Construction Procurement Methods Analysis

This assignment delves into the world of construction procurement methods. It requires you to critically evaluate various approaches, such as traditional, design-build, and partnering, outlining their respective strengths and weaknesses. The analysis should consider factors like project complexity, risk management, client involvement, and cost implications. You are expected to demonstrate an understanding of how different methods impact project performance and identify the most suitable approach for specific project scenarios.

RUNNING HEAD: ETHICS AND PROFESSIONAL PRACTICE
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RUNNING HEAD: ETHICS AND PROFESSIONAL PRACTICE
EXECUTIVE SUMMARY
The relationship between the client and the technical team in a construction project is an important
tool in the overall project execution as it defines the boundaries of each party, the communication
mechanism, the task assignment and therefore defines a path of accountability. It is therefore
important for clients to invest in a process that is suitable for a particular project as various projects
require different approaches for their overall success. Three modern methods have been have been
highlighted in the report which are the design bid build, design and build, and the construction
management process. They all have various advantages and disadvantages discussed below which
include construction time, amount of risk carried by the parties and the nature of relationship between
all parties included. They are also recommendable for different circumstances i.e. design bid build for
small to medium scale complex works necessitating expert and original design, design and build for
simple, non-complex and standard design structures, and construction management for large scale and
complex projects.
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RUNNING HEAD: ETHICS AND PROFESSIONAL PRACTICE
Contents
EXECUTIVE SUMMARY......................................................................................................................i
INTRODUCTION...................................................................................................................................1
DESIGN BID BUILD..............................................................................................................................1
DESIGN AND BUILD............................................................................................................................2
CONSTRUCTION MANAGEMENT.....................................................................................................3
CONCLUSION........................................................................................................................................5
REFERENCES........................................................................................................................................6
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RUNNING HEAD: ETHICS AND PROFESSIONAL PRACTICE
INTRODUCTION
The procurement process has been a fundamental part of construction ever since human beings
outsourced paid external assistance in building their homes and social buildings. These construction
processes utilized a traditional client-contractor relationship that saw the risk of the entire project
falling either solely on the contractor or solely on the client. They were simple as there was not much
technical assistance required aside from the contractor and the labourers (Davis, 2008). The traditional
procurement process had three main variations which included reimbursement contracts, lump sum
contracts and measurement contracts. The reimbursement and measurement contracts are similar in
that that an agreed price or term is usually stipulated before construction but the reimbursement
measurement is where contractors are paid after the work is done unlike the lump sum contract where
the work is paid for in advance. The measurement contracts on the other hand are where work is
undefined and can only be fully valued after it is done (Rowlinson and McDermott, 2005).
These procurement methods are however prone to some disadvantages owing to the scale of work for
which they were based on. They are impractical for large and complex design and construction works
owing to the fact that the risk in all the cases is unbalanced falling either on the contractor or on the
client. On the overall, they are also not conducive for projects that have time constraints as the whole
traditional process involves a lot of stages that must all be bureaucratically handled before the actual
construction work can kick off (Manley and Chen, 2015).
For that reason, a few modern methods have come up balancing the overall risk involved in a project
while maintaining a healthy relationship between both parties (New South Wales Government, 2005).
These methods have also either combined or totally done away with some stages in the whole
construction process in order to quicken the overall construction project and these are discussed
below.
DESIGN BID BUILD
This is a method of procurement where the client hires a technical design team to handle all the
preliminary designs of the structure being constructed. The design team is also tasked with the
responsibility of preparing contract documents and overseeing a tendering process where a contractor
is picked based on the reputation and bid price. This method of procurement usually puts the design
team consisting of an architect, engineering team and quantity surveyors on the client’s side where
they coordinate the construction process by liaising with the contractor. They act as the client’s
representatives both technically on paper and on the site (Masterman, 2003).
In this case, the design consultant is usually the only other contributor in terms of design and
specification of the structure and this puts them in a position where they take over the contract
documents as soon as preparation is done. There are rare cases of bidding for this position and in most
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cases, the client usually approaches a firm first which performs all those responsibilities for them.
This means that, while a contractor is paid by the client, their supervision falls solely on the design
consultant’s responsibilities (Masterman, 2003). In the hierarchy of the functional process, the client
and design team could occupy the same level with the contractor below them or the client could be
above the design consultant who would in turn be above the contractor.
For the client, the main advantage of this method is that they are guaranteed of a reliable technical
design. This is because the design consultant works with the client and their profit comes from both
the client and contractor. This enables a reliable design process with utmost dedication from the
consultant (Morledge, 2013). They can also get near accurate quotations limiting the variations
expected and therefore unforeseen expenditures. It is however time consuming as all the processes of
tendering have to take place before construction can take place.
