1. Introducing the Bulgarian version of
the FAC-1 Framework Alliance Contract
Efficiency, improved value and collaborative
working
Professor David Mosey PhD
Director, Centre of Construction Law and Dispute Resolution,
King’s College London
©David Mosey 2019

2. What is an alliance ?
 “Alliancing is a form of long term partnering on a project
[or programme of works] in which a financial incentive
scheme links the rewards of each of the alliance
members to specific and agreed overall outcomes .”
European Construction Institute
 Clients and the construction industry (and their lawyers/
advisers) focus mostly on allocating/ transferring risk
under individual construction phase building contracts
 An alliance focuses on the pre-construction phase and a
framework alliance uses lessons learned between team
members and between projects
 An alliance also enables and supports the use of BIM
and, for public sector clients, complies with EU
procurement regulations

3. What can an effective framework achieve?
“Evidence suggests that benefits can accrue from the use of
effective frameworks in procuring construction and they include:
delivering sustainable efficiency savings
reduction in consultancy and construction costs
delivery of projects closer to target cost and time
reduction of disputes, claims and litigation
high client satisfaction rates
high proportion of work undertaken by small and medium-sized
enterprises
high proportion of local labour and sub-contractors
high take-up of government in initiatives such as fair payment,
apprenticeships
high proportion of waste diverted from landfill
good health and safety performance against national average
acting as a key enabler to integration of the supply team”
UK Government Effectiveness of Frameworks Report, 2012

4. Why is FAC-1 significant?
 “The general lack of standard-form framework arrangements
makes it difficult for clients to procure frameworks on a
consistent basis”, UK Government report 2012
 King’s College London 12 months’ consultation with over 120
clients, consultants, contractors, lawyers and academics leading
to publication of FAC-1 in June 2016
 FAC-1 already adopted on over £42 billion of UK procurements
in housing, schools, engineering and public buildings
 FAC-1 Bulgarian, Italian, German, Portuguese translations
 FAC-1 projects in Italy, Germany, Kazakhstan and Bulgaria
 Kazakhstan mining project using FAC-1 with FIDIC
 German FAC-1 being used on office/residential project in
Germany and, with FIDIC Silver Book, on reconstruction of
German embassy in Sofia
 www.allianceforms.co.uk (News and Users) 4

5. The essentials of a framework alliance
 Why is the framework alliance created, how long will it last
and how can it be terminated if it does not work?(FAC-1
Objectives/Targets and agreed consequences of not
achieving them)
 How will work be awarded (FAC-1 Direct/ Competitive
Award Procedures, agreed Project Contract forms and other
Template Project Documents)
 How will members work together to improve value?
(FAC-1 Alliance Activities, Risk Register,Timetable)
 How will the members’ work be integrated (FAC-1 Alliance
Manager, agreement of shared data, intellectual property
and BIM, Core Group governance)
 What are the Alliance Members’ rewards? (FAC-1 Incentives
and payment provisions)
5

6. FAC-1- an umbrella/ enabler/ integrator
 FAC-1 operates as an umbrella that connects and
enables learning/ improved performance between
multiple Project Contracts
 FAC-1 integrates Project Contracts awarded by one or
more Clients to one or more consultants and/or
contractors and/or suppliers
 FAC-1 supports and integrates:
o A programme of related/ unrelated Project Contracts
o The Project Contracts comprising a complex Project
o The Project Contracts comprising a Project using BIM
o The operation of an EU ‘ Central Purchasing Body’

7. FAC-1 prototype: Ministry of Justice new
build and refurbished prisons and courts
 “Solid governance structure through a Strategic Core
Group comprising representatives from the MoJ and the
Alliance suppliers”
 KPI information and cost analysis “made available to all
schemes”
 “Individual project appointments made via mini-
competitions or by direct appointment” under a “standard
two stage selection process”
 “Standardised suite of processes and contract templates
are used to ensure consistency and ease of use” plus
“Early engagement of the supply chain is encouraged by
the two stage approach”
 Major benefits “include reduced operating costs estimated
at £10m, reduced burden on industry tendering of around
£30m and procurement risk mitigation of about £2m”
 Total cost savings of £42m
(Effectiveness of Frameworks Report 2012)
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8. MoJ: Cookham Wood Framework Alliance +
BIM
 https://assets.publishing.service.g
ov.uk/government/uploads/system
/uploads/attachment_data/file/325
950/Cookham_Wood_case_study
__CE_format__130614.pdf
 Agreed post-contract savings of
20% of capital costs and expected
additional savings in operational
costs
 Collaboration (using BIM) between
HLN Architects, Main Contractor
(Interserve) and Specialist
Subcontractor (SSC) resulted in
an innovative pre-cast volumetric
cell proposal
 Engineer (Arup) and Specialist
Subcontractor (EMCOR) worked
together on trialling designs for
service ducts and cell risers to
ensure secure repair and
maintenance, then incorporated
into the BIM model

