Procurement Management: in Construction in Construction

Procurement
Management
in Construction
Course Title
Part 2
Procurement routes
Quick review of previous topic
Course topics
1. Introduction to procurement and tendering
2. Procurement routes
3. Types of tendering
4. Forms of tendering (Tendering Procedures)
5. Features of tendering
6. Tender documentation
7. Tender evaluation and reporting
Quick review of previous topic
Part1- Introduction
1. Defined Procurement Management in Construction
2. Principles of Procurement Management
•Project planning and scope definition
•Procurement strategy development
•Selecting the right procurement route
•Tendering and choosing the right type/form of tender
•Tender documentation evaluation and reporting
3. Stakeholders (The client)
4. Procurement and tendering as a QS competency
5. Defined procurement
6. Defined tendering
7. Differentiated procurement from tendering
8. Importance of procurement and tendering in construction
9. Quick overview of procurement and tendering
Part 2- Procurement routes
Construction Procurement
General
•There are a number of fairly standard procurement
routes for construction.
•Each route comes with its own set of different demands
with differing risk allocations and responsibilities on
those involved.
•There is rarely such a thing as a perfect solution and
several routs may each present real advantages/
disadvantages for each party involved.
•The professional team/ Construction Management
team must understand the implication of the chosen
procurement route on every stakeholder.
General
...the goal of identifying

a procurement route...
General
•Procurement is an important part/ stage in a Construction Project
which is considered crucial to the success of every construction
project delivery.
•The selection of an appropriate procurement strategy is identified
as a key decision in terms of achieving client objectives.
•inappropriate choices can be a key factor in performance failure,
resulting in cost and time overruns and poor building performance.
•To be successful in every project endeavour it is important that
stakeholders understand their roles and how they relate to different
facets involved in the whole procurement management process
•Client’s role
•Development of procurement strategies and selection of the
most appropriate procurement route.
•Strategy Implementation process.
The role of the Client
Pre-design phase Pre-construction phase Contraction Post -construction
Client’s role •Appoint adviser •Procurement strategy •Design overview •Commissioning

•Develop the business case for the •Design overview •Cost control •Occupation and
project •Cost control overview overview takeover
•Define client’s responsibilities •Whole life costs •Time control
•Project definition •Value engineering overview
•Project briefing •Time control overview •Quality control
•Appointment of PM (if •Quality control overview overview
appropriate) •Appointment of •Change control
•Appointment of design and cost contractors overview
consultants •Confirming the business
•Procurement strategy case
•Value management
Procurement Considerations
Project Objective
•Procurement should be based on understanding of the
client’s business needs and drivers and to appreciate the
market in which it operates.
•This is fundamental in establishing how efficiently the
construction project can assist the client in achieving
their business success.
•The selection of an appropriate procurement strategy is
a major contributor to project success.
Project Objective
•Construction projects are often complex with potential for cost and
time overruns or the finished building performing less well than
planned.
•To minimise such risks the client should select the procurement
strategy which matches the objectives of the project.
•These must be clearly established and prioritised before any design
or other work begins
•Many procurement strategy selection techniques have been
developed, with a view to assisting clients in their choice of the most
appropriate procurement approach for their projects.
•It is normal for this procurement process to be crystallised into
formal contractual arrangements.
•Most conventional procurement selection techniques are based
around the concepts of time, cost and quality
Project Objective
Project Objective
Project Objective
The client must decide the relative importance of the three main
types of criteria – Cost, time and performance:
Cost (Price level of cost certainty)- with the exception of simple
‘standard’ buildings and certain ‘design and build’ strategies, a final
construction contract sum cannot be established until the design is
complete. Any overlap between design and construction means that
construction starts before the cost is fixed. This increases the
importance of accurate cost forecasting and the risk to the client
•Availability of necessary funding
•Need for early cost certainty
•Need to achieve a particular spend profile
•Need to limit exposure to cost from design development
Lesson 2- Procurement routes
Project Objective
Time (speed or certainty of completion date)- earlier
completion can be achieved if construction is started before
design is finished. The greater the overlap between the two, the
less time will be required to complete the project;
•Critical dates
•Available procurement period
•Restrictions on working/ access/ noise
•Decanting/ occupancy restrictions
Project Objective
Quality (Functionality and Performance)- the quality and
performance characteristics required from the completed building
determine both the project time and cost. Some strategies reduce the
client’s ability to control and make changes to the detailed building
specification after the contracts have been let
•Complexity of the finished product
•Used of the finished product may require a particular standard
•Ease of definition of the finished product – can you easily
describe it
•Client may simply require higher than normal standards
•What level of Quality must the delivered product have?
Project Objective
Risk and responsibility
•The procurement strategy developed should balance risk
against project objectives at an early stage. Even at an early
stage, initial concept designs can be developed to enable the
client to look at how initial designs will respond to their
business needs.
•Construction as a process is typified by project risks and once
these risks have been identified and prioritised, a suitable
procurement route to reflect the project risk profile can be
selected.
•The bespoke nature of construction projects increases the
inherent risks.
•These risks include completing a project which does not meet
needs, which is delivered late or costs more than the client can
pay or fund.
Risk and procurement strategy
Traditional
Design and Build
Management Contracting
Construction Management

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Procurement

...the goal of identifying

Client’s role •Appoint adviser •Procurement strategy •Design overview •Commissioning

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