CHAPTERT1

Introduction

1.1TProcurement

ProcurementTmethodsTforTconstructionTindustryTcanTbeTdefinedTasTtheTorganizational

structureTadoptedTbyTclientTforTtheTmanagementTofTtheTdesignTandTconstructionTofTa

buildingTprojectT(Masterman,T2002).TBut,TweTcanTalsoTsayTthatTit’sTaTprocessTbyTwhic

hTweTconnectTtheTsupplierTandTcustomer.TNowTitTcanTbeTofTanyTformTwhetherTit'sTco

ntractualTorTlogisticTweTprepareTaTrouteTtoTreachTtheTcustomerTwithinTtheTgivenTperiod

TbyTtheTcustomer.TDifferentTprocurementTmethodsTareTusedTforTdifferentTconstructionTp

rojectsTand

theTcorrectTchoiceTmayThelpTtoTavoidTproblemsTandTbeTtheTkeyTtoTtheTattainmentTof

projectTspecificTgoals (Eyitope, 2012).TTheTselectionTofTanTappropriate

procurementTmethodTcanTreduceTconstructionTprojectTcostsTbyTanTaverageTofT5%.TWhil

anTappropriateTprocurementTsystemTmayTenhanceTtheTprobabilityTofTprojectTsuccess

(Naoum,T1994;TLuuTetTal.,T2003).TManyTaTtimeTwrongTprocurementTrouteTorTinappropr

iateTprocurementTrouteTforTaTparticularTprojectThasTtoTleadTtoTmajorTblundersTinTtheTp

astTinTconstructionTindustry.TSo,TtheTselectionTofTproperTrouteTisTveryTmuchTimportant

TtoTavoidTanyTfurtherTdiscrepanciesTduringTandTafterTtheTprojectTcompletes.TTheTselecti

onTofTprocurementTrouteTisTdependentTonTtheTclientTwhichTcanTbeTanyoneTi.e.Tdevelop
er,TmainTcontractorTetc.TIt’sTtheTresponsibilityTofTtheTclientTtoTchooseTtheTrouteTinTco

mplianceTwithTtheTrequirementTofTtheTprojectTandTtheTcompetenceTheTpossessesTandTw

antsTforTproperTcompletionTofTtheTwork.TProcurementTselectionTprocessTisTaTveryTcomp

lexTandTcomplicatedTdecision-

makingTprocessTdueTtoTtheTpresenceTofTmanyTunknownsTandTassociatedTrisksTwithTit.T

ManyTtoolsTandTtechniquesTareTbeingTsuggestedTandTdefinedTinTProjectTManagementTB

ookTofTKnowledgeTandTRICSTguidanceTnoteTforTriskTassessmentTandTcontrolTtoTcopeT

upTwithTtheTrisksTwhichTcanToccurTduringTtheTprocurementTdecisionTmakingTprocess.TIt

TisTalsoTlargelyTdependentTonTtheTscopeTdefinitionTisTdoneTbyTtheTclientTandTdataTpro

videdTbyThimTtoTtheTcontractorTorTconsultantTforTfurtherTwork(designingTandTexecution)

TheTdecisionTtoTselectTtheTappropriateTprocurementTmethodTtoTimplementTa

theTconstructionTprojectTisTcrucial.TThoughTitTdoesTnotTnecessarilyTleadTtoTaTsuccessful

Tproject

butTwithTotherTfactorsTtakenTintoTconsiderationTcanTinfluenceTtheTsuccessTofTtheTprojec

(OkunolaTandTOlugbenga,T2010).TThereTareTmanyTdifferentTbasicTfunctionsTwhichTimpac

tTtheTselectionTofTtheTprocurementTrouteTi.e.Ttime,Tcost,Tquality,Tscope,TorganizationTcu

lture,TcashTflow,TprojectTcharacteristics,TrisksTassociatedTorTinvolvedTinTtheTprojectTetc.

TThroughTanalysisTofTtheseTfactorsTisTimportantTinTtheTselectionTofTprocurementTroute.

TByTtheThelpTofTpreviousTstudiesTandTliteratureTreviews,TweTasTaTprofessionalTcanTund

erstandTtheTfactorsTforTaTspecificTprojectTrequirementTandTcanTselectTappropriateTprocur

ementTroute.TApartTfromTtheTliteratureTavailableTtoTus,TtheTexperienceTofTtheTkeyTdecis
ionTmakers,Tclient,TconsultantsTetc.TisTalsoTimportantTinTtheTdecision-makingTprocess

(Shiyamini, 2006).T

1.2TIndianTConstructionTIndustryT

TheTconstructionTsectorTinTIndiaTisTtheTcountry’sTsecond-

largestTeconomicTsegmentTafterTagriculture.TItTemploysTmoreTthanT40TmillionTpeopleTan

dTcontributedTnearlyT8.1%TtoTtheTnationalTGDPTinT2012–

13.TItTisTexpectedTtoThaveTcontributedT7.8%TinT2013–

14.TInTIndia,TtheTconstructionTindustryThasTevolvedTfromTitemTrateTpackagesTtoTlumpsu

mTcontractsTandTthenTtoTEPCTcontractsToverTtheTyears.TItThasTresultedTinTaTvisibleTsh

iftTfromTowner-

managedTprojectsTtoTprojectsTwhereTtheTriskTofTtimeTandTcostToverrunsThasTbeenTtrans

ferredTtoTtheTcontractor,TalongTwithTtheTresponsibilityTofTdesigning,TprocurementTofTma

terialTandTconstruction.TThisTformTofTcontractTevenTprotectsTtheTowner/developerTfromT

currencyTandTinterestTrateTfluctuations. (Shyamal, 2017).

TheTGrossTDomesticTProductT(nominal)TofTIndiaTisT$T1.848TtrillionT(Indiabudget,T2011)

.TTheTGrossTDomesticTProductT(PurchasingTpowerTparity)TofTIndiaTisT$T4.457TtrillionT(

Indiabudget,T2011).TTheTannualTexpenditureTbudgetTofTIndiaTisTRs.1490925.29TCroresT(I

ndiabudget,T2011).TOverTtheTyears,TmoreTthanThalfTofTtheTexpenditureTbudgetTisTspent

TonTcivilTengineering,Tconstruction,TandTrelatedTactivities.TTheTconstructionTindustryTsets

TinTmotionTtheTprocessTofTeconomicTgrowthTinTtheTcountry,TinvestmentTinTthisTsectorT

contributesT6.5%TofTGrossTDomesticTProductT(GDP)Tgrowth (Essays, 2017).

TheTconstructionTindustryTinTIndiaTisTlargeTandTscattered.TTodayTinTIndiaTthereTisTaTm

assiveTdemandTforThousingTandTinfrastructure.TItTmakesTaTsignificantTcontributionTtoTth

eTnationalTeconomyTandTprovidesTemploymentTtoTaTsubstantialTnumberTofTpeople.TThe

TuseTofTvariousTmodernTtechnologiesTandTdeploymentTofTprojectTmanagementTstrategies

ThaveTstartedTtoTgainTimportance.TInTitsTpathTofTadvancement,TtheTindustryTmustToverc

omeTseveralTchallenges.THowever,TtheTindustryTisTstillTfacedTwithTsomeTmajorTchalleng

es,TincludingThousing,Tdisaster-

resistantTconstruction,TwaterTmanagementTandTmassTtransportation.TRecentTexperiencesTof

TseveralTnewTmega-

projectsTandTlargeTdemandTareTclearTindicatorsTthatTtheTindustryTisTpoisedTforTaTbright

Tfuture.TItTisTtheTsecondThomecomingTofTtheTconstructionTprofessionTtoTtheTforefrontTa

mongstTallTprofessionsTinTtheTcountryT(Essays, 2017).