9. FAC-1 structure
 Framework Alliance Agreement completed by reference to numbered
clauses of Contract Terms and signed by all Alliance Members
 Schedule 1 agreed Objectives, Success Measures, Targets and
Incentives
 Schedule 2 Timetable which sets out
o ways in which the Alliance Members agree to seek Improved Value
through Alliance Activities linked to achievement of the Objectives
o timescales for Alliance Activities, including nature, sequence and
duration of agreed actions of each Alliance Member and any
consents or approvals that are pre-conditions to subsequent actions
 Schedule 3 Risk Register
 Schedule 4 Direct Award Procedure and/or Competitive Award
Procedure
 Schedule 5 Template Project Documents
 Schedule 6 any Legal Requirements and Special Terms that
give rise to additions and amendments to the Contract Terms
9

10. FAC-1 structure
 Framework Brief provided by Client to all other Alliance
Members as the basis for their selection and sets out:
o all technical, management and commercial requirements in
relation to the Framework Programme
o the required approach to design, Supply Chain engagement,
costing, Risk Management and programming
o all other relevant procedures and expected outcomes
o where appropriate the required approach to BIM
 If Alliance Manager is an independent consultant, then include
Alliance Manager Service Schedule and Alliance Manager
Payment Terms
 Framework Prices and Framework Proposals submitted by each
Alliance Member in response to the Framework Brief, which are
binding only between the Client, the Alliance Manager and the
individual Alliance Member who submits them, and which
are confidential between those parties 10

12. Incentives under FAC-1
 A framework alliance can link success in meeting agreed
Targets to rewarding Alliance Members by means of a
range of Incentives as rewards for achieving agreed
Objectives, e.g. prospect of more work is a major
Incentive with a system of performance measurement
justifying the continued award
 FAC-1 Incentives at Schedule 1 Part 3 :
o ‘additional payments including shares of savings achieved
through Supply Chain Collaboration and other Alliance
Activities’
o ‘adjustment of any exclusivity in the award of Project
Contracts’
o ‘extension of the scope of the Framework Programme
and/or the duration of the Framework Alliance Contract
’

13. Introducing post-award Supply Chain
Collaboration
Client(s), Tier 1
Contractor(s) and
Consultants agree scope
for achieving
savings/improved value
through improved mutual
commitments with Tier
2/3 Subcontractors and
Suppliers
Client(s), Tier 1
Contractor(s) and
Consultants agree scope
for achieving
savings/improved value
through improved mutual
commitments with Tier
2/3 Subcontractors and
Suppliers
Timetabled processes
led by Tier 1
Contractor(s) to obtain
and agree new
proposals from Tier 2/3
Subcontractors and
Suppliers
Timetabled processes
led by Tier 1
Contractor(s) to obtain
and agree new
proposals from Tier 2/3
Subcontractors and
Suppliers
Improved mutual
commitments and
consequent savings/
improved value
captured in Supply
Chain Agreements
Improved mutual
commitments and
consequent savings/
improved value
captured in Supply
Chain Agreements
Scoping of Supply Chain
Collaboration
Supply Chain
Collaboration process
Decision to build

14. Project Horizon – Supply Chain Collaboration
under local government FAC-1 prototype
https://www.gov.uk/government/publications/procurement-
trial-case-study-report-highways-maintenance

15. Supply Chain Collaboration : agreed savings
 Surrey County Council with Kier, Aggregate Industries and
Marshall Surfacing
 Team motivated by prospect of contract extension, plus client offer
of £100m of additional work subject to demonstrable delivery of
£120m of value
 Agreed cost savings included breakdown offered by Tier 2/3
subcontractors/suppliers (against previously quoted rates) in return
for:
 Greater involvement in planning work and developing continuity of
work - 2%
 Agreed minimum annual volume of work - 5%
 Agreed minimum size of individual works orders -2%
 Prompt(er) payment by Tier 1 Contractor -1%
 Storage facilities in available space at Client depot -2%

