Retail Framework Agreements: Faster. Smarter. Scalable.

Introduction

Retailers are under constant pressure to upgrade, expand and deliver more for less and, increasingly, faster. 

The management and delivery of multiple construction projects across a retail portfolio requires efficiency, consistency and control. However, traditional procurement methods can be slow, fragmented and costly, involving different contractors, consultants, terms, payment models and designs for each project. 

The lack of a streamlined common approach across portfolios can lead to inconsistent quality, duplication of work, delays and cost overruns. 

Helpfully, there is an alternative approach, one which allows retailers to:

• front-load the work involved in setting up and managing a pipeline of projects;

• create a "go-to" list of trusted suppliers that can be instructed quickly and with ease; and

• drive efficiencies, consistency and control across portfolios,

all whilst allowing for project-specific tailoring as required: framework agreements.

What is a framework agreement?

Framework agreements:

• are umbrella agreements that establish an overarching relationship between a retailer and one or more suppliers (e.g. contractors, consultants and project managers);

• generally have a set term (typically around 3-to-5 years);

• allow the pre-appointed supplier(s) to be instructed using pre-agreed terms and rates, without needing to manage "full" procurement processes for each individual project;

• include a set process for instructing works / services, which can include "mini-competitions" between framework suppliers for similar works or services;

• are extremely versatile and can be tailored to suit any programme of works / services; and

• do not typically guarantee a minimum number or value of work, but give suppliers an indication of what potential instructions might be available during the framework term to secure buy-in.

The terms for each potential instruction, whether for works or services, are specified at tender stage. Suppliers must commit to these on day one to secure a place on the framework. Minor amendments can be made to the instruction terms at call-off / appointment stage (e.g. to account for unique circumstances on a specific project), but the general idea is that the terms are agreed upfront to reduce the amount of time, cost and effort required to finalise an instruction for a project.

Standard framework agreements exist (e.g. the JCT Framework Agreement), but retailers commonly use bespoke agreements tailored to their specific requirements and the sector in which they operate.

Why use a framework agreement?

1. Speed

Frameworks reduce the need for multiple "full" procurement exercises across works programmes.

Instructions can be issued quickly using a pre-agreed appointment process where the rules of engagement are established upfront (e.g. timings, terms and pricing).

This is essential on repeatable / high volume programmes, where time to market or operation is critical, such as fit-outs and retrofits or standardised new builds (e.g. fulfilment centres).

They can also be tailored by region and project type to maintain flexibility and agility.

2. Predictability

By sharing long-term goals and a proposed works programme with suppliers upfront, suppliers can properly manage capacity and resource planning – improving supply chain resilience and reducing the risk of delays due to resource or scheduling conflicts – as well as give the market confidence that the framework is an opportunity worth pursuing at the outset. 

3. Value for money

Framework suppliers benefit from multi-project opportunities during the term of a framework. 

By aggregating demand and standardising specifications, retailers can leverage frameworks to secure competitive pricing from day one (e.g. rates / prices and profit and overhead percentages) without compromising quality.

This also helps with driving cost certainty and budget management. 

Rebate or discount mechanisms can be used to secure continuous value for money.

4. Consistency and quality

The long-term nature of frameworks allows suppliers to become fluent in a retailer's design standards, operational protocols and onboarding, training and safety requirements, as well as what is important to them as an end client. 

Work is awarded based on performance, not entitlement, so suppliers are also motivated to deliver quality and continuously improve. Key performance indicators can be used to manage this.

This consistency allows for multiple projects to be managed and delivered simultaneously based on a predefined playbook, focusing on improved programme delivery, cost control and a reduction in defects at completion.  

5. Collaboration

Retailers depend on suppliers for timely, on-budget delivery, and suppliers depend on retailers for repeat work across portfolios. Unlike one-off projects, frameworks promote mutually beneficial long-term relationships with clear commercial incentives from day one. 

This can lead to:

• economies of scale (e.g. bulk purchasing of replacement tills across a portfolio);

• design standardisation (e.g. "how can we design this better" rather than "build this");

• value engineering (e.g. encouraging suggestions on how to do things differently at a lower cost or quicker);

• improved sequencing (e.g. around trading hours or other works); and

• shorter delivery times and lower costs through repeat work.

6. Risk management

The pre-approval and vetting of suppliers upfront can reduce risk exposure on matters such as:

• financial stability;

• health and safety; and

• legal compliance.

Regular reviews during the framework term can also help flag any potential issues early.

The use of pre-agreed terms for instructions (e.g. amended JCT / NEC forms or bespoke consultant terms) reduces the "traditional" back-and-forth on terms (and risk management) and promotes consistency across portfolios.  Key issues can be flushed-out pre-framework, allowing the parties to agree commercially acceptable terms upfront. 

This allows the parties to manage any risks or issues that are genuinely project-specific on a case-by-case basis.

Conclusion

Whether supporting the design and construction of new build stores or fulfilment centres, or the roll-out of portfolio-wide rebranding, frameworks offer a faster, smarter and scalable way of management construction programmes through the adoption and promotion of a common playbook and uniformity, allowing retailers to focus on streamlining delivery and programme management.

Frameworks provide a real opportunity to:

• reduce procurement friction;

• promote efficiency, consistency and control;

• deliver projects faster, more predictably and with greater cost certainty; and

• focus on long-term collaborative relationships,

without sacrificing quality and value across portfolios.  They can also provide a crucial competitive advantage in a continually evolving and fast-moving sector.

If you would like to speak with a member of the Foot Anstey team about how frameworks can work for your organisation, please get in touch.