PERCEPTIONS OF SMEs ON THE USE OF FRAMEWORK AGREEMENTS IN THE UK CONSTRUCTION INDUSTRY

Abstract

Following the Latham and Egan reports, Framework Agreements (FAs) came into the limelight in the UK construction industry as a means of reversing the adversarial nature of construction procurement. While the use of FAs has since been growing rapidly in the industry, it is generally believed that they favour larger firms over SMEs. The aim of this study therefore was to investigate the views of SMEs on the use of FAs and to identify and evaluate the barriers to the participation of SMEs in FAs in the UK construction industry. Data obtained from 56 SMEs in a questionnaire survey in Northwest England were analysed using percentage scores, relative important indices and Pearson’s Chi-square significance test with the aid of the SPSS software. The findings showed that most SMEs regarded FAs as a “closed system” barring new entrants into the market. The results also showed that the most and least significant barriers to SMEs’ participation in FAs were excessive product/service aggregation and the inability of SMEs to understand tender information in FAs respectively. These findings indicate that SMEs which constitute about 90% of the construction industry still consider themselves as disadvantaged by the use FAs due mainly to their limited resources in relation to larger firms.