27 August 2018
Early Contractor Involvement (ECI) is a procurement method that is being increasingly implemented in both the private and public sector. Typically, ECI has been reserved for large scale infrastructure projects where the design of the project is not fully developed at the outset and the principal requires specialist knowledge from the contractor.
However, ECI is being increasingly recognised as a highly successful procurement method in other industries and for smaller scale procurements.
Our recent experience in the first ECI conducted by the City of Sydney Council (the City) for a service contract showcases how the value of ECI processes are being unlocked by industry leaders for the benefit of other organisations and for future procurements.
1. What is an ECI process?
ECI is a procurement method that encourages collaborative contracting in the design and development stage of a project. Typically, ECI involves a series of workshops between the principal and the contractor aimed to refine the design or scope of the project prior to contract award. ECI has been typically implemented in the construction industry where the contractor’s expertise is required to develop the design of the project or where the project has many complex or unknown risks.
ECI aims to address the adversarial relationship between a principal and contractor on a large construction project that often arises due to the conflicting objectives of the parties and the high risk nature of large projects. ECI can reduce conflict and contract variations throughout a project as the contractor has the opportunity to develop and refine the design or scope of the project with the principal prior to contract award. A better understanding of the project risks prior to awarding a contract allows the parties to better allocate those risks which ultimately leads to better price optimisation.
However, an ECI requires clear project objectives, careful forward planning and a commitment from both parties to adhere to ‘best for project’ behaviours for the life of the project, not just the ECI phase. If poorly structured or managed, an ECI process can create additional challenges and its potential benefits may not be ultimately realised. Refer to section 3 below for key considerations when deciding to undertake an ECI process.
2. Recent experience – service contracts
We recently facilitated the first ECI process for a service contract for the City, who are leaders in local government procurement, and specifically ECI, having previously delivered two successful large scale infrastructure projects through ECI - the Green Square library and the Gunyama Park Aquatic Centre – for which we were also engaged as facilitator. The City’s recent ECI for a 10 year multi-million service contract was such a success that they are undertaking a further ECI process for another service contract.
The recent service contract ECI process with the City was a ‘triple ECI’ process with three shortlisted EOI proponents who each participated in a minimum of three ECI workshops with the City over a month long period.
The ECI workshops were designed to refine the scope of the services and service delivery expectations of the contractor, resolve ambiguities in the tender documentation and examine the contracting behaviours of the proponents, with a key driver for the City being an enduring positive relationship with the successful contractor having regard to the 10 year contract term.
The City’s sound understanding of the requirements of an ECI process allowed it to balance both the required ‘courage’ and ‘curiosity’ to participate in open and transparent dialogue with each proponent and preserve the integrity of the ECI process by protecting proponent information and confidentiality.
As facilitators, we ensured that the proponents, who were new to an ECI process given its rare adoption in the service contract sector, understood their roles and responsibilities throughout the ECI workshops, especially the requirement to thoroughly test and analyse the tender documentation and prepare detailed agendas for the proponent-led ECI workshops.
3. Considerations for an ECI process
With the potential benefits that ECI offers, it is being increasingly implemented by clients in both the public and private sector.
The question of whether an ECI is appropriate for a particular project should be considered early in the procurement phase and have regard to the following factors:
ECI processes are being increasingly implemented by both public and private sectors on a broader range of procurements with great success. We are especially seeing the value of an ECI project being unlocked for service contracts with a long contract term where the service specification requires refining and the long term positive relationship with the contractor is a key project driver.
Authors: Scott Alden & Victoria Gordon
Construction & Infrastructure Partner Scott Alden is the head of Holding Redlich’s new dedicated Procurement practice group that has been set up to respond to growing demand for advice in an area that is set to undergo sweeping legislative changes.
 NSW local councils are unable to run a ‘single ECI’ process with only one proponent due to NSW Local Government procurement requirements including under the Local Government Act 1993 (NSW), as opposed to State and Federal government and private sector entities who are able to run ‘single ECI’ processes with a single shortlisted proponent. A ‘double ECI’ process also complies with NSW Local Government procurement requirements, however, a ‘triple ECI’ was selected for this process having regard to the particular aspects of the contract and other market considerations.
Scott Alden, Partner
T: +61 2 8083 0419
Christine Jones, Partner
T: +61 2 8083 0477
Helena Golovanoff, Partner
T: +61 2 8083 0443
Troy Lewis, Partner & National Head of Construction and Infrastructure
T: +61 7 3135 0614
Stephen Burton, Partner
T: +61 7 3135 0604
Suzy Cairney, Partner
T: +61 7 3135 0684
Stephen Natoli, Partner
T: +61 3 9321 9796
Kyle Siebel, Partner
T: +61 3 9321 9877
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