PPMP20011 Contract & Procurement Management Assessment 2

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PPMP20011 Contract & Procurement management
Assessment 2: Case study
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Table of Contents
Introduction......................................................................................................................................3
Task..................................................................................................................................................4
1. What is the best procurement route (method) your PPMP20011 consultant company will
advise CQ to follow keeping in mind the constraints and priorities as well as the experience of
CQU as project owner.................................................................................................................4
2. Why do you think this is the best route (giving the project factors). Justify your selection.. .7
3. What are the advantages of this route over other routes (traditional/non-traditional)?...........9
4. What are the risks associated with this selected route for both the owner and the contractor?
...................................................................................................................................................11
5. How does this route will satisfy the main points (Cost, time, and Quality)?........................13
6. Select the best contract type for this project..........................................................................14
Conclusion.....................................................................................................................................17
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Introduction
The assessment contains the contracts and procurement that the Central Queensland University
adopts in order to enhance the efficiency of its project management. The advantage and
disadvantage of the procurement and contracts are also described along with its application in the
CQU context. The impact of the procurement and the contracts in the project management of an
organization are also explained. The advantage of the procurement and contracts are explained
with the reference of factors that represents the efficiency of the procurements in the project of
the organizations. The risk that comes along with the procurements is also explained with
conducting the viewpoints of both the owners and the contractors so as seek the overall risk
factor of the procurements. The methodology procurement is also explained with their specific
points that satisfy the other factors of the procurements. The best contract type is also explained
in the assessment.
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Task
1. What is the best procurement route (method) your PPMP20011 consultant company will
advise CQ to follow keeping in mind the constraints and priorities as well as the experience
of CQU as project owner
The procurement routes are as follows which are used in the procurement of stock and materials
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Admeasurement contract: In this type of contact, the rates and quantities are already mentioned
in the contractors’ tender. These types of contracts are most commonly used in the civil
engineering projects as the construction is done with a proper configuration.
The construction is completed on time in this type of procurement route. It is cost effective
(Marzouk & Elmesteckawi, 2015). This procurement route is very flexible; hence, the
amendments and changes can be done easily. The disadvantage of the contract is that the quality
of the work may be not up to the mark.
This type of contract will be beneficial for the CQU as the changes can be done easily, and the
work is done under this route effectively. This type of route meets all the priority of the
university; hence, this route will be most suitable for the university. With this route of
Procurement, the campus for the students can be prepared before 2020. By adopting this
procurement route, the university can get a unique campus to meet the increasing student number
and to provide a proper university life.
Construction management: The trade contractors are managed by the construction manager.
The construction manager is appointed at the initial stage of designing. All the trade contractors
complete the construction with the cooperation of each other. The contractors share their
experience and expertise in the construction of the building. The work may or may not be good.
The cost involved in this method is also very high.
This Procurement route will not be beneficial for the CQU as the work is done by different
contractors, and the work can be delayed. According to the requirements of the CQU, this route
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will not be suitable. The university cannot exceed its budget, and this method involves huge
costs; hence, this method will not be right for the university.
Custom build: In this type of procurement route, the benefit of this type of route is that the
owner can design the building according to his preferences and needs. The owner gets the chance
to build the building according to the needs in the direction of a developer and constructor. The
disadvantage of this procurement is that without the experience, the owner can misshape the
building. The construction may involve additional cost if any part has to be reconstructed.
This type of route will not be beneficial for the CQU because it is beneficial for the buildings
which are constructed for the purpose of living. The building of the college involves a proper
structure; hence, this type of route will not be suitable for the CQU (Klimt, 2015). The campus of
the university involves proper planning and construction; hence, the owner without experience
cannot design the campus. CQU University should not adopt this type of procurement route for
the construction of the campus.
Design and build: These can be completed into a single stage and two stage tender processes.
The advantage associated with his type of procurement route is that the construction can be
stared at the earlier stage. The work can be completed on time. The drawback of this route is it
involves an additional cost. The work is not carried out with efficiency.
