Construction Law: Anglo Synergy Solution - Essay Example

Construction law Introduction Anglo Synergy solution (ASyS) is a major stakeholder in the field of construction which focused on delivering eminence services both to government and to clients in private sector. ASyS is devoted in assessing and improving the accrediting process while at the same time making sure that the procurement processes are made simple and transparent. ASyS believe that adapting and upholding approach such as making procurement process simple, transparent and in the manner that it safeguards the embezzlement of taxpayers’ moneys are best strategies to implement thus perpetuation high standard integrity. Therefore, Anglo Synergy Solution is committed at conscripting conceptualize ideal procurement process that will be incomparable and acceptable to all. In the Mzansi Rail Shuttle project, the major stakeholders are Sandline Ventures with which has committed an investment of USD 120 billion, South African government and AUM Ventures. Sandline Ventures, the South African government and AUM Ventures expect a return on their investments. Hence, they must obtain the best procurement deal that will guarantee them high returns. How to conceptualize the best procurement deal 1. Competition Anglo Synergy Solution recommends that the Mzansi Rail Shuttle project should be procured by first ensuring that the authentic and fair competitions exist in responded to Prior Information Notice (PIN). Section 26(4A) of the railway Act, 1993, stipulate that advertisement should be made in both in the country and in the international journal, trade newspapers and other publication as this will eliminate political biases hence uplifting competency to handle the project (Crocker et al., 2010). It is very important to open-up communal procurement market as this will promote: “Value for money”- this is saving public fund from being defrauded. This can be achieved through encouraging competition for diverse people and countries. Equal treatment- contracting authority must handle both potential and authentic tenderers fairly without prejudice. Contracting authority when stipulating requirement must avoid brand names which would eliminate particular providers, services and products. Transparency- advertising Prior Information Notice is central in establishing and encouraging transparency (Lædre et al., 2006). It creates awareness of the condition for participation, selection criteria and the reason why some individuals were companies were not selected. 2. Time Frame Anglo Synergy Solution recommends AUM and Sandaline companies sponsoring the project to adjust the time restriction as time is an essential factor. Railway construction law does not specify duration for the accomplishment of the work by the contractors. The provision of services by contract is guided by section 24 of railway construction law, it clearly stipulates that time specification is allocated with regard to how technical the project and financial capability the sponsors have in supplying required material (Crocker et al., 2010). However, restricted time can only be enforced when contacting parties demonstrate the reason for urgency, failure to provide a resounding reason may result to the whole process being challenged. Engineering code Par 1264 advice the contractors that they must ensure they have complied with time set for the project to be completed, therefore, contactor must seek sufficient time if necessary to avoid breaking this law (Towey, 2013). It is also dangerous to reduce time scale as it may compromise the quality due to rashness, therefore, the contracting authority should publish their Prior Information Notice at least 12 month before it aim of starting the project, this will give contracting authority sufficient time for proper accessing the construction companies aptitude to handle the project. It also important for contracting authority to advocate time frame for each stage of procurement; allocate the responsibility to different agencies involve in the purchase process as this will circumvent any waste of time by contractors. 3. Effective Cost Anglo Synergy Solution also recommends that the two constructing companies, Arabtec and NKA-D, should not enforce additional cost of US$1.3 million. Article 390 of the UAE civil code allows contracting parties to negotiate in advance what compensation will be payable during the construction. The same law has also stipulates procedural ways of either reducing the amount paid or increasing the sum of money considered appropriate. Therefore, the law grants contracting authority, AUM and Sandaline, a legal chance to negotiate about reducing the cost or adhering to the amount specified by the two constructing companies. However, it recommended that if additional amounts will be an aim of misappropriating public fund rather than improving the delivery of quality services henceforth it important for contracting authority to consider not increasing the amount quoted (Crocker et al., 2010). ASyS recommend that the contracting company must consider the affordability and value for money before issuing the contract to the constructing companies. If the value for money of the contractor is unacceptable it is open for the contracting authority to cancel the award and reward next hierarchical purchaser that has satisfactory value for money. The aim of any project is to curtail the cost and maximize the profit, therefore, AUM and Sandaline must ensure that public fund is not misappropriated but it is used properly in delivering best service. AUM and Sandaline must use affordability of the national rail and transport budget in making judgment. ASyS recommend that the procurement to be issued to the construction companies only after contracting authority have publish the full information on the price offered by the winning auction-goers, it has also have to publish the dependability and other enhancement to which the buyer is contractually devoted (Casciano & University of South Australia, 2006). The license agreement between contracting authority and the constructing companies must be published in the country journal and in trade newspapers as taxpayers are entitled by the constitution to kwow what has been procured on their behalf. ASyS also demand this to enhance transparency and accountability both in the side of contracting authority and constructing companies. 