Construction Procurement: Choosing the Right Architect and Contractor
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This article discusses the complex process of construction procurement and the importance of selecting the right architect and contractor. It covers the criteria for evaluation, methods of selection, considerations for funding and pricing, and supply chain integration for successful apartment construction.
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Abstract Construction procurement is usually a complex process that involves several professionals. Each of the parties is expected to play a significant role in the success of the project. Selection of the right architect for the project is usually a multi-step process starts with the establishment of the criteria for evaluation all the way to the contract. The project design will be the responsibility of the project manager. The project manages will be expected to communicate with the client regarding the project update in terms of the progress. Just like any project of the construction, there will be a need for the accurate estimates for the process to be successful. Ajax must consider these requirements for the apartment construction to be successful.
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Introduction Just like any other engineering or construction work, the building of apartments requires experienced professional whose duties are coordinated to realize a common goal. Although the client will always be treated as the ‘boss" in such activities, he/she must be advised accordingly on the procurement process1. Ajax seeking the advice of a professional in regard to the construction work which is yet to be undertaken is an indication of compliance with the ethical requirement that will not only ensure comfort within such structures but also guarantee the safety of the occupants. Methods of choosing architects and Contractors Contractors Choosing the right contractor should be considered as one of the priorities for Ajax since it will affect the shape and the nature of the proposed commercial unit. In order to realize the dream of a perfect commercial unit, Ajax Should considers the following points: Track records There will need to consider the track records of the shortlisted contractors. It is from the track record that a proper idea about the contractor's experience will be obtained2. The past projects will be evaluated so as to know the quality of the work that the contractor has done before. Other factors may be considered in case the contractor is new in the field. Check of the background It will be considered appropriate to check the background of the contractor by sharing with its former clients as well as getting their review. Getting in touch with the local authorities in 1Barasa, H.W., 2014. Procurement practices affecting effective public projects implementation in Kenya: a case study of Kenya Civil Aviation Authority.European Journal of Business and Management,6(6), pp.49-67. 2Chakravarthi, I., 2013. Medical equipment industry in India: Production, procurement, and utilization.Indian journal of public health,57(4), p.203.
order to find out the existence of any kind of complaints will be very important including being embroiled in any legal confrontations. The credit reference of the contractor must be known considering that poor or bad credit may translate into the construction delay. Checking for the certification The chosen contractor must have all the required licenses and certification it will be more preferable for Ajax to consider contractors with the ISO qualification. Quality The contractor chosen will be trusted based on the quality of the material chosen for the construction. This will go alongside the quality of the workmanship. It is important to note that severe consequences usually characterize poor quality work. Cooperative A contractor who is very cooperative and is open to ideas through suggestion contribution will be a very good asset. This basically implies that the selection of experienced contractors by Ajax will assist in the generation of very valuable ideas based on the experience years. This will be extremely beneficial to the commercial unit3. Contractor’s insurance cover This wills one of the most important criteria to consider in the contractor selection. Ajax must ensure that the selected contractor is properly covered with liability as well as damage insurance against the accidents at the sites together with the unforeseen events. This will go alongside discussing the payment terms4. It would be preferable for Ajax to agree on the payment of 25% as the deposit whiles other payments to be made as the project progresses. 3Hufbauer, G. and Moran, T., 2017. 10 Government Procurement in US Trade Agreements.The Internationalization of Government Procurement Regulation, p.288. 4Lewis-Faupel, S., Neggers, Y., Olken, B.A. and Pande, R., 2016. Can electronic procurement improve infrastructure provision? Evidence from public works in India and Indonesia.American Economic Journal: Economic Policy,8(3), pp.258-83.
Architect Selections Selection of the right architect for the project is usually a multi-step process starts with the establishment of the criteria for evaluation all the way to the contract. Establishment of the criteria for evaluation This particular criterion will be used in the evaluation of both generation information on the background of the architect, his experience and specific proposal. The perspective of the architects will be identified while considering sources touching on the project done in the area before. Architect’s contact will be obtained in regard to the information available on the interview setups. It will be necessary to review the qualification of the materials in use before developing a list5. Ajax through its professional team will be required to conduct intensive interviews while using evaluation criteria in guiding and developing preliminary ratings. In most cases, it has been found out that just one architect may not completely satisfy all the criteria of evaluation. Block apartment is regarded as one of the specialized design in the construction field which cannot be handled by junior professionals. Such specific experience is not easy to come by. Ajax must consider organizing a mentor program to the selected architect in order to improve on his/her operation efficiency. Funding For most of the entrepreneurs, funding a project or getting money to be used in starting a business is one of the aspects that are most challenging. This aspect is actually hard. Ajax may consider one of the two great ways of project funding that are rarely discussed: clients and vendors. Both clients and vendors can be a great and potential source of project funding. 5Liebman, J.B. and Mahoney, N., 2017. Do expiring budgets lead to wasteful year-end spending? Evidence from federal procurement.American Economic Review,107(11), pp.3510-49.
