Procurement System Selection - Assignment Example

  Year: Final Introduction A procurement system is described as an organizational system used to allocate particular responsibilities and authorities to people and organizations, and defines the relationships of various elements in the construction of a project. Selection of a procurement system determines whether a project will be successful or fail. The right procurement system enables a contractor to complete the project at the right time, within right costs and standards to the satisfaction of a client (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Factors influencing the selection of the Procurement system Choosing the right procurement system is vital since the correct choice may help to avoid eventualities that might negatively impact on time, costs and quality; to ensure that the project’s goals are attained. One needs to consider a variety of factors from the project’s internal and external environment in which the industry operates. A point to note is that different projects may require different systems based on a project’s features (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Procurement systems are divided into three categories namely; traditional, management contracting and design and build methods. These three categories have different influences on each factor. The following factors are may be considered in the construction of site in Chelmsford. Time, complexity, price certainty, government policy, price completion, responsibility, risk avoidance and familiarity of procurement methods (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Discussion of factors and their Influence Time is of fundamental when deciding which procurement system to acquire for construction purposes. Time described here is from inception to completion stage. If the completion deadline is not met due to an inefficient procurement system, extra or overrun costs will be incurred by the contractor making the project expensive. The procurement system should monitor the lead-time schedules to ensure that the functional spaces are completed within the required time and start generating income. The client being a private firm, completion time of the project is truly crucial and of importance to them (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Therefore, the procurement system must be comprehensive in planning and its schedules to achieve deadlines and other timelines required. Time as a factor is affected by the given procurement methods in the following ways. Design and build method is advantageous for a client who wants a quick return on their investment. The client may employ management contracting method in order to reduce the project duration and minimize disruption to the operating facilities. A client may be able to control the overall time for the construction project by using the traditional method (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Complexity of a project plays a significant role in the selection of an appropriate procurement system. A project can be said to be complex depending on the physical services involved, labour to be used and the uniqueness of the project. The project in question at Chelmsford is not an easy one given the number of floors and how the restaurants and nightclub will be divided. As a private client, more value is placed on how prestigious a project is thereby making it complex. This calls for careful selection of a procurement system in order to satisfy the client (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Traditional method is sturdy enough for less complex projects. This is because different construction phases are handled by different expertise. The slightly complex projects will best be handled by the design and construction method as one party will do all the works and save time. Management contracting method is appropriate for more complex projects as a talented management team guarantees completion of the project on time (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Price certainty deals with the price that a firm has to be paid before the construction of a given project starts. It is usually a portion of the total construction cost that changes during the life of the project. Price certainty is a decisive factor to consider when deciding which procurement system to choose since it helps a contractor to control their financial budget (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Management contracting method ensures that a client commences building based on cost plan, project drawings and specification. Traditional methods highly ascertain price certainty at the design stage except for fluctuations experienced from cost of labour and material. Design and build method guarantees cost and completion date (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Different governments have different policies that govern the choice of a procurement system. This requires one to consider which government policies have been spelt out regarding the industry that may affect which procurement system one has to choose. The government usually lays down such regulations in a bid to protect and maintain order within different industries construction being one of them. The government steps so as to control the quality of materials used and the workmanship (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Price completion talks about issues such as value for money, maintenance costs and operational cost. These issues are of immense importance to the contractor as in the end they will determine whether the whole project economically viable. A procurement system should give a contractor a value for their money (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Healthy estimates of maintenance and operational costs help to avoid disputes in the budget. Traditional method ensures accountability and costs checks at all stages. Management contracting gets a client to commit themselves to start building based on cost plan, project drawings and specification only. The build and design method guarantees a client cost and completion date (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Responsibility is another factor that can influence the selection of a procurement system. This factor outlines the responsibility of the building team and is usually decided after the briefing stage when a client makes a decision to either separate the management of consultancy works and contractors or let it be handled by one entity (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Construction in the private sector value issues such as timeframe, accountability and value for their money when pursuing a project. Responsibility factor helps one to determine whether the mentioned issues will be realized in the most effective manner. Design and build method puts responsibility on one entity that client deals with and in case of failure, he is held responsible. Management contracting a client works with a professional team that is well coordinated at all stages and success here depends on the skills of the team. Traditional methods allow the client to divide the responsibilities between design and construction from the pre-tender to completion stage (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Risk avoidance is a factor that cannot be overlooked. Every construction project has elements of risk and uncertainty which the client must count the cost before settling for any procurement system. Risk and uncertainty is brought about due to the complex nature of projects, long production cycles and involvement of many people (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). In the counting of the cost, a client should be able to tell how risk has being spread out between him and other involved parties. Avoiding risk is a critical factor which can decide if any given project will succeed or fail. It is therefore critical for a client to try as much as possible to reduce any financial risks. A client should therefore consider settling for a procurement system that will fairly spread the risks between them and the contractor. Design and build method transfers all risks to the contractor while management contracting lets the client carry most of the risk. Traditional method reduces and balances the risks between the parties (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). As a client, familiarity of procurement methods in the construction industry will determine which procurement system one will select. The financial risk associated with trying an unfamiliar method pushes clients to opt for tried and tested methods. Others are reluctant to change from traditional methods they are used mainly because of the uncertainty of new methods (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). Conclusion Selecting a procurement system is not an easy task given the various factors governing the construction project. Different projects require different procurement methods since each project has its own unique objectives. No factor can be said to be superior or inferior to the other when considering a procurement system. This is because each factor is geared towards achieving objectives of any given project in the most effective manner to the satisfaction of a client. A universal guideline in choosing a procurement system can be based on the criteria of determining the success of a project which are time, cost and quality (Hashim, Yuet, Chu, Hooi, Heng & Yong 2006). References Hashim, M, Yuet, CM, Chu, N, Hooi, N, Heng, SM & Yong, TL 2006, Factors influencing the selection of procurement systems by clients. Paper presented at International Conference on Construction Industry. Retrieved from http://eprints.utm.my/716/ Read More