Answer:
Introduction
The selection of the procurement method is of significant importance for the success of any construction project. It is a series of risks i.e. for each of the methods has some strengths and weaknesses in the construction industry. The stakeholders and industry must carefully evaluate them as well.
There are various types of procurement available for the clients. They can be Design and Build, Job Order Contracting (JOC), Best Value Source Selection etc. They have their own advantages and drawbacks. The selection of an absolute method of procurement is difficult as even the most knowledgeable and experienced client is not aware of the benefits or risks of each method.
It is a succession of evaluated risks. The industry and researchers have focused on diminishing the risk with the help of innovative methodologies of procurement. The difficulty and the complexity of the projects are influenced by certain factors such as ground conditions, finance, availability of labor and service etc. ( Ruparathna and Hewage, 2013).
Therefore, this report aims at evaluating the three methods of procurement in construction projects along with analyzing their influence on the various stakeholders involved in the project. It shall also recommend the various projects suited for the above-mentioned procurement methods.
Three Procurement Methods in Construction Projects
Description, Comparison and contrast of the three methods of procurement of the construction projects
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Particulars
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Design-Bid-Build
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Job Order Contracting (JOC)
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Best Value Source Selection
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Description
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In this type of construction method, the contractor takes the responsibility for the design and construction of the building.
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It permits the public agencies to formulate job order contracts with the contractor. He shall be available on call for various projects during the contract.
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In this method, the contracts are awarded to the provider who has the best combination of qualifications regarding performance and price.
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Comparison
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A traditional approach aims to secure the best price for a construction project.
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Whereas under this method, a request for qualifications is issued and the contractors respond by providing their qualifications and book the prices for labor and materials to be supplied as per JOC (Doloi, 2012).
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Here the values are examined with the help of a multiple and weighted criteria which is judged by a panel of evaluators.
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The design package is publicized, thereby inviting bids from the contractors.
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The qualifications of the contractor are evaluated by the agency which selects the most qualified contractors for submission of the final proposals for each project.
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The panel evaluates the non-price criteria and their relative importance that is based on the context of the bid i.e. kind of project, completion date and its scale.
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On the opening day of the bid, the contract is awarded to the lowest responsive bidder.
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In JOC, the price of labor, equipment and material is analyzed through the price book that is identified with the help of request of qualifications.
The overhead cost of the contractors is evaluated through the agreement executed with the contractor.
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As per Hasnain, Thaheem and Ullah, (2017) after the ascertainment of the contractor in Best Value, the panel evaluates the action plan of the contractors.
In this process, the detailed proposal is put into the contract along with the quoted price of the contractor.
The contractor finally authorizes it so that he delivers the project in the execution phase.
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Contrast
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In this method, there is a single point of responsibility for the contractor regarding the design and construction.
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On the other hand, it is a delivery method for any kind of task, which is repetitive in nature.
It permits a long lasting relationship with specific contractors as a variety of job orders are issued under the same contract during its term (Ogunsanmi, 2013).
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The contractor has the responsibility to complete the project on time thereby eliminating delays and establishing a healthy relationship with the sub-contractors.
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This method lends itself more readily for permitting the contractors to initiate their activities on site prior to the completion of the design.
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In this method, the work authorizations are issued for various types of works. The design can be customized so that the needs of the stakeholders can be met.
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The contractor acts in a dynamic role in the success of the project as he is bound by the duty for the successful delivery of the project.
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The employer can engage with the contractors in the designing process so that they can get a more practical solution (Idoro, 2012).
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The employer is not involved with the contractors in JOC and its scope is exclusive to the contractor.
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The management and control of the projects are initiated from the planning phase by the panel of judges evaluating the project.
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Positive and negative aspects of three different procurement methods for construction projects
Advantages and disadvantages of the Design-Bid-Build method of procurement for the construction project
The advantages of the Design-Bid-Build method of procurement for the construction project can be that they provide a useful procurement route for developers. It allows them to control the costs of the project. In this, the contractors are made accountable for design and construction of the project at an agreed price (Morledge and Smith, 2013).
