Procurement Options - Revision history

Designing Buildings: Redirected page to Procurement route

2016-01-20T15:12:19Z

← Older revision		Revision as of 15:12, 20 January 2016
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−	Procurement ~~is the process of purchasing goods or services. There are many different routes by which the design and construction of a building can be procured. The selected procurement~~ route ~~should follow a strategy which fits the long-term objectives of the client’s business plan. Different routes also deal with construction risks differently. These risks include:~~	+	#redirect:[[Procurement_route\|Procurement route]]
−		+
−	~~- Defaults of parties in terms of design/management duties. Or complexity of project does not match with team’s skill capacity<br />~~	+
−	~~- Physical unexpected conditions – ground, weather, defective material<br />~~	+
−	~~- Accidents causing damage to property or injury to persons<br />~~	+
−	~~- External factors such as change in legislation, planning approval, financial constraints (funding uncertainties), wat or civil commotion, insolvency, market fluctuations<br />~~	+
−	~~- Above will cause delays, Disputes or Losses.~~	+
−		+
−	~~Procurement Options~~	+
−		+
−	~~Analysis of this project’s possible procurement strategies will focus around the project’s specific characteristics.~~	+
−		+
−	~~A. Design complexity (Conventional/ Require time for detailing /Buildability advise from contractor/Specialist design)<br />~~	+
−	~~B. Management complexity (Simple/complex contractual relationships)<br />~~	+
−	~~C. Potential to split into packages/separation of design from management /design focus on one aspect or overall<br />~~	+
−	~~D. Client experience/acceptable level of duty depending on capability/willingness.<br />~~	+
−	~~E. Client’s right to variations/changes<br />~~	+
−	~~F. Contractual remedies/points of contact<br />~~	+
−	~~G. Speed (Duration, start on site)<br />~~	+
−	~~H. Certainty of Price~~	+
−		+
−	~~Based on the above characteristics, there are 3 main procurement routes to consider, each with different pros and cons.~~	+
−		+
−	~~General Contracting~~	+
−		+
−	Firstly General Contracting (GC) is where we the design team is appointed to produce design and contract documents. A contractor is then selected either through competitive tender or negotiation to construct the scheme based on the contract documents for a contract sum.<br />	+
−	~~The Architect/Engineer/Quantity Surveyor would be appointed as Contract administrator (CA) to oversee the contract implementation during construction.~~	+
−		+
−	~~A. Allows time for client + Architect to develop/refine design to client’s satisfaction. If Client requirement too simple, DB may be better.<br />~~	+
−	B. If documentation is incomplete for tender (provisional sum can cover some unknown), or where highly complex technologies requiring many specialist sub-consultants. The management aspect may become too complex for GC.<br />	+
−	~~C. If design integration of whole package is unifying discipline of project, GC<br />~~	+
−	~~D. Client requires no experience. Will participate in funding + tendering.<br />~~	+
−	~~E. GC contracts have detailed provisions for variations and variation valuation.<br />~~	+
−	~~F. With certain contracts, client reserves right to select sub-contractors. (Jct IC 11)<br />~~	+
−	~~G. Slow in relation as requires design to be complete. (although common practice for the letting of early enabling contracts like demolition and earthworks)<br />~~	+
−	~~H. Lump sum contract imply price certainty but huge range of variability.~~	+
−		+
−	~~Design and Build~~	+
−		+
−	There are many different forms of Design and Build (DB) contracts. In our case, the type of interest is one where the client appoints us the Architect to develop the Employer’s Requirements. This will be used in the tendering process and the most appropriate Contractor will be selected based on its Contractor’s Proposal. The Contractor will agree to finish the design and build the building based on agreed contract sum. We the architect may be novated to complete design or retained by client to act as Employer’s Agent.	+
−		+
−	A. High risk/highly adventurous scheme should not use DB. DB allows scheme to benefit from contractor’s experience during design stage in terms of buildability. However if aesthetic conflicts with ease of fabrication, requirements of fabrication will dominate under DB. One disadvantage is that employer’s requirement must be very clear and unambiguous, moreover should not be subjected to change. Quality of project will depend on this.<br />	+
−	~~B. Single point responsibility – nominate specialist is unsuitable for DB.<br />~~	+
−	C. Kit of parts, system buildings lends itself very well to DB. Or schemes where some aspects (e.g. façade + lobby) can be designed in detail by Architect, whereas other parts can be left to contractor.<br />	+
−	~~D. Client does not need experience. Under JCT DB, an Employer’s Agent will be appointed to administer conditions.<br />~~	+
−	E. DB has limited scope for change. DB may not be appropriate on projects with too many known – which will load contractor with risk of insolvency. The valuation of change under DB can be difficult without a comprehensive contract sum analysis.<br />	+
