Evaluation of Construction Project Delivery Methods

The report analyzes the criteria behind calculating matrix scores to evaluate the best measures for network construction. It concludes that design and build contracts, cost-plus fixed fee contracts, and the best value method are suitable options. The selection process is prioritized based on quality checks, set costs, and time values.

REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PROJECT DELIVERY METHOD..................................................................................................1
FINANCIAL CONTRACT TYPE..................................................................................................3
PROCUREMENT METHOD SELECTION...................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
The report consists of establishment of easy road network for heavy vehicles in existing
Sydney motor way network by NSW government. It was important for the government to ensure
easy transportation services to manage the traffic. Moreover, the report analysed several methods
used by consultant in order to provide best services to NSW government. Besides, it will
examine the various factors which are necessary to be conducted while accepting the network
construction project. Hence, the report will evaluate the goals of the project through matrix
criteria which will assist the organisation in adapting the best methods and contracts for the
construction project.
PROJECT DELIVERY METHOD
The Sydney motorway network analysed the need of establishing easy transportation road
lanes for heavy vehicles, for which the organisation has hired a general contractor and project
consultant which will assist the business in selecting the best ways of establishment by
estimating cost, risk and many more factors which can come across.
The construction project includes M5 Motorway, M5 East and the M4 Motorway which
carries high levels of average weekday in peak hour traffic, including large volumes of heavy
vehicles from western Sydney to and from the Port Botany/Sydney Airport economic zone.
Therefore, the selection process for project is important as the government need to ensure the
perfection in 4 aspects of road work which are budget, quality, risk and time (Fong Avetisyan
and Cui 2014).
Goals Goals
Weight
Project Delivery System
Design and Building
contract
Construction Manager
at Risk (CM@Risk)
Design Bid Building
contracts (DBB)
Score Weighted
Score
Score Weighted
Score
Score Weighted
Score
Quality 35 7 245 5 175 7 245
Budget 30 6 180 8 240 7 210
Time 10 7 70 6 60 5 50
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Risk 25 8 200 8 200 7 175
100 695 675 680
The management estimated 3 project delivery system from which the consultant and
contractor will choose one in order to have effective implementation process of establishing 4
lane road. Project delivery system is adopted by the business to manage the smooth functioning
of organisational goals. Further, the consultant evaluated 3 methods which will assist the goals
such as:
Design and Building contract (DB): NSW government can implement this method as it
consumes less time and establish the organised schedule and scope for the construction process.
Moreover, it helps the company in estimating cost at early wastage and provides appropriate
communication at all the levels (Cardenas 2016). Further, the major advantage is it helps the
management in reducing time and risk and provides control over all the activities involved in the
process. Besides the method have some limitations increase the chance of uncertainties like it has
limited input for choosing subcontractors.
Construction Manager at Risk (CM@Risk): It is the methods which is the commitment
by the construction manager to complete the project at guaranteed maximum price which states
that the contractor will not way more than the decided price. Further, it can be used by the
management of APIC Constant can use this in n constructing 4 lane roads because it establishes
the control over cost and savings. Moreover, the major advantage of implementing this method is
that, it ensures the involvement of constructor during the design which helps the company in
discovering the loopholes in the project. Although this method assist the organisation in
managing cost and design but at the same time under this method owners are financially liable
for inconsistency and exclusions (Ball, Li and Shivakumar 2015).
Design Bid Building contracts (DBB): The Sydney motorway network can use this
project delivery method for road construction project as it segregate the work in different steps
like first the designing process, and then budgeting, quality and risk. Further the consultant
suggested this method as it estimates the time in start and provides full control to owner in
designing process and establishes competitive bid at lowest possible price. Besides, all the
advantages, this method also limits control over selecting sub contractor and takes much time as
the process is leads to stepwise delivering.