AsTperTaTreportTbyTPWC,TthereTareTthreeTdistinctTtrendsTshapingTtheTmarketTinT2017T

andTtoTmaintainTsustainableTsuccess.TLet’sTtakeTaTlookTatTtheseTtrendsTandTwhatTtheyT

meanTforTtheTsector:

1.TContractingTwillTgetTtougher.TE&CTcontractingTisTchangingTinTmultipleTways,Tcrea

tingTnewTchallengesTforTmanagementTteams.TOneTclearTshiftTisTtheTmigrationTtoTlump-

sum,TturnkeyT(LSTK)TcontractsT—

TinTwhichTE&CTfirmsTbearTtheTprojectTandTcostTriskT(lumpTsum)TandTguaranteeTopera

tionalTreadinessT(turnkey).TClientsTinTbothTtheTprivateTandTpublicTsectorsTareTbecoming

TfarTsavvierTaboutTwhatTprojectsTshouldTactuallyTcost,TandTtheyTareTbenefitingTfromTgr

eaterTcompetitionTforTbids.TAsTaTresult,TtheyTcanTdemandTLSTKTcontracts.TWeTexpect

TthisTtrendTtoTcontinueTandTaccelerateToverTtheTnextTyear.TSomeTtop-
performingTE&CTfirmsTareTgettingTbetterTatTworkingTwithTLSTKTcontracts,TbutTmanyT

othersThaven’tTyetTfullyTadapted.TForTexample,TsomeTfirmsTareTabsorbingTtheTriskTbutT

notTeffectivelyTfactoringTtheTadditionalTcontingencyTcostsTintoTtheirTbids.

YetTanotherTfactorTmakingTcontractingTtougherTisTtheTindustry’sTshiftTtoTtheTpublic–

privateTpartnershipsT(PPPs).TE&CTfirmsTareTnowTbeingTaskedTtoTinvestTtheirTownTcapit

alTsimplyTtoTparticipate,TinTexchangeTforTaTshareTofToperationalTrevenueTorTsomeTothe

rTenticement.TInTotherTpartsTofTtheTworld,TtheTmigrationTtoTPPPsTisToldTnews.THowev

er,TinTtheTU.S.TitTisTstillTinTtheTearlyTstages.TSeveralTtollTroadsTinTtheTU.S.ThaveTbee

nTbuiltTwithTcontractorTfunding.TMeanwhile,TtheTTrumpTadministrationThasTindicatedTtha

tTitTwillTpushTharderTforTPPPTprojects.TTheseTchangesTaddTupTtoTaTdifferentTwayTofT

working,TinTwhichTfirmsTassumeTgreaterTfinancialTrisksTbutTalsoTgainTaccessTtoTnewTp

otentialTopportunities.TSuccessTrequiresTpartneringTdirectlyTwithTpublic-

sectorTentitiesTonTanTongoingTbasis,TratherTthanTsimplyTforTtheTconstructionTphaseTofTa

Tproject’sTlifecycle. (Mike Sobolewsk, 2017).

1.3TResearchTAim

TheTresearchTaimsTtoTimproveTandTenhanceTtheTproductivityTofTprocurementTselectionT

methodTfromTtheTclientTandTotherTstakeholder’sTperspectiveTinTIndianTconstructionTindus

try.

1.4TResearchTObjectiveT

TheTmainTobjectivesTofTtheTstudyTareTasTfollowing
• ThisTstudyTisTmadeTtoTidentifyTtheTmajorTreasonsTforTdelays,TdiscrepanciesTandTany

TotherTissuesTwhichTreduceTtheTproductivityTofTtheTprocurementTprocessTthroughoutT

theTprojectTlifeTcycle.

• TheTidentifyTallTtheTmajorTprocurementTrouteTtrendsTadoptedTbyTindustryTforTallTki

ndTofTprojectsT(infrastructure,Tresidential,Tetc.)TinTIndianTconstructionTindustry.

• ToTdetermineTtheTfactorsTaffectingTsuchTasTeconomicTissues,TmanagementTissues,Tleg

alTissuesTandTculturalTissues,TwhichTareTimpactingTtheTselectionTofTprocurementTmet

hodTinTIndianTconstructionTindustry.

• IdentifyingTtheTbarriersTwhichTareTactingTasTaThindranceTinTtheTadaptionTofTnewTpr

ocurementTtechniquesTinTIndianTconstructionTindustry.

• ToTidentifyTandTrankTtheTmostTimportantTkeyTfactorsTwhichTareTreducingTtheTprodu

ctivityTofTtheTprocurementTmethodTandTselectionTofTthemTfromTclientsTandTothersTp

erspective.

• ToTdevelopTaTframeworkTforTtheTanalysisTofTriskTinvolvedTandThowTtoTmitigateTth

emTtoTimproveTtheTeffectivenessTofTtheTprocurementTroute.

CHAPTERT2
 LiteratureTReview

2.1TDefinitionsTofTProcurementTRoute

TheTmajorTconcernTaboutTthisTresearchTisTtoTunderstandTtheTprocurementTprocessTasTaT

wholeTandTunderstandTtheTareasTwhichTareTreducingTandTcanTreduceTtheTproductivityTo

fTtheTentireTprocessTandThowTcanTweTavoidTorTovercomeTthemTforTaTsuccessfulTprocu

rementTroute.

ProcurementTmethodTisTaTcontemporaryTterm,TwhichTisTknownTtoTmanyTpractitionersTan

dTresearchersTofTtheTconstructionTindustryTbyTdifferentTterms;TtheseTincludeTtermsTsuch

TasTprojectTapproach,TprocurementTsystems,TprocurementTdeliveryTmethodsTorTprojectTde

liveryTsystems,Tetc.T(Mathonsi, 2012). (Masterman,

2002)TstatedTthatTweTneedTtoTacceptTthatTtraditionalTprocurementTmethodTcanTnowTemb

raceTnotTonlyTdesignTandTconstructionTbutTalsoTfinancing,ToperatingTandTfacilitiesTmana

gement.TApartTfromTtheseTdefinitions,TthereTareTmanyTdifferentTdefinitionsTwhichTbestT

definesTtheTprocurementTmethod

• ATprocurementTmethodT(orTsometimesTknownTasTprocurementTsystem)T“isTan

anTorganizationalTsystemTthatTassignsTspecificTresponsibilitiesTandTauthoritiesTto

peopleTandTorganizationsTandTdefinesTtheTvariousTelementsTinTtheTconstructionT

of

aTproject” (Agha, 2013).

• ProceduresTusedTtoTprocureTgoods,Tservices,TandTworks.TSomeTmethodsTareTco

mpetitive;Tothers,Tnon-
 competitive.TThereTisTaTpreferenceTforTusingTcompetitiveTprocurementTmethods

(Lynch, 2013).

• ItTisTaTkeyTprocessTthroughTwhichTeachTrawTmaterialTpassesTtoTbecomeTaTfina

lTproductTfromTclient’sTvisionTtoTcontractor’sTfinalTproduct.TItTcanTbeTanyTgoo

ds,TservicesTorTworksTwhichTcanTrealizeTtheTuniqueTproductTdemandedTbyTtheT

client.

