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Design Build Form Of Contract In The Middle East Construction Essay

The Design and Build procurement process works on the basis that the Main Contractor is not only responsible for construction, but the design element of a project as well. The levels of responsibility and input from the perspective of the Contractor are far greater than that of the traditional form of procurement methods. From the Clients perspective, Design and Build is relatively low risk in terms of time and cost, but if the Client does not pay particular attention to the preparation of the document known as the “Employers Requirements”, their expectation in respect of quality can be compromised xxxxxxxxxxxxx.

Design and Build is not a new phenomenon, this type of procurement method has been with us since medieval times. According to Jeffrey L. Beard et al (2001), when Ictinus and Callicrates built the Parthenon, the master builder and master mason provided both a design and build service, to provide one without the other was unknown. Design and Build Contracts have been described as an arrangement between a contracting organisation and a client, where the contractor takes full responsibility for the design and construction of a project. The industrial revolution of the 18th Century in Europe and the 19th Century in the United States of America brought about the separation of these two key elements of a design and build contract. This led to the introduction of what we know today as the traditional design/bid then build method of procurement. The design/bid then build approach to construction procurement is where the client engages an architect who in conjunction with a structural engineer prepares the design, drawings and specification for a project. The design complete with drawings and specification are then issued to several contractors for pricing. Generally the contractor with the lowest price is then selected to build the project, but sometimes this is not always the case.

According to the Haskell Company (no date), “Cost and time factors initiated the resurgence of the master builder approach. Since the 1960’s, the percentage of Design-Build projects has increased dramatically. Today, non-residential Design-Build volume represents half of all construction in the United States of America. The reason for this increase is simple; the Design-Build process provides a unique set of client advantages not available in any other delivery system”. According to a report prepared by Handscomb ( 2004); “Design and build has shown a steady market penetration in some countries. In the United States of America and the United Kingdom, it has grown from less than 10 percent in the early 1980’s to more than 30 percent today”.

Prior to coming to the Middle East region in 2007, I was extensively involved in Design and Build type construction projects, albeit using the various different forms of the Design and Build Contract that are in circulation today; for example the Fédération Internationale Des Ingénieurs-Conseils (commonly known as “FIDIC”) and the Joint Council Tribunal (UK) (commonly known as “JCT”) have published their own editions of this type of Contract. The general principle behind all of these contracts is that the Employer has a single point of contact and that the Design and Build Contractor accepts total responsibility for both the design and construction of a project. Since arriving in the region and having worked in Oman, Bahrain & the United Arab Emirates, it is evident that the traditional (design, bid then build) type of Construction procurement method is extensively used, with little evidence of the design and build contract being utilised.

The region is synonymous for mega construction projects, and could benefit from other forms of procurement strategies such as design and build. So why are we not using this delivery method more? Similarly the employers in this region are notorious for setting ambitious time scales for the delivery of their projects. From my experience and initial research, it is generally accepted that the design and build procurement strategy would help them save both time and cost and full fill their requirements for fast track projects.

If the industry and professionals within this region is to better understand the benefits of a design and build procurement method (either from a client and/or contractors perspective); then they must get a better appreciation of the different forms of design and build contracts that are currently in existence today, and where they are best used. Furthermore, both the contractor and client also need to get a better appreciation of the advantages and disadvantages of the different design and build contracts if we are to use this procurement delivery method more within the Middle East.

Therefore, in this dissertation, the writer will attempt to answer some of the questions raised earlier in this introduction, particularly for those in the Middle region that may be interested at looking for alternatives. In addition to this, the writer will attempt to provide an insight into the views and perception of other construction professional within the region regarding the design and build procurement method.

1.2 Hypotheses

At the end of the research it is expected to arrive at the following conclusion:

Design and Build Contracts are not necessarily suited for every construction project; each and every project will have a unique requirement. However with education; the industry as a whole in the region could potentially benefit from this procurement method.

People in the construction industry within the region do not like leaving their comfort zones and are less likely to promote change and innovative ideas which may include the use of alternative methods of procurement for construction projects such as design and build.

1.3 Aims

There are two main aims for this research project. Firstly to identify what the benefits of design and build construction procurement method is to us here in the Middle East.

Secondly, to gauge what the overall consensus is on whether there is a future for the design and builds procurement method here in the Middle East.

1.4 Objectives

To compare and contrast the traditional design/bid and then build type of delivery method with the design and build method.

To critically analyse the benefits of a design and build construction procurement method.

To identify the various types of the design and build construction procurement methods and identify where they are best used.

To ascertain the feelings and attitudes of the construction professionals in the Middle East region to the design and build procurement method and to gauge whether there is a future for this procurement method.