4. Qualifications Anglo Synergy Solution use construction industry act, 38 of 2000 to recommend to AUM and Sandaline that they can attain procurement of Mzansi Rail Shuttle project if they abide by code stipulated in the construction industry act, 38 of 2000 which state that; Construction industry must ensure that they endorse combined partnership with communities. The two construction companies must also agree to tackle corruption. Must work in building capacity. Ensure that they perform their construction efficiently, responsibly, transparently, and with integrity. Anglo Synergy Solution use construction industry act, 38 of 2000 also to recommends to the two contracting authority AUM and Sandaline that before offering the procurement to the constructing companies must ensure that: They guard the constructing companies against stronger part with an ambition of personal interest. They satisfy all requirement stipulated in the Prior Information Notice (Crocker et al., 2010). They behave in a justifiable and transparent way. They are not engaged in any malicious attempt to ruin the construction company reputation. Anglo Synergy Solution with the aim of conceptualizing the best and sustainable ideal procurement procedure it consults section 35 of the law found in international construction agreement. ASyS recommends that construction companies must have documents, which confirm the competency of the It is important that before the Arabtec and NKA-D are granted the procurement, the two constructing companies must convince the contracting authority with a document showing their proficiency (Lædre et al., 2006). 5. Consultation Anglo Synergy Solution with the aim of conceptualizing the best and sustainable ideal procurement procedure it recommend that the two constructing companies Arabtec and NKA-D to consult affected transport department before undertaking Mzansi Rail Shuttle project. The transport department will be important at providing specification that should be meet before the franchising is done thus helping the two constructing companies Arabtec and NKA-D to deliver appropriate public services. The construction law Article 30 of Regulation (EC) No 1371/2007 of EAE stipulates that transport department shall monitor the rail passengers’ services development and public-use railway line infrastructure (Casciano & University of South Australia, 2006). Arabtec and NKA-D should ensure compliance with the basic requirement for carriage by rail and participation of appropriate railway specialist. ASys recommend that the construction company that complies with the basic requirement shall have the right to receive a special license for constructing Mzansi Rail Shuttle project. Procurement route for route A According to the Hitachi systems and ASyS, the Harare route involves extra expenses that can either be bore by the contractor or the procurers. For instance, in order to shield passengers from feeling nausea during tilts, the tracks need to be broadened by at least 10 cm. the changes required to be made on the Harare route might cause the delay in completion of the project by upto 18 months and USD 1.3 increase in costs. Increase in cost and increase in the project’s EF (earliest finish time) implies lost in revenues and the procurers will not be getting value for their money (Towey, 2013). In lieu of the prevailing situation, we recommend that the procurers use the Design-Bid-Build procurement route. This route will enable the procurers to appoint either NKA-D or Arabtec to carry on the construction. The procurers, AUM and Sandline, have little knowledge in project management and performance enhancement. If the Design-Bid-Build procurement route is used, the contractor will handle substantial segments of the project thus sheltering AUM and Sandline from impending risks. Moreover, the Mzansi Rail Shuttle project is a fairly complex project where functionality is prime (CABE, 2011). This sheer fact further makes it clear why Design-Bid-Build procurement route should be used for the ultimate benefit of AUM and Sandline; they will get value for their money while still maintaining the prerequisite standards and/or quality. Additionally, with this route, much of the work can be sub-contracted to specialist firms while the costs of such sub-contracts are met by the contractors; the client is not accountable. In such cases, NKA-D or Arabtec will administer the project on AUM and Sandline’s behalf and might offer significant advice in regards to progress, stage payments and design. NKA-D and Arabtec are highly experienced in delivering construction products and services, and managing projects and such an advantage should not be disregarded (Casciano & University of South Australia, 2006). There are high risks and uncertainty involved in the Harare route. AUM and Sandline may not wish to incur this risks and it would therefore be appropriate to use the Design-Bid-Build procurement route which will relieve them from the risk of design failure, the wagon design does not meet the stipulated safety standards, the risks of overspending and delays, that have already been estimated to be USD 1.3 and 18 months correspondingly. Additionally, the current tender documents are incomplete a factor that significantly increases the risks which otherwise will have to be bore by AUM and Sandline if they do not utilize the Design-Bid-Build procurement route is not used. Importantly, the Mzansi Rail Shuttle project has a tight time scale since it must be ready for business by 2019 (CABE, 2011). If it is to be completed within the scheduled time, it implies that activities will have to be rushed which increase possibility of risks and possible failure to meet the necessary standards. By using the Design-Bid-Build procurement route, any risks that might arise due to haste in construction will be bore by NKA-D or Arabtec and not AUM and Sandline (Towey, 2013). For instance, upon expiry of the targeted completion period, if the project will not have been completed, AUM and Sandline will be at liberty to impose liquidated damages on the contractors. AUM and Sandline are, therefore, able to maintain the target price and the target completion date without qualms. Moreover, the project design seems to be compelled by political interests rather than