Business Procurement and Contractual Practice

Business procurement and
contractual practice
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Table of Contents
Question 1 .......................................................................................................................................3
As senior manager advise him procurement method and types of contracts ..............................3
Question 2........................................................................................................................................4
Discuss four types of civil tort in construction phase of project and remedies ..........................4
Question 3 .......................................................................................................................................5
Critically evaluate provision in three forms of contract and how they are handled....................5
Question 4 .......................................................................................................................................6
a) Discuss golden principles of FIDIC.........................................................................................6
b) Evaluate three factors for selection of types of contracts........................................................7
Question 5 .......................................................................................................................................8
a) Discuss principles of NEC contracts.......................................................................................8
b) Discuss contribution of Donoghue and Stevenson to tort of negligence.................................9
REFERENCES..............................................................................................................................10
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Question 1
As senior manager advise him procurement method and types of contracts
It is necessary to select a proper procurement method in construction project so that
accordingly its contract type can be identified (Ameyaw, Pärn and Darko, 2017). Also, there are
some factors such as cost, risk, quality of raw material, etc. in contract which depends on
procurement method. It enables in evaluating methods pros and cons and then selecting it. Thus,
in case of Khan there are several procurement and contracts types which is mentioned as :
Open tendering- it is a procurement in which all companies are allowed to bid for tender. There
is open competition in it. Each company bids on cost and then least cost bidding is selected.
Restricted tendering – In this only a specific number of companies are allowed to bid for tender.
Usually, in this a cost is fixed by service provider on basis of which bid is done. It is also known
as selective tendering or competitive procurement method
Request for proposal- This method allows procurement company to review the proposal sent by
service provider. Here, a proposal is delivered and on basis of it answer is sent. It is a long
procedure in which at first step no financial details are included.
Request for quotations – It is least complex method in which only limited suppliers are selected
and then quotations are collected. So, on basis of cost and quality supplier is selected (Aqeel and
Asim, 2019).
So, in case of Jim Akis Khan, open tendering procurement method will be suitable. It is
because as he is not having any knowledge about construction he can allow contractors to bid for
tender. It will be easy for him to select the lowest bid. Along with it, he can also get involve with
contractor to design building interior. This method is preferred as in other it will require Jim
Khan to make proposal and then proceed further. Furthermore, in open tender he can do planning
with supplier. Also, as it is large project so for each project cost can be fixed. Hence, it will not
vary.
Types of contract – Along with procurement method there are different types of contracts as well
in construction. It is important to select suitable contract type as per requirement of client. They
are defined as : (4 common types of construction contracts, 2016)
Fixed price- As name depicts it is a contract in which the entire price of construction project is
fixed. In this benefits as well as penalties are imposed. It is suitable only when scope and
schedule of project is fixed. The builder is having overall risk (Boeger, 2018).
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Cost plus- in this contract the cost of entire project is mentioned. It included direct and indirect
cost. It is suitable when scope is not fixed.
Unit price – This type of contract unit price are set during bidding. The price can be modified if
scope is changed.
Time and material contracts – Here, both owner and builder agree on daily rate of project
including direct and indirect costs. It is used in small projects.
Here, contract type suitable is unit price as unit price of each house will be fixed during
bidding. Besides, if Khan wants to build only 2 or 3 house then project scope will be changed.
Hence, accordingly unit price can be modified as well. However, setting of unit price will give
insight to Khan that how much each house will cost. Besides, in this risk will be to both owner
and builder (Flammer, 2018).
Question 2
Discuss four types of civil tort in construction phase of project and remedies
In construction project, usually owner faces many types of tort case which highly impact
on project cost. A tort is a when a person inflicts injury on another. In this case the injured party
can legally sue other for causing damage. Here, in tort injured party is known as plaintiff and
other is known as defendant. However, tort law identifies whether entity must be held legally
liable for causing injury to another. Besides this, it also include that what type of compensation
should be paid to injured party. However, there are 4 elements of tort. They are duty, breach of
duty, cause and injury (Types of tort, 2019). In construction projects civil tort is common that
occur during project. This results in delay and rise in cost of project (Flynn and Davis, 2016).
Alongside, there are various types of tort which is specified as below:
Negligence- it is the most common tort in construction where careless infliction of harm or
damage is done. In this omission is made to do something in which a person guide on those
considerations that regulate human conduct. It does not only include this but also breach of duty
owned to group of person.
Nuisance – it is a type of tort in which there is unlawful interference with a person land. Here,
there may be some rights or connection with neighbour land as well. This results in nuisance.
Basically, there are three types of nuisance that is private, public and statutory. In private
individual bring a claim. Here, the person who has occupied land must show some proof of
substantial interference. This will restrict is not using land and damaging it. There are certain
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