Project Procurement Method Selection

This assignment delves into the selection of the most suitable procurement method for a specific project, emphasizing the 'best value' approach. It presents a risk matrix comparing different methods, highlighting the advantages of the best value method in terms of risk mitigation, cost-effectiveness, and user-friendliness. The analysis draws upon relevant academic references to support its claims.

Running head: PROJECT EVALUATION AND MANAGEMENT
Project Evaluation and Management
Name of the Student
Name of the University
Author’s Note:

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PROJECT EVALUATION AND MANAGEMENT
Table of Contents
Project Delivery System..................................................................................................................2
Design-Bid-Build.........................................................................................................................2
Design-Build................................................................................................................................3
CM @ Risk..................................................................................................................................3
Financial Contract type....................................................................................................................6
Lump Sum Contract.....................................................................................................................6
Guaranteed Maximum Price Contract.........................................................................................7
Cost Plus Fixed Fee Contract......................................................................................................7
Procurement Method.......................................................................................................................9
Competitive Method....................................................................................................................9
Negotiated Method....................................................................................................................10
Best Value Method....................................................................................................................10
References......................................................................................................................................13

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PROJECT EVALUATION AND MANAGEMENT
Project Delivery System
Design-Bid-Build
This Design-Bid-Build process of project delivery system comprises of the three phases
that are designing phase, bidding phase and building phase. In the very first phase, the project
owner recruits a designer to make the design of the project plan and to provide the required
documents that are related to the tender of the project (Kerzner, 2013). The designer needs to do
the design in presence of the project owner until the project is completed in order to check the
project execution that whether it is meeting the project requirements. Once the initial design is
done, various engineers will be recruited by the designer to do the task with him so that they can
produce the project successfully and completed. The bid document will be made at the finishing
time and therefore then the second phase will begin. There are various contractors, who will
always try to take the project tender. These people are known as general contractors. The smaller
contractors and the general contractors usually take the project tender. All the participants of the
bidding auction get to know the bid documents and thus they know it very well that whether they
will be able to do the project or not (Burke, 2013). The project owner however, has the authority
to reject all of the participants and to set up a brand new time and date for again the bidding
auction to happen, so that he can select the best alternative and complete the project in low cost.
Once the contractor is selected, there is no chance of changing the bid document. Various
authorizations are needed to be taken by the general contractor to start the task of the project.
The builder documents the time limit of that project to manufacture a successful document at the
finishing time of the project (Larson & Gray, 2013). The designer, who was recruited by the

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PROJECT EVALUATION AND MANAGEMENT
project owner does his work as a chosen worker of the owner, and with the general contractor to
verify whether the project is undergoing according to the requirements or not.
Design-Build
This Design-Build process is done to appoint an architect and a general constructor.
These people will do the planning, designing and the project implementation right from the
beginning till the conclusion (Walker, 2015). This is not the phase of giving the tender of the
project to any other contractor. Moreover, the design build phase mostly aims on the partnership
act or the joint venture within the respective organization and the designer.
CM @ Risk
In the CM @ Risk method, the constructor is given a particular construction project after
the design is made or the phase of designing (Schwalbe, 2015). The particular constructor is
allocated with the bidding of lowest price. It is the responsibility of the allocated constructor to
accomplish the project successfully (Minchin et al., 2013).
The evaluation of this project can be classified into several smaller classifications. They
are as follows:
a) Delivery Time – This particular time refers to the entire project schedule, right from
the starting till the execution of the project. This is extremely crucial for any project (Boyle,
2017).
b) Project Innovation – New and innovation ideas and planning are required for all
projects. However, this may bring certain risk factors for the project.

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PROJECT EVALUATION AND MANAGEMENT
c) Level of Design – The designing phase of the project should be successfully completed
to get the project without failure.
d) Major Risk Assessment – There is always a chance of risks or threats in any project.
However, this type of risks can be eradicated with the help of proper risk assessment and
management procedure (Walker, 2015). The main goal of performing this step is to train the
workers so that they can manage all sorts of risks and can successfully complete the project.
e) Budget – This is the most important step for any project. The budget should be
calculated before the starting to understand the overall cost of the project (Boyle, 2017). This
step is mainly carried out by the financial advisor of the project.
f) Experience of Employees and Availability – The staffs and the workers of the project
should be experienced so that there should not be any risks or mistakes in the project. Also, the
staffs should be available so that the project should be completed with time(Burke, 2013).
g) Level of Error and Control – The level of error in the project and the ability to mitigate
and control them should be evaluated before the starting of the project.
h) Competition and Contractor Experience – Competition increases the productivity of
any project. The competitive side of this undergoing project requires to be calculated (Nyborg,
2014).
Goals/
Criteria
Criteri
a
Weight
Project Delivery
Systems
Project Delivery
Systems
Project Delivery
Systems
Design-Bid-Build Design-Build CM @ Risk

