Ethics And Professional Practice For Social Buildings - Procurement Process

Traditional Procurement Process

Discuss about the Ethics and Professional Practice for Social Buildings.

The procurement process has been a fundamental part of construction ever since human beings outsourced paid external assistance in building their homes and social buildings. These construction processes utilized a traditional client-contractor relationship that saw the risk of the entire project falling either solely on the contractor or solely on the client. They were simple as there was not much technical assistance required aside from the contractor and the labourers (Davis, 2008). The traditional procurement process had three main variations which included reimbursement contracts, lump sum contracts and measurement contracts. The reimbursement and measurement contracts are similar in that that an agreed price or term is usually stipulated before construction but the reimbursement measurement is where contractors are paid after the work is done unlike the lump sum contract where the work is paid for in advance. The measurement contracts on the other hand are where work is undefined and can only be fully valued after it is done (Rowlinson and McDermott, 2005).

These procurement methods are however prone to some disadvantages owing to the scale of work for which they were based on. They are impractical for large and complex design and construction works owing to the fact that the risk in all the cases is unbalanced falling either on the contractor or on the client. On the overall, they are also not conducive for projects that have time constraints as the whole traditional process involves a lot of stages that must all be bureaucratically handled before the actual construction work can kick off (Manley and Chen, 2015).

For that reason, a few modern methods have come up balancing the overall risk involved in a project while maintaining a healthy relationship between both parties (New South Wales Government, 2005). These methods have also either combined or totally done away with some stages in the whole construction process in order to quicken the overall construction project and these are discussed below.

This is a method of procurement where the client hires a technical design team to handle all the preliminary designs of the structure being constructed. The design team is also tasked with the responsibility of preparing contract documents and overseeing a tendering process where a contractor is picked based on the reputation and bid price. This method of procurement usually puts the design team consisting of an architect, engineering team and quantity surveyors on the client’s side where they coordinate the construction process by liaising with the contractor. They act as the client’s representatives both technically on paper and on the site (Masterman, 2003).

Design Bid Build

In this case, the design consultant is usually the only other contributor in terms of design and specification of the structure and this puts them in a position where they take over the contract documents as soon as preparation is done. There are rare cases of bidding for this position and in most cases, the client usually approaches a firm first which performs all those responsibilities for them. This means that, while a contractor is paid by the client, their supervision falls solely on the design consultant’s responsibilities (Masterman, 2003). In the hierarchy of the functional process, the client and design team could occupy the same level with the contractor below them or the client could be above the design consultant who would in turn be above the contractor.

For the client, the main advantage of this method is that they are guaranteed of a reliable technical design. This is because the design consultant works with the client and their profit comes from both the client and contractor. This enables a reliable design process with utmost dedication from the consultant (Morledge, 2013). They can also get near accurate quotations limiting the variations expected and therefore unforeseen expenditures. It is however time consuming as all the processes of tendering have to take place before construction can take place.

For the designer, the advantage is that they represent the client as an equal and are paid off the project not by a particular side. They are in charge of the design, tendering and construction process enabling them to have control over a vast array of elements. They are however subjected to preparing for much of the legal work whose liability falls on them should an error occur (Morledge, 2013).

For the contractor, the advantage is that they face fairly fewer variations allowing smoother flow of work. For a specified profit, a contractor’s responsibility is limited only to construction allowing them to move on to other projects or build for parallel projects should the time and resources allow. They are however susceptible to the bulk of the financial strain as the tendering process is expensive and they are also paid in phases only after certain predetermined portions or stages of the work are complete. They are also locked out of the design process unable to offer technical or managerial input which would aid them in the construction process (Manley et al., 2014).

This type of project is best suited for complex structures requiring minimum price fluctuations, high quality of work done and least construction time taken. It is recommended for clients with no technical design or construction background hoping to achieve the best performance (Wang et al., 2010). Examples include construction of structures owned by organizations, companies, individuals or industries with no technical design or construction background e.g. banks, schools, etc. or whose technical personnel are not qualified by the oversight bodies to participate in the projects.

