Professional Documents
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Procurement is a term used to describe all activities undertaken by the client in seeking to bring
about the construction of, or refurbishment of building. It is also referred to as methods which
seek to weigh the pros and cons and the financial constraints which are likely to affect the project
so as to select effective contractual arrangement. Procurement is merging of activities undertaken
by the client to obtain a building.
When project is dreamt about by the client, he works towards actualizing it. Apart from funding
and providing land for development, the client does not have the requisite skills to actualize his
dreams, he therefore has to employ the services of those who would do it, and hence
procurement method in construction project management is a process of obtaining the design and
construction of building, commissioning and occupation. The task of designing of designing his
dream and subsequent construction are open to different methods, hence to choose the most
appropriate method for his project he need professional advice.
When a client wishes to choose any procurement method for realizing his project, his major
concerns are:
1. Traditional method
2. Design and build method
3. Management contracting method
4. Public-Private Partnership (PPP) method
TRADITIONAL METHOD
This method is as old as the construction industry. The major feature is that the design process is
separate from construction. It requires full documentation before the contractor can be invited to
tender. In simple form traditional method simply involves the steps-design, bid and build.
Although the traditional method procurement methods is very simple to understand by all classes
of client, the major problem is that contract periods tends to be more prolonged due to the fact
design process is separate and determines the commencement of actual construction.
Client
Architect
Main
Contractor
Sub- Sub-
Contractor Contractor
The following are the main type of traditional contract
Fixed/lump sum contract: The contract sum is known before work commences on site and the
contractor agrees to undertake a defined amount of work for specific amount. The contract is
often base on firm Bill (s) of quantities, drawings and specification.
Measurement contract: The contract is assessed and re-measured as on previously agreed basis.
All works done by the contractor will be measured on the site and valued at the agreed rate. This
type of contact can be based on approximate Bill (s) of quantities, drawings and specification
This is sometimes known as cost plus contract or prime cost. prime cost of a project is the net cost of
materials, labour, plant and other preliminary items expended on the project and in addition a fee to
contractor to cover his profit and overhead. Cost reimbursement contract could be
This type of contract, the net cost of material, labour, plant etc. expended on a project ascertained and
percentage added to cover the contractors profit and overhead. The percentage is agreed before the
contract is signed and may be subject to completion
The net cost of labour, materials and plant is ascertained on completion of the project. The total is paid to
the contractor in addition to a fixed fee to cover his profit and overhead. The fee is fixed and agreed
between the parties before the contract is agreed
This is an improvement on cost plus fixed fee contract, the contractor fee is increased by the agreed
sliding scale sliding scale basis should the final cost be below the estimated cost.
Target Cost with variable fee
A target estimate is agreed between parties to the contract. Should the final cost of the project be less
than the target estimate, the contractor fee will be increased by an agreed percentage of the saving. Also if
the cost exceed the target estimate, the contractors fee will be reduced by an agreed percentage of the
over-expenditure the greater the saving on the target estimate, the higher will his fee and vice versa
In this method, the contractor is responsible for undertaking the design and construction of the
work in return for a lump sum price i.e. the contractor both design and build the project.
However the client commits to the cost of construction as well as the cost of design. The design
risk is shifted to the contractor; therefore it is important that the design liability insurances be
maintained to cover that risk. Changes made by the client during design can be expensive as it
affects the whole of the design-build contract, rather than just the design team cost
To arrive at a choice of contractor, contractors are required to develop a design (from an initial
concept prepared by the consultant appointed to advise the client) to a certain level prepare a
tender figure and submit the proposal to be evaluated to client satisfaction. A team of consultant
will assess the contractors proposal, evaluate tenders which in the case is very difficult because
different contractors working with different designs.
This method of procurement is based on the client appointing a consultant who will prepare
drawings and project specifications. Upon preparation of drawings and specification, a
management contractor is then selected by the process of tender and interviews. The
management contractor will not carry out construction work, but manages the project on behalf
of the client. It is a cost – reimbursable form of contract, with the management contractor being
paid a fee. All the work is undertaken by subcontractors, referred to as works contractors, in
distinct works packages, employed by the management contractor. This is to preserve the
management contractor’s independency and reinforced a consultancy relationship with the client.
CONSTRUCTION MANAGEMENT
The Public Private Partnership (PPP) is also known as PPP or 3P or P3 which involves two or
more numbers of public and private sectors. This is a cooperative arrangement that is held for
long – term period.