This procurement route will not be beneficial for the CQU as the cost involved in is very high.
The university should not adopt this route as the work is also not done effectively and efficiently.
As the CQU has a very strict budget; hence, this type of method will not be useful for the
university. Cost is one of the priorities of the university; hence, this route should not be adopted
by the university.
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2. Why do you think this is the best route (giving the project factors). Justify your selection.
Admeasurement contract is the best route for the CQ for the management of their project because
of its significance in the following factors:
Cost: The admeasurement contract is cost-effective as in the form that the tender under this
contract is quick, which reduce the further cost that is implemented in the project because of a
lengthy project process. The CQ, after adopting this route for the project management, would be
able to reduce the excessive cost implementing in the project management and the project
management cost of the CQ would be effective. (Rasheli, 2016).
Time: The time factor of the project management of the CQ is efficient in the admeasurement
contract as this route provides the rates and quantities are predefined in the contract’s tender
which saves the time of the CQ for deciding the extensive contract elements.
Risk: The ability of the admeasurement contract of covering the requirement of the project and a
detailed description of the project reduces the risk that the CQ might have to face in the
development of the project.
Management Capacity: The management capacity that the admeasurement contract provides
for the project management are greater degree of control, selection of professional supervision,
provision of prime cost items, use of bill for quantities, supervision over the project contractor,
specialization in designing the project, schedules of the contract rates and standard method for
the measurement of the rate. (Oluka, et al., 2013).
Quality of the Service:. The quality of the services is improved as the contract provides the
ability of re-measured of the work in the contract, quoted prices of the contract, pre-calculation
of the risk allocated in the contract and details of the requirement in the contract. All these details
of the contract help in improving the project management with efficient techniques.
Changing Orders: The changing order of the project is supported by overall coverage of the
project requirements and full detailed description of the project at the early stage of the contract
by the admeasurement contract route. (Winter, 2013).
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Responsibilities: Building of the management process of the project, minimizing the risk of the
project, maintenance requirement, documents of the employees working in the project,
negotiation under the project management, cost control, efficiency of the project work, etc.
Claims: The claims are taken by re-measuring the course of the contract, values of the tender
rates and prices adjusted in the contract. Under the schedule of rate, the claims are returns by
measuring the plant hours, man- hours and quantities of the materials consumed in the project
along with managing the repetitive works.
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3. What are the advantages of this route over other routes (traditional/non-traditional)?
The advantage that the admeasurement contract route provides over the other routes is as
follows:
 The other routes such as construction management, custom build, design-build, etc.
consist the drawbacks of complicated amendments process and variables in the
management of the project as the process of the other routes contains complicated
methods for dealing with the management process of the organization with the tenders
and contracts. (Takano, et al., 2014).
 . The other routes contain the disadvantage such as complex working in the management
of the project. The working system of project management becomes critical in other
routes. Critical working of the other routes leads the organization to face problem in
adopting changes in the project. Because of complex working in the management of the
project leads to delay in the work of the project management.
 The other routes contain the disadvantage of delaying the construction work of the
project and the risk related to the project management of the contract. The risk that the
other routes carry, which further declines the efficiency of the management of the project.
 The misshaping of the construction of certain projects are major drawbacks of the other
routes in the management of the project. The misshape of construction of the project
management further leads the organization to face problem in the working of the
construction of project management. (Marzouk & Elmesteckawi, 2015).
 The other routes of the procurement have the disadvantage of the additional cost of the
project management. Because of the additional cost included in the project manager leads
the project to lowers its efficiency.
Thus the above points state the factors in which admeasurement contract advantage over the
other routes of the procurement as the admeasurement contract provides more advantage on the
efficiency of the construction, control of the risk, the flexibility of the working, evaluation of the
variables, etc.
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4. What are the risks associated with this selected route for both the owner and the
contractor?
The risk associated with the admeasurement contract according to the owner viewpoint is as
follows:
 The potential loss risk of the admeasurement contract refers to the negative potential that
the contract development of the CQU owners faces after adopting this type of route.
