Procurement & Administration

The facility at Desertcreat is a huge project for Northern Ireland with a budget of £139 million. This project is the first of its kind in the British Isles, and it will provide training facilities for the police, prison service, fire and rescue service. This will be a specialist facility accommodating training in state of the art surroundings. Taking all of this into account it is vital to get the procurement method correct in order for the project to be a success. Gordan 1994 reported “it is possible to reduce project capital costs by an average of 5% through selection of the most appropriate procurement methodology.” Sharif and Morledge describe procurement as “procurement is the framework through which construction is brought about, acquired or obtained.” (Sharif and Morledge 1996, p6) There are a number of different procurement strategies that could possibly be used in order to complete the project.

As this is a multi-million pound project funded by the government time, cost and quality all need to be considered. As this is a specialist building like no other in the country, quality will have to obviously have to be taken into consideration. This project is set to be a world leader in both design and build, which other nations can look to for guidance, as a benchmark for similar facilities in the future. The architect for this project is from America and was appointed because they designed a similar facility for the F.B.I in USA. This shows that the client wants the highest quality possible from this project.

However as this is a government funded project, cost will always be a factor. The government has set £139m as a budget. As this is taxpayer’s money they cannot go over budget and so a procurement route that minimises variations on cost may be needed.

Time is important as the fire and police services need to be able to use the facilities in order to train new recruits to be able to protect the public. I do not believe that the government is that concerned about having the project completed by a specific date, rather they would like some certainty regarding the time of completion. However I do not believe there is as much focus on time as there is on quality and cost.

I shall review the different procurement routes and select one which I feel would be best suited to my clients bespoke requirements.

Traditional

“Probably the most commonly adopted UK strategy, particularly for inexperienced and/or occasional construction clients is that of design-bid-build (traditional).” (Building Procurement, Morledge, Smith and Kashiwagi 2006, p108). Out of all the procurement routes this may be the one with the least risk associated. As the design of the project is carried out before the construction process takes place there is a certainty about the length of the project along with the design of it and total cost.

Under this procurement route the design is complete before the construction phase begins therefore there is separation between the design team and contractor. In the case of the Desertcreat project, an American design team have been selected to design the specialist facility as they have had experience on similar projects. Once that design is complete the drawings of the proposed build will be sent to obtain planning permission. Granted that the build receives permission to be constructed then contractors will be invited to submit their price upon the work. The client will be liable for the accurate nature of the quantities that are included in the bill of quantities prepared by the quantity surveyor. The client then appoints a contractor to construct the facility from the design by the contract completion date to the agreed price. The main contractor is liable for any problems that may occur during the construction phase. Morledge, Smith and Kashiwagi state that “the contractor assumes responsibility and financial risk for the construction of the building works to the design produced by the client’s architect, for the contract sum agreed and within the contract period.” (Morledge, Smith and Kashiwagi 2006, p109) For the Desercreat project this may be a viable option because it is a specialist building that requires a specialist design.

As the traditional route is design-led, the client is able to have a direct influence on the design fulfilling the clients bespoke requirements. Other advantages of the traditional procurement strategy are competitive fairness in awarding the job to the contractor. This is the case because all contractors bid on the same basis. As this is a public sector project this method is good in terms of public accountability as it is based upon competition.

However with the traditional route there are some disadvantages. In the case were the design is incomplete and there is an attempt to move the process on quickly by producing documents for tender, this may result in time and cost certainty being lost that may lead to costly legal debates. The traditional route normally takes a longer period of time compared to other strategies as construction cannot take place until the design process can be completed. Finally during the design process the contractor has no say in what is done as he or she is not appointed until later on in the process. This could cause detrimental problems in the construction stage.

Other variations in the traditional method are; a schedule of rates. Here tenderers competitively price a schedule of rates and not a Bill of Quantities. Actual quantities are measured after work has been completed, and so a contract sum is only established post construction work. This method of work is used when it is not possible to predetermine the nature of the works such as on civil engineering projects. Advantages of this method are that there is a closer working relationship with the client and contractor. However this method leads to a difficulty in predicting the prices in the long term and so it is difficult to assess value for money. As Desertcreat is a public funded project I do not believe this would be beneficial as the public always want to know where their money is being spent and if being spent wisely.

An alternative variation of the traditional strategy is the Ad-Hoc schedule of rates. This is prepared for a particular project and includes special and/or unusual items. A quantity surveyor would price the unit rates. This method is used in the situation when a design is not complete and there is some uncertainty regarding it. This procedure has its advantages as it allows for a restricted number of items to be priced which enables tenders to be submitted more accurately. However there is some uncertainty regarding the final costs and commitment.