Chapter 2 : Research Methodology

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2.1 What is Research?

The Concise Oxford Dictionary defines research as “a careful search or inquiry; endeavour to discover new or collate old facts etc. by scientific study of a subject; course of critical investigation”

2.2 Research Strategy

Naoum (2007) has defined research strategy as “the way in which the research objective can be questioned”.

Research strategies can be broadly classified into two groups;

Quantitative research

Qualitative research

2.3 Quantitative Research

Naoum (2007) confirms that Quantitative research is “objective” in nature and is used to measure how people feel, think or act in a particular way. This research focuses on gathering numerical data across a group of people. Quantitative research can be used for the following circumstances.

To collect factual evidence and study the relationship between these facts in order to test a particular theory or hypothesis.

To find facts about a concept, a question or an attribute.

In the context of research, the objective is to test or verify a theory rather than develop one.

2.4 Qualitative Research

Naoum (2007) also confirms that Qualitative research is “subjective” in nature and can be divided into two main subcategories;

Exploratory Research – This research method is used when we have a limited amount of knowledge about the selected topic. The interview technique is usually selected as a method of data collection.

Attitudinal Research – This research method is used to evaluate the opinion, view or the perception of a person towards a particular subject.

This research method seeks out the ‘why’ and not ‘how’. This type of research doesn’t just rely on statistics or numbers, which are the domain of quantitative research.

2.5 Methodology

The research data for this dissertation was collected from primary and secondary sources providing both qualitative and quantitative data. The primary data was obtained through a questionnaire and the secondary data through a literature review.

Literature Review

Empirical data was collected in order to compare and contrast the traditional design/bid and then build procurement methods with the design and build methods of procurement. In addition to this, empirical data was collected in order to critically analyse the benefits of the design and build procurement methods and to identify where they are best used.

The data for the literature review was obtained from journals, industry web sites and academic text books. Any other relevant and/or pertinent information was obtained through the internet.

Naoum (2007) confirms that for a successful literature review, consideration must be given to the following:-

Knowing the sources of information: Identification of the appropriate literature which maybe from primary sources (academic research journals, theses, reports, and government publications), and/or secondary sources (text books, trade journals, newspapers), and/or reference guides (dictionaries, encyclopaedias).

Primary literature is acknowledged as being the most accurate source of information.

Understanding how the library works: Bell (1996) listed three important points that you need to bear in mind while conducting a literature research (How to find relevant published material quickly, avoid getting bogged down, recording information derived from reading)

Note-taking: Dunleavy (1988) comments that, when undertaking taking a literature review, one needs to get away from focusing too single-mindedly on what the author is trying to say, and instead focus on what you are trying to get out of a source.

Systematically organisation of the literature: Align the literature gathered and to file according to the chapters of the dissertation for ease of future reference.

Appraising and writing up the literature review: Upon concluding the literature review, only then will we be able to critically review the contributions of other people work to the subject area.

Both primary and secondary literature was reviewed and the appropriate notes and data was systematically kept in a literature file. Due to the geographical constraints of living in the Sultanate of Oman and the relatively high cost of traveling to the United Kingdom which would have been needed to undertake a extensive literature review, the majority of the literature review was done via the internet. Here a detailed search of journals, research reports, newspapers and magazines was carried out to locate the established information needed to undertake this part of the dissertation.

Questionnaire

According to Naoum (2007), questionnaires are ideally suited to the gathering of mass information and opinions at a minimal cost. Questionnaires are also considered to be an excellent method for collecting both Qualitative and Quantitative data from respondents.

A draft questionnaire was piloted in order to check that it worked successfully. The final questionnaire consisted of primarily closed questions in order to obtain both qualitative and quantitative data. The questionnaire was targeted at the white collar construction professionals with within the Middle East. To the maximum extent possible, the questionnaire was sent to a combination of Employers, Developers, Consultants and Main Contractors in order to obtain a broad and balanced view of the problem subject.

It was also believed that the questionnaire would allow the writer to gauge the general perceptions of the construction professionals in the Middle East region as to the future of the design and build procurement method in this region.

The information provided by the respondents in the context of this dissertation is considered to be reliable, because it is from a diverse array of construction professionals and from different geographical areas within the Middle East.

The response rate to the questionnaire was 62%, therefore there was no need to implement the contingency plan for supplementing the data collected from th questionnaire with interviews, albeit these interviews would have been structured around the questionnaire.

