NZIA Lectures - D Flashcards
Time, quality and cost - pick two!
Time, quality and cost - pick two!
In the construction process of a 5 star hotel time will be sacrificed
In a factory quality will be sacrificed
High end home, time will be sacrificed
Rare that cost is sacrificed
Quality and time done sit well together
Procurement Types
Traditional - most common
Design and Build
Management
GMP (Guaranteed Maximum Price)
PPP/PFI (Private financial Initiative)
Partnering
Procurement - Traditional
- The architect is responsible for the designs, documents and observation. The contractor is responsible for the construction. Ie the client engages the consultants to design and document project
- For the completion of the documentation, the tender documents are prepared, and the contractor is invited to submit their tender for construction
- Usually under single stage competitive basis
- Under this method the contractor is not responsible for the design, other than the temporary works
- Although some traditional contracts do allow for the contractor to design some specific parts of the works
- Main advantage of traditional method is that there is a greater certainty
- Because the design is finalised before contractor has been engaged
- Therefore easier to understand how much the project is likely cost
- There is some flexibility after tender through variations for example (Architectural Directions)
- This method may be slower than other forms of procurement as contractor is appointed only once the design is complete - contractor not able to give early input into design (ECI)
- There may also be cost disadvantages through this method - as cost rise if large number of changes are made
- The contractor has very little flexibility to manage price, as design is fixed
What is a Design Build procurement type?
- This is a system that places responsibility for both the design and construction in the hands of the contractor
- Where the contractor does designa dn then construct works
- Advantages for time - overlapping design and construction
- Single point of responsibility - contractor
- Simpler and client is able to engage with contract and design team earlier int he process
- Cost - allows client certain amount of control. Preagreed price generally
- This means contractor will take on much of the financial risk
- As contractor responsible for design, they make make cost savings - impacts quality
- Under some design and build contractor a design team will work for the contractor instead of the client (novation)
- Novation - leaves the client without a independent design team
- Disadvantages
- Quality - contractors may exploit a specification that is open for interpretation by choosing the cheapest option
- Risk the client might have to pay more if contractor has to take an unreasonably high level of risk, due to lack of design clarity
- Consider any changes will have cost and time implications
Procurement - Management Contract
- The contractor has a management function. The work is divided into packages and these packages are let individually.
- Works are constructed by number of contractors, who are contracted to management contractor
- Management contractor appointed early on by client
- Management contractor experience is used improve cost and buildability
- Management contractor will advise on packaging and risk of interfaces(??)
- Agreement between client and management contractor is likely to cover pre-construction and construction activities - with a notice to proceed required
- Beneficial to client as they can retain the control of design while drawing on the experience of contractor
- Client is able to move the procurement and deliver risk to contractor who is responsible for project management and works.
- Rather contractor tendering fixed price, can provide cost savings for clients as well as time savings, by tending some of the work packages early, such as ground works, and then overlap the design and construction - quicker start on site
- Flexibility in design with changes being made during the contraction process
- This procurement route is not common in NZ but does work well
Procurement - GMP (Guaranteed Maximum Price)
- The contractor agrees that the contract sum will not exceed a specified maximum. If the cost is higher, the contractor bears the additional cost
- IF the cost is lower than GMP, the savings may go to the client, the contractor, or a shared between both
- Contractor is incentivise to make savings
- Client has a secured max price
- Risk transfers from client to contractor in this method
- Because of this the contractor is likely to tender higher price
- Contractor pricing the risk that they are taking on
- This may be acceptable to clients if their priority is certainty rather lowest possible cost
PFI (Private financial Initiative)
- A single integrated supply team is appointed for design, contraction and management and then operate it for a period of time
- Originated from the UK in early 90s
- Private financers provide their own money to deliver and maintain clearly defined public projects - 20-30 years
- In NZ a PFI is known as a PPP - Public private partnership
- Partnership between government body and private entity
- Goal of providing public benefit - such as asset or service
- PPPs are long term and involve large companies
- Company takes a lot of risk - as remuneration of company is usually tied to performance
Procurement - Partnering
- A collaborative management approach that encourages openness and trust. Commonly used on large, long term or high risk contracts
- Breaking down barriers between supplier and buying
- Agreement describes the way which the parities will conduct themselves
- Partnering can involve any or all contrsultants and clients
- Openness and collaboration
- Theory is that relationship between paities from linear to more equal
- The whole team becomes involved in management decisions and shared rewards for reaching objectives
How to choose which Procurement method?
- The nature of the project (size, complexity), apportionment of risk, responsibility for designs, price basis (lump sum etc).
- For example:
- A residential house - traditional
- A warehouse - design and build
- PPP - hospital or prison
- Partnering - tunnels
Types of Construction Contracts
- SCC/SCC SF
- NZS 3910
- NZS 3915
- NZ 3916
- NZS 3917
- NBC/NBC SF
- Others
- NEC and FIDIC
SCC/SCC SF
NZIA Standard Construction Contract
- Standard contract for the use between the Client and Contractor where an Architect is engaged to administer the contract
- Written by NZIA
- Requires the Architect to administer contract
- Form smalls projects to large projects
- Short form for very small projects
NZS 3910
- Conditions of contract for building and civil engineering construction
- Build only contract
- Most common form of contract
- Written by Standards New Zealand
- Traditionally used on commercial projects from small to large scale
- Contractor requires Engineer to administer it - which can be anyone from architect, engineer, or project manager
NZS 3915
- A standard construction contract designed for situations where no person is appointed to act as an Engineer to the Contract.
- Where the client administers the contractor directly -
- Similar to NZIA National Building COntractor - where clients can use when they haven’t engaged Architects beyond the BC stage
NZ 3916
- A design and build contract. Responsibility for the design is moved form the principal to the contractor
- Similar to NZS3910
- Adapted for situations where the contractor is responsible for both the design and the build
NZS 3917
- For use where the contract is intended to operate over a defined period.
- Where the building needs to operate for a defined period of time
- Typically used for repair, maintenance or renewal works
- Cleaning, painting etc