Procurement Assignment 2022

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Procurement Assignment
By Name
Course
Instructor
Institution
Location
Date

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Procurement Assignment
Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Traditional Procurement Method................................................................................................................4
Design and Build..........................................................................................................................................5
Management Procurement.........................................................................................................................6
Comparison of the Three Procurement Methods........................................................................................7
Recommendations.......................................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................10

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Executive Summary
Procurement is an essential component of any construction project. There are several
procurement methods, each with its unique characteristics, advantages, and disadvantages. This
paper discusses three procurement methods used in the construction industry. The traditional is
the conventional approach, while the build and design, and the management contracting are
among the modern procurement methods. The characteristics, advantages, and disadvantages of
these methods are explained. Also, the methods have been compared, and suggestions for the
suitable project for the techniques have been recommended. The author has no conflict of
interest for the views expressed.
Introduction

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The construction industry involves five essential functions, namely design, build,
operation, finance, and management. Procurement is a significant element in determining the
success of any construction project; hence, it is vital to understand the various procurement
methods in the industry (Mesa, Molenaar. and Alarcón, 2016). Procurement is the process of
purchasing goods and services. The procurement system identifies the tasks and responsibilities
of all the stakeholders in a project. There are several procurement methods in the construction
industry, each having its strengths and weaknesses. This essay discusses the traditional approach,
design, and builds method and management contracting method. Professionals in the
construction industry should have an understanding of the different procurement methods to give
guidance to clients.
Traditional Procurement Method
This is a conventional procurement method that has been used in the construction
industry for so long. In this method, the design process and construction are two separate entities.
The characteristics of this method include contractor appointment through competitive tendering;
the client has control over the design, a professional consultant is appointed by the client to
administer the contract and advice on stage payment, progress, and design. The construction cost
is usually known before construction, and the client pays it. In this method, building is the only
responsibility of the contractor while the consultant does the management and design works. The
client has the sole control of the finance and operation aspects of the project.
This procurement method has several advantages that have made it the most understood
and used in the construction industry. One of the benefits is that it ensures quality by contracting
out the built and taking control of the design. Also, because the design is completed before build
tenders are offered to contractors, the client knows what they are getting. However, this does not

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mean the method is a rigid design and builds approach. Even after the tender has been awarded,
there is room to adapt designs and change some instructions so long as the end product is not
distorted.
Additionally, the costs are fixed from the start giving the client certainty and also the
client controls the design throughout the project. The disadvantage of this method is mainly on
time taken to complete a project. The procurement method devotes a lot of time to the design.
The cost for project construction may also be high since the quantities are determined at the
design phase, taking away the contractor's flexible price management (Wong et al., 2016). If the
designs are delayed or if they change many times, conflicts and additional costs may arise.
This method gives the client control over the operation and finance of the project. Also, the
consultant manages the contract and controls the design through consultation with the client.
This method denies the contractor the opportunity to contribute to the design as he performs the
build. This method is suitable for relatively vast and complex projects.
Design and Build
The design and build procurement method gives the contractor control over the design
and builds of the project. The role of the consultant is solely to manage the contract. Just like in
the traditional method, the client controls the finance and operation in the project. Design and
build are characterized by the completion of the project within contract period with minimum
delays, two-stage tendering for the contractor, the client cannot alter the design after the
contractor has been tendered and it allows the construction and design can proceed in parallel.
The valuation and payment matters are also solely done by the contractor.
The disadvantages of this procurement method seem to rectify the weaknesses of the
traditional method. This method promotes fast project construction and offers cost certainty to

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the client as the contractor should work within a fixed maximum cost. Also, the consultant is the
single source of contact for the client and the contractor;, therefore, there is a smooth line of
communication with fewer fallouts. Additionally, the method offers the client the lowest risk
since the client sets the requirement which the contractor must meet diligently. However, the
technique has several shortcomings. First, the quality and quantity of materials may be
compromised since the contractor has the interest in cutting down the cost. This because the
calculated price offered during tendering is made to undercut the competitors, but since they
desire maximum profits, the quality and material can easily be jeopardized. Also, the method
introduces inflexibility in project construction (Ogunsanmi, 2016). The client may face huge
penalties if the design changes once the project has commenced.
In this method, the client has a single point of contact. Unlike the traditional method, the
client commits to the cost of design and construction earlier. The contractor bears most of the
risks in this construction approach. Also, as much as the contract period is shortened, the
evaluation and selection of the contractor are difficult since the renderers present different
designs.
Management Procurement
This is an entirely distinct approach from the design &build and the traditional method.
This method introduces specialized contractors to participate in the project with the contractor,
consultant, and client. The specialized contractors perform the real build function in their
specialized field while the contractors manage the project. Finance and operation is the
responsibility of the client. This method involves the client appointing a consultant to formulate
the project design and specifications. Then a contractor is selected through interviews and
tendering to manage the specialized contractors (Brook, 2016). Since the contractor does not

