Early contractor involvement

The ECI model is a collaborative procurement contract followed by a separate contract

for construction (generally a risk-allocated traditional design and construct contract).
ECI is split into two phases.
• phase 1 – The ECI phase; and
• phase 2 – construction phase.
In the ECI phase, two suppliers are engaged under an ECI agreement to work
collaboratively with the principal in parallel (see Figure 9). They develop the design, a
detailed project plan and commercial proposal for the construction phase, which
includes a risk-adjusted price for the construction phase to be delivered as a lump
sum contract. Selection for the ECI phase is based primarily on non-price criteria,
although limited price criteria may also be considered. Payment for the ECI phase is
based on a fixed fee negotiated as part of the ECI agreement. Generally this fee
should not exceed 50 per cent of the estimated costs incurred by the suppliers for
participating in the ECI phase.
The competition between the two suppliers in this stage prior to the construction
contract award drives early innovation capture and a robust tender price for the
construction phase. Following completion of the ECI phase, the principal selects one
of these two suppliers for the construction phase under a design and construct type
contract. The constructor’s team takes the time, cost and quality risks by assessing
the proposed project solutions and the tendered prices. In the exceptional
circumstance that the principal cannot reach an acceptable commercial arrangement
with either supplier at the completion of the ECI phase, the client may choose to go
to the market for other proposals.
It is very important to note that the planning and procurement strategy of all forms of
relationship and collaborative contracting including ECI must be consistent with the
National Alliancing Policy that applies to all departments and agencies. In exceptional
cases a ‘single’ ECI process may be used when approvals as required under the
National Alliance Contracting Policy Statement have been obtained. This involves the
principal collaborating with a single supplier in the ECI phase to develop a preferred
design and negotiate a price. Once this negotiation is complete, the works are the
subject of a ‘design and construct’ type contract, with the constructor’s team taking
the time, cost and quality risks. This non- competitive ECI process may potentially only
be acceptable when there is a scarcity of unique skills in the industry. In such cases
the client must engage independent project reviewers and estimators to verify the
scope of works and costings offered by the supplier in the non-competitive process.