Procurement Routes Flashcards
What are the main types of procurement route?
Traditional
Design and Build
Management
Non-traditional / collaborative
What are the key features of a traditional procurement route?
Contractor appointed by competitive tender
full documentation necessary for tendering processes
client in control of design quality
Independent CA required
What are the pros and cons of the traditional procurement route?
Pros
- competitive fairness with all tenders based on same info
- reasonable cost certainty as total figure known at the outset
- programme certainty as time frame established at the outset
- Design quality as scope of works prescribed by consultants
Cons
- Design and Construction stages are separate leading to longer overall programme.
- relies on fully developed design information prior to tender which takes time
- client may be in a weak position of major changes are introduced as variation during the contract
- Risk of claims for delay and disruption if the design is not fully detailed prior to agreeing the contract sum.
Name some traditional standard form JCT contracts
JCT Standard Building Contract With/Without Quantities
JCT Minor Works Building Contract
JCT Measured Term Contract
JCT Intermediate Building Contract
JCT Prime Cost Building Contract
What are the key features of a design and build procurement route?
The contractor is responsible for undertaking both the design and the construction of the work in return for a lump sum price.
Appointment of contractor usually be two stage tender.
Employers requirements can vary from simple accommodation to a fully worked out scheme design but should be matched by contractor’s proposals.
Once the contract is let the client has no control over the design detail
No provision for an independent contract administrator. Client may appoint an Employers Agent to advise on their decisions and act on their behalf.
Speculative risks are largely with the contractor but can be reduced dependent on the amount of design input by the client.
What are the pros and cons of the design and build procurement route?
Benefit
- Speed - the design and construction stages can proceed in parallel.
- Cost - relatively low risk in terms of cost and time but there can be uncertainty over design quality
- Cost - Low tendering and preparation costs to the client.
- Accountability - single point of responsibility for the design and cost risks.
Disadvantages
- Variations expensive - cost certainty is only provide if the client refrains from ordering changes during the works. Post-contract changes may not achieve a competitive price.
- Lack of control - Loss of client control over design and construction activities may impact quality.
Name some Design and Build standard form JCT contracts
JCT Design and Build Contract
JCT Major Project Construction Contract
What are the key features of the management procurement route?
A fast track method which overlaps the design and construction stage and enables contracts for early works packages (e.g. groundworks) to be let before overall design is complete.
Appointment of contractor usually by negotiated tender, who is paid a management fee Work package let by competitive tender.
What are the pros and cons of the management procurement route?
Benefits
- Speed - Quick start on site as quick method to procure main contractor.
- Speed - Expedited programme due to overlapping of design and construction activities allowing earlier start on site.
- Buildability - Improved buildability due to early contractor involvement allowing contractor input in design process and sequencing.
- Single point of responsibility and accountability.
- Flexibility – design activity extends into construction period and later procurement of finishes to suit tenant are possible.
- Client maintains overall design control through professional team.
Disadvantages
- Cost certainty - No cost certainty at the outset when employers enters into contract and work proceeds on basis of contract cost plan. Final costs will not be known until the final contract is let.
- Cost certainty - Delayed procurement exposes employer to market fluctuation.
- Requires high level of client involvement in rolling decision-making throughout the construction period. Very hands on for client.
- Speculative risks largely with the client, requiring trust and in-house expertise.
- Programme risk - scope of works develops well into construction phase.
What are the key features of the collaborative procurement route?
Introduces some form of collaborative working to unite parties to the project and avoid polarisation. The theory is that teamwork results in greater efficiency, resulting in increased cost and time certainty.
These provisions include collaborative working, early warning of disputes and performance indicators.
What are the pros and cons of the collaborative procurement route?
Benefit
- Maximises opportunity for innovation
- Provides good risk management
Potential to minimise claims during construction because of better risk identification, mitigation and allocation.
Disadvantages
- Requires strong client leadership and experience.
- Disputes more difficult to resolve using contractual remedies.
- Relies on good cost data and a cost ceiling to demonstrate value for money.
What is the difference between a Contract Administrator and an Employers Agent
The only differences is that an Employers Agent performs the contract administration role within design and build contracts whereas the Contract Administrator performs the same contract administration role in traditional forms of contract.
What is novation?
Novation is a process by which contractual rights and obligations are transferred from one party to another. Whilst the benefits of a contract can be transferred by assignment, if the parties wish to transfer both the benefits and the burdens then this must be done by a novation agreement.
What is consultant switch?
As an alternative to novation, there may be a ‘consultant switch’, which simply transfers the consultants from working for the client to working for the contractor, without altering the contractual history. As such, liability for work before the switch remains with the client.
What is the difference between Management Contracting and Construction Management?
Management contracting is a procurement route in which the works are constructed by a number of different works contractors who are contracted to a management contractor.
Construction management is a procurement route in which the works are constructed by a number of different trade contractors. These trade contractors are contracted to the client but managed by a construction manager (CM).
