Running Head: PROCUREMENT AND CONTRACT STRATEGY

[Name of Writer]
[Name of Institute]
Introduction
The below report is linked to the provided case of Dalrymple Quality Homes Ltd
(DQH), a property consultancy firm that is involved in refurbishment and extension activities
of an industrial property acquired by a client recently. The company has also established a
subsidiary, Dalrymple Industrial Developments Ltd (DID), which deals with the industrial
property division for the firm’s clientele. I have been appointed as the project manager for
this project. The refurbishment and extension project is basically divided into two separate
phases.
The initial stage involves recladding and refurbishing the existing four single storey
buildings that have a steel frame. The size range of the existent buildings are 2,500m2 to
8,000m2. The building units would be leased to the division of construction robotics, which
is known as Dalrymple Robotics Ltd. On the other hand, the second stage of the project is the
construction of two high bay steel-framed structures that are 50,000m2, alongside the
landscaping and infrastructure working upon the land acquired by the client that is next to the
industrial property.
The client is looking for planning permission for the high-bay steel-framed buildings
that are part of the industrial estate extension in the course of the refurbishment work. In
addition to this, the client is willing to start the implementation on the extension project as
soon as he receives the planning permission, but then again also wants to have the option of
postponing or deferring the construction process for an indefinite amount of time, if certain
business condition occur. The below report comprises of an analysis of different procurement
and contract strategies and selecting the most appropriate one according to the client’s
requirements.
Procurement Strategies
A strategy for procurement comprises of a plan that optimises the company’s
procurement operations, external spend, as well as many other value contributing factors with
a process which not only supports the corporate agenda overall but also assists in achieving
the final result of the process. If organisations do not have a well-defined procurement
strategy set up for their business endeavours, it becomes difficult or almost impossible for
them to gauge that whether or not their corporate strategy is in alignment with the
procurement organisation as well as the evaluation of the project progress (Jelodar, Yiu, and
Wilkinson, 2016).
According to research, it is advised that stratagems for procurements are to be devised
in accordance with the priorities of the project, the capability of the management as well as
the risk extent, which the clientele can agree to take. There are a few factors that are
necessary for evolving efficient strategies for procurement for establishing construction
projects (Shen, et. al, 2017). The factors are inclusive of client peculiarities integration,
analysis of the external factors, considering the different characteristics of the project, being
mindful of the issues related to costing, possessing the ability to initiate changes, in addition
to having the capability of evaluating time thoroughly, as construction related projects are
considered to be high time sensitive and are required to be completed or carried out within a
detailed time frame. There are three main procurement strategies are most likely to be used in
project procurement, traditional procurement strategy, management-based procurement
strategy and design-build procurement strategy (Sarhan, Pasquire, King, and Manu, 2018).
Traditional Procurement Strategy
The traditional strategy revolves around the contractor enterprising towards the
building process with regards to the designs offered by the clientele. Within this approach the
customer directly manages and appoints the consultants that move along with the services
related to the controlling of cost, design and contract administration. Moreover, the client has
complete liberty to put in place the key contract that is held responsible to carry out the
project related tasks, as well as all the materials and workmanship, regardless of the
appointed contractor outsourcing the subcontracting elements of the work to other contractors
(Davis, Jefferies, and Ke, 2017).
Design and Build Procurement Strategy
Another strategy used for procurement in construction is the design and build
strategy. This strategy is hardly used in twenty five percent of the projects, as stated by the
survey taken by the NBS (Lupton, 2019). Hence, the strategy is considerably used must less
often in comparison to the traditional strategy for procurement, then again with it is used
around ten times more than the management-based procurement strategies. The design and
build strategies include a number of different aspects to it. The design extent that is
undertaken by the design team of the employers directly determines the design responsibility
level of the contractors (Stanford, Molenaar, and Sheeran, 2016).
