Positive and Negative Aspects of Procurement System

This report discusses the positive and negative aspects of procurement systems like design and construct, management procurement, and joint venture partnering. It provides recommendations for each procurement method. The report is useful for clients, subcontractors, developers, and end-users. The subject is procurement systems, and the course code, course name, and college/university are not mentioned.

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POSITIVE AND NEGATIVE ASPECTS OF PROCUREMENT SYSTEM NAME
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Table of Contents
Disclaimer........................................................................................................................................3
Introduction......................................................................................................................................5
Procurement systems.......................................................................................................................6
Design and Construct Procurement.................................................................................................6
Characteristics..............................................................................................................................6
Advantages and disadvantages of design and construct procurement.............................................7
Advantages/ positive aspects.......................................................................................................7
Negative aspects/Disadvantages of construct procurement.........................................................8
Recommendations........................................................................................................................8
Management Procurement...............................................................................................................9
Advantages and disadvantages of management procurement....................................................10
Recommendations......................................................................................................................10
Joint venture partnering.................................................................................................................11
Characteristics............................................................................................................................11
Advantages and disadvantages...................................................................................................11
Recommendations......................................................................................................................12
References......................................................................................................................................13

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Disclaimer
Anybody or reader who is interested in utilizing any piece of information entailed within this
report concerning procurement methods should do so at his or her own contingency. This report
will not be held responsible for any step involved by the user or any third party with regard to the
information contained in this report. I openly express my disclaimer, any liability to any
individual in respect to any omission done in the report in or any additional information.

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Executive Summary
A number of technics and methods that are used in the procurement of construction projects are
always readily available to meet the expected needs of clients. It is almost a tall order to select or
decide on the most appropriate method to be used in a particular construction project which may
be a challenge to a prospective client since it is necessary for the procurement to meet the
client’s priorities and objectives. This goals and objectives need to be at per with the selected
procurement method. In this case, the client’s business needs to select the best procurement
method early enough before the project begins. There are several procurement systems that exist
from which a client can select and adopt .in this case, it is vital for to understand the various
characteristics of each procurement method before recommending it for use. This report tries to
give both the advantages and disadvantages that can be encountered by either the client,
subcontractor, developer or the end user depending on the choice of the procurement method.
The systems of procurement dealt with specifically include design and construct, management
and collaborative in addition to joint venture partnering. The report tries to give the
characteristics of each procurement method in line with the circumstances under which they can
be identified and applied for a specific construction project.

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Introduction
Nearly for the last two decades and five years, there hasn’t been any clear change in the
procurement methods of construction projects. Despite all these, time and cost do change more
often in this business arena (smith et al, 2001). Many attempts to come up with more efficient
procurement systems have been tried but still there are several sets of disadvantages and
advantages that do accompany any of these procurement methods. This in turn affects all the
players in this arena starting from the developer to the end user consumer. When selecting a
procurement system, it is very vital that the goals and objectives of the client should be
compared with the selected method to ensure they match.
This report gives detailed information about three procurement systems. The research
furthermore tries to highlight the various recommendations for each specific procurement
method. In this case therefore, not every type or form of procurement systems is right for a
certain project (Qing Chen et al, 2016, p.142). It is important therefore to note that analyzing the
needs and characteristics of procurement system is rudimentary. I the same line, it is also
necessary to know the major functions that are involved in a construction project which are
designing, building, the art of management , finances and mode of operation.

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Procurement systems
The existence of an organizational system which majors in the assignment of specified
responsibilities to people and organization is what can be termed as procurement system or
delivery system. It is thus responsible for defining certain constrains in the construction project
(Holt et al. 2000 p.57). Procurement systems or methods can be grouped as;
 Design and construct (integrated)
 Management procurement (packaged)
 Collaborative, joint venture/ partnering (relational)
In this case, the choice of the procurement method to be used by the client should be
underpinned earlier before the commencement of the project. Before the selection of the
procurement system, it is also important to assess both the risks and benefits associated to them
and how they can affect all the players i.e. the developer, contractors, consultants to the end user.
The figure below shows the speculated risks associated with the procurement methods.
Design and Construct Procurement
Characteristics
This type of procurement method involves the contractor taking the responsibility partly or of the
whole design. In this case, the contract should contain the extent of design liability clearly stated
not unless the contract states otherwise. It is also good to note that the design contains absolute
or total liability through which the contractor is supposed to warrant for the intended course of