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perform the real build, this improves his consultancy with the client and enforces the contractor's
independence. Based on the agreed fee and the cost of the work package, payment is made to the
contractor. The management function of the contractor contributes significantly to the success of
the construction project. Therefore, the contractor should always be carefully selected;
preferably, the contractor should be a company with an experienced team.
The significant advantage of this procurement method is the cost aspect. Since each
element of construction work is completely tendered for, the client gets the best price throughout
the project. Secondly, the client controls the quality of the construction project. In contrary to
other procurement methods, the client can make changes throughout the project development and
face minimum penalty and costs. However, this method has disadvantages, just like the other
procurement methods. It is the most management and time intense procurement approach. The
client will be forced to spend extra costs to hire contraction management offered by the
contractor (Rahmani, Maqsood, and Khalfan, 2017). Also, the approach may results in so many
contracts thus increase the room for error in the project development process.
This approach involves a highly skillful contribution since the specialized contractors
doing the build are specialized in their specific areas. This leads to a construction process with
high precision levels similar to that seen in the manufacturing industry. Since there is minimal
supervision in this method, all the stakeholders in the project are favored. However, the
organization becomes a challenge; thus, team working should be promoted throughout the
project development (Davis, Jefferies and Ke, 2017).
Comparison of the Three Procurement Methods
As illustrated above, each of the procurement methods has its advantages and
disadvantages. Let us compare and contrast the three procurement methods discussed above

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based on their uniqueness. First, the management procurement method is unique from the other
two methods since the specialized contractor is introduced. The skilled contractor ensures that
the build of the constructions project is of top quality since the contractors are conversant with
their specific areas. Based on the functions of construction, the build is done by the specialized
contractor. Also, the management is not done by the consultant, like in the other two methods.
For the traditional and the design and build approach, the functions of constructions are done by
similar stakeholders. The table below shows the functions of constructions with different
procurement methods.
Table 1: Procurement Methods in Project Construction
Procurement
Method
Function of Construction
Operation Finance Management Build Design
1 Traditional
Method
Client Client Consultant Contractor Consultant
2 Build and
Design
Client Client Consultant Contractor Contractor
3 Management
Contracting
Client Client Contractor Specialized
Contractor
Consultant
Based on the time taken to complete a construction project, the design and build allow a
fast project completion of a project. This is because the construction can commence before the
design has been finalized. The concurrent running of the design and build function cuts down the
time required to complete a project (Naoum and Egbu, 2015). However, the traditional method
approach involves a lot of time as the client can bring design changes that may disrupt the
project construction plan. In terms of quality assurance, management contracting methods

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enhance quality through the use of specialized contractors. Also, the tendering process used in
the management contracting approach ensures that the consultant helps the client to select the
best suppliers of products and services. Also, the management contracting method high cost
implications compared to the other methods, and the client has to pay for the extra functionalities
introduced in the system.
Recommendations
Each of the three procurement methods discussed above is unique, having its pros and
cons. If a procurement method is successful in one construction method does not necessarily
imply that it will be successful in all projects. Therefore, professionals in the construction
industry need to understand the dynamics of these project and appropriately advice clients on the
appropriate method for a specific project (Clough et al. 2015). The suitable choice for the
procurement method depends on several factors, but the nature of the construction project plays a
significant role in the selection. The other factors to be considered include the experience of the
contractor as well as the choice of the client. Selecting the procurement method is usually a
complex decision-making process.
If the client has the idea of the construction project, and it is unlikely that changes will
arrive, then the traditional contracting would be the most appropriate procurement methods. The
management contracting method is suitable for a somehow experimental construction project and
one that requires minimal cost implications as well (Hughes, Champion, and Murdoch, 2015).
This is because innovative construction projects require a high level of precisions that can be
offered only by the management contracting method through specialized contractors. The design
and build method would be suitable for the construction project where the client has an interest

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in fixed cost. Therefore, understanding the construction project and weighing different decision-
making factors would help the client select the appropriate procurement method.
Conclusion
Procurement is a crucial element in the construction project development in the
construction industry. Several procurement methods can be used to purchase goods and services
required to make the construction project a success. However, the procurement methods have
different advantages as well as disadvantages; thus, professionals in the construction industry
should have a comprehensive understanding of procurement approaches. The traditional method
is a conventional procurement method that has been used in the construction industry for so long.
The design and build procurement method gives the contractor control over the design and build
of the project. The management contracting is different from the two since it introduces
specialized contractors to participate in the project with the contractor, consultant, and client.
However, the nature of the project and other decision-making factors determine the appropriate
procurement method for a given construction project.
References
Brook, M., 2016. Estimating and tendering for construction work. Routledge.
Clough, R.H., Sears, G.A., Sears, S.K., Segner, R.O. and Rounds, J.L., 2015. Construction
contracting: A practical guide to company management. John Wiley & Sons.

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Davis, P.R., Jefferies, M. and Ke, Y., 2017. Psychological contracts: Framework for
relationships in construction procurement. Journal of Construction Engineering and
Management, 143(8), p.04017028.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and
management. Routledge.
Mesa, H.A., Molenaar, K.R. and Alarcón, L.F., 2016. Exploring performance of the integrated
project delivery process on complex building projects. International Journal of Project
Management, 34(7), pp.1089-1101.
Naoum, S. and Egbu, C., 2015. Critical review of procurement method research in construction
journals. Procedia Economics and Finance, 21, pp.6-13.
Ogunsanmi, O.E., 2016. Risk classification model for design and build projects. Covenant
Journal of Research in the Built Environment, 3(1).
Rahmani, F., Maqsood, T. and Khalfan, M., 2017. An overview of construction procurement
methods in Australia. Engineering, Construction and Architectural Management, 24(4), pp.593-
609.
Ruparathna, R. and Hewage, K., 2015. Sustainable procurement in the Canadian construction
industry: current practices, drivers and opportunities. Journal of Cleaner Production, 109,
pp.305-314.
Wong, J.K.W., San Chan, J.K. and Wadu, M.J., 2016. Facilitating effective green procurement in
construction projects: An empirical study of the enablers. Journal of Cleaner Production, 135,
pp.859-871.