Procurement Flashcards
Define Procurement
Obtaining by care or effort.
Aquisition. Bringing about
Why is the choice of procurement method important?
It dictates the allocation of risk between the parties.
5 Types of risk in construction
- Physical works
- Delays and disputes
- Management of project
- External factors
- Financial Risk
Examples of risk w/ physical risks
Ground conditions.
Defective workmanship/ materials
Inappropriate/non-functional design
Examples of risk w/ delays and disputes
Possession of site
Information delays
variations issued by clients
Examples of risk w/ Management of project
Direction and supervision
Damage and injury to persons and property
2 Examples of risk w/ external factors
What would a remedy be?
taxes go up or down
War/ politics
force majeure (contract clause allowing leave to both parties if circumstances are completely unforeseeable.)
Examples of financial risk
non payment
delays in payment
inflation of prices
claims for loss of expenses
3 steps of how to deal with risks
- Identify the risk
- Analyse the risk
- Respond to the risk
How to analyse a risk
find out the: -
probability of occurrence
Frequency of exposure to the risk
cost of ‘laying off’ the risk
Effect of occurrence/severity
How to respond to a risk
Transfer the risk
Accept the risk (minimise the possibility of occurrence/severity)
Avoid the risk
Insure against the risk
Do nothing (Not smart)
How to respond to a risk
Transfer the risk
Accept the risk (minimise the possibility of occurrence/severity)
Avoid the risk
Insure against the risk
Do nothing (Not smart)
Procurement choice depends on 1,2,3,4
1. The …
2. the .. of … responsibility/… responsibility
3. The basis for the ….. and the … of ….
4. Allocation of ….
- The priorities
- The allocation of design responsibility/ co-ordination responsibility
- The basis for the establishment and payment of costs
- Allocation of risk between the parties
3 Procurement routes
- Traditional
- Design and build
- Management routes
The separated system
Traditional