This method is collaboration between the public and private sector in other to achieve financing,
management or maintenance of a project of the provision of services. This is a government
service or private business venture which is funded and operated through a partnership of
government and one or more private sector/companies. A PPP project is not different from other
procurement forms. It is the financing of the project that differs.
What is Public Private Partnership (PPP) Construction Projects?
Construction Project developed based on a PPP on behalf of a concession agreement or on a
contract between two parties forms the PPP projects. Here, one party forms the government or
statutory entity and other one will be the private sector company. The contract is prepared for the
delivery of infrastructure service on the payment of respective charges.
The main goal of PPP construction projects is to combine and involve the capabilities from both
the private and public sectors for the mutual benefit.
Transport
Public health
Education
Safety
Waste management
Water and energy supply
Determines the drawing, technical, operational and financial requirements of the project
Assesses the proposal of the private sector
Support the construction of the project
Monitors the project and makes sure the private sector conforms with the contract
Proceeds with payment to the private sectors
Models of Public- Private Partnership
Design-Build (db): The private sector designs and builds infrastructure according to public
sector performance specification for a fixed price for a fixed price, thereby transferring the risk
of cost overrun to the private sector.
Management contract: here, the private sector contract to manage a government owned project
and manages the marketing and provision of service.
Lease and operate contract: a private owner contracts to lease and assume all management and
operations of a government owned facility and associated services, and may invest further in
developing the services and provide the services for a fixed term
Build-Operate-Transfer (BOT): a private entity receives the license to finance, design, build
and operates a facility for a specified period, after which ownership is transferred back to the
public sector. BOT is one of the most common privatization agreements. In this agreement, the
government will hand over the constructing and operating rights to a private sector. This will be
given for a pre – determined period of time. Once the period is completed, this will be taken back
by the government. One of the flexibility available in BOT is that the private sector can
implement the planning and design as per the agreement.
Buy-Build-Operate (BBO): if there is need to revive a public asset, the government can
transfer it to the private or quasi-public entity usually under contract that the asset are to be
upgraded and operated for a specified period of time. The government sells the facility to the
private business. The private business refurbishes and operates the facility. Public control is
exercised through the contract at the time of transfer.
1
A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an
asset. Property, buildings and vehicles are common assets that are leased. Industrial or business
equipment is also leased.
Build-Own-Operate (BOO): in this case, the private sector finance, builds, owns and operate a
facility or service in perpetuity. The public constraint are stated in the original agreement and
through on-going regulatory obligations
Build-Own-Operate and Transfer (BOOT): As the name tells, the government will hand over
the project to the private sector entity to perform:
o To design and build the Project
o To owns and operate the Project
o Transfer to the government or partner
The operation of the project completed must be performed for the specific period of time as
stated in the agreement and must be finally transferred to the government. The transferring to the
government or the partner is based on the previously agreed price or market price.
Benefits of Private Sector Participation
Following are the benefits involved in the participation of private sectors in public projects.
1. The efficiency of the construction Project is increased by the private sector participation
2. The economic growth is stimulated
3. As a result of private participation, there is competition and innovations in the economy.
4. This construction project organization helps to fastly implement the project.
5. There is a transfer of technology, local personal training, and the national capital markets
undergo developments.
6. Existing and ignored infrastructures can be improved and expanded.
7. The Government budget and borrowing practices are relieved
8. The quality of services delivered is highly improved
9. The cost-effectiveness of the project is improved
10. The risk present on public sector projects are reduced
11. The risk factors present in a construction project is allocated in a better way between the
private and the public sector.
12. The assets are improved and operated in a better way
13. The delivery of the capital projects is made faster
14. The investments in the public infrastructure are increased tremendously
15. Budget certainty is improved highly
16. The participation of private sectors in public sector projects helps to provide a benchmark in
order to judge the performance of the public sector.
17. The participation of private sectors in public sector projects is a more commercial approach
performed on infrastructure development.
18. This helps to avoid unnecessary intervention from the political side.
Advantages of PPP
The public sector gains the advantages the private sector offers such as: ability to design,
construct, manage and finance a project.
Public money is better used and at difficult economic periods for a government, this
method is good
Promote and help the innovation in the public sector with the transfer of knowledge and
technique
Better quality infrastructure and better operation throughout the life of the project
(maintenance of the project by the private sector) is assured
Use of private sectors in areas where there are weakness in the public sector such as lack
of expertise and qualified employee, lack of efficient and effective use of human
resources.
