CONSTRUCTION PROCUREMENT and -site supervisors were inexperienced and had

very little authority.

CONTRACT MANAGEMENT
-Questions, even minor in nature, had to be
answered by engineers in the respective home
This course introduces the concepts and offices. Quite often the workmen received
practices of local and international construction incomplete and improper drawings to work with,
laws, advanced procurement practices, the and they claimed that better isometric and
situations in which their use is appropriate, and schematic drawings would clarify some
the contractual principles they are based on. It ambiguities.
will also introduce students to the mechanisms x. Ineffective utilization of skills
used by a typical standard form construction
xi. Lack of cooperation among crafts
contract to control the risk exposure arising
xii. Poor inspection program
from the liabilities of contracting parties created
by the agreement and the flow of money and xiii. Communication breakdown
information between contracting parties. xiv. Unsafe conditions
xv. Lack of participation in decision making
Week 1-2: Chapter I: Introduction
b. Discuss each demotivator and identify
1. Brainstorming: Why Contractors fail? which are “beyond the control” or “within the
control” of the contractor.
• poor project management;
Beyond the control Within the control
• poor leadership;
• poor performance;
• poor accounting; and.
• poor planning.

Assignment:
a. Demotivators in Construction Projects
i. Disrespectful treatment
ii. Material availability
-problems were experienced in obtaining
materials from vendors as a result of short
design lead times leaving management with
little time to order the necessary materials.
- material availability was especially poor
immediately after design changes. The activities
were sometimes scheduled without positive
assurance of the availability of the required
materials
-Quite often it was discovered that the vendors
had delivered the wrong materials, they were
c. Duties & Responsibilities of Project
damaged, or the materials exceeded the
Manager/Materials Engineer.
acceptable tolerances.
-Some of their responsibilities are to inspect all
iii. Tool availability
sites, coordinate with contractors and
-substandard tool quality, inadequate supplies of
engineers, manage the budget and expenditure,
tools, excessive thievery, and lengthy delays in
purchase necessary materials and equipment,
replacing stolen,
and make schedules.
iv. Little accomplishment
- Materials engineers work with metals,
v. Redoing work ceramics, and plastics to create new materials.
-Most workers take considerable pride in the They develop, process, and test materials used
work they accomplish and having to take their to create a range of products, from computer
work apart and redo it again can be extremely chips and aircraft wings to golf clubs and
dissatisfying. biomedical devices.
vi. Crew discontinuity d. What are the calibrated sanctions for erring
-Inadequate coordination of the crew diminished contractors in Public Construction Project in the
the cooperative atmosphere Philippines?
-Lack of communication within the organization https://www.gppb.gov.ph/issuances/Resolutions/
was a problem frequently mentioned. There were GPPB%20Resolution%20No.%2005-2019.pdf
continual complaints of receiving only minimal
amounts of relevant information 2. Purpose of Project Procurement Management,
vii. Lack of recognition Construction Procurement Process, Procurement
viii. Productivity urged but no one cares and Contract Delivery System.
ix. Incompetent personnel
a. What is the purpose of Project Procurement
Management?
- Project procurement management is the
creation and maintenance of relationships with
external resources needed to complete a
project. A project procurement manager
communicates with vendors to buy, rent or
contract products and services needed to
achieve project objectives.
-in short obtaining all of the materials and
services required for the project.
b. Discuss each process on Project Procurement
Management.
i. The Planning Process
- involves the creation of the official
procurement management plan. The
decisions made involve which items will
be internally procured and which items
will be externally outsourced.
- Sample procurement documents will be
prepared, and criteria frameworks will
be developed to create a selection of
potential vendors. This selection matrix
is based on the project’s scope, schedule,
and requirements. Risk factors and
budgetary constraints are also
considered.
ii. The Selection Process
- involves comparing and contrasting
vendors’ advantages, disadvantages, and
contractual offerings. Standard tools and
techniques are used to select
procurements, such as video conferences
with bidders that allow them to
understand the project requirements and
ask questions.
- Procurement contracts are decided and
awarded through collaborations between
various managers.
- Proposals are carefully evaluated and if
no satisfactory bids are available, the
project management team may utilize
online ads to solicit new bidders.
iii. The Administration Process
- refers to the tools and processes used to
manage relationships with vendors. The
administration phase results in the
continual creation of procurement
documents and spreadsheets that may
drive project changes.
- A centralized system of contract change
monitoring and control will be used to
evaluate and determine whether
potential changes to contracts are
needed.
- The administration process is extremely
important, so it’s usually managed
through supply chain or project
management software.
iv. The Closing Process
- The closing process is not just about
ending procurement contracts; it’s about
noting weaknesses, documenting
successful processes and summarizing
the project for future needs.
- During the closing process, negotiations
may be necessary to resolve contract
disputes.
3. A Review of Procurement & Different Types of
Contract Delivery Systems.
a. Discuss each type of Procurement and
Contract Delivery systems
i. Force Account
- When the Project owners engage
themselves to undertake the project.
- Promoted if the project owners believe
that there is a comparative advantage in
cost, time and quality issues.
ii. Design Bid Build (DBB)
- This is the most practiced type of
delivery system in the Construction
Industry of Ethiopia since 1987.
- Since 1980s, this traditional approach
becomes less popular due to the
following factors:
o Severe relations between the design
and contract administration;
consultant and the contractor
o Fragmented contact for the project
owner
o Project owner responsibility for risks
associated with the design and
contract administration
o Non-impartiality of the Design and
Contract Administration services.
iii. Design Build (DB) or Turnkey,
- Turnkey Delivery system is a response to
problems associated to the last two
types of delivery systems.
- Reduces numbers of procurement
processes engaged in the fragmented
process
- Delivery is common worldwide
specifically for private projects.
Typical advantages of DB system include:
o Reducing fragmentation and adversarial
relations between designers and
contractors
 o Minimizing project owners’ risk
transferable due to designers’ faults
o Accountability and entire responsibility
for both design and construction
o Minimizes the opportunity to claims by
the contractor due to related issues etc.
Disadvantages of DB system include:
o Loss of control, due to limited supervisory
role by the employer representative
o Cost of tender: to provide reasonable
offer, their tender cost is higher than in
the case for DBB delivery system.
o Cost risks; increase on risk transferred
onto the contractor will be
counterbalanced by the increase in
contract prices.
iv. Finance / Build Operate System (BOT)
- Build-Operate-Transfer is a form of
procurement and contract delivery
system that promotes Public Private
Partnership
- The project owner is not responsible for
any liability other than force majeure
and agreed upon claim adjustments.
- This delivery system is advantageous
because of three major factors
o It minimizes owners’ scarcity of
financial resources
o The facility is and transferred with
free of charge or minimum
compensations
o It voids considerable risks from the
project owners
The increasing popularity of the BOT project is
largely due to a shortage of public funding and
opinion that the facility will be more efficiently
managed by a private entity.
Advantages of BOT
- It minimizes owners’ scarcity of financial
resources.
- It devoid of considerable risks from the
project owners
- the facility is well operated and
transferred with free of charge or
minimum compensations to project
owners.
- Integrates the process of design,
construction, operation,
and maintenance.
- Projects are likely completed faster
Disadvantages of BOT
- Longer tendering process
- Costly tendering
- No capable local contractors (for our
case)
- Costs more in the long run
- Contractors may not be interested in all
works
v. Construction/Facility Management,
Consultancy
- response to problems associated with DB
and BOT
- Construction management consultancy
firm issued to coordinate all activities
from concept inception through acceptance of
the facility.
- Facility management consultancy adds
operation of facility during operation
and maintenance to Construction
Management Consultancy.
- CM is involved in the whole construction
processes whereas all the others involve
only during the implementation phase
after major decisions are made during
the Basic planning phase
- Construction Management Consultants
then represents Project Owners to carry
out the following services:
o Feasibility studies of Construction
related services
o Plan and Monitor the Triple
Constraints of Project Performances
o Lead and Organize regulatory
systems of the Construction Industry
o Valuation, Quantity Surveying and
Procurement and Contract
Management Services
- Construction management is a broad term
covering a variety of project delivery scenarios
in which a construction manager becomes an
integral part of the team, at early stages in the
project, to oversee such elements as schedule,
cost, and construction methodologies and
procurement strategies.
- The general Construction Management
variations are
o Construction Management-for-Fee (CM for-
Fee)and
o Construction Management-at-Risk (CM-at-
Risk)
- CM-for-fee is a delivery method similar to the
DBB In CM-for-fee method,
o the construction manager is
responsible for project and site
management,
§ but is not involved in actual
construction work.
o The construction manager monitors
cost, time, quality and safety,
§ but does not take responsibility
for them.
 - If the goal is to seek integrated delivery methods,
then the client would consider the following
delivery methods.
a. Design-Build (DB)
b. Construction Management (CM at-Risk)
c. Design-Build-Operate-Transfer (BOT)
- And if the intention is to seek direct project
funding, the owner may consider the following
options:
a. Design-Bid-Build (DBB)
b. DB (Design-Build)
c. Construction Management (CM) at fee and
at risk.
- If the goal is to seek external financing
(indirect funding), then the client would
consider the build-operate-transfer
(BOT ).
- The construction manager is paid a fixed
or time-based fees for services provided
Note: It is worth mentioning that the above
- The construction management organization
division is based on the normal procedure
takes an advisory role or role of an agent
or the usual practice. It may vary as agreed
to the client
up on.
- The CM has limited risk because
construction contracts are between the
owner and individual contractors.