−	F. Strength of DB is single point of contact/responsibility, particularly those who want to avoid distinguishing between design and workmanship fault. In addition, the contractor will also take on design responsibilities of novated designer.<br />	+
−	G. Contractor will not rely on other parties to supply information. Communication are more efficient, therefore program and budget has shown to be more adhered to. Early start on site possible as contract also undertaking design work and can overlap design and construction processes. However this is assuming early assumptions and designs do not need revision.<br />	+
−	H. Cost certainty is an advantage of DB. It is a fixed price contract with less provision in contract for change. However single point responsibility + fixed price will mean that DB contractor may charge a premium for extra risks.	+
−		+
−	~~Management~~	+
−		+
−	Management type contracts involve the appointment of a construction manager or a management contractor to split up the works into packages. The packages will be let separately and sequentially in line with the construction program. The difference between construction management and management contracting is that the former establishes direct contractual links between client and trade contractors, whereas the latter is linked through the management contractor.	+
−		+
−	~~In our case, construction management (CM) will be more appropriate.<br />~~	+
−	A. CM allows for technologically complex projects involving diverse technologies and sub-systems. However design will not be the overriding feature of the job. CM is generally appointed early to bring in experience of construction site processes into client’s team<br />	+
−	~~B. No need for collateral warranty given that trade contractors are directly linked with client.<br />~~	+
−	~~C. CM will separate design and management responsibilities.<br />~~	+
−	~~D. The client must be experienced and has in-house capability to manage project.<br />~~	+
−	~~E. Client can make variations to packages before they are let.<br />~~	+
−	~~F. Client directly linked with each trade contractor, therefore need to have capability in house to allocate fault.<br />~~	+
−	~~G. CM allows for speedy progress and early start on site. However this may compromise decisions about least cost and exploration of problems from every angle.<br />~~	+
−	~~H. CM consists of a series of contracts. Therefore certainty of price will only come close to end of project.~~	+
−		+
−	~~In our case, management contracting (MC) will be more appropriate.<br />~~	+
−	A. MC allows for technologically complex projects involving diverse technologies and sub-systems. However design will not be the overriding feature of the job. MC is generally appointed early to bring in experience of construction site processes into client’s team<br />	+
−	~~B. Similar to General contracting, collateral warranty required given that work contractors are linked through management contractor.<br />~~	+
−	~~C. MC will separate design and management responsibilities.<br />~~	+
−	~~D. The client does not necessary need to be experienced. (CA and MC roles in contract to support client)<br />~~	+
−	~~E. Client can make variations to packages before they are let.<br />~~	+
−	~~F. Contractual structure similar to general contracting. Collateral warranty required from work contractors.<br />~~	+
−	G. Full design information is note required before work commence on site. MC allows for speedy progress and early start on site. However this may compromise decisions about least cost and exploration of problems from every angle.<br />	+
−	~~H. MC consists of a series of contracts. Therefore certainty of price will only come close to end of project.~~	+
−		+
−	~~<br />~~	+
−	~~Collaborative~~	+
−		+
−	The core idea of collaborative contracting is that points of difference and difficulty between the parties should be addressed as they arise and that risks should be actively managed during the project. Collaborative working can be added as a supplement onto other forms of contract (eg JCT SBC 11), however JCT also published the Constructing Excellence Contract. Contract will state the extent of design responsibility of each party. Risk register, risk allocation schedules and performance indicators will be used.	+
−		+
−	~~- Suitable for high risk projects / Unknown ground conditions and require design change to accommodate ground conditions.<br />~~	+
−	~~- Suitable for organizations involved in framework agreement. Chains.<br />~~	+
−	~~- Party may need to undergo training in advance.<br />~~	+
−	~~Contract Choices~~	+
−		+
−	I would recommend the use of a standard contract form drafted by committees such as the Joint Contracts Tribunal. Firstly, risks will be allocated more fairly between the parties (assuming that no clauses are amended). However it is advisable that parties still have a discussion to clarify details of risk allocation to avoid assumptions over the implications of standardized clauses. In addition, many standard forms are published in suites and will include sub-contracts designed very carefully to fit in the main contracts, so that a chain of responsibility if established through the supply chain.	+
−		+
−	~~Contract choice will also depend on<br />~~	+
−	~~- Contractor’s Design Portion<br />~~	+
−	~~- With quantities/approximate quantites/without quantities for SBC<br />~~	+
−	~~- Sub-contract (for SBC/IC) / Named contractor (for IC)<br />~~	+
−	~~- Framework agreement ?<br />~~	+
−		+