Design and Build

This type of procurement process has only two parties. Aside from the client, the contractor is usually the other side. In this type of contract, the contractor is usually in charge of producing every technical design component of the construction and finishing up by constructing it. This method has its own improvements over the traditional approach as it is a lot more time saving than the methods were. It also cuts down on the red tape required to see construction projects finished and especially when compared to a heavily staged process like the design bid build and traditional approaches (Seng and Yusof, 2006).

This process involves the contractor at the very beginning of the construction process unlike where the contractor joins in after a significant portion of the planning and design work has been carried out. As the method name suggests, the contractor produces the designs for the work as agreed with the client then. The client usually has an idea of the desired end result which, upon regular information exchange, is the basis of the contractor’s design process (Seng and Yusof, 2006).

The contractor, in this case, is usually in charge of the design consultants and all other sub-contractors. As for the design part, they may choose to have a joint venture with a design company, subcontract the design services or utilize an in-house design team for this end. The responsibility of coordinating these parties falls squarely on the contractor’s hands. The process therefore flows from contractor identification by a client, to the design and then construction without having to stop to tender some process components (El Wardani et al., 2006).

The main benefit enjoyed by the client in this case is are a shortened construction process with minimal involvement of multiple parties which leads to an economical balance. The fact that it is handled by one contractor also provides security in terms of accountability but it could also be disadvantageous where the contractor breeches the contract (Adafin et al., 2016). The variations in contract elements may also be a huge blow to the client as it may mean greater expense. It suits the contractor as they have a chance to contribute their technical and management expertise allowing for the design process to accommodate their capabilities and limitations. It also allows for direct communication with the client which reduces the delay in resource gathering and information collecting. This method is also adaptable to BIM technologies much to the benefit of both the client and contractor (Du et al., 2016).

Advantages and Disadvantages

This method of procurement is suitable to a few limited options which include where the structure being constructed is simple and/or requires minimal innovation and complexity (Wang et al., 2010). It is also suitable for structures whose design is almost uniform across various industrial functions and geographical locations. Such a building or structure has minimal variations too. An example of such a structure is a warehouse where there are very few design variations between various warehouse designs. It is also practical where only one technical team is needed for design, construction and maintenance and where a construction program’s activities overlap each other (Seng and Yusof, 2006).

This is a construction procurement method that incorporates one extra party whose sole responsibility is to manage the processes denoted in the construction project. This is similar to management contracting where a client hires an external management team to head the design, documentation and construction process too (Doloi et al., 2015). The only difference in this case is that the construction manager or management team usually has no contract with the subcontractors but rather they are contracted by the client. As such, their responsibility is simply managing the various parties involved, technical advice and representing the client in both the design environment and the site (Broome, 2002). They also prepare contractual documents for the client. Basically, they are a client’s proxy in the construction process but with no legal connection to the subcontractors (Manley and Chen, 2015).

The advantages experienced by the client in this case include rapid construction time, comprehensive management expertise at the commencement of the project and coordination of the technical teams. The client also gets a guarantee of accountability with the project. The client is however more open to risk in this case as they directly sign into the contract with the other contracting parties. This means that any variation in the contract would also affect the client directly. They are also susceptible to more expense with a construction manager than without (Chen et al., 2015).

For the construction management team, the advantage with this method is the liberty to engage and coordinate various parties according to their expert opinion. They are able to complete more processes at a go with the right compartmentalization skills and it is even possible for construction managers to take on more than one project at a go. The major disadvantages faced by this method include the lack of total authority over the subcontractors making them susceptible to open rebellion (Singh et al., 2007).

Suitability for Complex Structures

The subcontractors in this case include the technical design team i.e. architect, engineers, quantity surveyor and contractor. The advantage of this method is that it includes them all at the conception allowing them to work together as a team for maximum accountability and consideration of limitations. It reduces the working friction between various contracting parties as the lead charge is the construction manager and minimizes their risk considerably as the client takes the majority of it (Ross, 2003). This method makes it easier to integrate BIM technologies and other digital modelling to allow for convenient information sharing and simulation. This method however limits their independence and freedom of changing the set contractual guidelines for their individual profit meaning that profits for each subcontracting team may be lower than with other methods (Singh et al., 2007).