A contractor involved in a design and build strategy is able to proceed from the plan’s
outline, detailed specification and concept design. In this manner, the contractor has the
leverage to tender upon the grounds of the construction and design responsibility wholly, or
on the other hand, develop on the data offered by the customer’s design team within the ITT
(Ruparathna, and Hewage, 2015). Within this strategy, the liability of the contractor with
regards to the design can be limited with respect to the contract terms, and so diminishing or
negating the notion of the contractor as the liability point for construction and design.
Moreover, the client in this strategy does not have direct control upon the design’s detailed
aspects as well as the quality (Eriksson, 2017). The design and build strategy push the client
to trust on the buildability expertise of the contractor as well as ensure that the contractor is
more responsible towards the completion of project on time. In addition to this, the client is
required to have an independent administrator for contract in order to ensure that his interests
are protected in the duration or course of work, and also does not have a cost consultant, who
can help the client with the processes of valuation (Salem, Salman, and Ghorai, 2018).
Management-Based Procurement Strategy
The management-based procurement strategy is divided into three phases the prime
contracting, management contracting, and construction management. The point of parity in
all three with regards to being procurement approaches is the fact that the person responsible
for managing the entire process is chosen particularly grounded on the basis of his reputation
or expertise for having the ability to handle the processes of construction, instead of merely
the experience that he or she has in construction (Du, et. al, 2016).
A drawback that is often encountered while employing this procurement strategy,
which affects its efficiency is that the customers as well as their advisory committee have a
tendency to make changes within the contracts standard form in relation with representing a
risk balance, quite identical to traditional contracting. This is one clear reason why most of
the construction projects are not undertaken with this approach, in spite of offering clear
benefits (Hasnain, and Thaheem, 2016).
Contract Strategies
A contract is considered to be the main component of any procurement system, in
addition to being a vital element needed amongst two groups or parties that are willingly
collaborating to work together. A contract has an influence on the parties as well as the
occasion’s solemnity. The contract that are linked to constructions have the following
features listed within the contracts, the implementation of the construction operations,
arranging resources for the implementation and functioning of the construction operation
either through themselves or by sub-contractors. In addition to providing labour for carrying
out the operations of construction (Awuzie, and McDermott, 2016).
The contracts that the clients use can be of different types as well as can be linked to
different strategies. The strategy of contract is the outline of the key process components that
regulate in what manner or by what method the procurement of the project will occur.
According to various authors, it is established that different contract tactics or plans are
implemented for different types of projects. In addition to this, selecting a contract strategy
which is appropriate and in line with the project is the most crucial step of the entire process.
This strategy, if put in place correctly, impacts the project progress and drives it in the right
direction (Adediran, and Windapo, 2016). When a good policy or stratagem is implemented it
enhances the management supply with regards to delivering minimum cost with maximised
value, furthermore determining the manner in which the best practices of the process can be
implemented and developed for the contract management. The importance of contract
strategies is highly stressed upon by various authors, moreover, they have put emphasis on
the description that its an amalgamation of various tasks and activities that moves from
determining the following client aspects:
 Project objectives
 Responsibilities
 Priorities
 Types of contracts
 Organisational structure
 Contractor selection
 Condition laid down in the contract
 Risk allocation
 Procedures related to tenders towards selecting the most suitable strategy for
contract (Hughes, Champion, and Murdoch, 2015).
Standard Form of Contract
The standard or model contract forms are the contract conditions that are formulated
for the purpose of general use within a specific industrial division through a representative or
appropriate authority. The terms within contracts such as these are negotiated in the middle of
the concerned parties as well as are revised according to the understandings of both the
parties. According to Eriksson, and Lind (2016), within the risky, complex, or large
engineering projects the contracts are formed through specific document requirements, that
are:
 The agreement form
 The contract conditions
 Specifications of the contract
 The drawings of the contract (Hastie, Sutrisna, and Egbu, 2017)
In addition to this, at times the following documents are also added to the mix:
  Rates schedule or bill of quantities
 Programme
According to research, it is stated that there are various benefits of using the standard
form of contract. These contracts are considered to be tried and tested. The advantages of this
contract types are inclusive of equitable risk sharing, the time and cost of separately
negotiated contracts can be averted, in addition to this, the comparison of tenders are made
easier, for the fact that the allocation of risk is the same for all the tenderers (O’Connor,
O’Brien, and Choi, 2015).
