17 - Procurement and Tendering Flashcards
What are the main procurement methods?
Traditional
Design and Build
Construction Management
Management Contracting
PFI (private finance initiative)
What should be considered when selecting a procurement route?
The specifics of the project
Form of contract being used
Client objectives incl:
-time
-cost
-quality
-risk
What is traditional procurement?
The design is completed by the clients design team, before competitive tenders are invited and a main contractor is employed to build what the designers have specified
How does traditional procurement work?
The contractor takes responsibility and financial risk for the construction of the works to the design produced by the clients design team, for the contract sum, within the contract period.
The client takes responsibility and risk for the design and design team performance.
When is traditional procurement appropriate?
If the employer has had the design prepared.
If the design is substantially completed at the time of the contractor selection.
If the client wants to retain control of design and specification.
If cost certainty at start on site is important.
If the shortest overall programme is not the clients main priority (min.
overlap between D&B)
What are the advantages of traditional procurement?
Retaining control over design can lead to higher quality.
Offers increased cost certainty before commencement.
Design changes are relatively easy to arrange and value.
What are the disadvantages of traditional procurement?
Overall project duration longer due to lack of overlap between design and build phases
Lack of contractor input into design and planning.
Dual point of responsibility: design team over design, and contractor over the build.
What is design and build?
Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer requirements
How does design and build procurement work?
The employer gives the tenderers the ‘Employers Requirements’ and the contractor responds with the ‘Contractor Proposals’ which include the price for the works
When might Design and Build be appropriate?
-When there is a need for an early start on site as there can be an overlap between design and construction stages.
-Where client wants to minimise risk, as design responsibility transfers to client.
-Where a project is more technically complex and requires contractor input and expertise.
-Where the employer does not want to retain control over design development.
What are the advantages of design and build?
Single point of responsibility for D&B
Earlier commencement on site.
Early price certainty increased.
Client can benefits from the contractors expertise during the design phases
What are the disadvantages associated with design and build procurement?
Client has to commit to concept design early.
Clients may find it hard to prepare a sufficiently comprehensive brief.
Variations from original brief are difficult to arrange and more expensive.
Harder to compare tenders and determine value for money
May also be a risk prelim.
What are the disadvantages associated with design and build procurement?
Client has to commit to concept design early.
Clients may find it hard to prepare a sufficiently comprehensive brief.
Variations from original brief are difficult to arrange and more expensive.
Harder to compare tenders and determine value for money
May also be a risk prelim.
How much design input with the contractor have under design and build?
Dependant on amount of design work client has already completed at time of tender.
Can range from full design, to production information and coordination only.
(D&B) who carries out the design for the contractor?
May be outsourced to a separate design company (contractor retains responsibility)
May have in-house capability, or client design team may be novated to the main contractor
What is management contracting procurement?
A management contractor is employed to contribute their expertise to the design and to manage construction with a management fee being paid for them to do so
How does management contracting work?
Management contractor has direct contractual links with all the works contractors or trades packages.
Have responsibility for the construction works without actually carrying them out.
Not all designs need to be completed before works start.
The MC selects contractors through competitive, open book tender
The client reimburses costs of these packages to the MC plus their mgt fee.
When might management contracting be appropriate?
Where full cost certainty is not important before commencement.
When an early start is key priority (overlap of phases)
What are the advantages of management contracting?
Overall project duration likely to be shorter due to overlap.
Contractor involvement in design and planning.
Changes can be accommodated in packages not let.
Works are let competitively at current market price.
What are the disadvantages of management contracting?
Costs of the work is not received until last package has been let. (less cost certainty).
Changes to designs of later packages may affect work already let.
Little incentive for management contractor to reduce costs as they will still receive management fee.
What is the key issue after a design team have been novated?
Whether the new party has the right to take action against the novated party for breaches that occurred before the novation
How does novation affect the employers rights?
They lose all contractual relations with the novated party and therefore the right to take action for a breach. Therefore common for a collateral warranty between the employer and novated party.
What is construction management procurement?
Employer places a direct contract with the trade contractors and utilises the expertise of a construction manager who acts as a consultant to coordinate the contracts
How does construction management work?
The trade contractors carry out the work.
The construction manager supervises the construction process and coordinates the design team.
The Construction Manager has no contractual links to the trade contractors or members of the design team.
CM’s role involves preparation of the programme, determining requirements for site facilities, and breaking works down to suitable works packages, obtaining and evaluating tenders, coordinating and supervising works.
When might construction management be appropriate?
Large complex projects where CM expertise can be utilised, including buildability and programming advice.
Where early start is key.
Maintenance of flexibility in design and construction.
Where price certainty is not a key driver.
Where client is experienced in construction.
What are the advantages of construction management?
Project duration reduced due to overlap in design and construction.
Construction manager can contribute to design and planning phases.
Changes in design can be accommodated without paying a premium
Roles, risks and relationships are clear
Prices may be lower due to direct contracts with trade contractors
What are the disadvantages of construction management?
Price certainty is not achieved until the last package is let.
Changes to packages may adversely affect packages that are already let.
The client must be proactive and hands on.
The client has a lot of consultants and clients to deal with