2.2THistoryTofTProcurementTMethods

(Larmour,

2011)TstatedTthatTthereTwasTnoTchangeTinTprocurementTmethodsTpriorTtoTtheTSecondT

WorldTWar,Ti.e.TconventionalTandTtraditionalTtypesTofTcontractsTwereTpreferredTeverywh

ere.TPost-WorldTWar-

IITemergenceTofTnewTprocurementTmethodsTcouldTbeTseenTdevelopedTcountriesTwereTop

enlyTexperimentingTwithTtheseTnewTformsTofTprocurementTtoTgainTmaximumToutTofTth

emTandTtheTconventionalTandTtraditionalTtypeTofTcontractsTwasTalsoTevolvingTdueTtoTit

.TTheseTchangesTinTglobalTeconomicTfrontTwereTconstantlyTchangingTtheTprocurementT

methods.

(Masterman, 2002)TstatedTthatTPre-WorldTWarTIIT(1939-

1945)TtraditionalT(orTconventional)TprocurementTrouteTwasTtheTonlyToption.TPostT1945Tt

heTexperimentationTinTprocurementTrouteTwasTstartedTbecauseTofTincreaseTinTtheTscope

TofTworkTandTvarietyTofTworkTwasTalsoTdemandingTinTtheTchangeTinTtheTconventional

Tmethods.TItTwasTalsoTaTfrustrationTfromTpoorTperformanceTandTconstantlyTfailingTtoTa
ddressTtheTconditionsTdefinedTinTtheTcontractsTwhichTleadTtoTexperimentationTinTtheTpr

ocurementTapproach. (Larmour,

2011)TclassifiedTevolutionTofTprocurementTmethodsTintoTmainTfive

phasesTwhichTare

• PhaseT1:T1945T-T1972T–TSustainedTeconomicTgrowth

DuringTthisTphaseTNegotiatedTcontractsTandTDesignTandTBuildTcontractTcameTintoTexist

enceTwhichTwasTslowlyTtakingTaTgripTinTprivateTsectorsTthatTtooTinTonlyTinTdeveloped

Tcountries.TTheTEmmersonTreportTpublishedTbyTMinistryTofTWorks,TtheTUKTinT1962To

penlyTpointedToutTaboutTtheTlagTofTcooperationTandTcommunicationTbetweenTtheTclients

TandTotherTstakeholders.

ThisTphaseTwasTfindingTadoptionTofTnewTtechniquesTofTtenderingTextremelyTdifficultTbe

causeTlesserTawarenessTandTtheseTmethodsTwereTinTnascentTandTstillTunderTdevelopment

Tstage.TThe

earlyTtoTmid-1960’sTwasTaTtimeTofTeconomicTexpansion,TrapidlyTdeveloping

technology,TchangingTsocialTattitudes,TdemandTforTmoreTcomplexTandTsophisticated

buildings,TandTtheTincreasedTneedTfromTclientsTforTfasterTcompletionTatTaTminimum

cost.T

InTsummary,TitTwasTtheTtimeTwhenTtheTworldTwasTexpandingTatTaTtremendousTspeedT

butTstillTwasTfindingTdifficultTtoToptTforTnon-

conventionalTmethods,TconventionalTmethodsTofTprocurementTmethodsTwereTstillTpreferre

dToverTnon-conventionalTandTcustomizedTtenderTroutes.

• PhaseT2:T1973T-T1980T–TRecession
ThisTperiodTwasTofTutterTrecessionTdueTtoTchangeTinTtheTglobalTeconomyTandTincrease

dTcrudeToilTprices.TTheTgovernmentTthemselvesTsponsoredTtheTstudyTofTtheTcauseTofTt

hisTinflationTinTpriceTandTeconomicTslowdown.TInT1960,TmanyTreportsTthatTitTwasTbec

omingTextremelyTdifficultTforTdevelopingTcountriesTtoTconstructTtheirTinternalTinfrastruct

ureTasTitTwasTdemandingThugeTmoneyTandTinTotherTwayThugeTdebts.TSo,TcounterTthes

eTproblemsTmanyTnewTtypesTofTprocurementTmethodsTcameTintoTexistence.

(Masterman,

2002)TreportedTthatTduringTthisTperiodTclientsTwereThesitatingTinTinvestingTtheirTmoney

TinTanyTprojectTdueTtoThugeTuncertaintyTinTtheTmarket.

• PhaseT3:T1981T-T1990T–TPost-recessionTrecovery

ThisTphaseTwasTforTpost-

recessionTrecoveryTandTadjustment.TInTaTjournalTbyTNatasaT(2012)TsheTstatedTthatTtillTt

heTmid-

1980sTtheTmainstreamTconstructionTprocurementTrouteTwasTtheTtraditionalT(conventional)

TwayTpreferredTinTdevelopedTcountries.TPost-mid-

1980sTdueTtoTrapidTglobalizationTandTcross-

cultureTofTworkingTconditionsTandTworkingTstyleTpeopleTstartedTtoTdevelopTalternativeT

procurementTrouteTtoTsatisfyTtheirTneedsTwhichTcanTbeTcategorizedTbyTtheTwayTdesign

TandTconstructionTofTtheTprojectTareTmanaged.TProcurementTmethodTstartedTtoTorientTto

wardsTintegratedTapproachTratherTthanTsoleTownershipTi.e.Tmanagement-

orientedTprocurementTrouteTandTinTrecentTcaseTpartnering.

• PhaseT4:T1991T-T2000T–TRecessionTandTrecovery
“TheTearlyTpartTofTthisTdecadeTsawTlowTeconomicTgrowth,TuncertaintyTinTbusinessTand

finance,TsocialTpressuresTandTenvironmentalTissuesTemerge.TInTadditionTtoTgovernment

capitalTspendingTcuts,TthereTwasTlittleTenthusiasmTforTmajorTprojectsTinTtheTprivate

sector.TTheTresultsTwereTaTmajorTdownturnTinTtheTconstructionTindustryTwithTmoreTtha

500,000TconstructionTrelatedTjobsTlost,TandTmoreTthanT16,000TconstructionTcompanies

becomingTinsolvent” (Townsend, 1998).

AfterT1996TsituationsTimprovedTandTmanyTprivateTcompaniesTstartedTtoTtakeTsomeTmaj

orTinvestmentTprojectTbecauseTofTsomeTbetterTcontractualTclausesTintroducedTbyTclientsT

andTrisksTwereTalsoTdistributedTprudently.TAllTtheTbarriersTinTprocurementTprocessTwere

TsoughtTafterTandTslowlyTtheyTstartedTtoTtackleTthem.TSomeTbarriersTlikeTclient’sTroleT

inTmanagement,TmanagementTofTprojectTprocesses,TfragmentationTofTconstructionTindustr

y,TcompetitiveTtenderingTetc.

DuringTthisTperiodTriseTinTdesignTandTbuildTcontractsTandTmanagementTcontractingTwas

TseenTandTpeopleTalsoTstartedTtoTcollaborateTwithTeachTotherTinTtheTformTofTpartnershi

pTandTalliance.

