Promotion of Closed Systems Rather Than Opens Systems of Procurement in the Construction Industry - Coursework Example

PROMOTION OF CLOSED SYSTEMS RATHER THAN OPENS SYSTEMS OF PROCUREMENT IN THE CONSTRUCTION INDUSTRY Name of Student Name of School Promotion of Closed Systems Rather Than Opens Systems of Procurement in the Construction Industry. The importance that is placed on procurement systems cannot be taken lightly as it is believed that good procurement goes hand in hand with successful projects. The methods of procurement that are chosen should coincide with the needs of the project. This article looks at why procurement promotes the use of closed systems rather than open ones when handling construction projects. Statement of the problem. Building projects are often unique and when a project manager is considering a strategy for delivery, clients should be made aware of the many different activities and processes that necessitate the procurement process to enable proper management (Walker, 2007). For one to chose the best method of procurement there is need to establish the best overall arrangements for procurement, a contract system for the work packages that are in the project and also how the procurement will be managed to suit the delivery system (Franks,1998). Once a primary strategy has been established then there are factors that should be considered which include the client resources that touch on his or her knowledge. Sometimes their goals are influenced by the nature and culture of the organization and their inclusion in such projects should be considered (Winch, 2010). The possible impact of technological, political, social, legal, commercial and economic factors that may have an effect on the clients business should also be put in mind. Project characteristics should be checked as it would influence the cost, time and the risk involved Since many if not all projects have a time scope, it is important that a reasonable amount of time is allocated in the different tasks that are included in the project such as design and construction to make sure the best results are arrived at. Items such as planning approvals are known to take time and as such can overlap on the time allocated for construction. Time and cost tradeoffs can be evaluated (Masterman, 2001). An analysis of the cost of the project design should be done. It is because the designs are what influence the cost at the time tendering is done and as such after designs are complete, changes should be avoided since they influence the cost. The demands of the client should be determined in the initial phases of the project to ensure the changes are minimal and the impact on the cost and time scope is kept to a reasonable limit. Sometimes the problem does not arise from the methods in particular but it comes with the absence of proficient expertise and the counsel given while picking the kind of method that is suitable for the project. The most serious problems arise during the procurement process when there is a shortfall in correspondence which is then followed by changes being made to the client’s requirements of the job and issues relating to acceptance of liability when something goes wrong. Communication between industry experts and customers is important so as to achieve best practice. It in turn reduces the need for alterations in the client’s requirements and there is clarification in the liability of issue arising in the project. Problems also arise in the designing and communication between parties and to solve these problems communication must be upheld where compromises are found and it helps in achieving value for money. There are however many factors, some of which are out of the control of the contractors and customers hands that lead to cost overruns. The organizational structure for any given project should relate to the position of that project on the closed or open spectrum. If a project leans more on the closed end of the spectrum the organizational structure is designed to be more efficient and the entities forming the system of the project are more rigid and structured and are termed as mechanistic structures (Davis et al, 2008). They are characterized by high levels of complexity, centralization and formalization. However some construction projects tend to lean towards the open end of the structure spectrum that requires high levels of openness in the organizational structure. An important point to note is that systems do not control the environment which is external to them. It creates a problem in that the entities that form the external environment may not be working towards the attainment of the project goal. The production system should be capable of interacting with and responding to its external environment. Systems can also be set up to protect the project from the varying external conditions (Rwelamila et al, 2000). When interaction is established with the external environment the procurement system is regarded as open and when there is no interaction then it is a closed system. The construction industry is deemed as low profit and having many failures because relevant organizational systems are not put in place to ensure positive outcomes. For projects that cost five million dollars or less traditional procurement systems are found to be more effective and suitable on projects that are of low value. On projects running between five million and fifty million design and build is seen as the most fitting. On projects of large value partnering is viewed as the best option because collaborative working practices that are associated with partnering are found to be better for high value projects. High value projects that use traditional methods allow for little freedom when need arises for change in the design stages. Problems like these lead to the project being over budget while it also goes out of its time frame. Analysis and investigation of the problem. When using these closed systems one should consider that consultants are brought on board to give advice on matters relating to design and cost. Contractors rely heavily on instructions and information given to them by the architects who have to do it on time to avoid lapses in time limits (Walker et al 2008). Matters relating to