Procurement Flashcards
What does Procurement mean
The process used to produce goods and services
Name the types of Procurement
Traditional (Segregated)
Design and Building (Integrated)
Contract Management
Construction Management
New Procurement Strategies
Cost Led Procurement
Integrated Project Insurance Procurement
Two Stage Open Book Procurement
What are benefits of Traditional procurement?
Familiarity among contractors and consultants.
The client retains responsibility for and control of design team.
There is direct reporting by the design team to the client to ensure that quality control is maintained.
The client has a contract administrator monitoring the project.
There is certainty of price (if the work is fully designed in advance).
Priced Bills of Quantities provide a basis for variations to be priced at tendered rates.
All prices are based on the same information.
As all prices are based on the same information;
It is easier to analyse the prices.
The lowest price is usually the best value for money.
Where elements of the building are not fully designed. provisional sums may be used to allow for the later. design of those elements.
What is a Bespoke Contract?
A contract which has been tailored to suit the two parties and also the implied laws of foreign countries.
What are the 4 factors which can decide upon a Procurement strategy?
Quality
Time
Cost
Management
Why is procurement different in the Construction industry in regards to other industries?
You cannot purchase a project fully made. It has to be tailored by the client.
What are the 3 types of Procurement?
Traditional
D&B
Management
What are the 2 types of sub-contractors? Who do the sub-contractors have a contract with?
Domestic and Nominated
What are the benefits of Design and Build?
Speed of delivery
Single point responsibility of Contractor
Acceptance of design (the contractor has to buy in to the design)
Novation of design
Cost effective and cost certainty as the contractor can
Apply best margin, goods and services prices to the design.
Lower management costs - less client management
The law implies a duty of fitness for purposes on a design and build contractor (more care and skill than a design consultant)
What are the 5 types of procurement systems
price in advance (fixed price / lump sum)
design and build
management
cost reimbursement
partnering / alliancing / framework agreements
What are the cons of Traditional Procurement?
To be effective, it requires the scheme to be more or less fully designed before invitation to tender.
Adversarial blame culture.
Potential for over-design and/or over-engineering.
The contractor is not involved in the design process and therefore is not required to feel responsible for the design.
The client retains responsibility for the design team performance
A fixed lump sum price is rarely actually achievable
The use of provisional sums and the power of the A/CA to issue instructions for additional or varied works can lead to price escalation.
What are the cons of Design and Build?
Higher price due to higher risk premium
The client has less control and influence over design matters
Inflexibility. There is a limited scope for the client to
make changes
There is the potential of dual loyalties of a novated
architect
The quality achieved can be an issue because of the lack of control that the client has over the architect
The lack of independence of the architect.
D&B is not the appropriate route to use where a high quality design is required, unless a robust specification is included within the client’s requirements;
What is Contract Management?
100% sub-contracting from Main Contractor
Where the management contractor undertakes and carrying out work through work contractors, and those works contractors are contractually accountable to the management contractor.
The overall design is the responsibility of the client’s
consultants, but the management contractor is responsible for defining packages (tasks) of work and then for managing and carrying out of those work packages (tasks) through separate trades or works contractors
What are the benefits of Management Contracting?
particularly beneficial for fast-track complex projects where minimal design information is available at the start of the project
allows for early ‘buildability’ and programming input from the management contractor acting as a consultant
There is a single point contractual and payment arrangement for the client with the management contractor
the preliminaries and management fee can be fixed, therefore allowing for a degree of certainty on price
the quality can be controlled by the design team
greater scope for client changes.
What are the disadvantages of Management Contracting?
this procurement approach is a low risk strategy for the
management contractor as he/she has little responsibility for package contractor defaults, bankruptcy, etc.
although guaranteed maximum price can be achieved,
the process is still fundamentally prime cost in its nature
cost increases can be substantial, and there is often a
tendency for the initial cost plan to be adjusted upwards