• PhaseT5:TSustainedTeconomicTgrowth,TfollowedTbyTaTrecessionT(2000-2010)

ThisTdecadeTshowedTaTboomTinTtheTconstructionTindustryTinTformTofTbigTbudgetedTpro

jectsTbeingTsanctionedTandTstartedTtheTwokTfromTplanTtoTprogressTuntilTtheTlaterThalfT

ofTtheTdecadeTJuneT2008-

TDecT2009,TitTwasTtheTbiggestTfinancialTcrisisTsinceTtheT1950s.ThisTperiodTsawTtremen
dousTgrowthTinTconstructionTmanagementTandTusageTofTdesignTandTbuildTroute.TThisT

mayTbeTtheTresultTofTglobalizationTinTwhichTbiggerTbuildingsTwereTrequiredTinTaTshort

erTperiodTofTtimeTwhichTrequireTproperTmonitoringTofTtheTscheduleTandTcost.T(Larmour

2011)TarguedTinThisTstudyTthatTitTisTtooTearlyTtoTjudgeTtheTimpactTofTrecessionTonTth

eTprocurementTinTtheTconstructionTindustryTbecauseTofTtheTrecessionTthereTwasThugeTri

seTinTselectionTofTdesignTandTbuildTasTprocurementTrouteTbecauseTofTitsTprudentTriskT

allocationTandTalsoTimprovedTtheTconsultantTfeesTforTaTprojectTbecauseTtheTconsultantT

alsoThasTtoTdetermineTtheTriskTinvolvedTasThisTresponsibility.

(Larmour,

2011)TstatedTthatT“thisTdecadeTalsoTsawTaTshiftTinTtheTprocurementTmethodTfor

publicTsectorTprojects.TTheTincreasedTuseTofTprivateTfinanceTtoTfundTpublicTprojects,Tan

dTa

theTdesireTtoTmeetTtheTpartnering”.

ReviewTofTalternativeTappro
Author Year

TheTNationalTEconomicTDevelopmentTOrganization(NEDO)T 1985

SkitmoreTand
1988 IntroductionTofTDiscriminateTanalysisTtechn
Marsden

BrandonTetTal. 1988
basedTselectionTtechniqueTi.e.TIntroductio
Franks 1998

Singh 1990 TwoTsystems:TDiscriminateTanalysisTtechn

BennettTand
1990
Grice wh
 MohsiniT 1993

GordonT 1994

LiuT 1994

ChanTetTal.T 1994 ATmodelTutilizingTtheTBennettTand

LoveT 1996

LoveTetTal.T 1998

DecisionTmatrix-basedTm
Dell’IsolaTetTal.T 1998

TuckerTand
1999
Ambrose

AlhazmiTand
2000
Mccaffer

ChanTetTal.T 2001

CheungTetTal.T 2001
2.3TTypesTofTprocurementTmethods

(Larmour, 2011)TstatedTthatT

“OneTofTtheTimpactsTofTtheTmoveTawayTfromTtraditional

contractsTareTtheTincreasingTfragmentationTofTtheTindustry.TItThasTbecomeTmore

commonTforTcertainTpackagesTtoTbeTsub-contractorTdesigned,TresultingTinTaTlossTof

skillsTwithinTconsultantTpractices.TTheTfragmentationTofTtheTindustryTwhilstTenabling

theTdevelopmentTofTspecialistTteamsTmayTprecludeTtheTuseTofTsomeTprocurement

systemsTinTtheTfutureTandTmayTbeTdetrimentalTtoTsomeTprojects.”

WhenTselectingTaTprocurementTmethod,TseveralTfactorsThasTtoTbeTseenTonTtheTbasisTof

theTtypeTofTclient,TdevelopmentTandTfundingTpatternTforTtheTproject.TOnTthe

otherThand,TbeforeTaTprocurementTmethodTisTselected,TclientThasTtoTdevelopTaTprojectT

strategyTwhichTwillTallowTinfluenceTtheTselectionTofTtheTcorrectTorTappropriateTprocure

mentTroute.

(Davis, 2008)TclassifiedTprocurementTsystemsTasTtheTfollowingTtwoTmajorTmethods

1.TTraditionalTProcurementTMethodT(Separated);

2.TNon-TraditionalTProcurementTMethodTwhichTincludeTtheTfollowingTthree

methods

A.TDesignTandTConstructTProcurementTMethodT(Integrated);

B.TManagementTProcurementTMethodT(Packaged);Tand

C.TPublicTPrivateTPartnershipTProcurementTMethod
(Mathonsi, 2012)TstatedTthatToverTtheTpastTnumberTofTyears,Tthe

constructionTindustryThasTundergoneTchangesTinTaTmannerTneverTseenTbefore.TThe

increasedTsizeTandTcomplexityTofTtheTconstructionTprojects,TfinancialTchallenges,

politicalTandTsocialTconsideration,TandTinformationTtechnologyTareTjustTsomeTofTthe

changesTthatThaveTbeenTtakingTplace.TTheseTchangesThadTledTtoTtheTdevelopmentTof

alternativeTprocurementTsystemsTotherTthanTtheTfamousTtraditionalTone.TAlthoughTthe

developmentTofTnon-traditionalTprocurementTsystemsTseemedTtoTbeTtheTfavoriteTto

mostTclientsTofTtheTconstructionTindustry,TItTmust,Thowever,TbeTemphasizedTthat

thereTisTnotTyetTaTspecificTmethodTusedTtoTselectTtheTmostTappropriateTprocurement

method.

(Masterman, 2002)TdefinesTaTnon-traditionalTprocurementTsystemTasTaTdiversified

contemporaryTprocurementTsystem(s)TthatTnotTonlyTconsidersTdesignTand

construction,TbutTalsoTconsidersTfinancing,ToperatingTandTfacilityTmanagement.

2.3.1TTraditionalTProcurementTMethodT(Separated)

(Mathonsi, 2012)TstatedTthatTthisTmethodTisTcalledT“traditional”TbecauseTit

hasTbeenTinTexistenceTforTaTlongTtimeTandThasTbeenTtheTonlyTchoiceTavailableTfor

mostTclientsTofTtheTconstructionTindustryTforTmanyTyears.TUsingTthisTmethod,Tthe

clientTentersTintoTanTagreementTwithTtheTdesignTconsultantT(anTarchitectTor

engineer)TtoTactuallyTcarryToutTtheTdesignTworkTandTprepareTcontractTdocuments.

FollowingTtheTcompletionTofTthisTphase,TtheTcontractorTisTthenTappointedTbasedTupon

theTowner’sTcriteriaTandTtheTownerTentersTintoTaTcontractTwithTtheTsuccessful
contractorTforTtheTassemblyTofTtheTprojectTelements.TInTessence,TtheTclientTis

underTtwoTcontractualTobligations;TtheTdesignTprofessionalTandTtheTcontractor.

(Larmour, 2011)TarguesTthatTthisTmethodTisTusedTtoTdescribeTprocurementTwhich

involvesTtheTclient’sTdesignTteamTproducingTaTfullTconstructionTdesign.TThe

contractorTwillTthenTtenderTforTtheTconstructionTofTthisTpackage.TTraditionalTprocuremen

tTmethodTusuallyTresultsTinTmaximumTcostTcertaintyTforTaTprojectTwithTaTfullyTdefined

project,TbutTaTlongTprogrammeTasTdesignTandTconstructionTareTsequential.TItTisTalso

inflexibleTinTtermsTofTdesignTchanges,TwhichTwillTcanTresultTinTexcessiveTcost

andTprogrammeTimplications.

(Davis, 2008)TstatedTthatTinTtheTtraditionalTapproach,TtheTemployerTacceptsTthat

designTworkTwillTgenerallyTseparateTfromTconstruction,TconsultantsTareTappointedTfor

designTandTcostTcontrol,TandTtheTcontractorTisTresponsibleTforTcarryingToutTtheTworks.

