Analysis of Construction Procurement Systems: A Comprehensive Report

This report provides a comprehensive overview of construction procurement systems, including an executive summary outlining the core concepts and definitions. It delves into various methods such as standard, selection, construction and design, and divided contract approaches. The report then explores different procurement systems, like alliance contracting and public-private partnerships, highlighting their benefits, such as improved productivity and innovation. It further analyzes separated, integrated, and management-oriented procurement systems, comparing their effects on project performance in terms of time, cost, and quality. The separated procurement system, including traditional and variant approaches, is discussed in detail, alongside integrated systems like design-build and turnkey methods. The report also examines management-oriented systems, emphasizing their role in managing construction and design projects. Overall, the report offers a detailed examination of the strengths and weaknesses of each system, providing valuable insights into construction project management and procurement strategies.

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Executive Summary
Procurement is a process of purchasing, buying, acquiring goods or services or tasks from
outer sources. The process is made up of cycles of steps or activities which are to be
performed to attain the required objectives through identification of the required task.it can
also be stated as a business management process which is responsible for
sourcing ,identification and management of outer facilities or materials which an
organization requires to attain its strategic objectives (Songer & Molenaar, 1996). For
instance, construction procurement is defined as a plan or strategy required to fulfil or meet
the customers taste and preference since it contains the appropriate project documentation. It
also refers to the methods of obtaining construction project (Songer & Molenaar, 1996)
Introduction
A proper analysis of various procurement processes or strategies appears to be much hard and
much complex as they are seen as either beneficial or unbeneficial projects that appear to be
same in the systems procurement steps. For one to make a decision on what procurement
strategy is, one should consider the clients objectives, means of payments, design methods
and constructional obligations.to have a good working knowledge of key differences, one
should appropriately analyse and evaluate the working strategies by carrying out research
through studies to come up with an appropriate process documentation (Murdoch & Hughes,
2000).
Methods

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Construction project resources are put into two categories namely: managerial and technical
skills ,plant construction and equipment methods which can be evaluated or obtained through
the following methods (Murdoch & Hughes, 2000)
 standard approach.
 Selection approach.
 Construction and design approach.
 Divided contract approach.
 Indirect and direct labour.
 Consultants appointing.
 Client and consultants contracts.
 Consultant’s payment methods.
 Contractor’s appointments.
 Contract negotiations.
Procurement systems
Alliance contracting or the private public partnership is kind of infrastructure procurement in
which the national government in conjunction with the private sectors comes together to
purchase, buy, acquire capital assets or tasks from outer sources and accept to divide the
favourable circumstances and operate via risk in collaboration with a project progresses.
In alliance contracting the involved parties create a cohesive body that collectively divide the
risks and benefits as laid in the joint agreement formula whereas in the public-private
partnering the parties set aims and goals as well as the conflict resolution and escalation
strategies enacted with the partners retaining their independence and thus benefits or suffer
loses independently in the relationship creating a win-win or lose-lose environment.

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Among other benefits, alliancing has the following benefits;
Alliancing have demonstrated a positive correlation with productivity, job satisfaction as well
as loyalty what is significance in providing a positive results other than protecting a
contractual status
Through the use of alliance, it becomes easier to innovate new resolution ideas and manage
the stakeholders’ interest and conduct new benchmarks for the project safety.
The rate by which Australia alliances give a competitive edge to those who seeks to get
market overseas keeps improved.
Selection of appropriate procurement process system is aimed at reducing the project’s cost.
Due to this, it has been made difficult to come up with the best systems as clients, consultants
and contractor come up with different options and taste. Poor decision making in selecting
procurement systems may result to overruns of costs, delay times and problem in the quality
of the design project as correct choice of procurement system is vital for the efficiency of the
construction project. A study has been conducted through which all systems in building firms
to generate the best systems to be applied in project design and construction. Through project
evaluation, one is able to choose appropriate procurement methods. The various procurement
systems are as follows:
1. separated procurement system (traditional systems and variant of traditional systems)
2. Co-operated procurement systems(traditional systems and variant of traditional
systems)
3. Integrated procurement systems (include traditional procurement systems)