Disadvantages of PPP
The use of the project by the private sectors is difficult for low income people
In some cases, there may be in the contract clauses or provision which do not favour the
public interest but aim at increasing the profit of the private investor
Since much of funding the project is done by the private investor, there is every tendency
to aim at reducing the cost of a project which might lead to the use of substandard
materials and work
PROJECT MANAGEMENT
A project is temporary in that it has a defined beginning and end in time, and therefore defined
scope and resources. A project is unique in that it is not a routine operation, but a specific set of
operations designed to accomplish a singular goal.
Project management then, is the application of knowledge, skills, tools, and techniques to project
activities to meet the project requirements. The management, control, coordinate project from
inception to completion on behalf of the client.
A project manager is a person who has the overall responsibility for the successful initiation,
planning, design, execution, monitoring, controlling and closure of a project.
Executive project management: the project manager is entirely in charge of day-to-day running
of the project while the client takes key decisions. The project manager controls the project and
the executive project manager is appointed by the client and have sole contract with him and all
exclusive in all matters concerning the project.
Client
Project Manager
Non- executive project management: the project manager is not the project controller; the
client keeps the key control to himself. The project manager is just project coordinators
Client
Architect
They are a lot of similarities between courses and programs in the build environment. However
there are minor differences between them
1. Initiating
2. Planning
3. Executing
5. Closing
The Project Planning Phase is the second phase in the project life cycle. It involves creating of a
set of plans to help guide your team through the execution and closure phases of the project.
The plans created during this phase will help you to manage time, cost, quality, change, risk and
issues. They will also help you manage staff and external suppliers, to ensure that you deliver the
project on time and within budget.
Project plan
Resource plan
Financial plan
Quality plan
Risk plan
Communication plan
Procurement plan
Contact the supplier
The project manager needs to constantly monitor to ensure that the project is on the right track to
ensure resources are being used effectively and also see to ensure that project will be completed
within the time frame.
1. Arrange a post mortem to have experience and constantly learn by inviting core team to
get feedback on what worked and what didn’t on the project so to document success and
failure for project to plan for new project
2. Paper work: a project generate lot of document and need to be sign off and approved
from stakeholders which is a legal proof that project was concluded
3. Release resources: assembled teams for the project are formerly leased for the next
project
4. Celebrate success: Team reward to acknowledge a job well done
SWOT
Strengths
Weakness
Opportunities
Threats
STRENGTH OPPORTUNITIES
- Availability of materials/ reliable Opportunities are those chances that are stored up
suppliers for future which can be used to measure the
- Availability of funds (mobilization) project advantages
- Reliable/ experience personal - possibility of more project from
(the strength must be enhanced) same client
- scarcity of the project
- uniqueness of the project on the
area
(Take advantages of opportunities)
WEAKNESS THREATS
Set of problems facing the organization; weakness Threats are usually out of control of the project
are manger but influence/control the success or
- Unreliable nominated sub- failure of the project.
contractor/supplier Factors include:-
- Inexperience managers - Inflation
(Weakness should be eliminated) - Variation
- To many competitors
- Scarcity of materials
(Find ways of dealing with the threats)
This is a way of making various processes work together. Meaning, it takes the numerous
processes that are being used in a project and makes sure that they're coordinated. Project
complications also occur when working on a larger project with many moving parts that must
eventually align. Without proper alignment of these parts, the project can slow down, become
less productive and possibly grind to a halt. To create harmony between the various departments
and parts of a project, project integration management is implemented
This refers to the set of processes that ensure a project’s scope is accurately defined and mapped.
Scope Management techniques enable project managers and supervisors to allocate just the right
amount of work necessary to successfully complete a project concerned primarily with
controlling what is and what is not part of the project’s scope. For a project manager, scope
knowledge area is very important
Time management
This is the process of planning and controlling how much time to spend on specific activities.
Good time management enables an individual to complete more in a shorter period of time,
lowers stress, and leads to career success. Time is money and very crucial to project completion
Quality management
Quality management is the act of overseeing all activities and tasks needed to maintain a desired
level of excellence. This includes the determination of a quality policy, creating and
implementing quality planning and assurance, and quality control and quality improvement.
Human resources
Human resources is used to describe both the people who work for a company or organization
and the department responsible for managing resources related to employee such as Man,
material, money and machinery This involves all process used to develop, manage and to put
together the design team.
Communication management
Communications management is the key to project control; the essential element of project
management. Without the benefit of a good communications management system, the processes
involved in the development of a project from conception to completion can be seriously
constrained.