16. Supply Chain Collaboration : improved value
Supply Chain Collaboration on Project Horizon enabled
Improved Value comprising:
‘Improved whole life value, including agreement of ten-year
warranty for material and pavement design
Improved quality control through joint risk assessments and
integrated team agreement of appropriate surface treatments
and monitoring work on site
Improved apprentice commitments
Lean programming of individual tasks leading to time
savings
Innovation through collaborative working, for example to
increase recycling and reduce landfill’

17. FAC-1 Alliance Manager
FAC-1 provides for an in-house or external Alliance Manager
(clause 3.1) who integrates the work of the alliance members
and who:
Implements the FAC-1 Direct Award Procedure and
Competitive Award Procedure
Monitors and supports achievement of the agreed
Objectives, Success Measures and Targets
Monitors and supports achievement of deadlines,
gateways and milestones in the Timetable
Organises Core Group meetings, Supply Chain
Collaboration and other Alliance Activities
Manages agreed payments and Incentives
Monitors and supports Risk Management
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18. Building long-term relationships
 FAC-1 is designed to build long-term relationships through
shared Objectives, Success Measures, Targets and
Incentives plus consensual governance and agreed
Alliance Activities
 FAC-1 is compatible with any combination of roles,
responsibilities and warranties among consultants,
contractors and other team members engaged on each
Project
 FAC-1 can set out options in respect of:
o Any level or combination of design, construction and
operation contributions from design consultants,
contractors, subcontractors and suppliers
o Integrating the capital and operational phases of each
Project
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19. Improving from project to project
 On the MoJ prototype FAC-1 framework alliance, ‘Over
the course of successive projects, framework contractors
build up designs and solutions that they know will meet
MoJ specifications, and are able to transfer these from
one project type to another’
 Surrey, Project Horizon – achieved ‘Lean programming of
individual tasks leading to time savings.’
 Hackney Homes and Homes for Haringey (SCMG) –
achieved ‘Time savings, such as through quicker build-up
of prices leading to earlier start on site and reduced
client/consultant time/costs.’- ‘I don't know any other
London borough that has managed to carry out so much
work in so short a time.’
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20. FAC-1 and BIM
 Data transparency and team integration through direct
relationships under a multi-party structure
 Clarity as to reliance on data and communication systems
 BIM deadlines, gateways and interfaces in a multi-party
timetable
 Flexibility to agree any combination of BIM contributions
 Flexibility to bring in BIM contributions from specialist sub-
contractors, suppliers, manufacturers and operators
through Supply Chain Collaboration
 Direct mutual licences of intellectual property rights
 Integration of BIM management with governance and
clash resolution through the Core Group and Early
Warning provisions
20

21. MoJ, HMP Berwyn: FAC-1 prototype and +BIM
£157 million HMP Berwyn- 26% agreed post contract savings,
local businesses, training and employment, sustainable design
solutions and other improved value using BIM
http://constructingexcellence.org.uk/wp-
content/uploads/2015/12/Trial-Projects-North-Wales-Prison-Case-
Study_Final.pdf

22. Liscate School: FAC-1 alliance +BIM
 Milan Union of Municipalities Adda Martesana created the
first FAC-1 contract in Italy, governing construction of a
high school with an approximate value of Euros 5 million
 FAC-1 was explained to bidders, and the alliance
members are the client, the contractor, design team, the
construction manager and the safety coordinator
 FAC-1 alliance activities include data-sharing, BIM model
management and maximum supply chain involvement
 Subcontractors and suppliers will also be invited to join the
alliance but not the FAC-1 core group
 The next Italian FAC-1 is a Euros 335 million PFI campus
regeneration project for University of Milan
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23. Conclusions
 Alliances offer a fresh approach to procurement and
contracts and can achieve better project results
 The FAC-1 alliance contract supports BIM, FIDIC and
projects in any jurisdiction
 Case studies show how an alliance procurement model
combines early contractor involvement , collaborative
working and BIM to deliver improved value through the
FAC-1 relationships and processes
 The Bulgarian translation and adaptation of FAC-1 creates
important opportunities to implement international best
practice in compliance with Bulgarian law and EU
procurement rules
Thank you for listening
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