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PROJECT EVALUATION AND MANAGEMENT
Score
Weighte
d Score
Score
Weighte
d Score
Score
Weighte
d Score
Delivery
Time
25 6 120 9 180 6 120
Project
Innovation
25 8 200 4 100 4 100
Level of
Design
25 6 180 6 180 6 180
Major Risk
Assessment
10 8 160 4 80 8 160
Budget 30 4 80 8 160 4 80
Experience
of
Employees
and
Availability
30 4 120 4 120 9 270
Level of
Error and
Control
30 5 150 5 150 8 240

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PROJECT EVALUATION AND MANAGEMENT
Competitio
n and
Contractor
Experience
25 8 200 6 150 5 125
Total 200 1210 1120 1275
When the calculation is done for the three above mentioned processes, the best project
process is to be selected. According to the evaluation, the design build phase is the best method
of the three. The reason for this selection is the time span. The provided time span for this
project is 8 years. It is a large project. It will start in 2015 and is estimated to end in 2023.
Design-build process is the fastest and the construction time is the fastest in respect to the other
two methods. However, there is a high chance that there will be delay in the project as it is a
large project (Larson & Gray, 2013). This complexity can be eradicated by the utilization of the
method of design build. This particular method is cheaper and can be claimed as the cost
effective method. This will give the project to be accomplished before the calculated time and in
a cost effective way. The above mentioned evaluation matrix clearly signifies that the design
build method is the best method for the project (Potts & Ankrah, 2014). The marking of the
calculation is granted on the basis of the property of the project in the given case study.

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PROJECT EVALUATION AND MANAGEMENT
Financial Contract type
Lump Sum Contract
Lump Sum contract is a specified budget contract, which is decided between the
contractor and the project owner. The risks that are needed to be calculated are done by the
contractors. The owner does not take any responsibilities. Negotiation is very common for
money within them and the amount that is settled at the end is fully paid to the contractor
(Kerzner, 2013). The general contractor has to give the best possible report of the project for the
contract. All the costs that are incurred in the project and will be needed for the project are
calculated in the starting and are mentioned in the contract clearly.
Guaranteed Maximum Price Contract
The contractor always has the tendency to incur more expenses to the project. Therefore,
he will be responsible for any over expenses. This particular contract is estimated on the basis of
the compensation charges for the over expenses in the project. The contractor has to finis the
project in the previously mentioned price as per the contract (Schwalbe, 2015). However, if the
owner thinks, he can change and alter the project contract as per requirements.
Cost Plus Fixed Fee Contract
This type of contract is a cost repayment contract, which gives the contractor of the
project a negotiable amount that is set at the starting of the contract. This gives an edge for the
contractor to gain a profit from the project. The costs that are incurred are evaluated on the
current market value (Jones, Moura & Domingos, 2014). This type of contract is decided only
when both the groups agree that a certain amount of money will be paid to the contractor
independently from the costs sustained in the project.

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PROJECT EVALUATION AND MANAGEMENT
Goals/
Criteria
Criteri
a
Weight
Financial Contract
Type
Financial Contract
Type
Financial Contract
Type
Lump Sum Contract
Guaranteed Maximum
Price Contract
Cost Plus Fixed Fee
Contract
Score
Weighte
d Score
Score
Weighte
d Score
Score
Weighte
d Score
Agreeabl
e
25 8 200 6 150 6 150
Amount
of money
30 6 210 9 315 7 245
Profit
margin
25 7 140 2 40 8 160
Risk
taken
10 2 20 8 80 6 60
Based on
current
market
value
10 2 20 2 20 5 50
Total 100 590 605 665

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PROJECT EVALUATION AND MANAGEMENT
When the calculation is done for the three above mentioned contracts, the best project
contract is to be selected. According to the evaluation, the lump sum contract is the best method
of the three. The reason for selecting this contract is that it is simpler than the other two. The
owner of the project has to provide a lump sum amount of money to contractor and after that he
can relax. The rest of the task will be completed by the contractor and it will be his responsibility
to complete the project. The lump sum contract also gives a better profit to both the contractor
and the owner. The above mentioned evaluation matrix clearly signifies the lump sum contract
as the best contract. The number given is on the basis of the positivity of the method of working
in the case study. As the number goes higher, it signifies that the norm is being included in the
financial contract at that particular amount.
Procurement Method
Competitive Method
The particular method assists in the equitable and moral method of the suppliers bidding
(Kilic & Kaya, 2015). This enables all the general contractors, who are interested in the project
to present their individual bid for that tender. The owner tries the similar theory and then applies
the similar kind of procedure while choosing a particular bidder from the contractors, who have
applied (Jones, Moura & Domingos, 2014). The objective of the competitive procurement
method is to give an equitable and moral practice that will be helpful for the owner to maintain
the reinforcement of the contractors. It is observed that by following this particular method the
owner is able to choose the best contractor for his project to be undertaken. The moment this
decision is taken, the other workers, staffs and the agent will be able to know what can be
expected from the respective contractor when they are taking these decisions. The owner gives