vi. Alliances and Outsourcing.

- It focuses most on management of relationships
and value adding to ensure quicker, cheaper, and
quality services and products with less disputes
- This is a method where an owner/developer and
a contractor agree to work together by freely
Recommended Text, Resources, and other
sharing resources, risks, and knowledge during
Readings:
the course of the project
- It bases behind DB, BOT, FM\CM
1. Republic Act 9184 Government Procurement
consultancy delivery systems but they’re
Reform Act. Republic of the Philippines. Congress
at most and recent developments
This type of project procurement can be of the Philippines. Metro Manila
distinguished from others by
- collective performance of obligations by 2. Procurement Strategy & Contract Selection
the owner/developer and contractor, Dep’t of Housing & Public Works Queensland
Government
- decision-making by consensus,
- commitment to resolve disputes without
3. The 2016 Revised Implementing Rules and
resort to litigation
Regulations of Republic Act No. 9184 (Updated as
Consideration in Selecting Project of 31 March 2021). Philippines
Delivery Methods
4. Condition of Contract for Construction.
Multilateral Development Bank Harmonized
- Choice of project delivery methods can be
Edition March 2006.
pictured in a different context, which displays
the project delivery methods viewed by means of
two criteria.
- This is based on whether the project delivery
methods are based on:
o Approach (segmented or integrated), and
o Source of finance (direct or indirect funding)
- If the goal is to seek traditional or segmented
delivery methods, then the client would consider
the following delivery methods.
o Design-Bid-Build (DBB)
o Construction Management (CM)
at fee.