Professionals in the construction industry

Experts in the construction sector constantly ensure a thorough study and evaluation of the various procurement methods available to ensure a seamless project completion.

The approach used will be determined by the scale and nature of the proposed work, risk allocation, and design responsibilities. There are various procurement methods, and this paper will concentrate on the most recent ones, such as the design and construct approach, public-private partnerships, and managed contracting. It is critical to examine external considerations, client resources, project characteristics, ability to make essential adjustments, timing, and cost difficulties while determining the optimal procurement approach (Love et al. 2008, p.758). There will be an analysis of their benefits and limitations to all the stakeholders such as consultants, developers, subcontractors, builders, and end-users. After a thorough evaluation of the feature of the three approaches, there will be a recommendation on the appropriate method that can meet the developer or client’s needs.

Design and build method

In this method, the contractor is solely responsible for undertaking both work design and construction activities in return for the lump sum price. Risk primarily lies with a contractor and the client is solely responsible for the finance and operation. The process involved is easy to understand since the project design, and the building is done by the same contractor and hence allows effective communication (Wang 2007, p.653). Consultants may carry out other parts of the design phase while informing the contractor of the developments. During appointment of the contractor, it is crucial to take into account quality preservation and the competitive element which involves the two-stage tendering. Project duration can be shortened because design and construction can proceed in parallel. The approach is appropriate where the building is simple, functional as opposed to prestigious, and it is easy to accelerate the program through overlapping, the likelihood of change in scope and a single organization can take responsibility for design and construction.

Benefits of build and design procurement method

The main advantage includes single source accountability and responsibility whereby the architecture and construction are under one contract. This position strengthens the entire process and enhances reduction of financial risk. Everyone is in one team that has the same goal of arriving at the successful project that can meet or exceed a client’s expectations (Eriksson 2010, p.401). Secondly, there is an early knowledge of a firm price as the builders, consultants, and subcontractors work in a close collaboration which facilitates more rapid utilization as well as achieving a superior total project economics. There is also value-engineering as the personnel works as a team to enhance efficient and accurate evaluation of alternative materials, systems, and methods and the expertise bear upon all the components of the project (Chua et al. 2014, p.12). Since it is easier to overlap the design and construction process, there are possibilities of elimination of the redesign time and the bidding periods. Also, the approach leads to quality control and improvement as it removes the ambiguity that can arise during material and construction specifications. Other benefits to the stakeholders include enhanced communication, proper budget management, faster project completion, collaboration, and involvement of client and the builders.

Problems of build and design procurement method

It may be quite difficult to ensure an achievement of high standards in the architectural design together with an overall appearance of the project as the client can prepare the insufficient comprehensive brief and the design liability is always limited to available contract standards. Another inherent problem includes the fact that the builders may not be architects and since the builder is free to design there are possibilities of working to minimum possible specifications. Henceforth, it will interfere with quality of the final product or service to the end-user. Additionally, it is only suited for the fast track construction (Lam & Wong 2011, p.319). There are possibilities of conflicts or disputes after completion of construction as the owner is not involved in envisioning an idea on detailed designing of together with its refurbishment. Another problem is that the contract price can be higher as a result of the high risk placed on the contractor. Lastly, lack of sufficient communication between the builder and consultant on the developments regarding design phase can lead to misunderstandings.

Management contracting

In this procurement method, the specialists or subcontractors get direct contracts to the client, and a construction manager is responsible for the whole process from initiation to completion (Adekunle et al. 2009, p.341). There is payment of a fee to the contractor for the professional management, development of programs and coordination of design and construction activities which can facilitate collaboration towards an improvement of a project’s constructability. However, the client carries out the finance and operation functions. The approach makes it possible to have an early start on-site together with early completion (Eriksson 2010, p.405). Management contracting necessitates trust and good teamwork from the client, contractor, and design consultant to make sure that there are advancements in the design program, delivery of quality materials and property, tender action and the construction programs.

Benefits of management contracting

The client is capable of dealing with only one firm which later enables the improved collaboration and coordination between contractors, consultants, and designers. Another advantage includes early involvement of all the stakeholders in a particular project, and the management contractor can be in a better position to the trusted subcontractors whom they believe can help overcome many risks concerning an unknown factor. There are skillful inputs of high level as there is an engagement of subcontractors that seem to be experts from a broad range of fields (Lam & Wong 2011, p.321). Moreover, management contracting procurement strategy is characterized by minimal supervision and therefore it is evident that the whole process tends to favour every party involved from the developer down to the end-users. There are also potential for time savings as there is a possibility of overlapping the design and construction activities. Furthermore, the approach allows flexibility for changes in the design, clear explanation of the responsibilities, roles, and risks faced by all parties and an improved constructability. There is also quality enhancement since each package gets contracted to the specialist or experienced consultants.

Problems of management contracting as procurement method in construction

This approach lacks the single point of accountability and responsibility for both phases of design and construction which eventually leads to higher risks of potential disputes. Furthermore, the whole process can be frustrating if the team subcontractors are not pulled from the companies that emphasize team building as there cannot collaboration among all members to deliver the best. The client also loses direct control over the construction process which is under a management contractor (Love et al. 2008, p.756). Also, there is lack of professional and qualified specialists, and it means that there are possibilities of leaving gaps in the work that will be undertaken. Nevertheless, there are fixed costs that include the prime costs, and the new clients can result in an increment of the risks of failure of many projects that dissatisfies the end-user. The developer has to provide a quality brief, and inability to do so will yield confusion in the locus of control. Additionally, management contracting is only suitable for large and complex as well as fast-moving projects that compel early completion to meet all the stakeholders’ expectations and needs.

