Methods of procurement and types of contract

BUSINESS
PROCUREMENT AND
CONTRACTUAL
PRACTICE
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Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1..................................................................................................................................3
Methods of procurement and types of contract...........................................................................3
QUESTION 2..................................................................................................................................5
Law of torts..................................................................................................................................5
QUESTION 3..................................................................................................................................6
Provision of contractual delays....................................................................................................6
QUESTION 4..................................................................................................................................7
Golden principles of FIDIC.........................................................................................................7
Evaluate the three factors for the contracts..................................................................................8
QUESTION 5..................................................................................................................................8
Multi-tiered dispute resolution mechanisms................................................................................8
Principles of NEC contracts.........................................................................................................9
Contribution of Donoghue and Stevenson to the tort of negligence...........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Procurement is an important aspect of an organization which consists of sourcing and
acquiring products or services, typically for the business purpose. In fact, it is mostly related with
the industry because companies require soliciting services those are usually taken into account at
large level. However, there are plenty of routes through which the design as well as construction
of a building can be procured. The individual businesses tends to set procurement policies that
are govern as per the choice of suppliers, items and method those are going to be used to
communicate with the person (Morledge and Smith, 2013). Therefore, this particular project
intended to highlight specific information regarding use of appropriate procurement methods
along with the type of contract taken into account for the projects. Apart from this, evaluation of
various types of remedies occurs during the time of handling the project. Moreover, principle of
FIDIC as well as the factors associated with the contract is also been discussed effectively.
Further analysis has been based on the multi-tiered dispute resolution mechanism that are arises
within the projects.
QUESTION 1
Methods of procurement and types of contract
In every business project implementation under a given IPF (investment project financing) is
basically consists of procurement activities that are required to achieve the project objectives.
The Jim Akis Khan should be mindful that the pre-contract award processes tends to contribute
to the overall success of a contract. In fact, procurement involves contract management which is
a crucial element of a budget execution. Basically, procurement is a crucial terms which is used
to describe all activities that are going to be undertaken by the Jim Akis khan in seeking to bring
about the construction of his house. However, it is also referred to an essential methods that seek
to consider the pros and cons that are likely to affect the project so as to select an reliable
contractual approaches (Flynn and Davis, 2016). Therefore, it is important for any business
concern to make use of a reliable procurement option that can provide create chances of
protecting their investments for maximum period of time. Some of the key methods are
discussed below:
Traditional: It has been analysed that this particular methods is used since last so many
years in the construction sectors. In fact, the major aspect of this procurement method is that the
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design process is identical from the construction of house. It would also need full documentation
before the contractors could be invited to tender for the work. As a whole, traditional method
simply involves the steps, design & bid and builds process.
Justification: As this traditional method is quite easy or simple to understand by all
categories of customers just like Jim Akis. The major problem with this is the period of contract
that tends to be longer due to the design process. Therefore, this method could not be that much
effective for Jim construction work.
Design and build method: Under this procurement method, a contractor is held
responsible for undertaking both the design as well as the construction of the house in return for
a lump sum cost. However, to reach at an option of contractor, they are needed to develop a
design up to a certain level as well as prepare a tender amount which is submitted as proposal to
meet the satisfaction of the client (Ruparathna and Hewage, 2015). The best part of this
particular method is that the design and construction of house may move in parallel along with
the duration.
Justification: The design-build method tends to give Jim Akis khan a single point of
contract. However, Jim is committed to the cost of construction as he has take huge amount of
loan from the bank. The risk is also shifted to the contractors as it is important that design
liability insurance is been maintained to cover up the risk. On the other hand, the contract period
is short, the process of assessing the tender or selecting a contractors could be hardly due to the
fact that every tenderer are operating with their own design. Therefore, it has been suggested to
go with this particular method as it is taking very less time or risk till the completion of the
houses.
Construction law estimated to protect both builders as well as Jim as they enter into an
agreement to build a new house. Moreover, in case of any new construction it is imperative to
choose the right type of contract that can easily fulfil the needs and make sure that the contract
terms are fair to Jim Akis khan.
Lump sum or fixed price contract: It includes that buyer agreeing to pay a decent
amount and the contractor is liable to complete the project for that particular cost. By using this
type of contract, Jim Akis has certainty because he knows the actual cost that will be incurred,
unless changes are been made. Also, it concludes certain allowances that can help in mitigating
the risk to the builders, because if Jim goes over the payment the cost is bear by the buyer only.
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