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4. Management-oriented procurement systems (management contracting, construction
management)
5. Management procurement system.
Separated procurement system
This is a procurement process in which the construction and designing responsibilities are
separated or divided and various independent organizations such as constrictors and designers
are used to carry up the tasks. Other names used to refer to the system are; multiple
responsibilities contracting approach sequential or linear contracting systems.in this method
system, the development activities of the construction project begin from a simple study or
analysis, design preliminary, construction documentation and hand over are undertaken step
by step or one followed by the other. Locally, fully working designs or drawings are to be
made by the designers or constructors before the design work or construction project is
undertaken. This procurement system is separated into two sub-divisions namely; variant of
the traditional systems and traditional system. Furthermore, the variant of the traditional
systems is subdivided into; sequential method and accelerated method.
In the sequential method or single stage tendering approach, the client of the building is
capable of selecting a consultant’s team or group who on the client’s behalf generate
construction drawings and designs specifications and project documents and are also capable
of undertaking the tendering work process where they come up with the appropriate
contractor for the design. Once the contractor has been obtained, he /she will undertake the
construction project depending on the drawing designs provided by the client’s consultants.
Considering the accelerated method which is said to be an innovative approach used to haste
or speed up constructor’s appointments and the start of the construction project. Accelerated
procurement systems are classified into two various groups comprising of two-stage method

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and negotiation methods. It is through the methods that the project owners and the contractors
come in agreements about the payments, cost of the projects, contract time and submission of
fixed tender.
Effects of the procurement system on project performance
Traditional procurement system
Time. The traditional procurement system has been evaluated as the slowest project
presentation approach due to its sequential or linear approach. The advantage of this method
is that it is preferred as it gives clear accountability and good design and construction control
by the client. More time is availed for the client and the project team to review the project
before design as the pre-contract stage of the system is longer.
Cost. More price certainty is provided by the system to the clients at the beginning of the
project and also gives clients competitive and firmer price since the complete working and
design drawings have completely been developed and well detailed in the tender. Anny
construction and design ambiguity or uncertainties that make the contractor to unnecessary
inflate the price. In places where a lower project cost is required the bill of requirement
materials is needed, the bidding is fair as the project cost is lower. As a result of variation, the
system is employed to regulate the cost.
Quality. Through traditional procurement systems, a high degree of functional standards and
uncertainty quality is gained. Through the system, the client is presented a chance gt generate
and gather the best construction designs also enabling skills and knowledge sharing among
consultants and constructors. quality. The method provides enough time for consultants and
clients to evaluate and perfectly develop the design and specifications for proper document
presentation. Only limitation of the system is that it does not avail opportunities for the

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contractor to make the contribution on his or her management and technology as they come
to the scene after the development and approval of the projects. Integrated procurement
systems (Masterman, 1996).
In this procurement method, design and construction responsibilities are combined or
integrated into the working out of the design or tender. The roles are assigned to each specific
firm or body. This system is also referred to as single or parallel procurement system which
entails the client dealing with only one or single body for designing and constructing the
presented work or project. This system, therefore, allows or involves the project constructor
design teamwork. It is through this system that people team up or come together in agreement
to form a design and construction company where they are capable of sharing ideas to come
up with the best solutions. The project owner is capable of engaging with the consultants to
generate a design programme by collecting all important information on the project. Well
documented results, project description and clients requirements are obtained. Invited
contractors will submit their own drawings and designs, construction and come up with their
own projects proposal costs. It is through these procurement techniques that enables the
project owners come up with conclusions that prefers the best economic. Project cost and
duration. The procurement systems innovation and variation is made up of package deal,
turnkey, development and contract systems which help in economical time management. The
techniques give the contractor a role of designing and working on the project. This also
allows the contractor to start the project during the early times. Package deal is a procurement
system in which the client gives the contractor all the roles of all which is needed and
important for the construction, design and project delivery.it is also known as “all in” the
contractor is given a role to make projects brief preparations, final workings and sketch
drawings, construction project financing, finding all authorities approvals, commissioning

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and furnishing all accessories and equipment and presenting the construction project to the
client (Masterman, 1996).
Turnkey contract is a package contract in which a contractor responsible to undertake tasks
that are for project commissioning and construction. Turnkey is used to referring to
completion where the constructor is presented with the role of creating designs, brief project
presentations, he or she is given capital to fund the project workings and presenting project
documents.in this system the constructor is given the roles of designing and constructing the
design project.in addition, the customers consultant individual is allowed to generate design
concepts or drawings presentations. He or she is capable of constructing and evaluating the
design sicking to the given work (Rowlinson, 1987).
Effects of the procurement system on project performance
Design and build and turnkey procurement systems
Time. Through the pre-tender process, the personnel’s are allowed to start working on the
project just at the beginning of the project as such leads to time reduction in designing and
working on the project. The system also allows the detailed design process and construction
to concurrently run or parallels run to each other hence reduction of project overall
development period.as a single entity, the system is responsible for design and construction,
as it enables the contractor to not only control the construction time but also the reserved time
for the project design hence reducing overall construction time. Contractors are well chosen
based on their skills, knowledge, working experience and competency in design construction
which helps in minimizing construction time. This is done through design rationalizing,
process construction and site activities (Rowlinson, 1987)