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This will only work effectively when there is a proper approach. Getting of the finances from the clients is not usually easy although it is possible to get funding from the clients who are very cooperative and ready to come in during the process of the project handling6. In this particular case, the assumption made is that the company of Ajax is the client itself. Financing of the project will include a request for the prepayment for the specific orders to be handled. It is after the payments are made by the client that the business may get funds that are required to make it run. The funds will, therefore, be used effectively to ensure that the project is completed on time. The concerned parties will, therefore, be restricted to ensure that the funds are used specifically for the projects objectives and anything else. In case Ajax decides to fund the project through these mechanisms or arrangements, there must be proper reasons for the project prepayment7. This option will only be considered under the following conditions: The services offered are extremely unique The expected market potential or the business will be potentially good in terms of its proceeds at the start. For example, Ajax may decide to collect money from the tenants who intend to have retail shops in terms of the goodwill payment and later use this money to fund the project. This would mean that the retailers must have been convinced with their personal reasons that the business will surely prosper in the area. In case the clients are not convinced that such favorable conditions are not in existence then the products will definitely not meet the threshold value for consideration hence prepayment will not be an option in this case. In such 6Loader, K., 2015. SME suppliers and the challenge of public procurement: Evidence revealed by a UK government online feedback facility.Journal of Purchasing and Supply Management,21(2), pp.103-112. 7Mahmood, S.A.I., 2013. Public procurement system and e-Government implementation in Bangladesh: The role of public administration.Journal of Public Administration and Policy Research,5(5), pp.117-123
cases, Ajax should consider approaching a competitor who is in apposition to provide similar services and offer payment terms of 30-60 days8. Using the option of client funding approach, the contractor will be expected to remain responsive on several issues including the careful treatment of the prepayment made. This means that the contractor must consider getting prepayment as a privilege that should not be abused. The contractor will be expected to demand prepayment from Ajax under the following condition: Take payment when they are 100% sure of making deliveries Use the availed funds specifically and exclusively in the product delivery/adequate and satisfactory service to the client In case deliveries are not made, the money must be returned Alert the client on issues that may negatively impact delivery. Alternatively, the PLC Company may consider negotiating terms of payment with the suppliers. In this arrangement, the services and the products are delivered promptly but they will wait for 30 to 60 days to have the vendor’s invoices paid9. This is commonly referred to as “vendor credit.” Choosing this particular option would allow for the construction project to continue even with the delayed payment. Should the company consider taking this route; the cash flow will be improved. It will also allow for the effective use of money. Ajax must write to the vendors asking for the credit in advance almost 30 days prior. Selecting the best Method for Contractor Pricing 8Naoum, S. and Egbu, C., 2015. A critical review of procurement method research in construction journals.Procedia Economics and Finance,21, pp.6-13. 9Rickard, S.J. and Kono, D.Y., 2014. Think globally, buy locally: International agreements and government procurement.The Review of International Organizations,9(3), pp.333-352.
Just like any project of the construction, there will be a need for the accurate estimates for the process to be successful. Alongside strict budgets and timelines, the project client should consider having estimates will ensure that milestones are hit on time as well as being within the range of the budget. Although there are usually very many variables of the projects that are unknown, the ability to forecast the cost needed as well as the resources will finally set up good grounds for success10. One of the important factors that Ajax must consider is the understanding of different categories as well as costs that will be involved. The costs are classified as direct and indirect. The direct costs will include the payments made for equipment fuel, wages among others while the indirect payment will include the specific payments made to the utilities, securities among others. There are several methods that may be used in the estimation of the price of the contractor including: Analogous Estimating This kind of estimation is also called top-down estimate. This kind of estimation process will involve analyzing the data of the project so as to properly develop the estimate for the expected projects. The basis of this method will be reliance on the archive of the similar projects that had been done before. Ajax should only consider this method if there is a similar project that had been admired before. As a performance-based approach, the deliveries will be the same as the project under comparison. It will be cost effective since the trend or pattern of expenditure is predictable11. Bottom-Up estimating 10Sargiacomo, M., Ianni, L., D’Andreamatteo, A. and Servalli, S., 2015. Accounting and the fight against corruption in Italian government procurement: A longitudinal critical analysis (1992–2014).Critical Perspectives on Accounting,28, pp.89-96. 11Sikka, P. and Lehman, G., 2015. The supply-side of corruption and limits to preventing corruption within government procurement and constructing ethical subjects.Critical Perspectives on Accounting,28, pp.62-70.