Interviews

As stated above, in view that the response rate to the questionnaire was relatively high, there was no need to supplement the data gathered from the questionnaire with a series of face to face interviews. Had the response been below 40%, it was indented to conduct a series of interviews albeit structured around the questionnaire to help supplement the data gathered from the questionnaire. A further contingency plan for telephone interviews was also consider in order to supplement the data collected from the questionnaire. The Interviews were considered to be an excellent way of supplementing any short fall in data had it been necessary.

2.6 Data Analysis

The data received from the respondents were collated and analysed using the descriptive statistic method. Bar charts and/or histograms have been used to present the data gathered from the questionnaire. Each question and/or where necessary a group of questions are accompanied with the appropriate narrative and analysis.

2.7 Reliability of Data

Walliman (2005) wrote that data can be misleading because it is elusive and ephemeral, In other words, the data collected from a respondent at any point in time may only be representative of a respondents mind set on a particular day, and at a particular moment in time. If the respondent is again asked the same question one month later, you may find their answer different to the answer obtained earlier.

2.8 Bais

To help overcome the practice of “selective bias” (Torgerson & Torgerson 2003), the questionnaire was sent to a number of nationalities (Italian, French, India, Sri Lankan, Bahraini, Omani, Filipino). To a large extent, this eradicated the potential for “selective bias”.

2.9 Limitations of Survey

Due to the relatively small numbers of respondents, the results of this dissertation may not be a true and accurate reflection of the construction professionals in the Middle East region as a whole. However, for the purpose of concluding this dissertation, the results of this survey are deemed to be a true representation of the thoughts and perceptions of the professionals who live in different geographical areas within the Middle East.

2.10 Ethical Consideration

In the covering email and/or letter that accompanied the questionnaire, each of the participants was advised of the nature and/or the purpose of my research. Furthermore, the writer asked each of participants to obtain the consent of their manager to participate in the survey if they have any uncertainty whatsoever. The writer also confirmed in the covering email that the information provided by the respondents would remain confidential. For the purpose of this dissertation, “confidentiality” is taken to mean that the participant will not be identifiable in any way by a reader of this dissertation. Furthermore, it was made clear to the participants that they could withdraw from the survey ant any time and their response would be destroyed accordingly.

Chapter 3 : Literature Review

Compare and Contrast the various types of Traditional / Design and Build procurement methods

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3.1 Introduction

To understand the concept of a design and build method of procurement method, this can be better explained by comparing it to a traditional construction procurement method.

Shapiro Hankinson & Knutson Law Corporation (no date) describes a traditional procurement method as an arrangement that involves three parties i.e. the client, the designer and the contractor. The client appoints the designer to prepare drawings and specifications. These contract documents inclusive of the drawings and specification when complete are issued to various contractors for pricing. Normally the lowest priced contractor is appointed to construct the project according to the design plans and specifications. The client warrants the sufficiency of the plans and assumes any liability for defects for them to the contractor. The contractor is responsible for any defective construction and workmanship, but is not liable for design defects. The designer is responsible for any design defect, but the designer is not liable for any defect in the construction. A more in-depth look at this type of construction procurement method can be found latter in this chapter.

In contrast to the traditional forms of construction procurement, Shapiro Hankinson & Knutson Law Corporation (no date) then describes a design and build contract as an arrangement where the client enters in to a single agreement by which the design and build contractor performs both the design and construction of the project. The client sets out their requirements in a document called the employers requirements. This document must clearly set out any performance standards, aesthetic and functional requirements for the proposed project. Furthermore, this document must also identify any specific requirements in relation to the project. For a simple building with little consideration for aesthetic, the emphasis of the employer’s requirements is on the contractor delivering the project at a competitive price and time. Where the client has already undertaken a substantial amount of the design works, the client may wish to transfer the design responsibility to the contractor. In some instances, the employer’s requirements may also describe the process of delivering the project. The employer’s requirements will need to be a detailed and concise document to avoid the potential for any misunderstandings. From time to time, the client may stipulate in the employers requirements that it is the contractors responsibility for acquiring land, and for financing the project. This arrangement is often referred to as a “turnkey” contract. In either a design and build or turnkey arrangement, the contractor’s objective is to satisfy the client’s performance specifications rather than to adhere rigidly to the design professional’s plans and specifications. In addition to this, the contractor remains responsible for any faulty workmanship in construction; the contractor is also liable for any deficiencies in design under this arrangement. Again, a more in-depth look at this type of construction procurement method can be found latter in this chapter.

3.2 Traditional Procurement (Design, Bid then Build)

Normally there are three distinct phases in traditional procurement method which are generally undertaken in a sequential and systematic order. These phase are not unique to the traditional procurement method, and can be generally found in all construction procurement methods, albeit in the design and build type of contract procurement, some of these phases are done concurrently to save time.

