Procurement & Tendering Level 1 Flashcards
What is procurement?
The overall act of obtaining goods & services for a construction project
The selected procurement route should follow a strategy which fits the project criteria & objectives
What are the main factors that determine the selection of a procurement route?
Client objectives, such as time, cost and quality
Risk allocation
What is the relationship between time, cost and quality?
Time - greater emphasis on time / certainty of completion date may influence project costs and design development
Cost - emphasis on cost certainty / price level may have an impact on speed to completion or design quality
Quality - an emphasis on quality / performance may impact both cost and project pace
How is risk dealt with?
Risk can either be accepted by the client, reduced, shared or transferred to another party - it cannot be ignored
Risks should be held by the party best able to deal with them
Risk retention are risks which are retained by the employer but are not neccessarily controllable
What are they key risk categories?
Design development risk - allowance during design process for risks associated with design development e.g. planning requirements, environmental issues, procurement methodology
Construction risks - for use during construction process for risks associated with site conditions
Employer change risks - for use in both design & construction process for employer driven changes e.g. change in scope of works, or brief
Employer other risks - other employer risks e.g. availability of funds, early handover
What are the key stages of a procurement strategy selection process?
Analysis - identifying the importance of client objectives and client attitude to risk
Choice - consideration of potential procurement routes, evaluating these, identifying routes which are inappropriate and selecting the best route which provides best fit to the analysis
What are the main procurement routes?
Traditional Procurement,
Design & Build Procurement
Construction Management
Management Contracting
What is Traditional Procurement?
Separate design from construction
The employer appoints consultants to design the project in detail, where contractors are then invited to submit tenders based on a fully developed scheme
Allows construction costs to be determined with reasonable certainty before works begin, assuming no significant design changes arise
What are the advantages of Traditional Procurement?
Competitive fairness as all tenders are based on the same information
Cost efficiency as the cost is largely known at the outset of the project
Programme certainty as the time frame is established at the outset of the project
What are the disadvantages of Traditional Procurement?
Long pre-contract stage as it relies on full design information prior to tender
Design risk is retained by the employer, any changes post contract will be a variation or compensation event (dependent on form of contract)
If full design is not achievable, this can lead to contractor design portion supplements or provisional sums - both of which compromise the certainty of output
When might Traditional Procurement be appropriate?
The employer has specific or detailed design requirements
Cost certainty is important to the client
If time is not a client priority
What is Design & Build Procurment?
The contractor is responsible for both the design and construction phase of the project
Under JCT, the employer’s team produce Employer’s Requirements of which the contractor responds with Contractor’s Proposals and appoints their own design team OR the employer’s design team may be novated to the contractor for continuity
Design risk is transferred to the contractor
What are the advantages of D&B Procurement?
There is a single point of responsibility for design and construction - the contractor
Earlier commencement on site is possible if design and construction can be overlapped
Benefit of contractor’s buildability input
Design & construction risk with the contractor
What are the disadvantages of D&B procurement?
The design is only as good as the ER
More complex in comparing tender returns
Client has less control over aesthetics and quality
Contractor will build in risk premiums within their tender in exchange for taking on design risk
When might D&B Procurement be appropriate?
When there is a need to make an early start on site (potential to overlap design & construction)
Where the employer wishes to minimise their risk profile as design is passed onto the contractor
For technically complex projects, the design will benefit from the contractors buildability input
Where retaining control of the design is a not a priority
