Procurement of Construction, Engineering and Professional Services - Term Paper Example

Procurement of Construction, Engineering and Professional Services Name: Course: Instructor: Date: Contents 1.0.Introduction 3 1.1.Aims and objectives 4 2.0.Statement of problem 5 3.0.Analysis of the problem 5 The entire problem lies within the current procurement systems as being implemented in public construction projects. The analysis of the problem will therefore be basically be an analysis of the current tendering and [procurement systems including the supply chain selection, tender evaluation and contract award process. for instance the major flaws lies within the three major tendering and procurement process, specification, selection and awarding. 5 3.1.Management Contracting 6 Management contracting cab be cited as the major cause of the setbacks and shortcomings in the current procurement system. This process was developed in order to ensure that the package contractors work in direct contact with the management contractor since clients did not wish to be in direct with the works trade team. Since initial contractors majorly consisted of large contracting firms who had sufficient expertise to take charge of works team as part of their project managerial responsibility. In this case, the initial mistake lies in the exclusion of the client from the project management. For instance, this leaves the contractor at liberty to manipulate the bill of quantities for individual gain. Similarly, the client cannot have any control over the overall duration of the whole project. 6 3.2.Contractual Risks 6 According to the provisions of the management contracting approach, while the management contractor would develop the bill of quantities and the whole project estimate, all the contractual risks associated with the project are spread between the client and the works/trade package contractors. The management contractor is therefore not legally responsible for any default or whatsoever caused by the works/trade contractors. Again, this is a great mistake; the project management ought to ensure efficient resource usage and counter any probable losses. In this regard, secluding the contract manager from the contractual risks might eventually increase the financial burden on bother the client and the works contractors while the project lump sum to the contract manager is never tampered with. 6 4.0.Proposed solution 7 4.1.0.Competitive Design and Build Procurement System Approach 7 4.1.1.Design and Build procurement system 7 4.2.0.Analysis of the Design and Build Procurement System 8 4.2.1.Characteristics of the Design and Build Procurement System 8 IV.2.2.Contractual relationships 10 Risks associated with Design and Build Procurement system 11 4.4.4. Advantages of the Design and Build Procurement system 12 4.4.5. Disadvantages of the Design and Build procurement system 13 5.Conclusion 14 6.Recommendations 15 7.References 16 1.0. Introduction The south East England Local District council intends to initiate and execute a multi-purpose health and fitness facility to serve as a fitness center as well as a community center. The complex nature of the intended facility therefore requires sufficient panning especially with regard to tendering and procurement to ensure that the final responsibility of erecting the new public facility is eventually awarded to a worth and deserving contractor organization. For instance, the implementation team intends to put up a structure approximately 3700 square meters to serve a wide range of functions such as 25 m training pool, 1250 square meters gymnasium and aerobic studio. Similarly, the gross floor area of the proposed facility should be further subdivided to cater for the usable floor area approximately 2830 square meters in size. These are major subdivisions which require much though and consideration in the design and implementation phases to produce a structure that meets the various descriptions within the plan. The concept of Design and Build procurement system therefore comes in handy in such like a project that requires constant reference to the initial plan as intended by the client. In this case, in order to eventually build a public facility that befits the various functions as desired by the implementation team, there is need to actively involve the same team in the whole process of executing the project, especially in the initial design. The Design and Build procurement system therefore allows for such free inclusion of the client, in this case the leisure committee of the local authority, and thus becomes the most appropriate and suited procurement approach to go by in this case. This report is therefore established to offer guidance to the leisure committee on the most suited procurement approach to implement if they should actually meet the demands of the local authority. 1.1. Aims and objectives The aims and objectives of this report include the following: i. To provide a critical analysis and in-depth evaluation of the problems facing the current procurement systems. ii. To provide an alternative cost effective procurement system for the public to replace the current procurement procedures. iii. To effectively analyze the Design and Build procurement system as the preferred and most cost effective procurement approach to be implemented and thereby replace the current procurement systems iv. To provide possible recommendations and suggestions on the implementation of the Design and Build procurement system approach. v. To provide possible recommendations aimed at improving the general tendering and procurement procedures as currently being implemented. 