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Cost. The design and Build and Turnkey Procurement Systems cost is higher than that of the
traditional contracting system regardless of the fixed costs at the beginning of the project.
However, the significant saving cost in this procurement process is done through the
reduction of development time. Loan reduction interest and early financial benefits or
returns.in this process saving cost can also be made when the constructor simplifies or makes
the project simple by application of his or her own skills and knowledge (Rowlinson, 1987)
Management-oriented systems
It is a procurement system that aims at managing the construction and design projects.it is in
this method that the consultant take the place of the client as a manager of of the of the
construction design project. Commissioning of the construction is meat to any sub-contractor
or specialist who gets into the contract with either the client or the management contractor.
The system is put in place to enable the consultant or specialist to gain more skills for him to
be in control of all processes involved in design project. The work of the client’s constructor
is to manage or supervise the construction and design by the design consultants and the
chosen specialists constructors. The clients consultant is not allowed to undertake any task as
his role is to manage or supervise the work in absence of the client. This procurement system
is divided into three different categories namely: Design and manages, management
construction system and construction management systems.
Design and manage procurement system.
This is a system where one body or organization is approved of being responsible for
designing the construction project and managing its construction. The organization or firm
takes the tender which it performs itself. The firm is made up of a number of package
constructors or specialist sub-constructors who make an agreement with the client.

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Construction management contracting system and management contracting are procurement
systems in which one is given some projects to fund by managing, supervising, design and
project construction. This is a system in which constrictors are hired as consultancy
personnel. Construction management constructing and constructor management is where in
one instance, the management contractors are in agreement while in construction
management contracting, sub-contractors are in agreement with the project owner (Akintoye
& Fitzgerald, 1995)
Co-operative procurement system
Co-operate management system isn’t similar to various arrangements that exists among in
cooperate commonwealth commodities. It is different as compared to small arrangements
between two non-corporate commonwealth commodities, to large organizations containing
more non-corporate Commonwealth entities.it can further contain single deed or contract of
standing offer handled by a single entity, with the rest joining through understanding
agreement or separate contracts for every separate commodity.
Advantages of the procurement system.
 The method leads to reduced market approaches due to presence of administrative
efficiencies for industrial commodities.
 There is cost savings through discount making.
 It is through this procurement process that one is able to share knowledge and better
practices between entities.
Cooperate procurement benefits are only important to smaller entities that are not able to
make price savings through an individual market approach or contain the necessary skills r
knowledge to peruse procurement. This system is only limited to services and products in

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common use by most entities and also performs well for specialist areas that are only needed
by a small number of entities. Panel arrangements are specifically suited to cooperate
procurement since they are able to accommodate more flexibility to meet a range of
requirement entities (Ashworth, 2001)
Management procurement system
This system covers goods and services procurement as it involves activities and consultancy
services. The main objective of this method is to ensure availability of required materials or
goods and services comprising of roads, buildings, and other infrastructure at appropriate
time and price to ensure a smooth running of planned activities The Aqua Group, 2001).
Conclusion
Quality, cost and time are most important parts of a constructional project performance. The
three have been noted to be most in highly competitive and uncertain business fields as
clients are in need of better values from their project investments. Most people or project
owners of quick completion of projects and as per the agreed periods and cost. It has been
noted that it is through evaluation and analysis of procurement systems that the client’s needs
or requirements can be met. The major reason behind this is that procurement systems have
varying effects on quality, time and project cost. It is most necessary at every outset of any
project to appropriately consider important factors when choosing the most appropriate
procurement system for a project construction (Kwakye, 1997)

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References
Ashworth A (2001) Contractual Procedures in the Construction Industry, UNITEC, New
Zealand.
Akintoye, A and Fitzgerald E (1995) – Design and Build: A Survey of Architects’ Views,
Engineering, Construction and Architectural management.
Kwakye A A (1997) Construction Project Administration In Practice – Longman,
London.
Chitkara K K (2005): Project Management - Planning, Scheduling and Controlling – Tata
McGraw Hill, New Delhi.
Masterman J W E (1996) – Building Procurement Systems: An Introduction, E & FN
Spon, London.
Lam, E W M, Albert P C and Chan D W M (2003) Is Design and Build the Preferred
Option to Procure all Projects? Research Fellow, Department of Building and Real estate,
The Hong Kong Polytechnic University.