ThisTresponsibilityTextendsTtoTallTworkmanshipTandTmaterialsTandTincludesTallTworkTby

subcontractorsTandTsuppliers.TTheTcontractorTisTusuallyTappointedTbyTcompetitive

tenderingTonTcompleteTinformationTbutTmayTifTnecessaryTbeTappointedTearlierTby

negotiationTonTtheTbasisTofTpartialTorTnotionalTinformation.
 FigureT1ProcurementTmethodTcharacteristics,Tsource:TRowlinsonTetTal.,T(1999)

FigureT2TraditionalTprocurementTmethod,Tsource:TDavisTetTal.,T(2008)

(Davis, 2008)TarguesTthatTtheTtraditionalTprocurementTmethod,TusingTtwo-stage

tenderingTorTnegotiatedTtendering,TisTsometimesTreferredTtoTasTtheT“Accelerated
TraditionalTMethod”T–

TthisTisTwhereTtheTdesignTandTconstructionTcanTrunTinTparallelTtoTa

limitedTextent.TWhilstTthisTallowsTanTearlyTstartTonTsite,TitTalsoTentailsTlessTcertaintyTa

bout

cost.TThereTareTthreeTtypesTofTcontractTunderTtheTtraditionalTprocurementTmethod

1.TLumpTsumTcontracts:TwhereTtheTcontractTsumTisTdeterminedTbeforeTconstructionTst

arts,TandTtheTamountTisTenteredTinTtheTagreement.

2.TMeasurementTcontracts:TwhereTtheTcontractTsumTisTaccuratelyTknownTonTcompletio

nTandTafterTre-measurementTtoTsomeTagreedTbasis.

3.TCostTreimbursement:TwhereTtheTcontractTsumTisTarrivedTatTonTtheTbasisTofTtheTact

ualTcostsTofTlabor,TplantTandTmaterials,TtoTwhichTisTaddedTaTfeeTtoTcover

ToverheadsTandTprofit.

2.3.1.1TLumpTsumTcontractTmethod
(Davis, 2008)TstatedTthatTtheTcontractorTundertakesTtoTcarryToutTaTdefinedTamount

ofTworkTinTreturnTforTanTagreedTsum.TThisTcanTbeTaTfixedTamountTnotTsubjectTto

recalculation,TinTwhichTcaseTthereTwouldTbeTnoTopportunityTforTtheTemployerTtoTmake

variations.TTheTsumTisTlikelyTtoTbeTsubjectTtoTlimitedTfluctuations,TusuallyTtoTcoverTta

etc.TchangesTnotTforeseeableTatTtheTtimeTofTtendering.TTheTsumTmayTbeTsubjectTto

fluctuationsTinTtheTcostTofTlabor,TplantTandTmaterialsT–TtheTso-calledTfluctuations

provision.TRecoveryTmayTbeTuseTofTaTformula,TorTbyTcheckingTinvoices.
(El Wardani,

2004)TstatedTthatTlumpTsumTcontractsTwithTquantitiesTareTpricedTonTtheTbasis

ofTdrawingsTandTaTfirmTbillTofTquantities.TItemsTwhichTcannotTbeTaccuratelyTquantified

canTbeTrecoveredTbyTanTapproximateTquantityTorTaTprovisionalTsum,TbutTtheseTshouldT

be

keptTtoTaTminimum.

2.3.1.2TMeasurementTcontractTmethod

(Davis,

2008)TarguesTthatTmeasurementTcontractsTareTalsoTreferredTtoTasT„remeasurementTcontra

cts‟.TThisTisTwhereTtheTworkTwhichTtheTcontractorTundertakesTtoTdo

cannotTforTsomeTgoodTreasonTbeTaccuratelyTmeasuredTbeforeTtendering.TTheTpresumptio

isTthatTitThasTbeenTsubstantiallyTdesigned,TandTthatTreasonablyTaccurateTpictureTofTthe

amountTandTqualityTofTwhatTisTrequiredTisTgivenTtoTtheTtenderer.TProbablyTtheTmostTe

ffectiveTmeasurementTcontracts,TinvolvingTleastTriskTisTtoTtheTemployer,TareTthoseTbase

onTdrawings‟TwithTapproximateTquantities.

MeasurementTContractTisTbasedTonTtheTspecificationTprovidedTbyTtheTclientTandTtheT‘S

cheduleTofTRate’TbyTtheTcompetentTauthorityTofTtheTstateTorTcountry.TSometimesTtheyT

alsoTconsiderTtheTratesTprovidedTbyTtheTclientTduringTtheTpre-

bidTmeetingsTtoTmakeTtheTtenderingTmoreTcompetitive.TThisTtypeTofTcontractTisTaccept

edTwhenTtheTclientTisTinTshortageTofTtimeTandTreadyTtakeTtheTriskTwithinTtheTprovide
dTbidTbyTtheTcontractor.TThisTtypeTofTcontractTisTpreferredTforTsmallTandTconfinedTjob

s.

TheTestimationTisTalsoTdependentTonTtheTexpertiseTofTtheTquantityTsurveyor.TTheTgreate

rTexperiencedTquantityTsurveyorTmoreTaccurateTwillTbeTtheTestimateTandTalsoThelpsTthe

TclientTfromTbearingTanyTkindTofTunknownTriskTinTquantityTandTcostTboth.

2.3.1.3TCostTreimbursementTcontractTmethod

(Davis, 2008)TillustratedTthatTthisTtypeTofTcontractTsometimesTreferredTtoTasT“Cost

Plus”Tcontracts.TTheTcontractorTundertakesTtoTcarryToutTanTindeterminateTamountTofTwo

rkTonTtheTbasisTthatTtheyTareTpaidTtheTprimeTorTactualTcostTofTlabor,Tplant,TandTmate

rials.TIn

addition,TtheTcontractorTreceivesTanTagreedTfeeTtoTcoverTmanagement,ToverheadsTand

profit.THybridsTofTtheTcostTreimbursementTcontractsTinclude

•TCost-plusTpercentageTfee

TheTfeeTchargedTisTdirectlyTrelatedTtoTtheTprimeTcost.TItTisTusuallyTaTflatTrate

percentage,TbutTitTcanTalsoTbeTonTaTslidingTscale.THowever,TtheTcontractorThasT

no

realTincentiveTtoTworkTatTmaximumTefficiency,TandTthisTvariantTisTonlyTlikelyTt

beTconsideredTwhereTtheTrequirementsTareTparticularlyTindeterminateTprecontract.

•TCost-plusTfixedTfee
 TheTfeeTtoTbeTchargedTisTtenderedTbyTtheTcontractor.TThisTisTappropriateTprovid

ed

thatTtheTamountTandTtypeTofTworkTisTlargelyTforeseeable.TTheTcontractorThasTan

incentiveTtoTworkTefficientlyTsoTasTtoTremainTwithinTtheTagreedTfee.

•TCost-plusTfluctuatingTfee

TheTfeeTvariesTinTproportionTtoTtheTdifferenceTbetweenTtheTestimatedTcostTandTt

he

actualTprimeTcost.TTheTassumptionTisTthatTasTtheTlatterTcostTincreases,Tthe

contractor’sTsupposedTinefficiencyTwillTresultTinTaTfeeTwhichTdecreases.TThis

approachTdependsTuponTthereTbeingTaTrealisticTchanceTofTascertainingTtheTamoun

andTtypeTofTworkTatTtenderTstage.

(Mathonsi, 2012)TstatedTthatTinTorderTforTtheTclientTtoTobtainTa

constructedTfacility,TtendersTfromTtraditionalTprocurementTmethodTareTinvitedTin

oneTofTtheTthreeTfollowingTmethods.