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This is also referred to as analytical estimating. This particular method involves the division of the project deliverables in a series of the packages of work that translates into a series of tasks. The basis of this method is to ensure the estimation of the total costs that are needed for the completion of the total cost through summing up the cost of completing every individual task. This technique is considered to be one of the most accurate despite the fact that it consumes a lot of time. For accuracy purposes, the client may consider using it. Although there is uncertainty in the market as indicated before by Ajax, breakdown of the project will allow issues to be addressed on the priority basis. Parametric estimating In case the company chooses to work with this method of the cost estimate, the project will be divided into the units of work before the cost of every unit can be determined. The number of the units will be multiples by the cost per unit so as to obtain the entire cost of the project. This particular method, however, is recommended for those projects that are repetitive in nature. It may not be necessary for consideration by Ajax. Having considered the above options, Ajax should employ the use of analogous estimation because of its overwhelming advantages. Supply Chain Integration Considering the requirements for the construction of the apartment, the requirements can be summarised as shown below
Ajax should consider measurement of time so as to assist in the detection and analysis of the time buffers as part of the process of the supply chain which will include sand excavation as well as delivery, fabrication and element delivery and finally site installation. It will be important for the client to show the outcome of the analysis of time that is used along the process so as to get the insight in the build-up of time, location of the time buffers and finally the magnitude12. The method to be used should include decomposition of the major operation lines in sub-processes and measurements of the activities time allocation. The time used for every activity should be categorized including non-value adding, wasted, value adding, quantifying and locating time buffer. It will be realized towards the end of the project that; towards the commencement period as well as the end of other sub-processes delays occurred which will result in remarkable time buffer as well as inventory. The key problem of the time buffer will, therefore, include separate planning. It is only by addressing the issue of proper planning that the project will be delivered on time. Responsibility allocation for the design The project design is one of the initial steps that every successful project must embrace. It involves the strategic organization of ideas, processes, and materials for the purpose of achieving the project goal. In order for Ajax to realize the dream of proper apartment construction, the responsibility of this process should be allocated to the project manager. The project manager will be expected to rely on good design in order to avoid failure as well as provide parameters to be used in the maintenance of the crucial aspects like the budget and the schedule. This should involve the creation of the project plan which will center on the client's needs. The will this be used in the management of the project with its copy being shared with the client. 12Simcoe, T. and Toffel, M.W., 2014. Government green procurement spillovers: Evidence from municipal building policies in California.Journal of Environmental Economics and Management,68(3), pp.411-434.
Responsibility allocation for construction work allocation at the site In order to ensure that the processes run smoothly, there will be a need for the construction project coordinator whose responsibility will include looking after the projects of the building from the start of the project to the end13. The coordinator will be charged with the responsibility of ensuring that the building plan as given by the architect and approved by the client is built within a specific time frame and budget. Conclusion and Recommendation All the projects usually experience financial constraints. Also, the success of the project will depend on the commitment of the contractor. Pricing of the contractor's payments should, therefore, take an approach of analogous estimation. The basis of this method will be reliance on the archive of the similar projects that had been done before. Ajax should only consider this method if there is a similar project that had been admired before. As a performance-based approach, the deliveries will be the same as the project under comparison. It will be cost effective since the trend or pattern of expenditure is predictable. In order to ensure cash flow in the project, Ajax should consider using the supplier funding approach. This will ensure that the materials are supplied are in the required quantity, quality and within the specified time.The chances of the project stalling and contractor abandoning the site will be minimized. While selecting the architect and the contractor, the track records must be traced to determine the anticipated quality of work. This will include evaluation of the qualification against the standards laid down by the certification bodies including the ISO standards. Ajax should consider the quality of the work at the expense of the cost. This will not only reduce the maintenance costs but make the building safe for use. The materials will, therefore, be 13Snider, K.F., Halpern, B.H., Rendon, R.G. and Kidalov, M.V., 2013. Corporate social responsibility and public procurement: How supplying government affect managerial orientations.Journal of Purchasing and Supply Management,19(2), pp.63-72.