2.0. Statement of problem This report is written in line and basing on the submitted annual expressions of interest open invitation in which a speculative sketch scheme proposals by a design and build expert involving the use of a competitive design and build procurement system approach. It is therefore expected to shed more light on the current management contracting procurement process vis-à-vis the proposed Design and Build procurement system. Among the issues noted in the open invitation was the need to provide an alternative and equally effective procurement for public and private implementation and thus third forms the major problem tackled in this report. The proposed new procurement system as contained in this document is thus intended to replace the current and existing current facility in which the public authority has often cited as too expensive to refurbish and upgrade. In this case, the existing facility will be totally demolished under a separate contract and the proposed Design and Build procurement system installed as the best alternative in this case. 3.0. Analysis of the problem The entire problem lies within the current procurement systems as being implemented in public construction projects. The analysis of the problem will therefore be basically be an analysis of the current tendering and [procurement systems including the supply chain selection, tender evaluation and contract award process. for instance the major flaws lies within the three major tendering and procurement process, specification, selection and awarding. 3.1. Management Contracting Management contracting cab be cited as the major cause of the setbacks and shortcomings in the current procurement system. This process was developed in order to ensure that the package contractors work in direct contact with the management contractor since clients did not wish to be in direct with the works trade team. Since initial contractors majorly consisted of large contracting firms who had sufficient expertise to take charge of works team as part of their project managerial responsibility. In this case, the initial mistake lies in the exclusion of the client from the project management. For instance, this leaves the contractor at liberty to manipulate the bill of quantities for individual gain. Similarly, the client cannot have any control over the overall duration of the whole project. 3.2. Contractual Risks According to the provisions of the management contracting approach, while the management contractor would develop the bill of quantities and the whole project estimate, all the contractual risks associated with the project are spread between the client and the works/trade package contractors. The management contractor is therefore not legally responsible for any default or whatsoever caused by the works/trade contractors. Again, this is a great mistake; the project management ought to ensure efficient resource usage and counter any probable losses. In this regard, secluding the contract manager from the contractual risks might eventually increase the financial burden on bother the client and the works contractors while the project lump sum to the contract manager is never tampered with. 4.0. Proposed solution The only viable solution to the various flaws within the current procurement and tendering system is provision of a more elaborate procurement system that meets the demands of not only the clients but even the various design contractors as well as contractor organizations. In this case, the Design and Build procurement system is proposed as the most suited approach to rectify the identified flaws. Within its context, the Design and Build procurement system ensures active participation of all the involved parties in the execution process of the entire project to completion. The risks involved in the Design and Build procurement process are minimal and to the advantage of the involved parties, the contractor as well as the design and implementation team. In this regard, the Design and Build procurement system is presented as the most apt remedy that will effectively reduce the overall cost of projects amongst the clients as well as significantly cut down on the overall project execution time. The proceeding sections therefore present and in-depth analysis of the Design and Build procurement system with a view of justifying the procedure as the most suited remedy for public procurement and tendering process. 4.1.0. Competitive Design and Build Procurement System Approach The Design and Build procurement method has been extensively used in the United Kingdom in various procurement transactions. 4.1.1. Design and Build procurement system The competitive Design and Build procurement system is a project delivery system in which the design and the entire construction tasks are assigned to a single Design and Build contractor. In this system, the entire execution of the project is wholly enthroned on a single point of responsibility contract and thereby helping minimize the overall risks in the whole process on the client. By single approach, the Design and Build contractor is therefore fully responsible for any contractual remedies that might come up in the course of executing the project regardless of the source or nature of the fault. This approach subsequently reduces the overall duration of the entire project through implementation of an overlapping schedule design and construction approach. Design and Build procurement systems are distinguished from other procurement systems from the fact that one organization is totally responsible for both the design and construction. Design and build was initially used in building houses in the private sector. Arising from this, package deal design and build was subsequently developed as a procurement system in which contractors were actively involved using their own propriety building systems and constructing on a repetitive theme. However, the Emerson Report of 1962 and The Banwell Report of 1964 encouraged the use of Design and Build for public sector contracts thereby increasing the use of this system within the United Kingdom. Currently, the Build and design procurement system is the widely used procurement system in the whole of the United Kingdom. 