What is procurement?
The overall process of acquiring construction work or services
What should be considered when selecting a procurement route?
- The specifics of the project
- The client objectives regarding cost, time, control, quality and risk
What are the main procurement methods?
a) Traditional / general contracting
b) Design and build
c) Management contracting
d) Construction management
What is traditional procurement?
- The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified
How does traditional procurement work?
- The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team for the contract sum within the contract period
- The client takes the responsibility and risk for the design and design team performance
When might traditional procurement be appropriate?
a) If the employer has had the design prepared
b If the design is substantially completed at time of contractor selection
c) The client wishes to retain control over the design and specification
d) Cost certainty at start on site is important
e) The shortest overall programme is not the client’s main priority
What contracts might be used for traditional procurement?
JCT – minor, intermediate, standard with quantities
What are the advantages of traditional procurement?
a) Competitive fairness and transparent process – increase value for money
b) Design led – can ensure quality
c) Price certainty before commencement
d) Well known procedures
e) Changes are reasonably easy to arrange and value
What are the disadvantages of traditional procurement?
a) Overall project duration may be longer than others – sequential process
b) No input into design and planning by the contractor
c) Strategy based on price competition – could lead to adversarial relations
d) Dual point of responsibility – design team for design and contractor for construction
e) If design not complete at time of tender, cost and time certainty are reduced
What is design and build?
- Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements
How does D&B work?
- The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works
When might Design & Build be appropriate?
a) Where there is a need to make an early start on site – can overlap design and construction
b) Where the client wishes to minimise their risk – not got responsibility for design
c) For technically complex projects – benefit of contractor’s expertise
d) Where the employer does not want to retain control over the design development
What contracts might be used for Design & Build?
JCT Design & Build 2016
What are the advantages of design and build?
a) Single point of responsibility for design and construction
b) Earlier commencement on site
c) Early price certainty
d) Benefit of contractor’s experience harnessed during design
What are the disadvantages of Design & Build?
a) Client may find it hard to prepare a sufficiently comprehensive brief
b) Client has to commit to a concept design early
c) Variations from the original brief are difficult to arrange and often expensive
d) Harder to compare tenders – harder to determine if getting value for money
e) Ease of fabrication may be prioritised above aesthetic quality
f) May be less real competition due to fewer design and build firms
How much design input will the contractor have in Design & Build?
Depends on the level of design the employer has already completed at time of tender.
Who carries out the design for the contractor in D&B?
- It may be outsourced to a separate design company (contractor retains responsibility)
- They may have in-house design capabilities
- OR the client’s team may be novated
What is novation?
- A new contract that transfers the rights and obligations of one contractual party to a new third party i.e. design rights and obligations of architect transferred to contractor
If the design team is novated, what should the client put in place?
- A collateral warranty to the design team to give them remedies for breach of contract
What is management contracting?
A management contractor is employed to contribute their expertise to the design and to manage construction and is paid a fee for doing so
How does management contracting work?
- The management contractor has direct contractual links with all of the works contractors
- They have the responsibility for the construction works without actually carrying them out
- Not all of the design need be completed before the first works contractors start work
- The MC selects the works contractors through competitive open book tenders
- The client reimburses the cost of these packages to the MC plus their fee
- The MC’s role is low risk – get prime cost plus a fee
When might management contracting be appropriate?
- Where the client does not want cost certainty before commencement
- Where an early start on site in a priority
What contract might be used for management contracting?
JCT – Management Contract 2016
What are the advantages of management contracting?
a) Overall project duration is shorter due to overlapping design and construction
b) There is contractor contribution to the design and planning process
c) Changes can be accommodated in packages not yet let if they have no further impact
d) The works are let competitively at current market prices on a firm price basis
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Conduct Rules, Ethics...38
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Health And Safety18
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Communication And Negotiation4
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Client Care4
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Accounting principles and procedures10
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Contracts62
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Fire Regulations0
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Sustainability6
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Conflict avoidance24
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Insolvency24
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Cost Estimating/ Planning57
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Value management / Value engineering12
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Life cycle costing18
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Risk Management18
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Capital allowances10
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VAT3
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Procurement55
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Tendering29
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Pre-construction agreements6
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Variations15
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Loss and Expense8
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Extensions of time15
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Valuations16
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Retention12
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Completion and Certificates15