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action. This type of procurement method can sometimes limit the design liability of the
contractor so that they can put into practice reasonable skills and skill. In this kind of
procurement, the consultants who are involved by the contractor only have a normal liability.
Thus, the acceptance of liability must be backed up by adequate indemnity insurance.
It is also necessary to state the requirements of the client in a simpler and brief manner. This
necessitates the need of restricting the contractor’s input to taking the design scheme brought by
the client so that he can develop the details and production information. They tend to offer
certainty on the contract sum thus bringing cost benefits.
Advantages and disadvantages of design and construct procurement
Advantages/ positive aspects
The main advantage of design and contract procurement to the client is that it allows them to
specifically deal with one firm and thus help in reducing the need to decentralize resources and
time to contracting designers and contractors on a separate basis. This intern allows the client to
manage his resources in an easier manner. It is also advantageous to all the parties involved since
the price is certainly obtained before construction commences since the end user requirements
are specified and changes re not introduced. The presence of guaranteed maximum price with a
Client Design
consultant client
Contractor Sub-
contractor
Contractor
Design
Sub-
contractors

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saving option has the abilities of stimulating innovation thus reducing time and cost of the
project (Love et al, 2006 p 33).
The existence of overlap of design and construction activities has the ability to help reduce the
project construction time thus being of benefit to both the contractor, consultant and the client. In
addition to this, design and construct procurement necessitates the improvement of
constructability due to the input of the contractor in the design (Yong et al, 2012, p19).
Negative aspects/Disadvantages of construct procurement
The client can have trouble in preparing an adequate/ fully detailed and sufficient brief. It can
also be very costly when the client wants to change the scope of the project. It is disadvantageous
on the side of the developers and contractors especially when forwarding bids since project
programs will vary and they will also contain different prices. More so, it can be
disadvantageous for the single organization taking the contract since it has to bare all the risks
for the design and construction (Love et al. 2006, p. 8).
Recommendations
The following recommendations are necessary for design and construct procurement.
 When the building to be constructed is functional rather than for prestigious purposes.
 This method should only be used when a single organization is required to take the
responsibility for the design and construction.
 When the brief of scope is expected to change or deviate at any moment.

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 In the case where the building to be constructed is simple and does not require technical
innovation or complexity.
Management Procurement
Management procurement does exist in various forms such as management contracting, construct
management and design and manage (Love et al, 2006).. These types of management
procurement do have slight differences. For management contracting, the contractor is in
possession and in control of all construction work, in construction management, the contractor
has to be paid a certain amount of money in order to manage the project professionally thus
developing a program that can coordinate and control the activities of design and construction.
The methods in this process include;
 Management contracting- It is the task of the client to select independent professional
teams whose responsibilities are advising in making decisions during the preconstruction
stage. They are also held responsible for executing the work during the commencement
of the project. In order for this to work out, there should be a mutual trust between the
client, consultant and contractor.
 Construction management- After a careful selection of the management contractor,
they are paid a fee to manage the project. The difference between construct management
and management contracting is that there is contraction of work. Even though they are
managed by the management contractor, there is a direct link between the works contract
and the client.

