Part 3 Flashcards
What are the main types of clients in the construction industry?
- Public vs private
- Experienced vs inexperienced
- Primary constructors (construction is main business) vs secondary constructors
What are the key characteristics of public vs private clients?
Public clients are publicly financed, not-for-profit, risk averse, and subject to regulations and auditing.
Private clients are privately financed, aim to maximise profits and shareholder value, can be more aggressive and willing to take commercial risks.
What are the key characteristics of experienced vs inexperienced clients?
Experienced clients have detailed construction knowledge, regular involvement in complex projects, ability to produce comprehensive briefs, and expertise managing projects and teams.
Inexperienced clients lack construction knowledge and project management experience, struggle to produce briefs, may change requirements, and rely heavily on consultants.
What is construction procurement?
Construction procurement refers to the process and organisational structure used by the client to obtain design and construction services for a building project. It involves acquiring the necessary goods and services from external sources.
What are the main construction procurement routes?
Traditional (design-bid-build)
Design & build
Management contracting & construction management
Partnering arrangements
Public-private partnerships (PPP/PFI)
Describe the traditional (design-bid-build) procurement route.
In traditional procurement, the client appoints designers to produce a detailed design. Contractors then bid on the design, with the lowest bidder winning the construction contract. Construction is done by the main contractor and subcontractors. The client pays based on work done, certified by the architect/QS.
What are the advantages and disadvantages of traditional procurement?
Advantages: widely used and understood, reasonable cost certainty, fair risk allocation, client control over design.
Disadvantages: slower sequential process, contractor expertise not used in design, tendency for adversarial relationships.
Describe the design & build (D&B) procurement route.
In D&B procurement, the client contracts with a single entity to provide both design and construction services. The D&B contractor is responsible for the entire project. Detailed design is done by the D&B contractor concurrently with early construction works. The client has less direct control over design details.
What are the advantages and disadvantages of design & build procurement?
Advantages: faster project delivery by overlapping design and construction, improved constructability, early price certainty, single point responsibility for the client.
Disadvantages: reduced client control and input into detailed design, minimal changes allowed after contract award, potential for lower design quality and innovation.
What are management-oriented procurement methods?
Management contracting and construction management are methods where the contractor is appointed early and paid a management fee.
The main difference is construction management contracts trade packages with the client directly, while management contracting uses subcontractors.
Both allow early contractor involvement but leave more financial risk with the client.
What is a public-private partnership (PPP) like the Private Finance Initiative (PFI)?
PPP/PFI involves a private sector consortium designing, building, financing and operating a facility over a long concession period, before transferring it back to the public client. Examples include schools, hospitals, roads, etc. The client specifies outputs and makes payments linked to performance and availability.
What are the main considerations when selecting a construction procurement route?
Key factors in selecting a procurement route include:
- Client experience and capability
- Project type, size, complexity and repeatability
- Need for early price or cost certainty vs flexibility
- Desire for design control vs integration
- Appetite for risk taking vs risk transfer
- Importance of project program and speed
- Targets for innovation, value, quality and sustainability
What are the key stages in an options appraisal when deciding to build?
- Understand the underlying problem and client objectives
- Generate alternative options that could meet the need
- Evaluate the alternatives based on costs, benefits and risks
- Select the best option and confirm the solution
- Obtain sponsor approval to proceed
What factors are considered in a development appraisal or feasibility study?
A development appraisal or feasibility study looks at:
- Strategic case - defining the problem and rationale
- Economic case - finding the best value option
- Financial case - affordability of the preferred option
- Commercial case - viability and procurement route
- Management case - client capacity and project delivery
What financial aspects are considered in an options appraisal?
Financial aspects include:
- Initial capital costs and whole life costs
- Revenue and running costs
- Return on investment and payback period
- Net present value