	[[Category:Articles_needing_more_work]]		[[Category:Articles_needing_more_work]]

Yu Chien: Created page with "Procurement is the process of purchasing goods or services. There are many different routes by which the design and construction of a building can be procured. The selected procu..."

2016-01-12T08:04:03Z

Created page with "Procurement is the process of purchasing goods or services. There are many different routes by which the design and construction of a building can be procured. The selected procu..."

New page

Procurement is the process of purchasing goods or services. There are many different routes by which the design and construction of a building can be procured. The selected procurement route should follow a strategy which fits the long-term objectives of the client’s business plan. Different routes also deal with construction risks differently. These risks include:

- Defaults of parties in terms of design/management duties. Or complexity of project does not match with team’s skill capacity 
- Physical unexpected conditions – ground, weather, defective material 
- Accidents causing damage to property or injury to persons 
- External factors such as change in legislation, planning approval, financial constraints (funding uncertainties), wat or civil commotion, insolvency, market fluctuations 
- Above will cause delays, Disputes or Losses.

Procurement Options

Analysis of this project’s possible procurement strategies will focus around the project’s specific characteristics.

A. Design complexity (Conventional/ Require time for detailing /Buildability advise from contractor/Specialist design) 
B. Management complexity (Simple/complex contractual relationships) 
C. Potential to split into packages/separation of design from management /design focus on one aspect or overall 
D. Client experience/acceptable level of duty depending on capability/willingness. 
E. Client’s right to variations/changes 
F. Contractual remedies/points of contact 
G. Speed (Duration, start on site) 
H. Certainty of Price

Based on the above characteristics, there are 3 main procurement routes to consider, each with different pros and cons.

General Contracting

Firstly General Contracting (GC) is where we the design team is appointed to produce design and contract documents. A contractor is then selected either through competitive tender or negotiation to construct the scheme based on the contract documents for a contract sum. 
The Architect/Engineer/Quantity Surveyor would be appointed as Contract administrator (CA) to oversee the contract implementation during construction.

A. Allows time for client + Architect to develop/refine design to client’s satisfaction. If Client requirement too simple, DB may be better. 
B. If documentation is incomplete for tender (provisional sum can cover some unknown), or where highly complex technologies requiring many specialist sub-consultants. The management aspect may become too complex for GC. 
C. If design integration of whole package is unifying discipline of project, GC 
D. Client requires no experience. Will participate in funding + tendering. 
E. GC contracts have detailed provisions for variations and variation valuation. 
F. With certain contracts, client reserves right to select sub-contractors. (Jct IC 11) 
G. Slow in relation as requires design to be complete. (although common practice for the letting of early enabling contracts like demolition and earthworks) 
H. Lump sum contract imply price certainty but huge range of variability.

Design and Build

There are many different forms of Design and Build (DB) contracts. In our case, the type of interest is one where the client appoints us the Architect to develop the Employer’s Requirements. This will be used in the tendering process and the most appropriate Contractor will be selected based on its Contractor’s Proposal. The Contractor will agree to finish the design and build the building based on agreed contract sum. We the architect may be novated to complete design or retained by client to act as Employer’s Agent.