(Klimt, 2015).
 The admeasurement contract associated with the risk of liability in the management of
the project. The risk of liability associated with the assets related to the contract and
project management of the CQU. The owner of the CQU faces the risk of liability in the
form of threat of the damage of the operation, products or act along with the risk related
with the purchase, ownership, quality of services, etc.
 Legal accountability is also a major risk which is allocated with the admeasurement
contract that the owner of the organization faces as if the legal accountability of the
contact and project management are not taken care then the owner could face a major
threat of loss in the future. The CQU owner faces the threat of risk from the legal
accountability of the contract and project.
 The CQU owners face the risk related to the performance of the contract. The
performance of the contract is impacted by the risk in the fixed price contracts and least
in the cost-type contracts. (Takano, et al., 2014).
The risk associated with the admeasurement contract according to the contractor viewpoint is as
follows:
 The contractor of the organization which adopt the admeasurement contract faces the risk
related to the creation of the contract. The CQU contractors face the risk of contract
creation because of the delay in the revenue associated with the tender of the
organization. The delay in the contract leads the contractor to face further delay in the
development of the project.
 The contractor of an organization faces the risk related to the unapproved contract, which
further impacts the execution of the contract by adopting the admeasurement contract
route for the procurement and contract management. The CQU contractors face the risk
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from the threat of the unapproved contract of the project by the seniors, which further
delays the execution of the construction work of the project of the organization.
 The contractors under the admeasurement contacts face the risk related to the financial
status of the contract or tender of the organization. The CQU contractors face the risk of
additional cost and financial status of the project, which affects the procurement and
contracts management of the organizations.
 The admeasurement contract associates the organization to face the risk related to the
market assessment which the contractor of the tender faces. The CQU contractors face
the risk of market assessment as the assessment prevailing in the market impacts the
management of the project. The market assessment risk includes the risk related to the
sourcing strategy, market strategy development, contract structure, over-committing,
supplier credentials, etc.
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5. How does this route will satisfy the main points (Cost, time, and Quality)?
The methodology of the admeasurement contract includes the numerous steps such as specifying
the items of work in Bills of Quantities or Scheduled of Rates which are carried out by the
contractors in the procurement and contract management of an organization. In the
admeasurement contract, the contract specifies the rate of each item, provision of facilities for
the clients, adoption of changes in the work of the project and detailed definition of the tender
documents. (Rasheli, 2016).
This contract also includes the step of tender pricing, which is further divided into two forms of
admeasurement contract, and they are a bill of quantities and schedule of rates. It includes the
process of measuring the quantities of the bill.
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6. Select the best contract type for this project
Admeasurements contract- it is a contract of unit price or unit rate of contract which is used
most commonly in works contract. In this contract, items represent the bill of quantity and rate of
scheduled. This basically adds a new thing in the contract. The price of tender generally
increased due to claims of contractor and variations (Du Plessis and Oosthuizen, 2018). There
are two types of admeasurements contract-
Bill of quantity contract –The quantities are reassessed during the course of a contract, and
price of contract value according to the tender rate.
Scheduled rate of contract- Therefore it reflects the rate of the material. The contract price is
determined with the plant hours, man hours and material quantity of work. Pricing should be
done with the price of tender.
Factors influencing for the choice of contract-
 There should be an inappropriateness for developing incentives for efficiency.
 There should be an ability to change introduced.
 Risk allocations
 Contractor performance
 The start and completion date of the contract
Advantages of admeasurements contract-
Complete design tender has not required a tender- during contract making a whole designing of
tender is not required. Building designing tender is not required to disclose initially, but they can
add further changes in time to time.
Suitable for competitive bidding- it is the facility that is given to the client, which is good for
competitive bidding. It creates a transparent environment which is fair and opens (Takano et al.,
2014). It is a benefit for the client because they can add changes in the contract from time to
time. It is suitable when a client wants to do additional changes in the building. A contractor
must charge value for this but give facility to the client to add a value of his contract.
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