Procurement

Question 1

What constitutes a legal contract?

Answer 1

Intention - what will happen, when and how

Capacity - if all parties have capacity to agree

Agreement - details of the offer and acceptance by both parties

Certainty of terms - which terms are being set out

Consideration - who will provide the services and payment schedules

Question 2

What is Assignment and Novation

Answer 2

Novation - transfers your obligations and rights under that contract.

Assignment - transfers only your rights and benefits.

Question 3

What is a collateral warranty

Answer 3

They create contractual relationships between the main parties of a contract with an external third party.

The contractual relationship would not exist with the third party due to privity of contract.

Question 4

what is the role of contract administrator?

Answer 4

It involves managing the procedural aspects of a contract during the delivery of a project.

• Tendering
• Change of control procedures
• Evaluating works
• Progress reports
• Issuing certificates - interim certificate, certificate of making good defects, practical completion, final certificate.

Question 5

What is the difference between client consultant vs agent of the contract?

Answer 5

Client Consultant:
advisor to the client, providing expert advice on various matters related to a property project.

Agent of the Contract:
is responsible for the practical administration of the contract terms.
they must ensure fair and unbiased administration of the contract in accordance with its terms,

Question 6

What is meant by procurement?

Answer 6

Procurement in construction involves the process of acquiring goods and services needed for a construction project.

It usually begins with the identification of need, followed by the selection of contractors or suppliers (also known as vendors), negotiation of prices, and finally, the awarding of contracts.

Question 7

What is traditional procurement?

Answer 7

The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified.

Question 8

How does traditional procurement work?

Answer 8

The contractor takes responsibility and financial risk for the construction of the works to the design
- Produced by the client’s design team for the contract sum within the contract period.
- The client takes the responsibility and risk for the design and design team performance.

Question 9

When would traditional procurement be most appropriate?

Answer 9

• If the employer has had the design prepared.
• If the design is substantially completed at time of contractor selection.
• The client wishes to retain control over the design and specification.
• If cost certainty at start on site is important.
• The shortest overall programme is not the client’s main priority

Question 10

What are the advantages of traditional procurement?

Answer 10

• Retaining control over the design can lead to higher quality.
• It offers increased levels of cost certainty before commencement
• Design changes are reasonably easy to arrange and value.

Question 11

What are the disadvantages of traditional procurement?

Answer 11

• The overall project duration may be longer than others due to lack of overlap between design and construction.
• There is no input into design and planning by the contractor.
• A strategy based on price competition can lead to adversarial relations.
• There is a dual point of responsibility with the design team controlling the design and the contractor retaining responsibility for the construction.

Question 12

What is design and build?

Answer 12

Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.

Question 13

13) When might design and build be most appropriate?

Answer 13

• Where there is a need to make an early start on site as there can be overlap between design and
  construction.
• Where the client wishes to minimise their risk as they transfer design responsibility to the Main
  Contractor.
• For technically complex projects requiring the contractor’s expertise.
• Where the employer does not want to retain control over design development.

Question 14

14) What are the advantages of design and build?

Answer 14

• There is a single point of responsibility for the design and construction.
• There is earlier commencement on site.
• Early price certainty is increased.
• The client can benefit from the contractor’s experience harnessed during the design.

Question 15

What are the disadvantages of design and build?

Answer 15

• Clients may find it hard to prepare a sufficiently comprehensive brief.
• The Client has to commit to a concept design early.
• Variations from the original brief are difficult to arrange and are often expensive.
• It is harder to compare tenders and harder to determine whether value for money is being achieved.

Question 16

16) What is management contracting?

Answer 16

• A management contractor is employed to contribute their expertise to the design and to manage construction with a management fee being paid to them for doing so

Question 17

how does management contracting work?

Answer 17

• The management contractor has direct contractual links with all of the works contractors.
• They have the responsibility for the construction works without actually carrying them out.
• Not all of the design need be completed before the first works contractors start work.
• The MC selects the works contractors through competitive open book tender.
• The client reimburses the cost of these packages to the MC plus their management fee.

Question 18

When would management contracting be most appropriate?

Answer 18

• Where the client does not want cost certainty before commencement.
• Where an early start on site is a priority.

Question 19

What are the advantages of management contracting?

Answer 19

• Overall project duration is shorter due to overlapping design and construction.
• There is contractor contribution to the design and planning process.
• Changes can be accommodated in packages not yet let if they have no further impact.
• The works are let competitively at current market prices on a firm price basis.

Question 20

What are the disadvantages of management contracting?

Answer 20

• The price for the works is not received until the last package has been let.
• Changes to the design of later packages may affect packages already let.
• There is little incentive for the Management Contractor to reduce costs.
• In practice, the MC has little legal responsibility for the defaults of the works contractors.

Question 21

What is construction management?

Answer 21

• The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction manager who acts as a consultant to coordinate the contracts.

Question 22

How does construction management work?

Answer 22

• The trade contactors carry out the work.
• The construction managers supervises the construction process and coordinates the design team.
• The construction manager has no contractual links with the trade contractors or members of the design team.
• Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works.

Question 23

When is construction management most appropriate?

Answer 23

• On large, complex projects where the advantages of Construction Management can be utilised for example using upfront buildability knowledge of the Construction Manager and their programme advice including specialist input from trade contractors.
• Where an early start on site date is key.
• Maintenance of flexibility in design and construction strategy.
• Where price certainty before commencement is not considered a key driver.
• Where the client is experienced in construction.

Question 24

What are the advantages of construction management?

Answer 24

• The overall project duration is reduced by overlapping design and construction.
• The construction manager can contribute to the design and project planning processes.
• Roles, risks and relationships for all parties are clear.
• Changes in design can be accommodated without paying a premium.
• Prices may be lower due to direct contracts with trade contractors.
• The Client has a means of redress to trade contractors through direct contractual links.

Question 25

What are the disadvantages of construction management?

Answer 25

• Price certainty is not achieved until the last trade package is let.
• Changes to packages may adversely affect packages that are already let.
• The client must be proactive and hands on.
• The client has a lot of consultants and contractors to deal with.

Question 26

What is the difference between management contracting and construction management?

Answer 26

• Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t.
• Under management contracting, the Main Contractor is in direct contractual relationships with the trade contractors and the client is in contract with the Main Contractor only.