Discuss about the Methods of Procurement used in Construction Projects.
There is a range of methods that consultants, developers’ subcontractors, and various end users in the construction sector may procure. Above all the approach chosen should be one that meets and exceeds the needs of the final consumer (Naoum&Egbu, 2015, p. 7). To decide on the appropriate approach to use, various factors need to be taken into consideration. The process of choice of the approach to be used is not an easy activity since achievements of client need to be in line with the chosen approach as it is vital to improving effective outcome of the final project (Naoum&Egbu, 2016, p. 310). Before a given approach is chosen, the risks associated with the type of approach and the extent of the impact should first be evaluated. The choice of the project route to adopt will play a greater role in the overall success of it. This report will provide an intensive discussion of the various approaches used in procuring process in the construction industry their various benefits and limitations.
General contracting is a type of procurement that involves the contractor accepting to build the design that is presented by the employer (Doloi, 2013, p. 224). It is the most approach used in the construction sector. Under this approach, the contractor is only required to come up with the structure as provided and not under any circumstance develop the design. In some cases, the contractor under this approach may be needed to create specific parts of the construction work to be undertaken which are in most cases temporary. The client in most cases employs the services of various consultants to come up with the design of the structure, which is followed by establishing the tender documentation for the project including drawings for the project, work schedules, and preparation of bills of quantities (Naoum&Egbu, 2015, p. 9). The price to be charged by the contractor will be based on the bill of the quantities which are prepared by the employer that quantifies every aspect of the work to be undertaken. Under this approach, where the bill of quantities as not been established, the contractor can price the project using the drawings of the project(Pinto, Slevin& English, 2008, p. 640). In general contracting, the client retains the design consultants during the phase of construction for purposes of preparing and review of insider works and additional design information which may be required. They also become beneficial in the final stage of project inspection.
The method is popular among many contractors and employers. The approach is famous because it has been in operation for a while and many individuals are used to it. Thus, it is familiar to a wide range of individuals who are experienced in using it to carry out construction projects(Doloi, 2013, p. 230). It is a tried and tested method of contracting.
The approach also offers a significant sense of price certainty.The cost of the project to be undertaken can be easily estimated which is possible if the designer of the contract takes time and carries out a thorough analysis of the requirements of the project before it starts off. General contracting enables the team undertaking the construction to first and foremost come up with a detailed design of every tool they require in the project and the estimated market cost of the same(Naoum&Egbu, 2016, p. 315) as it will enable the group to come up with the projected cost of the construction clearly. This is beneficial in that it ensures the employer sets aside adequate resources to complete the project successfully.
It gives the employer greater control over the project execution.This method essentially provides the projector owner autonomy of deciding on how it should be carried out due to the fact that the owner of the project controls all the design team and he is in close contact with every step the team undertakes in the whole process of project construction (Alderman & Ivory, 2007, p. 385). Consequently, the owner of the project gets the opportunity to correct any anomaly that may be witnessed as the project is in progress.
It enables the employer to appoint an independent administrator.General contracting gives the owner of the project a chance to recruit an independent person to act as the contract administrator and carry out the overall project of overseeing the project implementation process (Lesniak& Zima, 2013, p. 315).The project owner should ensure he/she recruits individuals who have deep expertise in project implementation and whose record from the previous assignments can be plausible(Strahorn,Gajendren& Brewer, 2015, p. 83).
The process is open to accountability due to a competitive selection. The entire process of tendering is open and transparent. All the interested suppliers for the various construction materials are required to make final bids to offer these services, and finally, they are selected in an open and detailed process (Jeelani, Al-Dosary&Karthikeyan, 2012, p. 12).
The main demerit is that the approach in most cases results to disputes within the various groups involved in implementing the project. The split of work between the various individuals and groups can be a source of conflict. Majorly one group is in charge of design as the other undertakes construction. This comes out clear instances of defects in the final project as it becomes difficult to know exactly where the challenges emanated from (Okunlola&Olugbenga, 2010, p. 20). This will lead to finger pointing as no group is ready to accept the blame
The method is unsuitable for Public Institutions. Public body projects work with budgetary constraints. Hence, in cases where the design stage is not fully developed before construction starts-off it results to uncertainty in terms of pricing the cost of the project is usually pre-determined and it is not easy for the body carrying out the work of construction to go for more funding because it takes a rigorous process as it requires legislative approval.