For the designer, the advantage is that they represent the client as an equal and are paid off the project
not by a particular side. They are in charge of the design, tendering and construction process enabling
them to have control over a vast array of elements. They are however subjected to preparing for much
of the legal work whose liability falls on them should an error occur (Morledge, 2013).
For the contractor, the advantage is that they face fairly fewer variations allowing smoother flow of
work. For a specified profit, a contractor’s responsibility is limited only to construction allowing them
to move on to other projects or build for parallel projects should the time and resources allow. They
are however susceptible to the bulk of the financial strain as the tendering process is expensive and
they are also paid in phases only after certain predetermined portions or stages of the work are
complete. They are also locked out of the design process unable to offer technical or managerial input
which would aid them in the construction process (Manley et al., 2014).
This type of project is best suited for complex structures requiring minimum price fluctuations, high
quality of work done and least construction time taken. It is recommended for clients with no
technical design or construction background hoping to achieve the best performance (Wang et al.,
2010). Examples include construction of structures owned by organizations, companies, individuals or
industries with no technical design or construction background e.g. banks, schools, etc. or whose
technical personnel are not qualified by the oversight bodies to participate in the projects.
DESIGN AND BUILD
This type of procurement process has only two parties. Aside from the client, the contractor is usually
the other side. In this type of contract, the contractor is usually in charge of producing every technical
design component of the construction and finishing up by constructing it. This method has its own
improvements over the traditional approach as it is a lot more time saving than the methods were. It
also cuts down on the red tape required to see construction projects finished and especially when
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compared to a heavily staged process like the design bid build and traditional approaches (Seng and
Yusof, 2006).
This process involves the contractor at the very beginning of the construction process unlike where
the contractor joins in after a significant portion of the planning and design work has been carried out.
As the method name suggests, the contractor produces the designs for the work as agreed with the
client then. The client usually has an idea of the desired end result which, upon regular information
exchange, is the basis of the contractor’s design process (Seng and Yusof, 2006).
The contractor, in this case, is usually in charge of the design consultants and all other sub-
contractors. As for the design part, they may choose to have a joint venture with a design company,
subcontract the design services or utilize an in-house design team for this end. The responsibility of
coordinating these parties falls squarely on the contractor’s hands. The process therefore flows from
contractor identification by a client, to the design and then construction without having to stop to
tender some process components (El Wardani et al., 2006).
The main benefit enjoyed by the client in this case is are a shortened construction process with
minimal involvement of multiple parties which leads to an economical balance. The fact that it is
handled by one contractor also provides security in terms of accountability but it could also be
disadvantageous where the contractor breeches the contract (Adafin et al., 2016). The variations in
contract elements may also be a huge blow to the client as it may mean greater expense. It suits the
contractor as they have a chance to contribute their technical and management expertise allowing for
the design process to accommodate their capabilities and limitations. It also allows for direct
communication with the client which reduces the delay in resource gathering and information
collecting. This method is also adaptable to BIM technologies much to the benefit of both the client
and contractor (Du et al., 2016).
This method of procurement is suitable to a few limited options which include where the structure
being constructed is simple and/or requires minimal innovation and complexity (Wang et al., 2010). It
is also suitable for structures whose design is almost uniform across various industrial functions and
geographical locations. Such a building or structure has minimal variations too. An example of such a
structure is a warehouse where there are very few design variations between various warehouse
designs. It is also practical where only one technical team is needed for design, construction and
maintenance and where a construction program’s activities overlap each other (Seng and Yusof,
2006).
CONSTRUCTION MANAGEMENT
This is a construction procurement method that incorporates one extra party whose sole responsibility
is to manage the processes denoted in the construction project. This is similar to management
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contracting where a client hires an external management team to head the design, documentation and
construction process too (Doloi et al., 2015). The only difference in this case is that the construction
manager or management team usually has no contract with the subcontractors but rather they are
contracted by the client. As such, their responsibility is simply managing the various parties involved,
technical advice and representing the client in both the design environment and the site (Broome,
2002). They also prepare contractual documents for the client. Basically, they are a client’s proxy in
the construction process but with no legal connection to the subcontractors (Manley and Chen, 2015).
The advantages experienced by the client in this case include rapid construction time, comprehensive
management expertise at the commencement of the project and coordination of the technical teams.
The client also gets a guarantee of accountability with the project. The client is however more open to
risk in this case as they directly sign into the contract with the other contracting parties. This means
that any variation in the contract would also affect the client directly. They are also susceptible to
more expense with a construction manager than without (Chen et al., 2015).
For the construction management team, the advantage with this method is the liberty to engage and
coordinate various parties according to their expert opinion. They are able to complete more processes
at a go with the right compartmentalization skills and it is even possible for construction managers to
take on more than one project at a go. The major disadvantages faced by this method include the lack
of total authority over the subcontractors making them susceptible to open rebellion (Singh et al.,
2007).