Traditional Contract
In the traditional contract form the client or employer has the liberty to engage a
Consulting Engineer or architect for the implementation and functionalities of the design
work. Moreover, the contractor, consulting engineer or architect binds into the contract
alongside the customer for constructing design work (Du, et., 2016). On the other hand, no
guarantee is there that the designed work provided by the client to the architect or engineer
could be constructed. In order to function properly the contractor search for assistance from
the suppliers as well as the sub-contractors. The main aspects of the traditional contract forms
are that the client does not have any kind of contractual relation with the suppliers and the
sub-contractors. Moreover, any third party involved in work does not have any contractual
obligation or rights (Sunindijo, 2015).
Within the traditional procurement contract the designer does not have any link with
the expertise, due to this all communications are required to be run through the leading
contractor. This is considered to be a downside as the contractor is not requisited towards the
requirements of the specialists. In addition to this, the excessive reliance upon the traditional
contract on the “Bill of Quantities” to provide a price for contract would be a source of
inflexibility that is considered to be another big flaw (Bengtsson, and Rosander, 2018).
Suitable Procurement and Contract Strategy for Dalrymple Industrial Developments Ltd
According to the requirements of the given case the client has acquired an industrial
estate and has hired the firm for refurbishment as well as extension of the property. In
addition to this the client is seeking to get the construction work permission while the process
of refurbishment will be in due course. Although it is required by the client that in case of any
changes within the business strategies or business plan the construction on the extension of
new buildings can be deferred or postponed to an indefinite amount of time, without any
contractual bump (Eriksson, 2017).
 Given the above case it is advised that the client should employ the traditional
procurement strategy as it gives the client complete control over the project as well as the
timeline in which it should be completed. The traditional procurement strategy will provide
the client with complete liberty to change, pause or elongate the project timeline according to
their business needs. In terms of the contractual strategies the client once again should opt for
the standard forms of contract as it gives more options and control to the client and his design
team to regulate the project in accordance to their business endeavours (Stanford, Molenaar,
and Sheeran, 2016).
The client, design team and the contractor can easily continue working on their
refurbishment project, which is the first stage of the project and clearly state in the contract
the requirements about any possible deferment or delay about the completion or
implementation of the second phase or stage of the project (Awuzie, and McDermott, 2016).
By applying the traditional procurement strategy and the standard or traditional form of
contract the client has most control over the management and process of the project as well as
the timeline of the project. Once again, the combination of these two procurement and
contract strategies also give the client the complete freedom to regulate the project in
accordance with their business needs, which will make it easier for the client to manage the
project according to their own requirements (Ruparathna, and Hewage, 2015).
Conclusion
According to the above details alongside the support of the theory, it can be stated that
there are different strategies, which can be applied to different construction projects.
Moreover, it can be seen that in order to consider an appropriate strategy it is mandatory to
keep the requirements of the client in mind, as this is a crucial step of the process initiation.
The given case revolved around the client recent industrial estate acquisition and his
requirements about the two parts of the project, refurbishment and extension. Furthermore,
Planning endorsements can impact the advancement of the venture. In the event that early
fulfilment is a basic factor, at that activities of construction and design can be overlaid with
the goal that development can initiate prior on location. Time and cost trade-offs are a key
point of strategies and are ought to be assessed.
With regards to the requirement of the clients the strategies proposed are traditional
procurement strategy and standard or traditional forms of contracts, these stratagems used
together can assist the client in leading the process of the project in accordance to their
business needs as well as to modify or make any amends to the conditions of the contract
without any hassle. This even gives the client the complete liberty to control and manage the
timeline of the project with their organisational goals and plans, which makes it more
effective and the client feels more in control of the project.