The approach is time-consuming. The method consumes time because it is sequential. The period to undertake given projects may take a longer time frame than other procurement methods since the process of construction cannot be started as it depends on the drawing of the project design (Strahorn et al., 2015, p. 85).
Nonetheless, the traditional contracting approach is ideal.When the client is undertaking a project wishes to appoint designers and contractors to implement a given project.There needs to be a clear guide between the responsibilities of the owner and supervisor project design and the constructor conducting the activity of implementing the same (Chen&Chen, 2007, p. 476). This process is vital to avoid the blame game in the case of defects after the construction process is completed.The traditional approach is also best suited in cases where the quality of the project is required to be attained, and the whole project has a spelled program with adequate time for carrying of the implementation process.The traditional approach is also well placed to be utilized than other contracting methods in a case where price certainty of the project construction is wanted before the start of the construction process.
Under this approach, the contractor takes the whole responsibility for all or part of the design as clearly spelled out in the contract of service. Here the contractor is responsible for developing and undertaking the construction process of the structure (Forgues&Koskela, 2009, p. 373). The function of the employer under this method is only to provide the requirements of the project to be undertaken. The extent to which the designer is liable should be spelt out in the contract before commencing the construction work (Schroeder & Hatton, 2012, p. 406). Nonetheless, the input of the constructor may be limited in cases where the employer provides the designs of the scheme to be carried out. Under this approach, most of the operational risk is placed under the contractor.
It offers a single point responsibility.The approach does away with the blame game experienced between the groups engaged in project formulation and implementation.(Forgues&Koskela, 2009, p. 376). This attribute is beneficial since it improves the success of the project as it has ensured faster decision making due to the removal of bureaucracy in the construction process(Knotten, Svalestuen, Hansen &Lædre, 2015, p. 120). Moreover, it ensures that the resources are optimally utilized as it involves utilization of a single firm.
It enhances certainty in the total sum for carrying out the project and cost benefits.Since the contractor is the single contact person in this method, it offers the chance to integrate both the design and the construction processes while implementing the project (Knotten et al., 2015, p. 126). Consequently, this process will enhance the use of the market knowledge and the purchasing power to benefit the client of the project with competitive price in the acquisition of construction materials.
The approach is time-saving.Design and build approach allows the contractors to start operations quicker on the site in comparison to other construction methods. Further, it provides a close-knit of the two processes of project design and construction leading to effective project implementation especially in projects which are government-sponsored which need to utilize their allocated expenditure within budgetary periods (Ratnasabapathy&Rameezdeen, 2010, p. 65).Design and build approach guarantees a maximum price a project is expected to absorb with an apparent savings option plan. Therefore, this can significantly result to constructors devising ways of reducing project time. Above all the approach gives the contractor a chance to contribute to the process of design hence improving the final quality of the project.
Client’s experiences difficulties in comparing the bids from various contractors since they will present different designs at different costs. Design and construct approach can be costly in cases where there is a change scope of the initial design. It limits the liability of the design to the standard contracts signed and available, anything beyond that cannot be borne by the designer of the contract (Hackett, Robinson & Statham, 2007, p. 57). The approach is best utilized in projects of constructions that are not for prestigious purposes since the building is simple and does not entail much innovation.
In this approach, a client appoints a manager to be in charge of the construction.C&M approach is defined as a project implementation method where “the client selects design and cost consultants for a fee(Solis-Carcano, Corona-Suarez & Garcia-Ibarra, 2015, p. 57). Hence the manager acts and takes orders on project implementation from the client. The contractor cannot give a guarantee on the actual cost to be incurred and the time frame of the project as he takes instructions from the client
Low construction cost.The cost incurred in the construction of projects using the C& M approach is less in comparison to the profit made by the general contractor.
The time for construction is reduced because it utilizes fast tracking techniques. The period is also shortened through the overlapping of the design and construction processes (Solis-Carcano et al., 2015, p. 59). Moreover, the approach is also beneficial in that it ensures there are project and client suitability in the final project.