They agree to a specific design with the developer but after the contractor authorizes the contract, he shall have the whole responsibility of the contract. Another advantage is the probability of reduced time in construction. If the contractor is accountable for the design, a lot of time can be saved as the designing and building elements run in a concurrent manner.
The disadvantages can be that if the contractors are granted the liberty to design the base of the building on a pre-agreed price then even if the costs do not rise, still they are likely to work at the lowest possible specifications. Moreover, the builders are not architects. So, there are chances that the designs are not according to the specific skill set (Brook, 2016).
The relationship between parties involved (benefits and problems)
The stakeholders involved in the Design-Bid-Build method are contractors, engineers, owners and architects. The stakeholders involved in the construction project reveal that the Design-Bid-Build method has a significant impact on the distribution of risk amongst the parties. It tries to diminish the risk of the owners by increasing the risk of the other members of the project.
The concept of distribution is also applicable to the allocation of responsibilities as well. The owner might lose control over the specifications of the design while the entity adopting the Design-Bid-Build method may gain some power on the decision-making aspect. The key success factors in this approach are the commitment of the owner to the project and the communication amongst the stakeholders (Plusquellec, Lehoux and Cimon,2016).
Advantages and disadvantages of the Job Order Contracting (JOC) method of procurement for the construction project
The advantages of the Job Order Contracting (JOC) method of procurement for the construction project can be that they can accelerate the timelines of reconstruction. They promote interaction amongst the owner and participants of the design phase and construction phase. The pricing criterion adopted in this method is also firm, constant and objective.
The disadvantages can be that there is a lot of investment required for the owners and contractors who are implementing the Job Order Contracting (JOC). The project development process and line item estimating methods are a significant investment for a successful JOC program. The proper training and support are also required to be provided by consultants that require a huge investment in the beginning.
Some of the owners can confront resistance from the community of contractors in which JOC is perceived as a diminishing the opportunities of the contracts (Volk, Stengel and Schultmann, 2014).
The relationship between parties involved (benefits and problems)
The stakeholders involved in the Job Order Contracting (JOC) method are the contractors, clients, the officials pertaining to campus building and campus fire marshals etc. The scope of JOC is exclusive to the contractor. The contracts of the job order are well defined and the contractors do not have the repetitive work where quick execution is required. Job order contracts create a win-win relationship between the owners, contractors, building users and other stakeholders.
There are shared risk and rewards in Job Order Contracting and cooperation is required amongst the internal and external participants with a focus upon the results (Cooke and Williams,2013).
Advantages and disadvantages of the Best Value Source Selection method of procurement for the construction project
The Best Value Source Selection can be used when it is essential to analyze and compare the factors along with the costs of selecting the most advantageous offer. When the government demands high technical capabilities and low cost, then the best value approach can be the most desirous procurement method of construction (Hardin and McCool, 2015).
It is best suited when the requirements of the government are difficult to explain or are historically troublesome. Therefore, it permits a greater flexibility for comparing the technical and cost factors for determining the value of the strengths, drawbacks and risks of offers. It also takes the advantages of the independent judgment and experience of the judging panel.
The major disadvantages can be sometimes the evaluation criterion does not accurately reflect the requirements of the government. The selection of the wrong criteria can result in monetary benefit to the offeror, which may not be advantageous to the government. Furthermore, a large number of criteria dilutes the consideration of those who are important (Walker, 2015).
The relationship between parties involved (benefits and problems)
As per Schultz and Dotson (2015), coordination is required amongst the various team members in order to ensure consistency in the Best Value Source Selection. The major stakeholders are government and contractors. In this method, the government considers the award to other than the lowest priced offeror or other than the offeror of the highest price. It is based on the method that represents the greatest value to the government.
Recommendations
Kinds of projects best suited to the different procurement methods
Here are some of the recommendations to the potential developer or owner regarding the best projects suited for the various procurement methods of construction which are mentioned above.
