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Construction Projects

Construction Projects

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Construction Projects: Establishing a Procurement Strategy

Bolaji Akinyemi Northumbria University (2008) Introduction The construction industry is one of the major contributors to the gross domestic product of many economies, and as a result, it is important that the environment of the industry is kept as healthy as possible. Previous research studies based on the construction industry (NWPC, 1990; Latham, 1994) have emphasised the key improvement areas, and one of these areas is the selection and use of a suitable procurement strategy in any construction project. The construction process has been seen as involving “all those activities, be they technical, managerial or strategic which make up the realisation phase of a project where the physical facility actually appears, and on completion, the facility is in a useable state, which is an important part of the whole project endeavour and actually impacts the perception of the client” (Rowlinson & McDermott, 1999: pp. 27). But then the concept of success is generally an ambiguous one in a construction project because of the varying perceptions of the project participants, since they will all have their own view of success (Chan, Scott & Lam, 2002). Therefore, several issues need to be considered in order to ensure the success of the outcome of a construction project. However, current research (Chinyio, Olomololaiye & Corbett, 1998) confirms that construction clients have been dissatisfied with the performance of construction consultants and contractors on most projects, but Kometa & Olomololaiye (1997) found that there are several factors which influence the decision of construction clients’ decision to build and which ultimately also affects the project’s outcome as well. Despite this, researchers (Rowlinson & McDermott, 1999) still believe that construction contractors and other professionals have a duty to operate within ‘best practice’ tenets while implementing construction projects. Therefore, in implementing construction projects such as the building of a new concert hall with a budget of about £70 million, which is partly funded by the national lottery, it is essential that the construction professionals to be involved in the project ensure that the procurement strategy eventually selected for the project is best suited to the successful

1997). While it is essential to consider construction clients (Rowlinson & McDermott. Suitability of the Design and Build Strategy for the Concert Hall The application of the design and build strategy has enjoyed considerable patronage in the construction industry (Molenaar & Songer. 1998) construction professionals need to consider the main construction strategy of choice in particular projects with regards to their suitability and risk apportionment among project participants. other strategies include construction management. The design and build as well as the construction management strategies are two of the application strategies which construction clients and contractors consider in the implementation of projects in the construction industry.delivery of the project in value-for-money terms (Kometa & Olomololaiye. and the Construction Management Strategies. two stage tendering. This paper considers the whole life suitability and risk apportionment of two construction procurement strategies which include the design and build. 2002). and evaluating these needs (Chinyio. 2010). as well as their project needs (Kometa & Olomololaiye. 2010). Olomololaiye & Corbett. An Evaluation of the Suitability and Risk Apportionment of Traditional Design and Build. 2010. this procurement strategy operates in a situation where a client appoints a building contractor to provide a completed building to an agreed cost and programme (Leading Learning and Skills. management and construction of the project which is expected to be delivered according to agreed time. the attitudes of construction clients toward project consultants’ performance (Kometa. and the construction management strategies. but differing procurement methods be evaluated in order to determine the procurement method that is best suited to the project (Rowlinson & McDermott. Olomololaiye & Harris. 1999). 1998. public private partnerships/private finance initiative. management contracting. the main features of this strategy is that the contractor is the single point of responsibility to the client. In doing this. According to the OGC (2010). Chan. for design. 1998. 1997). Scott & Lam. 1994). Office of Government Commerce. and in accordance with agreed output specification within reasonable skill and care competences. it is essential that the relative whole life suitability and risk apportionment of the appropriate. . budget including the whole life costs. and framework agreements (Kumaraswamy & Dissanayaka. Leading Learning and Skills. 1999).

Gunning & McDermott.  Design. 1994). and the client can appoint a consultant to oversee the works (Office of Government Commerce. and  Develop and construct (Akintoye. According to Akintoye (1994).  Package deal.  Novation D & B. six variants of design and build construction strategy has been identified from literature as well as procurement practice and they include:  Traditional design and build. schedule definition. for the client. Chan. 1994. They also presented an extended list of criteria against which the preference of design and build strategy can be measured based on its efficacy in delivering successful projects.The contractor can be selected through the course of a tender process or through negotiation. this is the greatest advantage of the strategy. 2008). One main advantage of the design and build strategy is that the client has to deal with only one single point of responsibility during the entire implementation phase of the project. budget definition. and it helps to increase the rate at which issues are resolved and also shortens construction time. according to Akintoye (1994). According to Anumba & Evbuomwan (1997). In the same vein. Scott & Lam (2002) observed that previous research studies have used design and build project success criteria to explain the reasons for the popularity that the strategy has enjoyed among clients and contractors in the industry. they then highlighted that the main reason for which the strategy has been applied within the industry is that it is of shorter duration than the other procurement methods. manage and construct. 1997).  Design and manage. . It has also been recorded in research that the strategy particularly contributes to a reduction in project and construction costs (Chan & Tam. since the provisions of the contract would have included the specification of a clear maximum guaranteed price. Molenaar & Songer (1998). there is price certainty. and professional fees are also lower. found that project characteristics that correlate with success include scope definition. project complexity.