It is difficult to estimate the final cost of the project prior to completion.Hence, can lead to price uncertainty. Again, C&M deters the owner from being in direct control of the design process which may ultimately result in dispute with the agent supervising it (Kristensen, Lædre, Svalestuen&Lohne, 2015, p. 600). Additionally, C&M is time-consuming as it requires close supervision. The client is also under an obligation to provide adequate resources and a detailed brief on the project design. The approach is best suited in contracts that are complex in nature and require a faster completion.
Conclusion.
In conclusion, it is clear that different projects require different procurement projects for them to be effectively implemented. Nevertheless, all the procurement approaches have their limitations hence every group undertaking a particular approach need to first accurately evaluate their requirements and address the same for the projects to be successful. A comprehensive evaluation will provide the ground for applying the most suited method that will ensure the organization or clients accomplishes the ultimate aims.
References
Alderman, N. & Ivory, C. (2007) Partnering in Major Contracts: Paradox and Metaphor.International Journal of Project Management, Vol. 25, no. 4, pp. 386-393.
Chen, W.T. & Chen, T.T. (2007).Critical success factors for construction partnering in Taiwan. International Journal of Project Management, Vol. 25, no. 5, pp.475-84
Doloi, H. (2013). Empirical Analysis of Traditional Contracting and Relationship Agreements for Procuring Partners in Construction Projects. Journal Management In Engineering, Vol. 29, no. 3, pp. 224–235.
Forgues, D. &Koskela, L. (2009). The influence of a collaborative procurement approach using integrated design in construction on project team performance. International Journal of Managing Projects in Business Vol. 2 No. 3, pp.370-385
Hackett, M. Robinson, I., & Statham, G. (2007). The Aqua Group Guide to Procurement, Tendering & Contract Administration. Revised and updated (3rd ed.). Oxford: Blackwell Publishing. pp. 50-123
Jeelani, S.A.K., Al-Dosary, A.S. &Karthikeyan, J. (2012). Empirical evaluation of the performance of construction management at-risk (CM at-Risk) project delivery system with and without agency-CM. International Journal of Engineering and Advanced Technology, Vol. 2 no. 2, pp.1-12.
Knotten, V., Svalestuen, F., Hansen, G.K. and Lædre, O. (2015). Design management in the building process-a review of current literature. Procedia Economics and Finance, vol. 21, pp.120-127.
Kristensen, K., Lædre, O., Svalestuen, F. &Lohne, J. (2015).Contract Models and Compensation Formats in the Design Process. In 23rd Annual Conference of the International Group for Lean Construction, pp. 599-608
Lesniak, A. & Zima, K. (2013). Design and build procurements in the polish public sector. Journal of Public Procurement, vol. 13, no.3, p.315.
Naoum, S. &Egbu, C., (2015).A critical review of procurement method research in construction journals.Procedia Economics and Finance, Vol. 21, pp.6-13.
Naoum, S.G. &Egbu, C. (2016). Modern selection criteria for procurement methods in construction: A state-of-the-art literature review and a survey. International Journal of Managing Projects in Business, Vol. 9 no. 2, pp.309-336.
Okunlola, O. &Olugbenga, A. (2010).Developing a decision support system for the selection of appropriate procurement method for a building project in Nigeria.Global Journal of Researches in Engineering, pp.18-30.
Pinto, J.K., Slevin, D.P. & English, B. (2008). Trust in projects: An empirical assessment of owner/contractor relationships. International Journal of Project Management, Vol. 27, no.6, pp.638-48.
Ratnasabapathy, S. &Rameezdeen, R. (2010).A decision support system for the selection of best procurement system in construction.Built-Environment Sri Lanka, Vol. 7, no.2, pp. 58-98
Schroeder, K. & Hatton, M. (2012). Rethinking risk in development projects: from management to resilience. Development in Practice, Vol. 22 no. 3, pp.409-416.
Solis-Carcano, R.G., Corona-Suarez, G.A. & Garcia-Ibarra, A.J. (2015).The Use of Project Time Management Processes and the Schedule Performance of Construction Projects in Mexico.Journal of Construction Engineering, pp. 55-98
Strahorn, S., Gajendren, T. & Brewer, G. (2015). The influence of trust in traditional contracting: investigating the “lived experience” of stakeholders. Construction Economics and Building, Vol. 15, no. 2, pp. 81-101.
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