4.2.0. Analysis of the Design and Build Procurement System 4.2.1. Characteristics of the Design and Build Procurement System The design and build procurement system has got four major variants within its implementation process which can be used to distinguish the procurement process from other similar practices and approaches. These include: I. Direct The client deals directly with the organization. This reduces chances of manipulation of any aspects of the projects due to the close working proximities between the client and the contracted organization. Even if there might be cases of appraisal of the design, specification, whole costs and the construction methods, costs and time, this will be without competition. This also applies in speculative house for example where different departments within the house building contractor, developer organization would be involved and therefore all profits accrued will be channeled towards one contractor or developer organization. II. Competitive Design and building procurement process has often ben opted for by most contractors and developers who describe it as a true design and build method since it allows contractors to offer process for the design and construction , time and cost in completion. Such allowances as provided by the approach ensure that the contractors put in their best effort and resources and therefore quality out to the benefit of the client. It therefore serves as the most appropriate contractors’ proposal and answer to detailed employers requirements. III. Develop and construct: This is basically a design and builds procurement method that provides a solution to some of the client difficulties inherent in the competitive design and build. In develop and construct, the client appoints an architect and a consultant to develop an outline design. In this case, the client can effectively work with the design team so as to provide solutions that satisfy his employer’s requirements. The approach therefore allows for incorporation of client suggestions when developing the design of the intended project hence offering more client satisfaction after completion IV. Novated develop and construct This refers to develop and construct procurement system that also involves the client novating his outline design team to the contractor. This therefore implies that the design and build contractor is required to take on the employment of the client’s design team as his own design team, together with all responsibility for the design work undertaken. While all the variants as listed above are distinct from each other, the entire procurement process is controlled by the contractor and therefore the client is only left with a single point of contact as well as single point of responsibility. Some of the distinguishing characteristics of the Design and Build procurement system is that the involved organization has total responsibility over both the design and construction. The organization can therefore dictate and control the contracted team on certain aspects of the project such as issues regarding change of design or intentional delays in the execution process. In fact, this is the key reason why the system was extensively used in building houses in the private sector. IV.2.2. Contractual relationships The Design and Build Procurement systems forms a kind of contractual relationship in which the project manager sits at the top of the hierarchical order. The project manager might be an in-house salaried employee or an external consultant hired to oversee the entire project. The project manager therefore acts as the employee’s agent in the entire process. Right after the project manager sits the client to whom the whole project belongs to and will be handed over after completion. The client therefore serves as the link between the project manager and the Design and Build contractors team. There is also a design and build contactor just after the client. Other parties such as sub-contractors and suppliers of the various materials are therefore directly answerable to the design and build contractor. The whole hierarchy of relationships is as shown below. Risks associated with Design and Build Procurement system i. Lowest overall risk The Design and build procurement system makes it possible to integrate both design and construction activities to rather than doing them separately. In this case, due to the economics of the choice of the various constructional materials involved, as well as the methods and systems can be successfully incorporated within the design details and thereby overall low t risks ii. Low time risk Design and Build procurement system provides for overlap in construction and design processes thereby considerably cutting down on the overall time duration of the entire project. In this approach, a number of phases can be simultaneously implemented thereby significantly reducing on the overall time the entire project takes. iii. Cost risks Due to the provision of lump sum tender, the design and build procurement system culminates into cost certainty thus reducing the client risk. 4.4.4. Advantages of the Design and Build Procurement system The main advantage of this procurement system is on the client in the sense that that the client is able to consider alternative design, construction, cost, time and quality solutions to their employer requirements. The client has freedom to access and evaluate a number of available choices before finally choosing on his or her preferred design. There is also allowance for the client to seek expertise help and consult before making final decision. In fact, the client can pick on a certain design and drop it for a more preferred one after such consultations and expertise advice. In a nut shell, this approach offers the client significant freedom and allowance when it comes to choosing a design. 4.4.5. Disadvantages of the Design and Build procurement system The major disadvantage associated with Build and Design procurement system is that there is always need to develop and subsequently provide a definitive employer’s requirement project brief since the contractor may require firm proposals in order to bid a lump sum fixed amount for the project. In this case, the client ought to be fully aware that once the contract has been entered into, modifications such as client driven changes can be extremely difficult for incorporation by the contractor as well as expensive on the side of the client. Hence in this procurement system, the freedom of the client to alter any financial obligations by way of appropriately adjusting is limited and virtually impossible. In most cases, most clients find it difficult to spell out up-front in document their requirements for building and how they intend to use it. The project manager might therefore take up responsibility to spell out the same up-front document leaving more room for manipulation and exploitation of the client especially where incredible contractors are involved. Similarly, it is also difficult to carry out evaluation of contractor’s proposals and the overall quality of what is being offered across a wide range of client requirements within such a tender competition. Once the tender documents have been signed and contract entered, the entire project executions remains the core responsibility of the project manager. Any misunderstandings or similar occurrences between the client and the project manager might easily affect the entire implementation process. 