A. High risk/highly adventurous scheme should not use DB. DB allows scheme to benefit from contractor’s experience during design stage in terms of buildability. However if aesthetic conflicts with ease of fabrication, requirements of fabrication will dominate under DB. One disadvantage is that employer’s requirement must be very clear and unambiguous, moreover should not be subjected to change. Quality of project will depend on this. 
B. Single point responsibility – nominate specialist is unsuitable for DB. 
C. Kit of parts, system buildings lends itself very well to DB. Or schemes where some aspects (e.g. façade + lobby) can be designed in detail by Architect, whereas other parts can be left to contractor. 
D. Client does not need experience. Under JCT DB, an Employer’s Agent will be appointed to administer conditions. 
E. DB has limited scope for change. DB may not be appropriate on projects with too many known – which will load contractor with risk of insolvency. The valuation of change under DB can be difficult without a comprehensive contract sum analysis. 
F. Strength of DB is single point of contact/responsibility, particularly those who want to avoid distinguishing between design and workmanship fault. In addition, the contractor will also take on design responsibilities of novated designer. 
G. Contractor will not rely on other parties to supply information. Communication are more efficient, therefore program and budget has shown to be more adhered to. Early start on site possible as contract also undertaking design work and can overlap design and construction processes. However this is assuming early assumptions and designs do not need revision. 
H. Cost certainty is an advantage of DB. It is a fixed price contract with less provision in contract for change. However single point responsibility + fixed price will mean that DB contractor may charge a premium for extra risks.

Management

Management type contracts involve the appointment of a construction manager or a management contractor to split up the works into packages. The packages will be let separately and sequentially in line with the construction program. The difference between construction management and management contracting is that the former establishes direct contractual links between client and trade contractors, whereas the latter is linked through the management contractor.

In our case, construction management (CM) will be more appropriate. 
A. CM allows for technologically complex projects involving diverse technologies and sub-systems. However design will not be the overriding feature of the job. CM is generally appointed early to bring in experience of construction site processes into client’s team 
B. No need for collateral warranty given that trade contractors are directly linked with client. 
C. CM will separate design and management responsibilities. 
D. The client must be experienced and has in-house capability to manage project. 
E. Client can make variations to packages before they are let. 
F. Client directly linked with each trade contractor, therefore need to have capability in house to allocate fault. 
G. CM allows for speedy progress and early start on site. However this may compromise decisions about least cost and exploration of problems from every angle. 
H. CM consists of a series of contracts. Therefore certainty of price will only come close to end of project.

In our case, management contracting (MC) will be more appropriate. 
A. MC allows for technologically complex projects involving diverse technologies and sub-systems. However design will not be the overriding feature of the job. MC is generally appointed early to bring in experience of construction site processes into client’s team 
B. Similar to General contracting, collateral warranty required given that work contractors are linked through management contractor. 
C. MC will separate design and management responsibilities. 
D. The client does not necessary need to be experienced. (CA and MC roles in contract to support client) 
E. Client can make variations to packages before they are let. 
F. Contractual structure similar to general contracting. Collateral warranty required from work contractors. 
G. Full design information is note required before work commence on site. MC allows for speedy progress and early start on site. However this may compromise decisions about least cost and exploration of problems from every angle. 
H. MC consists of a series of contracts. Therefore certainty of price will only come close to end of project.

 
Collaborative

The core idea of collaborative contracting is that points of difference and difficulty between the parties should be addressed as they arise and that risks should be actively managed during the project. Collaborative working can be added as a supplement onto other forms of contract (eg JCT SBC 11), however JCT also published the Constructing Excellence Contract. Contract will state the extent of design responsibility of each party. Risk register, risk allocation schedules and performance indicators will be used.

- Suitable for high risk projects / Unknown ground conditions and require design change to accommodate ground conditions. 
- Suitable for organizations involved in framework agreement. Chains. 
- Party may need to undergo training in advance. 
Contract Choices

I would recommend the use of a standard contract form drafted by committees such as the Joint Contracts Tribunal. Firstly, risks will be allocated more fairly between the parties (assuming that no clauses are amended). However it is advisable that parties still have a discussion to clarify details of risk allocation to avoid assumptions over the implications of standardized clauses. In addition, many standard forms are published in suites and will include sub-contracts designed very carefully to fit in the main contracts, so that a chain of responsibility if established through the supply chain.

Contract choice will also depend on 
- Contractor’s Design Portion 
- With quantities/approximate quantites/without quantities for SBC 
- Sub-contract (for SBC/IC) / Named contractor (for IC) 
- Framework agreement ? 

[[Category:Articles_needing_more_work]]