Architectural services and engineering, construction engineering and software cater the best kind of projects for the Design-Bid-Build method. The projects of civil engineering and construction are also included in this method. The energy-related systems of the whole building are yet another kind of projects suited for Design-Bid-Build method (Eastman, 2018).
The kind of projects that are best suited for the Job Order Contract is preventive maintenance contracts of Intelligent Transportation Systems. Another project best suited for it is the maintenance of the property and real property maintenance activities of the army. Integrated delivery of the projects for new construction and job order contracting for renovation and repair are examples of delivery methods of construction, which enhance the productivity, satisfaction and quality.
The projects best suited for Best Value Source Selection are the highway construction projects and all the infrastructure projects owned by the government. The best value procurement methods are used in conjunction with a customary design-bid-build system for all the government-owned infrastructure projects. It is gainer interest from agencies of federal and state (Allen and Lano, 2013).
Disclaimer: There is no conflict of interest in terms of the views expressed.
Conclusion
Hence, to conclude, it can be said that determining the optimum procurement method is a challenge for the various stakeholders. They consider an array of methods of procurement, which are at their disposal. In order to assist the public sector clients with the process of decision-making, the group of various stakeholders is involved in developing an approach for determining a solution for their needs.
Several techniques have their own merits but they tend to be prescriptive and therefore fail to recognize the complications, which are associated with the selection process. Many stakeholders are involved in the decision-making process and the decisions would be dependent upon the interaction of variables incorporated with a high degree of intuitive judgment and subjectivity.
Referencing
Allen, E. and Lano, J.( 2013) Fundamentals of building construction: materials and methods. New Jersey : John Wiley & Sons. pp. 1-10.
Brook, M.( 2016) Estimating and tendering for construction work. NY: Routledge. pp. 1-10.
Cooke, B. and Williams, P.(2013) Construction planning, programming and control. New Jersey : John Wiley & Sons. pp. 1-10.
Doloi, H.(2012) Empirical analysis of traditional contracting and relationship agreements for procuring partners in construction projects. Journal of Management in Engineering. 29(3), pp.224-235.
Eastman, C.M.(2018) Building product models: computer environments, supporting design and construction. CRC press. pp. 1-10.
Hardin, B. and McCool, D.(2015) BIM and construction management: proven tools, methods, and workflows. New Jersey: John Wiley & Sons.pp.1-10.
Hasnain, M., Thaheem, M.J. and Ullah, F.(2017) Best Value Contractor Selection in Road Construction Projects: ANP-Based Decision Support System. International Journal of Civil Engineering. 16(6), pp. 695-714.
Idoro, G.I.(2012) Influence of project plans on the outcome of construction projects procured by Design-Build (DB) in Nigeria. Journal of Construction in Developing Countries. 17(2), pp.81-103.
Morledge, R. and Smith, A.( 2013) Building procurement. New Jersey: John Wiley & Sons. pp. 1-10.
Ogunsanmi, O.( 2013) Effects of procurement related factors on construction project performance in Nigeria. Ethiopian Journal of Environmental Studies and Management. 6(2), pp.215-222.
Plusquellec, T., Lehoux, N. and Cimon, Y.(2016) Design Build In Construction: Performance and Impact on Stakeholders [online] Available from: https://www.cirrelt.ca/DocumentsTravail/CIRRELT-2016-57.pdf [Accessed 3rd October , 2018].
Ruparathna, R. and Hewage, K.( 2013) Review of contemporary construction procurement practices. Journal of management in engineering. 31(3), pp.1-10.
Schultz , B. and Dotson, D.(2015) Getting the Best Value in a Source Selection? [online] Available from: https://www.dtic.mil/dtic/tr/fulltext/u2/1016282.pdf [Accessed 4th October , 2018].
Volk, R., Stengel, J. and Schultmann, F.(2014) Building Information Modeling (BIM) for existing buildings—Literature review and future needs. Automation in construction. 38, pp.109-127.
Voutchkov, N.( 2012) Desalination engineering: planning and design. McGraw Hill Professional. pp. 1-10.
Walker, A.( 2015) Project management in construction. New Jersey : John Wiley & Sons. pp. 1-10.