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Hence, after evaluating all the three delivery methods the project consultant advised the
company to implement and make use of Design and build contracts as it will help the
management in maintaining value of the aspects which are related to all four goals. Furthermore,
according to the matrix calculation the consultant reached the end result which identified that by
using this method contractor can fulfil all the needs and demands of the client which are Quality
Budget, Time and risk management (Decarolis 2014). Under this method the Sydney Motor
network just need to adjust with budget as the network building process can be costly but it will
ensure, the proper quality of raw material and will reduce the chances of risk and uncertainties.
Henceforth, using this method can be beneficial for the company as it has the highest weighted
score in this matrix which is 685 in which the goal weight for quality was 35 which is multiplied
to the score that is 7, Budget weight is 30 and score is 6, further the time weight is 10 and score
is 7 and lastly the weight for risk is 25 and score is 8 which denotes that the APIC Consult can
implement this in construction project.
FINANCIAL CONTRACT TYPE
It is a legal binding agreement between two or more parties, which represents a
relationship between buyer and seller.
Goals Goals
Weight
Financial Contract type
Lump sum
contract
Guaranteed Maximum
Price Contract
Cost Plus Fixed Fee
Contract
Score Score
Weight
Score Score
Weight
Score Score
Weight
Quality 35 6 210 6 210 7 245
Budget 30 8 240 7 210 8 240
Time 10 7 70 6 60 8 80
Risk 25 7 175 6 150 7 175
695 630 740
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Lump sum contract: The consultant analyses organisation can make use of lum sum
contract as it provides full responsibility in form of profit and losses according to timely
performance and at fixed price of contract. It is used by the company when it wants to establish
the project at lowest possible price by evaluating performance on regular basis (Kudo and et.al.,
2014).
Guaranteed Maximum Price Contract: This enables the company to set fixed prices of
construction project according to the resource requirement. Moreover, it helps the company in
limiting the cost of project therefore sometimes it limits the construction process and that is why
contractors do not prefer using this method of financial contract type. Furthermore, in this the
APIC consult can assume the full cost responsibility (Fong Avetisyan and Cui 2014). Besides,
with all the advantages it limits and underestimate the cost of project which leads to shrink in
profit margin. The consultant do not prefer using this model because it consumes time for
preparation and adjusting bids.
Cost Plus Fixed Fee Contract: This is the flexible contract where the cost may vary but
is acceptable by the client. Further, it assists the company is maintaining audit book in regular
basis which helps the organisation in analysing the loopholes of the project. This financial
contract needs engineering-construction contractor who bids for a fixed dollar fee or profit for
the services which be applied in the project like, labour cost, resources, etc. which are repayable
at actual cost.
Hence, after evaluating all the three type of financial contracts in the matrix on the basis
of goals, the project consultant advised the company to implement the Cost plus fixed fee
contract as it will assist the company in managing all the aspects of the goals together. Moreover,
the company believes that this type of contract will the contracts in satisfying the needs and
wants of NSW government. Furthermore, it will help the EPIC consult in providing maximum
protection to the contractor for establishing fixed cost for the project. Besides, in this type the
consultant advise all the possible risk and uncertainties to the company which can come across
due to unavailability of funds and resources. Henceforth, according to the matrix evaluation of
goals, establishment of road network will be according to cost plus fixed priced contract because
it concluded that with the highest weight score of 740 in which score of quality is 7 and weight is
245 that is by multiplying it by the weight of goal that is 35. Moreover, Budget weight is 30 and
score is 8, further the time weight is 10 and score is 8 and lastly the weight for risk is 25 and
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score is 7 which determines that the APIC Consult can implement this financial contract in order
to provide mutual legal binding agreement between consultant and the NSW government.
PROCUREMENT METHOD SELECTION
The selection process of the company is based on three factors which are, price, quality
of work, and combination of price and quality of work.