assessment should be handled by the employer’s consultants. When it is not possible to determine the nature and amount of some of the tasks it is wise to adopt the traditional system on account of the approximate quantities. The benefits of such a system that is regarded as open include the accountability that is found due to its aggressive selection (Fewings, 2013). There is equal competition since all who are tendering bid on the same principle. The prices are definite when the contract is granted. Alterations being made to the agreement are easy to make. It is a more familiar technique since there is the inclusion of the client allowing for a better understanding of the expected outcome. It allows for a high level of functionality and there is improved quality in the end product much to the delight of the client. There are also downsides to using this method because it can sometimes take a lot of time to give out all the documents pertaining to the contract and may cause disputes to arise. The duration of the project may be longer since the construction cannot start without completion of the design. Input from the consultants on the design and the planning is not available because they are not commissioned during the design period (Oyegoke et al 2009). While using the design and construct method the use of one firm reduces the cost and also the time that is taken from having separate contractors and designers. The running of design and construction activities together reduces the time that the project takes in general (Lam et al, 2008). Construction is found to be better in quality since the contractor also makes inputs in to the designing. Price determination is acquired before construction begins seeing as the client’s demands are specified early enough and changes cannot be made. The disadvantage of using this system is that sometimes clients experience challenges when it comes to preparing briefs that are all inclusive, design liability is limited to the standards outlined on the contract (Lindahl et al, 2007). Clients are expected to commit to early concept designs even before the detailed designs are completed and any changes to the project outline can be costly. Comparison of bids is not easy due to difference in designs and prices for each different project. Design and construct systems are mostly used when the project is not complex but rather simple. Where the scope design might change it is also best to use this system. When an organization is expected to take liability for risks in building and design and also when the overlapping activities such as design and construction can be accelerated. It is found to be a closed system of procurement and the use of novation excludes the inclusion of the client and sometimes problems may arise with the design including errors and omissions. It sometimes lead to a design that might not be applicable leading to more costs being incurred by the client as they try to rectify the mistakes which would have been avoided if it were a more open system allowing communication between the client and the designers. The company handling the project is left with the power of choosing subcontractors and suppliers (Yisheng, 2008). The design and construction procurement system requires that the contractor take some of the responsibility for the design and the extent of the liability should be well outlined in the contract. Some of the contracts are found to limit the draft liability of the expert on their professional obligation to make sure they carry out due care and diligence in the project. Clients may specify their requirements briefly or in detailed specifications (Erik et al, 2007). The contractor is allowed some input in the form of performance requirements. This method offers definite information on the contract sum while also bringing cost benefits to the client. It is because the combination of construction and design methods coupled with the freedom given to the contractor to use their market knowledge allows for competitive pricing. Effective programming is gained and work on the site is started with no delays. Before commencement time should be given to the consultants to ensure they handle all the details and make comparisons of other competing tenders (Hale et al, 2009). After wards changes being made to the contract are found to be expensive. Since the employer only uses one firm it is easy for him to appoint blame if something goes wrong. However the client lacks control when it comes to the detailed design of the building making it more of a closed system. The responsibility to accomplish the task in the set time limit is solely placed on the contractor since they handle everything. The employer is expected to commission consultants to counsel on the preparation of the requirements and should be allocated enough time to do so. When designers and estimators work together there are benefits to be found in the contractor’s knowledge of the market as it allows for the project to be run economically, efficiently and in a smooth manner (Olander, 2007). For construction management, Management procurement applies best to the large and complex projects that move fast and where there is the need to finish the project early. It needs a lot of assurance and conviction because the firm’s contract price is usually not available before work commences on the site so the decision to take on the project is done on estimates of the price (Aritua et al, 2009). Interests of the client are put first since the management contractor is the liaison of the client. When the management contractor is appointed at an early stage their expertise is useful in the design stages of the process. In most cases the design work runs in parallel with the construction and does not interfere with the costs, and this would be found to be difficult if the traditional method was being used. Ordering of material with long delivery time is possible without having uncertainties which is not possible in traditional procedures. Projects continue based on the contract cost plans but surveyors are involved to ensure cost control (Rameezdeen et al, 2012). Management procurement system includes other branches that deal with construction management, design and managing and