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acquired at whatever cost and experienced contractor and architect should be hired at their charging fee. The allocation of the responsibility of construction work must be done by experienced and competent individuals. The competence of individuals may be confirmed through intensive interviews. This should go alongside the establishment of the proper planning that will ensure that the project runs smoothly. The coordinator will be charged with the responsibility of ensuring that the building plan as given by the architect and approved by the client is built within a specific time frame and budget14. The project design will be the responsibility of the project manager. The project manages will be expected to communicate with the client regarding the project update in terms of the progress.The project manager will be expected to rely on good design in order to avoid failure as well as provide parameters to be used in the maintenance of the crucial aspects like the budget and the schedule. The two professionals will be expected to complement each other in the activities during the entire period of the project. It will be his role to ensure that quality health and safety standards are adhered to and therefore commence should not be compromised during recruiting The supply chain integration is expected to be a lineally described process that will indicate the project variables. The contractor should consider communicating every stage of this kind of work to the client with the utmost due diligence. It's only through this mechanism that Ajax will ensure the proper and timely delivered process References 14Wamae, J.W., 2014. Role of the procurement function in enhancing performance in devolved government: A case of Machakos County.International Journal of Social Sciences and Entrepreneurship,1(11), pp.168-190.
Barasa, H.W., 2014. Procurement practices affecting effective public projects implementation in Kenya: a case study of Kenya Civil Aviation Authority.European Journal of Business and Management,6(6), pp.49-67. Chakravarthi, I., 2013. Medical equipment industry in India: Production, procurement, and utilization.Indian journal of public health,57(4), p.203. Hufbauer, G. and Moran, T., 2017. 10 Government Procurement in US Trade Agreements.The Internationalization of Government Procurement Regulation, p.288. Lewis-Faupel, S., Neggers, Y., Olken, B.A. and Pande, R., 2016. Can electronic procurement improve infrastructure provision? Evidence from public works in India and Indonesia.American Economic Journal: Economic Policy,8(3), pp.258-83. Liebman, J.B. and Mahoney, N., 2017. Do expiring budgets lead to wasteful year-end spending? Evidence from federal procurement.American Economic Review,107(11), pp.3510-49. Loader, K., 2015. SME suppliers and the challenge of public procurement: Evidence revealed by a UK government online feedback facility.Journal of Purchasing and Supply Management,21(2), pp.103-112. Mahmood, S.A.I., 2013. Public procurement system and e-Government implementation in Bangladesh: The role of public administration.Journal of Public Administration and Policy Research,5(5), pp.117-123. Naoum, S. and Egbu, C., 2015. A critical review of procurement method research in construction journals.Procedia Economics and Finance,21, pp.6-13. Rickard, S.J. and Kono, D.Y., 2014. Think globally, buy locally: International agreements and government procurement.The Review of International Organizations,9(3), pp.333-352.
Sargiacomo, M., Ianni, L., D’Andreamatteo, A. and Servalli, S., 2015. Accounting and the fight against corruption in Italian government procurement: A longitudinal critical analysis (1992–2014).Critical Perspectives on Accounting,28, pp.89-96. Sikka, P. and Lehman, G., 2015. The supply-side of corruption and limits to preventing corruption within government procurement and constructing ethical subjects.Critical Perspectives on Accounting,28, pp.62-70. Simcoe, T. and Toffel, M.W., 2014. Government green procurement spillovers: Evidence from municipal building policies in California.Journal of Environmental Economics and Management,68(3), pp.411-434. Snider, K.F., Halpern, B.H., Rendon, R.G. and Kidalov, M.V., 2013. Corporate social responsibility and public procurement: How supplying government affect managerial orientations.Journal of Purchasing and Supply Management,19(2), pp.63-72. Wamae, J.W., 2014. Role of the procurement function in enhancing performance in devolved government: A case of Machakos County.International Journal of Social Sciences and Entrepreneurship,1(11), pp.168-190.