T•TOpenTtendering

TThisTisTaTprocedureTthatTallowsTpracticallyTanyTcontractorTtoTsubmitTaTtenderT

for

theTwork.TThisTprocedureTinvolvesTeitherTtheTclientTorTconsultantT(onTbehalf

ofTtheTclient)TplacingTaTpublicTadvertisementTgivingTaTbriefTdescriptionTof

theTwork.TNormallyTtheTclientTwillTrequireTaTcashTdepositTwhenTcontract

documentsTareTrequestedT(Pilcher, 1992).
 •TSelectiveTtendering

TThisTconsistsTofTtheTclientTdrawingTupTaTshortlistTofTcontractorsTthatTare

knownTtoThaveTtheTappropriateTqualificationsTtoTcarryToutTtheTwork

satisfactorily.TThoseTcontractorsTwhoTseekTtoTbeTlistedTareTthenTaskedTfor

furtherTdetailsTconcerningTtheirTtechnicalTcompetence,TfinancialTstanding,

resourcesTatTtheirTdisposalTandTrelevantTexperience.TPre-qualifying

contractorsTwhoTareTonTtheTlistTareTinvitedTtoTtenderT(Pilcher, 1992).

•TNegotiatedTtendering

TThisTmethodTisTappliedTinTseveralTorTdifferentTcontexts,TbutTtheTessenceTis

thatTtendersTareTobtainedTbyTtheTclientTinvitingTaTsingleTcontractorTofThis/her

choiceTtoTsubmitTaTtenderTforTaTparticularTproject (Agha, 2013).

2.3.2TDesignTandTconstructTprocurementTmethodT(Integrated)

(Masterman, 2002)TdefineTtheTdesignTandTconstructTprocurementTmethodTasT"An

arrangementTwhereToneTcontractingTorganizationTtakesTsoleTresponsibility,TnormallyTonTa

lumpTsumTfixedTpriceTbasis,TforTtheTbespokeTdesignTandTconstructionTofTaTclient's

project".

(Mathonsi, 2012)TstatedTthatTthisTmethodTisTaTsystemTwhereTone

organization,TusuallyTbutTnotTexclusivelyTtheTcontractor,TtakesTresponsibilityTforTthe

designTandTconstructionTofTtheTproject,TinTtheoryTatTleast.TTheTclientTdealsTonlyTwithT

one

organization.
(El Wardani, 2004)TstatedTthatTseveralTdefinitionsThaveTbeenTdevelopedTforTtheTvarious

designTandTconstructTteamsTprocurementTapproaches. (Douglas D. Gransberg,

2004)TindicatedTthatTtheTfixed–

priceTapproachTtakesTintoTconsiderationTonlyTtheTpriceTasTtheTsoleTcriterionTforTselectio

n.

ATtwo-

stepTselectionTapproachTconsistsTofTaTprequalificationTofTtheTprospectiveTdesignTandTco

nstructTteamsTusingTaTRequestTforTQualificationT(RFQ),TfollowedTbyTanTevaluationTofTt

heTpriceTandTtechnicalTaspects.TThisTrepresentsTtheT“bestTvalue”TapproachTandTtheTwei

ghtsTgivenTtoTeachTofTtheTtechnicalTandTfinancialTcriteriaTdiffersTfromToneTorganization

TtoTtheTother.TItTisTworthTnotingTthatTmanagementTaspects,TanTorganization’sTfinancialT

standing,TinTadditionTtoTpreviousTdesign

andTconstructTteamTexperienceTareTalsoTconsideredTinTaTbestTvalueTprocurementTapproa

ch (Douglas D. Gransberg, 2004).

FigureT3SelectionTmethodologyTcontinuum,Tsource:TMolenaarTandTGransbergT(2001)

(Davis,

2008)TstatedTthatTwithTdesignTandTconstructTprocurementTmethod,TaTcontractorTacceptsT

responsibilityTforTsomeTorTallTofTtheTdesign.TThereTshouldTbeTexpressTreferenceTtoTthis
TinTtheTcontract,TandTtheTextentTofTdesignTliabilityTshouldTalwaysTbeTsetToutTasTclearl

yTasTpossible.TUnlessTtheTcontractTstatesTotherwise,TitTseemsTthatTtheTliabilityTforTdesi

gnTisTanTabsoluteTliabilityTunderTwhichTtheTcontractorTwarrantsTfitnessTforTtheTpurpose

Tintended.

TheTclient’sTrequirementsTmightTbeTstatedTbrieflyTandTsimply,TperhapsTlittleTmoreTthan

Ta

siteTplanTandTscheduleTofTaccommodation.TOnTtheTotherThand,TtheyTmayTbeTaTdocume

nt

ofTseveralThundredTpagesTwithTpreciseTspecifications.TTheTcontractor’sTinputTmightTbe

restrictedTtoTtakingTaTschemeTdesignTsuppliedTbyTtheTclientTandTdevelopingTdetailsTand

productionTinformation.TItTisThoweverTbetterTtoTspecifyTinTtermsTofTtheTperformance

requirementTratherTthanTtoTprescribeTinTdetail,TbecauseTthisTleavesTtheTresponsibilityTfor

designTandTselectionTfirmlyTwithTtheTcontractor (Agha, 2013).

FigureT4PreTandTpost-novationTcontracts,Tsource:TDavisTetTal.,T(2008)
(Rowlinson,

1987)TsuggestedTthatTdesignTandTconstruct/buildTcontractorsTorganizeTtheirTactivitiesTinTt

hreeTdifferentTwaysTasTtheTfollowing

1. PureTdesignTandTbuild

TheTcontractorTstrivesTforTaTcompleteTandTself-

containedTapproachTwhereTallTtheTnecessaryTdesignTandTconstructionTexpertiseTreside

sTwithinToneTorganizationTthatThasTsufficientTresourcesTtoTcompleteTanyTtaskTthatTar

ises.TInTsuchTorganizations,TallTaspectsTofTdesignTandTconstructionThaveTtheTcapacit

yTtoTbeThighlyTintegrated.

2. IntegratedTdesignTandTbuild

InTthisTform,TaTcoreTofTdesignersTandTprojectTmanagersTexistsTwithinTtheTorganizati

on,TbutTthisTtypeTofTcontractorTisTpreparedTtoTbuyTinTdesignTexpertiseTwheneverTne

cessary.TAlthoughTmoreTeffortTisTneededTtoTintegrateTtheTinternalTandTexternalTmem

bersTofTtheTdesignTandTbuildTteam,Tin-houseTprojectTmanagersTareTemployedTtoTco-

ordinateTtheseTfunctions.

3. FragmentedTdesignTandTbuild

ManyTcontractors,TbothTlargeTandTsmall,TandTincludingTnationalTbuilders,Toperate

aTfragmentedTapproachTtoTdesignTandTbuildTprojects,TwherebyTexternalTdesign

consultantsTareTappointedTandTcoordinatedTbyTin-houseTprojectTmanagersTwhose

otherTmainTtaskTisTtoTtakeTandTrefineTclientTbriefs.TUnderTthisTregime,TmanyTofTth

integrationTandTco-ordinationTproblemsTofTtraditionalTapproachTareTlikelyTto
manifestTthemselvesTalongTwithTsomeTroleTambiguityTamongTtheTprofessionsTasTthey

comeTtoTtermsTwithTtheTbuilderTasTleaderTofTtheTdesignTandTconstructionTteam.