The subcontractors in this case include the technical design team i.e. architect, engineers, quantity
surveyor and contractor. The advantage of this method is that it includes them all at the conception
allowing them to work together as a team for maximum accountability and consideration of
limitations. It reduces the working friction between various contracting parties as the lead charge is
the construction manager and minimizes their risk considerably as the client takes the majority of it
(Ross, 2003). This method makes it easier to integrate BIM technologies and other digital modelling
to allow for convenient information sharing and simulation. This method however limits their
independence and freedom of changing the set contractual guidelines for their individual profit
meaning that profits for each subcontracting team may be lower than with other methods (Singh et al.,
2007).
This method is suitable for extremely large projects or projects including repetitive processes that
need to be coordinated. It is recommendable where the client, while wishing to take full responsibility
of the project, requires professional assistance owing to a variety of limitations. An example of a
project needing such a procurement process would be the construction of an infrastructure project e.g.
road or railway spanning a relatively long distance that is subdivided into sections allowing for more
subcontractors, either per section or for more than one section (Lu et al., 2010).
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CONCLUSION
The preferred method is usually a matter of client preference. To obtain optimum economic
gains/savings and quality against time spent, a client needs to factor in the advantages and
disadvantages highlighted above in order to select a suitable procurement method (Victoria State
Government, 2006).
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REFERENCES
Adafin, J., Rotimi, J.O. and Wilkinson, S., 2016. Risk impact assessments in project budget
development: architects’ perspectives. Architectural Engineering and Design Management, 12(3),
pp.189-204.
Benson, L., 2010. Organizational flexibility Management in Construction.
Broome, J., 2002. Procurement routes for partnering: a practical guide. Thomas Telford.
Chen, L., Manley, K. and Lewis, J., 2013, May. The impact of construction organisations’ learning
capabilities on collaborative projects. In Proceedings of the 19th International CIB World Building
Congress. Queensland University of Technology.
Davis, R.P., Love, P. and Baccarini, D., 2008. Building procurement methods.
Doloi, H., 2015. Key Factors of Relational Partnerships in Project Management. In Handbook on
Project Management and Scheduling Vol. 2 (pp. 1047-1061). Springer International Publishing.
Du, L., Tang, W., Liu, C., Wang, S., Wang, T., Shen, W., Huang, M. and Zhou, Y., 2016. Enhancing
engineer–procure–construct project performance by partnering in international markets: Perspective
from Chinese construction companies. International Journal of Project Management, 34(1), pp.30-43.
El Wardani, M.A., Messner, J.I. and Horman, M.J., 2006. Comparing procurement methods for
design-build projects. Journal of construction engineering and management, 132(3), pp.230-238.
Lu, S.T., Kuo, Y.C. and Yu, S.H., 2010, July. Risk assessment model for the railway reconstruction
project in Taiwan. In Machine Learning and Cybernetics (ICMLC), 2010 International Conference
on (Vol. 2, pp. 1017-1022). IEEE.
Manley, K. and Chen, L., 2015. Collaborative learning model of infrastructure construction: a
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Manley, K. and Chen, L., 2015, September. Client learning and the performance of collaborative
infrastructure projects. In The Proceedings of the 6th International Conference on Engineering,
Project, and Production Management (EPPM2015) (pp. 508-517). Griffith School of Engineering,
Griffith University.
Manley, K., Rose, T. and Lewis, J., 2014, May. The distribution of absorptive capacity among
construction supply chain participants. In Proceedings of the CIB 2014 International Conference on
Construction in a Changing World (pp. 1-16). The University of Salford/International Council for
Building (CIB).
Masterman, J., 2003. An introduction to building procurement systems. Routledge.
Morledge, R. and Smith, A., 2013. Building procurement. John Wiley & Sons.
New South Wales Government, 2005, February. Procurement Methodology Guidelines for
Construction. Version 1, NSW Government, Sydney, Australia.
Ross, J., 2003, April. Introduction to project alliancing. In Alliance Contracting Conference (Vol. 30).
Rowlinson, S. and McDermott, P. eds., 2005. Procurement systems: A guide to best practice in
construction. Routledge.
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Seng, N.W. and Yusof, A.M., 2006, September. The success factors of design and build procurement
method: a literature visit. In Proceedings of the 6th Asia-Pacific Structural Engineering and
Construction Conference (APSEC 2006) (pp. 5-6).
Singh, A., Shiramizu, S. and Gantam, K., 2007. Bid Risk and Contingency Analysis. Cost
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Victorian State Government, 2006. Project Alliance Practitioners Guide. Department of Treasury and
Finance, viewed 21 September 2017, <http://www.dtf.vic.gov.au/projectalliancing>.
Wang, J., Guan, S. and Lin, D.Q., 2010, August. Study on approach of cost risk assessment in bidding
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