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 Design and manage- This is very similar to management contracting the only difference
is that the contractor is paid and thus assumes all the responsibilities for the design team
and also for the work contractors.
Advantages and disadvantages of management procurement
Advantages/ positive aspects
It has the advantage of reduced confrontation between the design team and the team that
undertakes the responsibility of supervising the construction since the client only deals with one
firm thus leading to improved coordination and collaboration between designers and
collaborator. It is an added advantage to both the contractors, subcontractors and the client given
the fact that work packages can be let competitively at prices that are current. It is also
advantageous since it the risks and responsibilities for all the concerned parties are clearly stated.
The presence of public accountability and absence of nomination of trade contractor is also an
added benefit to all the players.
Disadvantages/ negative aspects
It is not possible to determine the exact price of the project until the accomplishment of the
project thus coursing lots of uncertainties to the parties involved. There is often poor price
certainty thus coursing inconveniences. It requires close time and control of information which is
quite hectic to both players. The client my end up losing direct control over the design quality

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since it is greatly influence by those undertaking the construction. It also requires a good quality
brief that may be hectic for the client to develop.
Recommendations
 The client should only select this type of procurement if there is a high degree of trust
and confidence since there is no initial capital before commencement of the project.
 It should be given priority if the nature of the project to be undertaken is complex, fast
moving and completion is desirable.
 If the competitive tendering element needs to be retained for all work contracts.
Joint venture partnering
Characteristics
Joint venture/ partnering procurement can also be called collaborative forms like alliancing. This
type of procurement is majorly used in high and complex projects. Here, a new business project
is thus created to which every party contributes resources. They are commonly used for enabling
small scale organizations to deliver large projects by combining their skills, and also in gaining
local knowledge in oversee markets (Love 2002, p. 4).
Advantages and disadvantages
Positive aspects

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The client can get quick access to the intended project objective since the contractors combine
resources to achieve the stated objective.it is advantageous to the contractor since there is sharing
of risks thus minimizing the losses that my occur. There is access to greater resources such as
specialized staff, technology and finance. It furthermore facilitates growth and development of
the firm without borrowing of funds.
Negative aspects
It can be very complex to partner with another business for instance forming relationships with a
business that does not meet the abilities of your own business. It can be very cumbersome to
build the right business relation thus can be disadvantageous to the client and the developer since
it may lead to wastage of resources and time. The objectives of the venture may fail to match
those of the client thus may be problematic to the project accomplishment.
Recommendations
This type of procurement method should be used if the nature of the project is complex and
requires technical observations. It should also be considered when dealing with large and costly
projects.

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References
Dosumu, O. S. (2018) ‘Perceived Effects of Prevalent Errors in Contract Documents on
Construction Projects’, Construction Economics & Building, 18(1), pp. 1–26. doi:
10.5130/AJCEB.v18i1.5663.
El Sawalhi, N. I. and El Agha, O. (2017) ‘Multi-Attribute Utility Theory for Selecting an
Appropriate Procurement Method in the Construction Projects’, Journal of Construction in
Developing Countries, 22(1), pp. 75–96. Doi : 10.21315/jcdc2017.22.1.5.
Li, H., Arditi, D. and Wang, Z. (2014) ‘Transaction costs incurred by construction
owners’, Engineering Construction & Architectural Management (09699988), 21(4), pp. 444–
458. doi: 10.1108/ECAM-07-2013-0064.
Love, PED 2002, ‘Influence of Project Type and Procurement Method on Rework Costs in
Building Construction Projects’, Journal of Construction Engineering & Management, vol. 128,

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no. 1, p. 18, viewed 4 October 2018, <http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=6673873&site=ehost-live>.
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Concept to Ribbon Cutting’, Planning for Higher Education, 46(2), pp. 31–41. Available at:
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Ojo, S. O., Aina, O. and Adeyemi, A. Y. (2011) ‘A Comparative Analysis of the Performance of
Traditiona Contracting and Design-Build Procurements on Client Objectives in Nigeria’, Journal
of Civil Engineering & Management, 17(2), pp. 227–233. doi: 10.3846113923730.2011.574449.
Qing Chen et al. (2016) ‘Time and Cost Performance of Design-Build Projects’, Journal of
Construction Engineering & Management, 142(2), pp. 4015074-1-4015074–7. doi:
10.1061/(ASCE)CO.1943-7862.0001056.
Ruparathna, R & Hewage, K 2015, ‘Review of Contemporary Construction Procurement
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direct=true&db=aft&AN=504994227&site=ehost-live (Accessed: 4 October 2018).
Wood, G. D. and Ellis, R. C. T. (2005) ‘Main contractor experiences of partnering relationships
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