(Larmour, 2011)TstatedTthatTthisTmethodTisTusedTtoTdescribeTprocurementTwhich

involvesTcontractorTdesignTandTconstruction.TItTisTgenerallyTassociatedTwithTgoodTco

st

certaintyTandTaTminimizationTofTriskTtoTtheTclient. (Turner,

1990)TstatedTthatTaTnumberTof

variationsTofTdesignTandTconstructTexist,TwhichTincludeT

1. Direct

InTthisTcaseTnoTcompetitionTisTobtainedTinTtenders.TSomeTappraisalTofTtheTpossi

ble

competitorsTmayTbeTmadeTbeforeTtenderingTbutTonlyToneTtenderTisTobtained.

2. Competitive

TendersTareTobtainedTfromTdocumentsTthatTareTpreparedTtoTenableTseveral

contractorsTtoTofferTcompetitionTinTdesignsTandTinTprices.

3. DevelopTandTconstruct

ConsultantsTdesignTtheTbuildingTrequiredTtoTaTpartialTstage,ToftenTreferredTtoTas

“scopeTdesign”,TthenTcompetitiveTtendersTareTobtainedTfromTaTselectTlistTof

contractorsTtoTdevelopTandTcompleteTtheTdesignTandTconstructTtheTbuilding.TThe

amountTofTconsultantTdesignTcanTvaryTdependingTonTtheTclient’sTneeds.

4. PackageTdealT/TTurnkey
ThisTmethodTisToftenTusedTwhereTtheTcontractorsTcompetingTwillTuseTaTsignifica

ntTpartTofTtheirTownTorTanotherTproprietaryTbuildingTsystemTorTtheyTwillTbeTco

nstructingTvariationsTofTaTrepetitiveTtheme.TThereTisTlimitedTscopeTforTinnovation

TwhenTthisTmethodTisTused.TSomeTcontractorsTmayTofferTtoTfindTaTsite,TtoTsell,

TmortgageTorTleaseTtheirTproduct,TobtainTapprovalsTetc.TatTaTriskTtoTthemselvesT

orTatTaTchargeTtoTtheTclient.

5. Novation

SometimesTreferredTtoTaTdesign,TnovateTandTconstruct.TThisTisTwhereTtheTcontra

ctorTtakesToverTfromTtheTclientTaTpreviousTcontractTforTtheTdesignTwork,Tcompl

etesTtheTdesignTandTconstructsTtheTwork.

(El Wardani,

2004)TclassifiedTtheTdesignT&TconstructTprocurementTmethodTintoTtheTfollowingT

procurementTmethods

1. SoleTsourceTselection

TheTsoleTsourceTprocurementTmethodTinvolvesTtheTdirectTselectionTofTtheTdesign

andTbuild/constructTteamTwithoutTproposals.

2. Qualifications-basedTselection

InTaTqualifications-basedTselection,TtheTownerTselectsTtheTmostTqualifiedTdesign

andTconstructTteamTthroughTanTRFQTandToftenTnegotiatesTonlyTwithTthatTentityT

to
aT“fairTandTreasonable”Tprice.TSelectionTofTtheTteamTisTprimarilyTbasedTon

qualitativeTcriteriaTsuchTasTpastTperformance,TdesignTandTbuildTteamTreputation,

technicalTcompetenceTandTfinancialTstability.

3. FixedTbudget/bestTdesignTselection

TheTfixedTbudget/bestTdesignTisTaTprocurementTmethodTwhereTtheTownerTspecifie

theTprojectTbudgetTduringTtheTRFPTprocess.TTheTdesignTandTbuildTteams

competeTbyTplacingTasTmuchTscopeTasTtheyTcanTinTtheirTsubmittedTproposals.TT

he

designTandTbuildTteamsTareTselectedTbasedTonTqualitativeTandTtechnicalTaspects.

4. BestTvalueTselection

TheTbestTvalueTprocurementTmethodTisTanTapproachTwhereTtheTdesignTandTbuild

teamsTrespondTtoTtheTownerTbyTsubmittingTproposalsTthatTareTprimarilyTevaluate

basedTonTtheTtechnicalTaspectsTtogetherTwithTtheTassociatedTcostTofTtheTproject.

NegotiationsTmayTtakeTplaceTafterTtheTproposalTsubmittalsTphase.TTheTowner

selectsTtheTproposalTthatToffersTtheTbestTvalue.

5. LowTbidTselection

TheTlowTbidTisTaTprocurementTmethodTwhereTtheTownerTprimarilyTselectsTthe

designTandTbuildTteamTbasedTonTtheTprojectTvalueTandTrelatedTcostTitems.TCost
 criteriaTrepresentTmoreTthanT90%TofTtheTdesignTandTbuildTteamTprocurement

selectionTprocess.

2.3.3TManagementTprocurementTmethodT(Packaged)

(Larmour, 2011)TstatedTthatTthisTmethodTisTusedTtoTdescribeTprocurementTwhich

involvesTaTcontractorTprovidingTmanagementTservices.TTheTtwoTmainTvariantsTof

thisTareTManagementTContractingTandTConstructionTManagement,TwhichTareTboth

veryTdifferentTapproaches.TInTManagementTContracting,TtheTcontractorTprovides

managementTservicesTtoTcontrolTandTcoordinateTallTsiteTactivities,Tsubletting

worksTtoTsuitableTcontractorsTonTaTcompetitiveTbasis.TInTConstructionTManagement

theTclientTentersTintoTseparateTcontractsTwithTtheTconstructionTmanager,Tdesigners,

andTtradeTcontractors.TConstructionTManagementTisTgenerallyTassociatedTwith

programmeTsavings,TandTaThigherTdegreeTofTcontrolTforTtheTclientTinTtermsTof

designTquality,TbutTlessTcostTcertainty.

(Mathonsi, 2012)TstatedTthatTunderTaTmanagement-orientedTprocurement

system,TtheTmanagementTofTtheTprojectTisTcarriedToutTbyTanTorganizationTworking

withTtheTdesignerTandTotherTconsultantsTtoTproduceTtheTdesignsTandTmanageTthe

physicalToperationsTwhichTareTcarriedToutTbyTcontractors.TWhenTusingTsystems

withinTthisTcategory,TtheTclientTwillTneedTtoThaveTaTgreaterTinvolvementTwithTthe

projectTthanTwhenTemployingTanyTofTtheTotherTmethods.

(Davis, 2008)TstatedTthatTseveralTvariantsTofTmanagementTprocurementTformsTexist,

whichTinclude;TmanagementTcontracting,TconstructionTmanagementTandTdesignTand

manage.TThereTareTsomeTsubtleTdifferencesTbetweenTtheseTprocurementTmethods.TInTthe
caseTofTmanagementTcontracting,TtheTcontractorThasTdirectTcontractualTlinksTwithTallTth

worksTcontractorsTandTisTresponsibleTforTallTconstructionTwork.TInTconstruction

management,TaTcontractorTisTpaidTaTfeeTtoTprofessionallyTmanage,TdevelopTaTprogramm

andTcoordinateTtheTdesignTandTconstructionTactivities,TandTtoTfacilitateTcollaborationTto

improveTtheTproject’sTconstructability.