References
Adediran, A. and Windapo, A.O., 2016. Evaluating the impact of public sector targeted
procurement strategies on the development of SMEs in the construction industry.
In Proceedings of the 9th cidb Postgraduate Conference (pp. 526-536).
Awuzie, B.O. and McDermott, P., 2016. The role of contracting strategies in social value
implementation. Proceedings of the ICE-Management, Procurement and Law, 169(3),
pp.106-114.
Bengtsson, S.H. and Rosander, L., 2018. Public clients' possibilities to initiate sustainable
change-Exploring two Swedish clients' procurement strategies. In 34th Annual
Association of Researchers in Construction Management Conference, ARCOM 2018,
3 September 2018 through 5 September 2018 (pp. 424-434). Association of
Researchers in Construction Management.
Davis, P.R., Jefferies, M. and Ke, Y., 2017. Psychological contracts: Framework for
relationships in construction procurement. Journal of Construction Engineering and
Management, 143(8), p.04017028.
Du, L., Tang, W., Liu, C., Wang, S., Wang, T., Shen, W., Huang, M. and Zhou, Y., 2016.
Enhancing engineer–procure–construct project performance by partnering in
international markets: Perspective from Chinese construction
companies. International Journal of Project Management, 34(1), pp.30-43.
Eriksson, P.E. and Lind, H., 2016. Strategies for reducing moral hazard in construction
procurement: A conceptual framework. Journal of Self-Governance and Management
Economics, 4(1), p.7.
Eriksson, P.E., 2017. Procurement strategies for enhancing exploration and exploitation in
construction projects. Journal of Financial Management of Property and
Construction, 22(2), pp.211-230.
Hasnain, M. and Thaheem, M.J., 2016. Best value procurement in construction and its
evolution in the 21st century: a systematic review. Journal for the Advancement of
Performance Information & Value, 8(1).
Hastie, J., Sutrisna, M. and Egbu, C., 2017. Modelling knowledge integration process in early
contractor involvement procurement at tender stage–a Western Australian case
study. Construction Innovation, 17(4), pp.429-456.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and
management. Routledge.
Jelodar, M.B., Yiu, T.W. and Wilkinson, S., 2016. A conceptualisation of relationship quality
in construction procurement. International Journal of Project Management, 34(6),
pp.997-1011.
Lupton, S., 2019. Which Contract?: choosing the appropriate building contract. RIBA
Publishing.
O’Connor, J.T., O’Brien, W.J. and Choi, J.O., 2015. Industrial project execution planning:
Modularization versus stick-built. Practice periodical on structural design and
construction, 21(1), p.04015014.
Ruparathna, R. and Hewage, K., 2015. Sustainable procurement in the Canadian construction
industry: current practices, drivers and opportunities. Journal of Cleaner
Production, 109, pp.305-314.
Salem, O., Salman, B. and Ghorai, S., 2018. Accelerating construction of roadway bridges
using alternative techniques and procurement methods. Transport, 33(2), pp.567-579.
Sarhan, S., Pasquire, C., King, A. and Manu, E., 2018. Institutional waste within the UK
construction procurement context: a conceptual framework. Engineering Project
Organization Journal, 8, pp.36-64.
Shen, W., Tang, W., Yu, W., Duffield, C.F., Hui, F.K.P., Wei, Y. and Fang, J., 2017. Causes
of contractors’ claims in international engineering-procurement-construction
projects. Journal of Civil Engineering and Management, 23(6), pp.727-739.
Stanford, M.S., Molenaar, K.R. and Sheeran, K.M., 2016. Application of indefinite delivery–
indefinite quantity construction strategies at the federal level. Journal of Management
in Engineering, 32(5), p.04016011.
Sunindijo, R.Y., 2015. Improving safety among small organisations in the construction
industry: key barriers and improvement strategies. Procedia Engineering, 125,
pp.109-116.