Design & Build

Design and build is a different procurement route from traditional in that it is a fast track strategy. At the contractors own risk they can start construction work before all of the details have been agreed on the final design of the facility.

In the design and build procedure the contractor takes on full responsibility for the overall design and construction of the project, in return for a lump sum at a fixed price. Price certainty is known at an early stage. Therefore the contractor is liable for both the design and the construction of the new build. This may suit some clients in that there is only one single point of responsibility.

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A variation of the design and build method is known as ‘develop and construct’, this concept is when the client appoints a designer to construct the initial concept of the design before the contractor takes overall control over completing the design and constructing the facility. At the point when the contractor takes all of the responsibility the client loses some control over the project. Any bespoke requirement that is not stated in the tender document and which the client would like to add would be classified as a change to the contract, these variations may end up becoming very expensive. Therefore it is vitally important that the design brief is fully explained and finalised before contracts are signed.

A design and build procurement route is used in the situations were the client would like an ‘off the shelf’ package deal building. In this method the client does not require any specific personal touches. In this method the building loses its aesthetic appeal.

As this is a special type of building we will need to get the planning permission before tendering. For Desertcreat the full design will be needed at the beginning to make sure the builder builds what the client wants. Also Desertcreat will need to be unique and of a high quality standard. Hence Design and Build would not suit.

Construction Management

A third procurement strategy open to the client is construction management. This is the process were a construction manager is employed to oversee and coordinate the design and construction process while constantly promoting collaboration in order to improve the project. In this process the risk is not solely on one main contractor.

This strategy is usually used when speed of completion is a priority. However the client has little certainty from beginning.

The construction manager provides professional expertise and is liable only for negligence. Once appointed he/her shall take responsibility for scheduling and costing information. In this strategy the client must appoint project management to overlook the recommendations of the construction manager, and also the client must have some sort of presence through their team that is technically aware. Therefore this route would not be suitable for inexperienced clients in the construction industry. As Desertcreat needs to built on time, this could possibly be a procurement strategy that could be used. However price certainty is not known until the end of the project.

A variation of the construction management procedure is ‘design and manage’. Here the contractor is paid to manage and take responsibility construction and design. In this way there is a lot of time saved due to the overlapping of the design and construction. However the client loses control over the design process. This would be unsuitable for Desercreat due to this point.

Discretion (Partnering)

Partnering has been described as “a structured management approach which facilitates team working across contractual boundaries by integrating the project team and smoothing the supply chain.” (Procurement, Tendering and Contract administration, Hackett, Robinson and Statham 2007) In essence partnering is a way to establish a common framework based on the same objectives and goals whilst adhering to the same agreed procedures that should be carried out.

In partnering all of the participants in the project come together and plan out all the stages of the project. The objectives that are usually set out at the beginning can be to avoid any disputes throughout the process, improvements in quality of design and build, efficiency in production and making the project within budget and on time.

Partnering carried out well can improve the whole project as a whole from design all the way through to finishing the construction of the facility. However successful partnering only works well if everyone involved takes an active and positive role. Another pitfall may be different objectives and personalities clashing with each other.

As Desertcreat is a very technical and advanced project, I feel it would be too complex a job for partnering to work well. I believe this would lead to disagreements and frustration.

Evaluation/Conclusion

From my in depth analysis of the various procurement methods available for the government, in building the Desertcreat facility, I am able to evaluate my findings. I believe that the government’s main priority is quality as this is a state of the art building that will have world class innovative technology. However as the government are using tax payers money cost will always have to be examined. The government have stated that they are willing to spend £139m, and so I believe they would wish to stay within that budget. Therefore I feel that quality with cost certainty is the main objective for the government.

The procurement strategy that I believe would most suit the Desertcreat project would be the traditional method. I have come to this conclusion due to the fact that this is a specialist design like no other in the UK and so a specialist Architect is required that has experience in this field of work. As this is a specialist building it will require a fully designed and specified tender package before construction work begins. In this case the design and construction teams will need to be separate.

References

1. Morledge, R, Smith, A and Kashiwagi, D.T. (2006) Building Procurement.Oxford. Blackwell Publishing.
2. Hackett, M, Robinson, I and Statham, G (2007) Procurement, Tendering and Contract administration, Blackwell Publishing
3. Gordan, C.M. (1994) Choosing appropriate construction contract method. Journal of Construction Engineering,120 (1), 196-210
4. Sharif, A and Morledge R. (1996) Procurement Strategies and national organisations: the dependency linkage. In: Proceedings of CIB W92 Symposium, ‘North meets South’ Procurement Systems, Durban (ed. R.G. Taylor), pp. 556-557