pp. N. 2002.com/science?_ob=MImg&_imagekey=B6V9V-3TKVCYD-61&_cdi=5908&_user=122879&_pii=S0263786398000015&_orig=browse&_coverDate=12%2 F31%2F1998&_sk=999839993&view=c&wchp=dGLbVlzzSkzS&md5=6ef50f838cf5b3d7b33280f10c471f98&ie=/sdarticle. Ogunlana. & Lam. & Bach. A. Chan.serialssolutions. 269-295 [Online]. O. References Akintoye. International Journal of Project Management. M. 27-33. Hong Kong. pp... 18 (3).serialssolutions.. S. E.sciencedirect. Ogunlana & Bach.pdf (Accessed: 07 March 2010). M.com/?sid=google&auinit=APC&aulast=Chan&atitl e=Framework+of+success+criteria+for+design/build+projects&id=doi:10. Construction Management and Economics. Available at: http://jr3tv3gd5w. P. Scott. & Tam. & Corbett. C. Construction Innovation. this is because of the total control allowed the project contractor. Journal of Management In Engineering. 12 (2).com/776191_769972562_739375420. Available at: http://pdfserve. (1994) 'Design and Build: A Survey of Construction Contractor's Views'. pp. Olomololaiye. S. Available at: http://jr3tv3gd5w. C. E. W.informaworld. Charitamara.Commencements of work on sight is far earlier under the design and build strategy than other forms of procurement strategy.1061/(ASCE)0742597X(2002)18:3(120&title=Journal+of+management+in+engineering&volume=18&date=200 2&spage=120&issn=0742-597X (Accessed: 07 March 2010). pp.pdf (Accessed: 12 March 2010). (1998) 'An Evaluation of the Project Needs of UK Building Construction Clients'. O. 16 (6). 155-163 [Online].scholar.scholar. (2002) 'Framework of Success Criteria for Design/Build Projects'. P. 120-128 [Online]. Chan. Available at: http://www. A. Chinyio. D. 4-7 December 1994. Hawkswell Kilvington. this influences the ease with which programmes and budgets are achieved on site (Charitamara. 385391 [Online]. (1994) 'Design and Build Through Novation'. L. A. Proceeding of CIB W92 Symposium on Procurement. pp. . 2002). (2002) 'System Dynamics Modelling of Design and Build Construction Projects'. 2 (4). P.com/?sid=google&auinit=S&aulast=Chritamara&a title=System+dynamics+modeling+of+design+and+build+construction+projects&title=Constr uction+innovation&volume=2&issue=4&date=2002&spage=269 (Accessed: 02 March 2010).

. National Public Works Conference. Kumaraswamy. K. Australia. F.com/deliver/connect/routledg/09613218/v26n4/s3. (1994) Constructing the Team: Final Report of the Government / Industry Review of Procurement and Contractual Arrangements in theUK Construction Industry. Kometa. Office of Government Commerce (2010) Procurement and Contract Strategies. [Online]. London: HM Treasury. Latham.com/156106_769972562_739376217. pp.lsc.co. Building Research & Information. [Online]. 124 (6). [Online]. (CP0163/03/08) [Online]. 467. (1997) 'Evaluation of Factors Influencing Construction Clients' Decision to Build'. 20-23 May 1997. Available at: http://www.1061/(ASCE)07339364(1998)124:6(467&title=Journal+of+construction+engineering+and+management&volu me=124&issue=6&date=1998&spage=467&issn=0733-9364 (Accessed: 07 March 2010). (1994) 'Attributes of UK Construction Clients Influencing Project Consultants' Performance '. M.[Online]. Journal of Construction Engineering and Managment. M. Construction Management and Economics. M. Proceeding of CIB W92 Symposium on Procurement. J. & Dissanayaka. Office of Government Commerce (2008) An Introduction to Public Procurement. 223-238 [Online]. M. A. & Songer. T. Canada. Available at: http://web. 26 (4). M. Available at: http://www.com/?sid=google&auinit=KR&aulast=Molenaar&a title=Model+for+public+sector+design-build+project+selection&id=doi:10. Available at: http://jr3tv3gd5w. S. Available at: www.pdf (Accessed: 17 March 2010).Gunning.ingentaconnect. 433-443 [Online]. 213-222. T.thkp. G.uk/process/construction/procurement-methods/ (Accessed: 17 March 2010).ebscohost.gov. Hawkswell Kilvington (2002) Construction: Bulletin. (1998) 'Linking Procurement Systems to Project Priorities'. pp. P. S. S. pp. O.ogc.. O. Montreal. London: The Stationery Office. Leading Learning and Skills (2010) Procurement Methods. R. & Olomololaiye. Journal of Management In Engineering.pdf (Accessed: 08 March 2010). NWPC (1990) 'No Dispute: Strategies for Improvement in Australian Building and Construction Industry '.scholar.uk/documents/Introduction_to_Public_Procurement.pdf (Accessed: 07 March 2010). Available at: http://designguidance. & McDermott. C.informaworld. & Harris.uk/media/bulletins-new/Design%20and%20Build%20HK.uk/documents/CP0066AEGuide6. Canberra.pdf (Accessed: 05 March 2010).pdf?ex pires=1269807891&id=55878891&titleid=450&accname=University+of+Northumbria+at+Ne wcastle&checksum=6EA498C1CF34EEE81B685687380969EB (Accessed: 07 March 2010). D. (1997) 'Developments in Design and Build Contract Practice in Norther Ireland'.com/ehost/pdf?vid=5&hid=104&sid=c19776a5-cdac-473c-8ead08163911767e%40sessionmgr112 (Accessed: 18 March 2010). 12 (5).ogc.gov.serialssolutions. A. Olomololaiye. Kometa. Available at: http://docserver.gov. [Online]. P. Available at: http://pdfserve. (1998) 'Model for Public Sector Design-Build Project Selection'. pp. Molenaar.

P. London: Routledge. & McDermott. S. M. 1st edn.Rowlinson. . (1999) Procurement Systems: A Guide to Best Practice in Construction.

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