This method is suitable for extremely large projects or projects including repetitive processes that need to be coordinated. It is recommendable where the client, while wishing to take full responsibility of the project, requires professional assistance owing to a variety of limitations. An example of a project needing such a procurement process would be the construction of an infrastructure project e.g. road or railway spanning a relatively long distance that is subdivided into sections allowing for more subcontractors, either per section or for more than one section (Lu et al., 2010).

Conclusion

The preferred method is usually a matter of client preference. To obtain optimum economic gains/savings and quality against time spent, a client needs to factor in the advantages and disadvantages highlighted above in order to select a suitable procurement method (Victoria State Government, 2006).

References

Adafin, J., Rotimi, J.O. and Wilkinson, S., 2016. Risk impact assessments in project budget development: architects’ perspectives. Architectural Engineering and Design Management, 12(3), pp.189-204.

Benson, L., 2010. Organizational flexibility Management in Construction.

Broome, J., 2002. Procurement routes for partnering: a practical guide. Thomas Telford.

Chen, L., Manley, K. and Lewis, J., 2013, May. The impact of construction organisations’ learning capabilities on collaborative projects. In Proceedings of the 19th International CIB World Building Congress. Queensland University of Technology.

Davis, R.P., Love, P. and Baccarini, D., 2008. Building procurement methods.

Doloi, H., 2015. Key Factors of Relational Partnerships in Project Management. In Handbook on Project Management and Scheduling Vol. 2 (pp. 1047-1061). Springer International Publishing.

Du, L., Tang, W., Liu, C., Wang, S., Wang, T., Shen, W., Huang, M. and Zhou, Y., 2016. Enhancing engineer–procure–construct project performance by partnering in international markets: Perspective from Chinese construction companies. International Journal of Project Management, 34(1), pp.30-43.

El Wardani, M.A., Messner, J.I. and Horman, M.J., 2006. Comparing procurement methods for design-build projects. Journal of construction engineering and management, 132(3), pp.230-238.

Lu, S.T., Kuo, Y.C. and Yu, S.H., 2010, July. Risk assessment model for the railway reconstruction project in Taiwan. In Machine Learning and Cybernetics (ICMLC), 2010 International Conference on (Vol. 2, pp. 1017-1022). IEEE.

Manley, K. and Chen, L., 2015. Collaborative learning model of infrastructure construction: a capability perspective. Construction Innovation, 15(3), pp.355-377.

Manley, K. and Chen, L., 2015, September. Client learning and the performance of collaborative infrastructure projects. In The Proceedings of the 6th International Conference on Engineering, Project, and Production Management (EPPM2015) (pp. 508-517). Griffith School of Engineering, Griffith University.

Manley, K., Rose, T. and Lewis, J., 2014, May. The distribution of absorptive capacity among construction supply chain participants. In Proceedings of the CIB 2014 International Conference on Construction in a Changing World (pp. 1-16). The University of Salford/International Council for Building (CIB).

Masterman, J., 2003. An introduction to building procurement systems. Routledge.

Morledge, R. and Smith, A., 2013. Building procurement. John Wiley & Sons.

New South Wales Government, 2005, February. Procurement Methodology Guidelines for Construction. Version 1, NSW Government, Sydney, Australia.

Ross, J., 2003, April. Introduction to project alliancing. In Alliance Contracting Conference (Vol. 30).

Rowlinson, S. and McDermott, P. eds., 2005. Procurement systems: A guide to best practice in construction. Routledge.

Seng, N.W. and Yusof, A.M., 2006, September. The success factors of design and build procurement method: a literature visit. In Proceedings of the 6th Asia-Pacific Structural Engineering and Construction Conference (APSEC 2006) (pp. 5-6).

Singh, A., Shiramizu, S. and Gantam, K., 2007. Bid Risk and Contingency Analysis. Cost engineering, 49(12), pp.20-27.

Victorian State Government, 2006. Project Alliance Practitioners Guide. Department of Treasury and Finance, viewed 21 September 2017, <https://www.dtf.vic.gov.au/projectalliancing>.

Wang, J., Guan, S. and Lin, D.Q., 2010, August. Study on approach of cost risk assessment in bidding phase. In Internet Technology and Applications, 2010 International Conference on (pp. 1-4). IEEE.