also management contracting. In management contracting the clients commissions a non-partisan team and also a management contractor. Here there is the possibility of starting work on the site early as is it found to be a more flexible contract that even allows for changes in design while construction is going on (Harris et al, 2013). It is more open in nature and a lot of trust is required between the client, contractor and design consultants. It is better to appoint contractors during the outline stage to allow for them to issue advice on the design program, delivery of the building materials and equipments, tender action and also on the construction. Management contractors take on the work under the premise of the contract levy plan formulated by quantity surveyors and the business owner accepts most of the liability since there is no surety about levies and programs (Wysocki, 2011). In building management the management contractor is selected after a rigorous undertaking where a fee is paid for administration of the project which includes developing a program, coordinating the design and construction tasks, and fostering collaboration to improve the projects outcome. Here there are few changes made in the contract, there is overlapping of design and construction reducing the time taken on the project (Smith et al, 2009). Confrontations between the design team and the constructions team are kept at a minimum. It allows for the early inclusion of the construction management expertise and the need for nominated trade contractors is diminished. The difficulties of management procurement include the poor establishment of prices and it is only achieved after the project is finalized; the client loses control over the design which is handled by the contractors. Looking at the European Union and their regulations on public procurement and the advertisement of jobs, complaints arise on the assignment of jobs where contractors think that jobs based in the UK should be assigned to UK contractors while advertisements from other EU members are found to be time wasteful. Conclusions and Recommendations. Looking at the various methods of procurement we find that in traditional methods there is a chance for the client to bring together the best design, management and construction expertise that is provided by the contractor and the consultants. Time is available for the clients and the consultants to review and develop the design fully while also making sure there is effective preparation of documents (Mc George et al, 2012). But in the same context there is no chance for the contractor to contribute on the project design since they come in after the design process is complete, costs are determined early while it is also found to be the slowest method when it comes to completing the project. In the design and build the construction process is hastened and it is also referred to as the “build it fast” delivery system since the drafting and the building run concurrently. The levy is fixed at the tender stage and the changes mostly prove to be costly. However the costs are also found to reduce due to the short development period of the project and also the applied market knowledge of the contractor (Lock, 2012). The integration of design and construction allows for creativity while improving the construction techniques. Management contracting and professional construction management work on almost the same concept and the knowledge and competency expressed by the contractor in administration of the design and building of the project goes a long way in helping to save time while expediting the process. It allows for the early commencement of the project due to simple documentation. In the two methods the detailed designs are done during the construction period. When all these factors come together they contribute in the reduction of the overall time allocated (Broughton, 2007). Time, quality and fee are the most essential points to consider in project execution. With business environments that are very competitive and uncertain, clients are constantly asking for better and higher value in their investments. There is continuous demand for completion of projects within the stipulated time, while working in the limits of the set budget with the outcome having satisfactory quality (Erik et al, 2007). The use of the different methods of procurement is seen as an attempt on part of the construction industry to try and meet client’s demands. Even though closed systems are more popular since they allow for less interference and changes in design and processes it is also evident that open systems also have their advantages relating to the outcome of the project and the quality since the client is able to check on the construction process (Fellows et al ,2009). However closed systems allow for the utilization of the contractors and the consultants expertise to enhance the final outcome and allow for more creativity in the drafts and the construction process which is also a good thing for the outcome as it is found to be high quality. Sometimes the interference of the clients especially if they do not have the necessary knowledge may lead to conflicts and lapses in meeting the time frame that was initially set for the project (Akitonye, 2007). The traditional method is sometimes seen to be in need of revamping. The detachment of the designing and the building processes and disputes that come about from using this method moves against the need for more consolidation. Time and cost that arise with current procurement methods indicate that they are not completely satisfactory to the construction and industry alternatives and greater understanding is required for better outcomes of the projects. Most of the time organizations have had to make alterations in contracts that did not suite the procurement method selected for a particular project. Transparency is a common issue with most projects and clients prefer when there it is exercised so as to build trust and enhance better communication in the running of the projects. References. Walker, D., & Rowlinson, S. (2007). Procurement systems: a cross-industry project management perspective. Routledge. Winch, G.M. 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