the authenticity on the ground. If such a design is forced onto the contractor, as is often the case with other procurement routes, it will ultimately be unbuildable and will result in devastation for both the procurers and the contractors. The Design-Bid-Build procurement route effectively fetters this as it increases design acceptance. NKA-D and Arabtec and their supply chains will be responsible for production of the design to be used and will easily buy into the design thuds resulting to a buildable design that might result to high value to AUM and Sandline (Crocker et al., 2010). It will also minimize any probabilities of NKA-D or Arabtec making claims about the affiliation of the design and the build function hence a quicker delivery may be witnessed. While the initial price might be significantly high and post-contract variations exorbitant, the Design-Bid-Build procurement route is still the most appropriate procurement route for the Harare route in the Mzansi Rail Shuttle project as it significantly limits the contractor’s ability to adjust the price upwards (Lædre et al., 2006). The laws and procedures used in this procurement route are quite in line with AUM and Sandline’s risk minimization, uncertainty reduction and yield maximization objectives. We, therefore, highly recommend that AUM and Sandline use it for procurement in the Harare route. Procurement route for route B The Bulawayo route is quite safe and does not involve any adjustments of tracks which would otherwise result in increase in costs and delays in completion. Hence, in the Bulawayo route, AUM and Sandline do not have to pass risks to the contractors, NKA-D and Arabtec. In view of this and from an economic perspective, we recommend that AUM and Sandline use the management contracting procurement route for the Bulawayo route. In this approach, NKA-D and Arabtec will undertake to carry out the construction of the Mzansi Rail Shuttle project through work contractors who will ideally be accountable to them (Crocker et al., 2010). NKA-D and Arabtec are highly proficient and AUM and Sandline should ask them to take an active role from the project’s initial stages to its completion. Moreover, this procurement approach is predominantly constructive for fast-track projects such as the Mzansi Rail Shuttle project where marginal design information is currently available. Additionally, since the management contractors, NKA-D and Arabtec, will be involved in the initial phases of the project, they will act as a consultant and early programming and buildability input will therefore be realized (Lædre et al., 2006). Noteworthy, the management contracting procurement route will reduce confusion and increase efficiency as far as disbursements are concerned since AUM and Sandline will not have to pay the individual works contractors on the ground but will simply pay NKA-D and Arabtec who later pay the contractors performing the work. What’s more, the management contracting procurement route will increase the degree of certainty as it makes it possible for the preludes and management costs to be fixed. In case of any ambiguity that might necessitate change, AUM and Sandline will also be able to make any changes without incurring further expenses, as this procurement route effective accommodates any emergency changes in strategy (Casciano & University of South Australia, 2006). The allowance to make variations in a procurement contract is very vital considering the currently competitive and rapidly changing corporate world. Furthermore, the management contracting procurement route will increase AUM and Sandline’s involvement with the project, a factor that can contribute to the best and fast completion of the project (Crocker et al., 2010). AUM and Sandline’s involvement with procurement in the Bulawayo route is encouraged as it is unlikely to result in any adversarial effects on the investors (CABE, 2011). If the management contracting procurement route is used, AUM and Sandline will have a significant control over the design and this is likely to result to a good design that will eventually lead to establishment of a quality project within the required period. In view of the scenario that AUM and Sandline are currently in, we strongly recommend that the management contracting procurement route be used for the Bulawayo route. However, AUM and Sandline must be careful when dealing with the works contractors to minimize chances of defaults that might negatively affect the project. This approach allows easy implementation of work packages at a comparatively low cost and scuffles. Moreover, the maddening subtle that may result from the handoff from design to structuring is imperatively plummeted. For maximum benefits from the Bulawayo route, AUM and Sandline should employ management contracting procurement route. Conclusion As elucidated above, the Sandline Ventures with which has committed an investment of USD 120 billion, South African government and AUM Ventures are major stakeholders in the Mzansi Rail Shuttle project. They can obtain the best procurement deal by ensuring that they take into account the resources at hand, including time, competitiveness of the contractors and complexity of the project. In selecting the best procurement approach for the two competing routes, we recommend that AUM and Sandline use the Design-Bid-Build procurement route for the Harare route and the management contracting procurement route for the Bulawayo route. They are the best procurement routes considering the situations and conditions prevalent in the two possible routes for the Mzansi project. Reference list CABE. (2011). [ARCHIVED CONTENT] Procurement routes | Creating excellent buildings | CABE. Retrieved from http://webarchive.nationalarchives.gov.uk/20110118095356/http:/www.cabe.org.uk/buildings/procurement/routes Casciano, E., & University of South Australia. (2006). Procurement and project management - a contractors perspective. Crocker, B., Moore, D., & Emmett, S. (2010). Excellence in service procurement. Cambridge Academic. Lædre, O., Austeng, K., Haugen, T. I., & Klakegg, O. J. (2006). Procurement Routes in Public Building and Construction Projects. Journal of Construction Engineering and Management-asce. doi:10.1061/(ASCE)0733-9364(2006)132:7(689) Towey, D. (2013). Cost management of construction projects. Read More