2.3.3.1TManagementTcontractingTprocurementTmethod

((CIOB),

2010)TstatedTthatTmanagementTcontractingTworksTbyThavingTaTcontractorTmanagingTaTse

riesTofT“works”TcontractorsTorTsubcontractors.TAdvantagesTincludeTearlyTinvolvementTin

TtheTproject,TandTtheTmanagementTcontractorTcanTalsoTappointTtrustedTsubcontractorsTth

eyThaveTworkedTwithTpreviouslyTratherTthanTriskTanTunknownTfactor.TDisadvantagesTin

cludeTtheTlackTofTaTsingleTpointTofTresponsibilityTforTbothTdesignTandTconstructionTpha

ses,TwhichTopensTtheTpossibilityTforTdisputesTtoTarise.TTheTclientTappointsTanTindepend

entTprofessionalTteam,TandTalsoTaTmanagement

contractor.TTheirTinvolvementTatTpre-constructionTstagesTwillTbeTasTadviserTtoTtheTteam,

andTduringTconstructionTtheyTwillTbeTresponsibleTforTexecutingTtheTworksTusingTdirect

worksTcontracts.TWithTthisTtypeTofTcontract,TitTisTpossibleTtoTmakeTanTearlyTstartTon-

site

andTachieveTearlyTcompletion.TBecauseTofTitsTflexibility,TitTallowsTtheTclientTtoTchange

theTdesignTduringTconstructionTbecauseTdrawingsTandTmattersTofTdetailTcanTbeTadjusted

andTfinalizedTasTtheTworkTproceeds.
TheTmanagementTcontractorTundertakesTtheTworkTonTtheTbasisTofTaTcontractTcostTplan

preparedTbyTaTquantityTsurveyor,TprojectTdrawings,TandTaTprojectTspecification.TThe

clientTacceptsTmostTofTtheTriskTbecauseTthereTisTnoTcertaintyTaboutTcostsTandTprogram

me.TCompetitiveTtendersTforTworksTpackagesTfollowTlaterTandTtheyTwillTusually,Tthough

Tnot

always,TwillTbeTlumpTsumTcontractsTwithTbillsTofTquantities (Agha, 2013).

2.3.3.2TConstructionTmanagementTprocurementTmethod

((CIOB), 2010)TstatedTthatTconstructionTmanagementTisTnotTaTwidelyTused

procurementTmethodT–TitsTmainTreasonTforTexistenceTisTforTuseTonTlargeTand/orTvery

complexTconstructionTworks.TTheTsystemTworksTbyThavingTaTconstructionTmanagerTasT

pointTofTcontact,TwhoTwillTtypicallyTbeTheadTofTaTdesignTteam,TwhoTco-ordinatesTthe

projectTinTtermsTofTtheTvariousTconstructionToperationsTonTsite.TConstruction

managementTisTgenerallyTconsideredTtoTbeTtheTleastTadversarialTformTofTprocurement,

andTisToftenTusedTwhenTdesignTneedsTtoTrunTinTtandemTwithTconstruction.
 FigureT5TConstructionTmanagementTprocurementTmethod,Tsource:TDavisTetTal.,T(2008)

2.3.3.3TDesignTandTmanageTprocurementTmethod
(Turner,

1990)TstatedTthatTaTdesignTandTmanageTprocurementTmethodTisTsimilarTtoTmanagement

Tcontracting.TUnderTaTdesignTandTmanageTcontract,TtheTcontractorTisTpaidTaTfeeTandTa

ssumesTresponsibility,TnotTonlyTforTworksTcontractors,TbutTalsoTforTtheTdesignTteam.TT

heTcommonTvariationsTofTdesignTandTmanageTare

• Contractor

ATprojectTdesignTandTmanagementTorganizationTdesignTandTmanagesTtheTwork,

generallyTforTaTfeeTandTdeliversTtheTprojectTbyTemployingTworksTcontractorsTas

Tits

subcontractorsTtoTdesign/orTconstruct.

• Consultant
 ATprojectTdesigner/managerTisTtheTclient’sTagent,TwhoTdesignsTandTmanagesTthe

work,TobtainsTsubcontractTtendersTfromTworksTcontractorsTwhoTthenTeachTenter

intoTaTdirectTcontractTwithTtheTclient.

2.3.4TPublicTprivateTpartnershipTprocurementTmethodT"PPPP"

(Larmour,

2011)TstatedTthatTpublicTprivateTpartnershipT(PPP)TprocurementTmethodTinvolvesTtwoTor

TmoreTorganizationsTworkingTtogetherTtoTimproveTperformanceTthroughTagreeingTmutual

Tobjectives,TdevisingTaTwayTforTresolvingTanyTdisputes,TandTcommittingTthemselvesTtoT

continuousTimprovement,TmeasuringTprogressTandTsharingTgainsTandTpains.TExamplesTin

cludeTframeworkTagreementsTandTjointTventures.TThisTisTaTrelativelyTnewTformTofTproc

urementTandTalthoughTdiscussedTinTtheTLathamTreportTinTtheT1990‟s,ThasTtakenTaTlong

TtimeTtoTcomeTintoTgeneralTuse.TIt

isTmoreTcommonlyTseenTwithinTlargeTcivilTengineeringTprojects,TthanTindividualTbuildin

gTprojects.

((CIOB), 2010)TbelievesTthatTthisTmethodTisTtheT“mostTefficientTwayTof

undertakingTallTkindsTofTconstructionTworkTincludingTnewTbuildingsTandTinfrastructure,

alterations,TrefurbishmentTandTmaintenance”.TLong-termT(strategic)Tpartnering

commitmentsTshowcaseTtheTrealTbenefitsTofTtheTprocurementTmethod,TalthoughTshort-

termT(project-specific)TpartneringThasTalsoTprovedThighlyTbeneficialTonTindividual

projects.

2.4TFactorsTaffectingTtheTselectionTofTprocurementTmethod
(Shiyamini, 2006)TfocusedTonTtheTselectionTcriteriaTinTtermsTofTclientTrequirements,

projectTcharacteristics,TandTexternalTenvironment,TthusTensuringTthatTtheTselectionTcriteri

haveTbeenTfocusedTatTmacroTlevel.TTheTresultsTofTfactorTanalysisTrevealedTnineTsignific

ant

factorsTfromTclientTrequirementsTwhichTareTriskTmanagement,TtimeTavailabilityTand

predictability,TpriceTcertainty,TpriceTcompetition,Taccountability,TflexibilityTforTchanges,

qualityTofTworks,TresponsibilityTandTparties‟Tinvolvement,TandTfamiliarity.TSixTfactors

fromTtheTprojectTcharacteristicsTwhichTareTprojectTcostTandTfundingTmethod,Tproject

complexity,TprojectTtype,TtimeTconstrains,TdegreeTofTflexibility,TandTpaymentTmodality.

FiveTfactorsTfromTtheTexternalTenvironmentTwhichTareTmarketTcompletion,Teconomic

conditionsTandTtheTfiscalTpolicy,Ttechnology,TsocioTculturalTsuitability,TandTregulatory

environment.

(Maizon,

2006)TpresentsTtheTvariousTfactorsTinfluencingTtheTselectionTofTprocurementTsystemsTinTt

heTMalaysianTconstructionTindustry.TTheTselectionTcriteriaTthatTareTidentifiedTasTtheTmo

stTcommonTcriteriaTinfluencingTtheTchoiceTofTprocurementTmethodTareTtime,Tcontrollabl

eTvariation,Tcomplexity,TqualityTlevel,TpriceTcertainty,Tcompetition,TresponsibilityTdivision

,TriskTavoidance,TpriceTcompletion,TgovernmentTpolicyTandTclient’sTfamiliarityTinTaTpro

curementTmethod.

WorksTCited