5. Conclusion The leisure committee of the public authority is indeed interested in finding the most effective procurement and tendering approach that will not only guarantee ultimate success of the intended project but also ensure that the various deliverables are done so within the stipulated timeframe. Similarly, the leisure committee of the public authority intends to find the most cost effective approach that will ensure all the risks in the entire project are evenly distributed between the various contractors and the client thereby helping instill a sense of concern and efficient resource management among the involved parties. Being a public project, aspects such as oversight responsibilities as well as supervision and monitory ought to be jointly done by all the parties, contractors and client and therefore further need to implement a procurement system with such provisions. The current public procurement system has evidently proved inefficient and costly and can therefore not be entrusted by the leisure committee of the public authority to successfully deliver the proposed forthcoming project. It contains so many loopholes which when capitalized upon by any witty or unscrupulous contractors and project managers, and then the clients as well as subcontractors and suppliers will be in for great losses. In the same regard, the various flaws and shortcomings of the management contracting will not only increase the overall costs of the whole project but will also drag the implementation of the entire project. In this regard, it will be in the best interest of the leisure committee of the public authority to adopt and implement the competitive Design and Build procurement system if they should deliver on the public mandate. 6. Recommendations A number of recommendations can be floated for implementation by the leisure committee of the public authority in the course of executing the intended public project. The recommendations are made in order to help the implementing committee reduce the overall risks involved by distributing the same risks equally amongst the contractors and the clients as well as ensuring effective and active participation of the leisure committee of the public authority, herein presented as the client, in the whole project implementation process. i. The leisure committee of the public authority adopts the competitive Design and Build procurement system rather than the management contracting system to avoid the setbacks in cost and time as earlier on highlighted in the various sections of the report. ii. The leisure committee of the public authority subsequently awards the tender to a Design and Build contractor, with sufficient expertise and experience as well as sufficient resources to effectively manage the works team. This will thereby avoid any extra payments once the contract lump sum is made since such experienced contractors have sufficient financial power to run such projects. In this case, it is therefore recommended that the tender be eventually be awarded to a contracting organization rather than individual contractors. iii. If the management contracting is to be used in the tendering and procurement process, then various amendments should be made so as to actively involve the client in the entire process of implementing the various contractual projects. Amendments are the only way to subsequently empower the client to have some voice on such issues such as how long the entire project should last. iv. There is need to review the entire procurement and tendering process and subsequently make the client an active member of the entire project implementation team rather than limiting the participation of the client to financial obligations of the project only. For instance, the relati0onship between the project manager and the Design and Build Contractor should be developed with the client as the link between the two stakeholders in the project. v. The final recommendation regarding the implementation of future public projects is that the competitive Design and Build procurement system should be adopted as the most suited approach due to the numerous strengths and advantages as enumerated. Efforts should also be made to educate the general public on the benefits of implementing this procurement system so as to seal all loopholes through which unscrupulous contractors might use to con clients, sub-contractors and even suppliers 7. References AKINTOYE, A., GOULDING, J., & ZAWDIE, G. 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Bids, tenders and proposals: winning business through best practice. Philadelphia, PA, Kogan Page. GREAT BRITAIN. (2007). The future of UK manufacturing: public procurement : report, together with formal minutes, oral and written evidence. London, TSO. POMAZALOVA, N., & POMAZALOVA, N. (2013). Public sector transformation processes and internet public procurement: decision support systems. Hershey PA, Information Science Reference. GRIFFITH, A., KNIGHT, A., & KING, A. (2003). Best practice tendering for design and build projects. London, Thomas Telford. HACKETT, M., ROBINSON, I., & STATHAM, G. (2007). The Aqua Group guide to procurement, tendering & contract administration. Oxford, Blackwell Pub./Davis Langdon THERON, C., & DOWDEN, M. (2014). Strategic sustainable procurement: an overview of law and best practice for the public and private sectors PESSO, C. (2000). Greener public purchasing issues and practical solutions. Paris, OECD. INSTITUTION OF CIVIL ENGINEERS (GREAT BRITAIN). 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