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PROJECT EVALUATION AND MANAGEMENT
an advertisement for the project (Bingham, Asmar & Gibson Jr, 2016). There is a form that is to
be filled out by the contractor, who are interested and can then apply for the tender after
submission of their quotation. Then they have to wait until the owner approves them. The owner
examines the bids and chooses that particular contractor, who is the best for the task. If the
owner of the project is price oriented, then he will select the contractor with the lowest bid. The
procedure unlocks the tender for getting it to all the contractors, who are interested. There is a
honest decision from the owner’s side in choosing the best contractor for the project (Potts &
Ankrah, 2014). It is seen that most of the contractors do not favor to utilize the traditional way of
competitive bidding.
Negotiated Method
In this particular Negotiated method of procurement, the owner selects a contractor, who
will be helpful to him regarding the contract (Nyborg, 2014). The amount of money that is to be
paid to the contractor, is further decided with the contractor. When the contractor is ready with
his quotation, the tender is selected. However, when the situation is opposite, the contractor can
also negotiate the budget of the project but keeping in mind the risk factors and the profit margin
for the contractor. When the negotiation is successful on the tender given to the contractor, a
contemporary contractor is summoned to do the task on the tender and thus the procedure repeats
itself (Naoum & Egbu, 2016). It is better to avoid this method as there is a chance that the
contractor can demand more money.
Best Value Method
In this particular procurement method, the main focus is given to the lowest bidding and
on the factor that the particular contractor has the necessary proficiency in the field of job that is
related to the project. The standard of work that the contractor demands to deliver is further

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PROJECT EVALUATION AND MANAGEMENT
contemplated as the owner explores for the best standard of work for this particular project
(Schwalbe, 2015). The determination is done before the project planning. Utility of the
contractor appointed are scheduled time taken, previous working processes, cost that is incurred
on the contractor and standards of his final product. The profits are pre planned out in a tabular
form for several contractors and from them the best one is selected. This system is mostly used
by maximum owners of projects as it is simple to be implemented, risk exposure is less, major
decision making is not required, future consequences can be estimated easily (Kibert, 2016).
When the project owner will have a specific amount of money considered then he would check
for other contractors, who have the experience of such complex and big projects. This step will
eradicate the procedure of choosing a particular contractor on the basis of the least bid (Kilic &
Kaya, 2015).
Goals/
Criteria
Criteri
a
Weight
Procurement Method Procurement Method Procurement Method
Competitive Negotiated Best Value
Score
Weighte
d Score
Score
Weighte
d Score
Score
Weighte
d Score
Bidding 25 9 225 8 200 2 50
Decision
of the
owner is
25 8 240 2 60 8 240

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PROJECT EVALUATION AND MANAGEMENT
final
Negotiatio
n
15 2 20 9 90 2 20
Risk taken 20 5 100 8 160 2 40
Total 85 585 510 350
The procurement method that is recommended for this particular project is the best value
method. The method helps to eradicate the risks and vulnerabilities of the project and to attain
success with utter perfection. This particular method is accepted by many governments to lower
their risks. The above matrix clearly describes the benefits and the advantages of best value
method. This method is even cost effective and user friendly.

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PROJECT EVALUATION AND MANAGEMENT
References
Bingham, E., Asmar, M. E., & Gibson Jr, G. E. (2016). Project Delivery Method Selection:
Analysis of User Perceptions on Transportation Projects. In Construction Research
Congress 2016 (pp. 2110-2118).
Boyle, G. (2017). Design project management. Routledge.
Burke, R. (2013). Project management: planning and control techniques. New Jersey, USA.
Jones, H., Moura, F., & Domingos, T. (2014). Transport infrastructure project evaluation using
cost-benefit analysis. Procedia-Social and Behavioral Sciences, 111, 400-409.
Kerzner, H. (2013). Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Kibert, C. J. (2016). Sustainable construction: green building design and delivery. John Wiley &
Sons.
Kiliç, M., & Kaya, İ. (2015). Investment project evaluation by a decision making methodology
based on type-2 fuzzy sets. Applied Soft Computing, 27, 399-410.
Larson, E. W., & Gray, C. (2013). Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Minchin Jr, R. E., Li, X., Issa, R. R., & Vargas, G. G. (2013). Comparison of cost and time
performance of design-build and design-bid-build delivery systems in Florida. Journal of
Construction Engineering and Management, 139(10), 04013007.

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PROJECT EVALUATION AND MANAGEMENT
Naoum, S. G., & Egbu, C. (2016). Modern selection criteria for procurement methods in
construction: A state-of-the-art literature review and a survey. International Journal of
Managing Projects in Business, 9(2), 309-336.
Nyborg, K. (2014). Project evaluation with democratic decision-making: What does cost–benefit
analysis really measure?. Ecological economics, 106, 124-131.
Potts, K., & Ankrah, N. (2014). Construction cost management: learning from case studies.
Routledge.
Schwalbe, K. (2015). Information technology project management. Cengage Learning.
Walker, A. (2015). Project management in construction. John Wiley & Sons.