Goals Goals
Weight
Procurement method selection
Competitive Negotiated The Best Value
Score Score
Weight
Score Score
Weight
Score Score
Weight
Quality 35 6 210 7 245 8 280
Budget 30 7 210 8 240 7 210
Time 10 6 60 7 70 8 80
Risk 25 6 150 7 175 8 200
630 730 770
Competitive: This method is completely on price and cost of the project. Consultant also
termed this method as transparent procurement method win which vendors and suppliers are
invited to advertise the scope, specification and terms and conditions of their project. Moreover,
it is a time consuming process which take time to evaluate and monitor the period from issuing
the notice for processing the construction of project. Hence, the management consider this
process because it is based on lowest bid which aims at obtaining resources at least possible
prices by stimulating competition (Larson and Gray 2013).
Negotiated: It is completely partial method which is based on the reputation and
qualification. Moreover, it is a fast process as it do not involve steps. It just depends on the
relation of consultant and contractor (Naoum and Egbu 2015). Besides, it can be little risky for
establishment of M4 road network. Hence, the government also evaluates all the major risk and
then signs agreement.
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The Best Value: This the majorly use procurement method as it a mixture of both the
above methods that is negotiation and competitive bidding in which construction projects are
reviewed and received which consumes more time in negotiating and less time in competitive
bidding.
Illustration 1
The Best Value Procurement Method
Hence, the APIC Consult will make use of The best value procurement method because
according to the criteria matrix of goals of M4 network, the business analysed that it is the only
method which combine both the selection aspects that is price and quality of work. According to
the matrix evaluation the consultant concluded that in the best value the weight score is highest
that is 770 in which the quality, budget, time and risk weights are multiplied to the score of the
method which demonstrated that except budget all three goals are on 8 where budget is on 7
which will do not impact the construction of project. The selection done by APIC consultant is
on ranking that is in rank 1 the management considered tendor should be received on priority for
quality check, in rank 2 received tendor should be as per the set cost, and lastly in rank 3 both the
criteria should attain the time value for money.
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CONCLUSION
The report summarized, that it is necessary for every consultant company to evaluate all
the possible methods which can assist the government in establishing road network at lowest
possible prices. Further, the report analysed the importance and criteria behind calculating matrix
as it helped the APIC consultant in evaluating the best measures possible for the network
construction process of the government. Hence, the report concluded by identifying the best
methods which are Design and build contracts, Cost plus fixed fee contract and the best value
method.
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REFERENCES
Books and journals
Ball, R., Li, X. and Shivakumar, L., 2015. Contractibility and transparency of financial statement
information prepared under IFRS: Evidence from debt contracts around IFRS
adoption. Journal of Accounting Research. 53(5). pp.915-963.
Cardenas, D.P., 2016. Evaluation of Construction Project Delivery Methods: A study of
Axiomatic Design Principles Measuring the Efficiency of the Design Process (Doctoral
dissertation, Worcester Polytechnic Institute).
Decarolis, F., 2014. Awarding price, contract performance, and bids screening: Evidence from
procurement auctions. American Economic Journal: Applied Economics. 6(1). pp.108-
132.
Fong, C.K., Avetisyan, H.G. and Cui, Q., 2014. Understanding the Sustainable Outcome of
Project Delivery Methods in the Built Environment. Organization, Technology &
Management in Construction. 6(3).
Kudo, T., and et.al., 2014. Application of a Lump-sum Update Method to Distributed
Database. Informatics Society. p.11.
Larson, E.W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Naoum, S. and Egbu, C., 2015. Critical review of procurement method research in construction
journals. Procedia Economics and Finance. 21. pp.6-13
Online
The Best Value Method. [ONLINE]. Available through <https://www.google.co.in/search?
q=PROCUREMENT+METHOD+THE+BEST+VALUE&client=ubuntu&hs=SAe&chan
nel=fs&source=lnms&tbm=isch&sa=X&ved=0ahUKEwi6_fithvXVAhVHtY8KHdjaC6
AQ_AUICigB&biw=1535&bih=749#imgrc=c23NgV14KcXLUM:>. [Accessed on 25th
August 2017].
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