Private finance initiative or Public-private partnerships (PFI/PPP)

It is a procurement method that involves collaboration and cooperation between private and public sectors with the aim of achieving management, financing or maintenance of a particular project accompanied with the provision of the appropriate services. The private sector has the primary responsibility for the delivery of part or whole project financing, risks regarding the construction, and gets the long-term benefits (Kuiper and Holzer 2013). On the other hand, the public sector determines the design and construction requirements, assessment of submitted proposals, supports and monitors the process, and proceeds with the payments. It is suited for the large-scale and high-value construction projects such as road and rail infrastructure, refurbishments, alterations, and building and maintenance of hospitals. The contractor takes control of all the functions, and after a successful completion it is transferred to the owner, and it is helpful to the clients who may not have a sound financial background. The method focuses on the infrastructural development. It is also an important technique as it contributes significantly towards an improvement of the economic effectiveness accompanied with the appropriate utilization of the scarce public resources and meeting the needs of citizens.

Benefits of Public-Private Partnerships (PPP)

Partnering ensures that a client and end-users needs and expectations are met as they are the heart of any construction project. The consultants, clients, supply chains and contracts commit themselves toward working more collaboratively and always portray a strategic fashion (Lam & Wong 2011, p.320). It is an approach that aims at the maximization of the effectiveness of every partner’s resources. Hence, there arises a need to have an open relationship and trust in the partnership, which can eventually drive the achievement of improvement accompanied by best construction practices in the whole process. It also becomes quite simple to gain better infrastructure solutions and a faster project completion. Due to the availability of innovative design together with appropriate financial approaches, the returns on investment are greater as opposed to the traditional, management contracting and the design and build procurement methods. There is high certainty on the contract value, and the payment for all services depends on the delivery of facilities to an agreed standard.

Problems of Public-Private Partnerships (PPP)

It can become challenging to achieve clear functional specifications, and there can be a delay in completion when a detailed discussion of all stakeholders is necessary as a strategy to meet the design needs and expectations (Chua et al. 2014,p.11). There can be higher cost variations after the initiation of the construction process that result from the risk pricing together with the complex financing arrangements. It is also hard to transfer all the risks to the private cost-effectively without causing potential disputes (Kuiper and Holzer 2013). Furthermore, the complexity of contracting necessitates specialists’ skills from the public sector which may be quite challenging to accomplish as many government contracts are full of corruption and do not focus on meeting all the stakeholders’ needs and expectations. The PPP construction projects tend to be comparatively inflexible, long-term and complicated as a result of the impossibility of evaluating and envisaging all the events that may influence a particular future activity.

Conclusion

In summary, there several methods of procuring in the construction industry, which is readily available and provides a broad variety of options for clients to select that best suits their construction activity. Prime concerns of a developer such as quality, cost and time and a type of project to be completed and the stakeholders’ requirements are the determinants while choosing the best method to select. The construction professionals have to understand the procurement approaches available in their industry to choose an alternative that is crucial towards making sure that there is a satisfaction of both the project participants and the clients and ensure successful completion of the design, building and construction processes.

Recommendation

The selection of the best procurement method necessitates a robust analysis of the project environment. It may include policies, associated risks, available resources, preferred contractual agreements and technicality that impact the achievement of all stakeholders’ goals, objectives, cost, time and quality. The construction planners together with managers should select the systematic selection approach as a strategy to eliminate the unnecessary project demands. It is also essential to set out the explicit contractual agreements to aid in the determination of all participants’ responsibilities. Additionally, it is paramount for clients to be familiar with different procurement systems that can guide them in making well-informed decisions. Lastly, the procurement criteria of selection should contain the contingency measures as a way to counteract the unforeseen circumstances and enhance early planning of all activities to be undertaken. Therefore all stakeholders’ involvement is necessary during procuring to increase successful completion of building and construction projects.

References

Adekunle, S. O., Michael, D., Malik, M. A. K., Peter, M., & Steve, R. (2009). Construction project procurement routes: an in-depth critique. International Journal of Managing Projects in Business, 2(3), 338-354.

Chua, S.J.L., Ali, A.S. and Alias, A. (2014) Procurement Method Selection for Building Maintenance Projects: The Case of Malaysian Public Universities. World Journal of Engineering and Technology, 2, 7-13.

Eriksson, P., 2010. Improving Construction Supply Chain Collaboration and Performance: A Lean Construction Pilot Performance. Supply Chain Management: An International Journal, 5/5, pg. 394-403.

Kuiper, I. and Holzer, D. (2013) Rethinking the contractual context for Building Information Modelling (BIM) in the Australian built environment industry, Australasian Journal of Construction Economics and Building, Vol.13, No.4, UTS Press, Sydney (Australia).

Lam, P.T.I. & Wong, W. H. (2011). ‘A comparative study of buildability perspectives between clients, consultants, and contractors.’ Construction innovation. Vol. 11. Iss 3. pp. 305-320.

Love, P.E.D. Davis, P., Baccarini, D., and Edwards, D. (2008). Uncertainty avoidance: Public sector clients and procurement selection. International Journal of Public Sector Management 1(7), pp.753- 776.

Wang, G. (2007). ’Research on Business Environment of Construction Supervision in China,’ paper presented at the CRIOCM. International Symposium on Advancement of Construction Management and Real Estate, Sydney, Australia, p.649-659.