Risk management
Project risk management is the process of identifying, analyzing and then responding to any risk
that arises over the life cycle of a project to help the project remain on track and meet its
goal. Risk management isn’t reactive only; it should be part of the planning process to figure out
risk that might happen in the project and how to control that risk if it in fact occurs.
Project risk management is a process to identify, analyze, and minimize potential problems that
could negatively affect the progress of a project. The main objective of risk management in
project management is to take care of anything that might deflect the project from reaching its
ultimate goal. If project risks aren’t identified, avoided or rectified, your project may end up over
budget, delayed, or even brought to a complete standstill.
Procurement management
Procurement management is one such form of management, where goods and services used to
complete the project are acquired from a different organization or firm.
Every organization has its human resources, which should be managed effectively, because the
success of the organization in the competitive environment is only due to the human resource
factors, as all the other resources like financial, technological etc are common to almost every
organization. The HR department plays central role in managing the employees of the
organization. For this purpose, it performs certain functions of the Human Resource
Management,
STAFFING
The organization can become effective when it possess the qualified persons, who are designated
for specific position along with the proper place & timing. This would make an organization to
achieve its organizational objectives. Organization gets such qualified employees on time when
its HR department performs effective staffing function. Following are the important activities of
the staffing function of HR department.
Job Analysis
Human Resource Planning (HRP)
Recruitment
Selection
Job Analysis: In job analysis, systematic effort is made to ascertain the knowledge, skills &
duties necessary to perform certain jobs in the organization.
Human Resource Planning (HRP): Human Resource Planning is the systematic activity of
staffing function of HR department, in which the requirements of human resource are reviewed
in order to confirm that the required number of workers with the require skills & knowledge are
made available when they are demanded.
Recruitment: Recruitment is the systematic process of attracting & encouraging relatively large
number of applicants to apply for the required jobs of the organization.
Selection: Selection is the final systematic process through which the organization identifies the
best persons from a pool of applicants for the job that can effectively fulfill the required criteria
of performing the desired duties in the organization.
Functions of human resource management include another important role of the Hr department
in which the training & development of the employees is conducted along with the career
planning. For this purpose, certain activities including performance appraisals are performed that
identifies the needs for training & development of the specified employees. The training is
designed & given to provide the employees with the required skills & knowledge for their
current positions of the jobs. While development is much broader than training in which the
future aspect of employees are covered by providing them sufficient & knowledge to perform
more complex duties of future jobs.
The individual as well as the teams of employees can benefit from the human resource
development which ultimately benefits the organization by improving its entire performance.
The human resource development is not an optional activity but rather it the necessity of the
employees as well as organization to cover the changing skills, jobs & technology of the world.
Career planning is much more advance activity in which the employee determine his career goals
& then he try to point out the proper means to accomplish those goals. Organizations also use
career development in which properly qualified & experienced people are made available to the
organization when needed. The performance appraisals are prepared to check the performance
level of the employees by analyzing the performed tasked.
The HR department has also responsibility to perform the function of compensation & employee
benefits. The compensation is defined as all the rewards that are obtained by the employee as a
result of his employment. These rewards may take any of the following forms.
Benefits: Benefits are those extra financial rewards that are received other than pay.
Benefits include sick leaves, paid leaves, holiday& medical insurance.
Non-financial Rewards: There are also some non financial rewards that are availed by
the employees & which are non-monetary in nature like pleasant working environment &
delightedness of work performed etc.
Safety & health is included in the functions of human resource management performed by the
HR department of the organization. In this function the safety of the employees form serious
accidents in working environment is ensured. Health is little different from safety in such a way
that it is related to the normal physical & mental well-being of employees that make them free
from the illness. The safety & health issue of the employees is very crucial for the HR
department because employees are asset of the organization & their good health in a safe
working environment ensures the increased productivity & effectiveness of the organization in
the long run.
The unionism of the employees is becoming popular for many years & now it becomes
compulsory by law for the organizations to declare a union of its employees & bargain with the
union on certain matters. If the employees of the organization wants to join the union, then the
organization do not put pressure on them for prevention. Although unionism is an earlier concept
which is also working in the private industry but still many organizations try to keep a union free
environment because unions can become harmful for the organizations if they are not properly
handled.
The human resource research is not nominated as a function of the human resource management,
but still it is considered to be the one of the functions of HRM because it does not require cost
for separate laboratory & provide effective solutions for many issues of the HR department.
Procurement is the act of obtaining or buying goods and services. The process includes
preparation and processing of a demand as well as the end receipt and approval of payment. It
often involves