourage new suppliers to participate, letting buyers see and do business with a wider cross-section of the marketplace.

Not only that but many construction buyers choose framework agreements as they provide a collaborative environment and allow all parties involved in a framework agreement to develop positive and long-lasting relationships.

Advice for construction buyers

It may take time for your organisation to establish a framework – in most cases doing so involves more work than awarding a single major contract – but, that said, the benefits of doing this will show up in the long run.

If you are considering using a framework agreement to procure the goods works or services your organisation requires, once of the main benefits is that you have the freedom to award contracts for recurring requirements without the need to re-advertise and re-apply the selection and award criteria.

This task can be time-consuming and it will save your organisation and its suppliers time and effort involved in repeat procurement.

Purchase with ease, procure with Delta

Delta supports the construction sector to transform the way they procure goods to long-lasting positive effect.

Our eSourcing tools allow public sector buyers to quickly procure goods, works and services that are available in the market.

If your organisation has plans to improve its eProcurement strategy, Delta’s eProcurement tools, such as Tender Management can be tailored to fit the requirements and needs of your organisation.

Request your free Delta demo now