Procurement and Tendering Flashcards
What is procurement?
The overall process of acquiring goods and services for a construction project.
What should be considered when selecting a procurement route?
Cost.
Time.
Control.
Quality.
Risk allocation.
What are the main procurement methods?
Traditional.
Design and Build.
Management Contracting.
Construction management.
What is traditional procurement?
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.
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.
What are the advantages of traditional procurement?
Tender analysis made easier.
Minimal built in contractor risk premium.
Client retains control of design.
Reasonable cost certainty at project start.
What are the disadvantages of traditional procurement?
Longer programme due to tender process.
Client retains design risk.
Dual point of responsibility.
No buildability input of contractor.
What is design and build?
Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.
The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works.
When might D&B be appropriate?
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.
What are the advantages of design and build?
Single point of responsibility.
Earlier start on site due to overlap of design and construction.
Buildability input of contractor.
Client relinquishes design risk.
When might traditional be appropriate?
If the employer has had the design prepared.
The client wishes to retain control over the design and specification.
If cost certainty at start on site is important.
What are the disadvantages of design and build?
Client must commit to a concept design early.
Client loses control of the design.
Built in contractor risk premium.
Design only as good as ER’s.
What are employer’s requirements (ER’s)?
Used to describe the documents produced by the employer to set out its requirements in relation to the project.
This is what the design and construction will be based off.
What are contractors proposals (CP’s)?
Prepared by the contractor in response to the ER’s.
It will contain detailed design information which will require further development throughout the course of the project.
Why does the employer usually pay a premium for a D&B project at tender stage?
The contractor will factor in a risk allowance.
Who executes the design for the contractor under a D&B?
They may use in house designers, external consultants, or the employer’s design team could be novated.
What is construction management?
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.
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.
When might construction management be appropriate?
Where an early start on site date is key.
Where buildability and programme input is required of the construction manager.
Where price certainty before commencement is not considered a key driver.
Where the client is experienced in construction.
What are the advantages of construction management?
Buildability input on Construction Manager.
Earlier commencement on site due to overlap of design and construction.
Potential for cheaper costs due to direct trade packages.
Design changes can be accommodated without paying a premium.
What are the disadvantages of construction management?
No single point of responsibility.
No cost certainty until last trade package is let.
Employer must be hands on and proactive.
What is the difference between management contracting and
construction management?
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 Management Contractor is in direct contractual relationships with the trade contractors and the client is in contract with the Management Contractor only.
What is management contracting?
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.
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.
The client reimburses the cost of the trade packages to the MC plus their management fee.
When might management contracting be appropriate?
Where an early start on site is a priority.
Buildability input from the management contractor is required.
Where cost certainty is not a priority.
What are the advantages of management contracting?
Single point of responsibility.
Design changes can be made without paying a premium.
Potential for earlier start on site due to overlap of design and construction.
Buildability input of Management Contractor.
What are the disadvantages of management contracting?
No cost certainty until last package has been let.
No incentive for Management Contractor to reduce costs.
Proactive and hands on employer required.