Design phase – Here the Client retains the services of a number of consultants and/or advisor to design the project and provide cost advise. The consultants will work with the Client to identify their requirements. These requirements will then be developed into conceptual and schematic design and be fully costed. If the Client then decides that the project is affordable, then the conceptual and schematic designs will be fully developed into the final tender documents.

Bidding phase – Here the preferred contractors obtain the tender documents and then carry out a wide variety of task that will enable them to price the works and these tasks include inter alia:- decision to tender, project appreciation, pre tender meetings, pretender site visit, obtaining quotation from subcontractor and suppliers, preparing pretender method statements, preparing the pretender programme, analysing the tender and deliverables, preparing pre tender health & safety plan, preparing pretender risk assessment, preparing pre tender quality plan, prepare estimate, assessment of preliminaries, tender adjudication.

Construction phase. The Contractor makes the clients requirements a reality by constructing the project according to the drawings and specification.

Other features of the traditional procurement methods include inter alia:-

Traditional contracts require the Client to appoint a professional consultant to administer the contract.

Time is needed to prepare the full tender documentation for the Contract to price.

Design and construction are not generally done concurrently which consequently increases the overall time of a project.

The Client to one degree or another has cost certainty because the contract sum is known at the outset.

It has been suggested by the JCT (2008) that this form of procurement method should be used in the following circumstances:-

Where the design quality is critical and the client wishes to control the design process and be involved in selecting, engaging and directing the design team

The outline design has not been sufficiently development and changes are likely to occur.

The designer has sufficient expertise in a particular field and they do not need the support of a design/build contractor or specialist subcontractors.

The client has sufficient time to allow the detailed design works to be completed before inviting contactors to tender.

Inexperienced clients

Where a client wants time predictability

Where the project is complex and were functionality of a project is the prime objective

The main types of the traditional procurement methods are briefly discussed and described below:-

3.2.1 Lump Sum Contracts – It is generally accepted that there are two types of lumps sum contracts “with quantities” and “without quantities”. Lump sum contracts “with quantities” are generally priced on the basis of drawings, specification and Bills of Quantities (also known as “BOQ”) albeit the Contract is not subject to re-measurement. It is the Contractors responsibility of ascertain whether the Bills of Quantities are correct and their price is deemed to representative of the quantity ascertained from the tender drawings. Lump sum contracts that are “without quantity” means that the contractor is required to ascertain his own quantities from the drawing and specifications without the benefit of a BOQ prepared by the Client.

3.2.2 Measurement Contracts – Normally the contractor prices drawings, specifications and BOQ that contains indicative quantities. The BOQ is subject to measurement based on the actual quantities that can be ascertained from the final design drawings and the Contract sum is adjusted accordingly. Another variant of this type of the measurement contract is where the contact is based on drawings and specifications together with a schedule of rates and/or prices.

3.2.3 Cost Reimbursement Contracts. This type of contract is commonly known as “Cost Plus”. This type of contract is generally used where it is difficult to quantify and/or define the scope of works to be executed by the contractor. This type of contract is acknowledged to be high risk from the perspective of the Client because the total cost of the project is not known until completion. The Contractor is generally reimbursed their proven cost for labour, plant and materials plus a percentage addition for site preliminaries, overhead and profit.

Some of the perceived disadvantages of the traditional procurement methods:-

Often the Contractor is not involved until the design is finalized, and they are not given an opportunity to participate in the discussion regarding buildability, construction technologies to be utilized, alternatives etc.

A potential adversarial contractual relationship, particularly between Contractor and Consultants

There is a greater risk of time and cost overruns, particularly when the deign and or scope of works has not been fully finalized.

Some of the perceived advantages of this the traditional procurement methods is:-

The Client retains more control over the design phase of a project

The Client has more access to the design team.

The design team is employed by the Client and they look out for the interest of the Client.

The Client is better able to compare the bids of the Contractors because there is a common basis for pricing.

3.3 Design and Build

The main types of the design and build procurement methods are briefly discussed and described below:-

Akintoye (1994) identifies the following six forms of the design and build procurement method;

traditional design and build

develop and construct

design and manage

design, manage and construct

novation design and build

package deal (including turnkey)

Whereas Rowlinson (1987) identifies three broader types thus;

pure design and build

integrated design and build

fragmented design and build.

3.3.1 Pure Design Build / Traditional Design and Build

As described previously, the pure design and build (also commonly known as the traditional design and build method) is an arrangement where the client enters in to a single agreement by which the design/build contractor performs both the design and construction of the project. The client sets out their requirements in a document called the Employers Requirements. This document must clearly set out any performance standards, aesthetic and functional requirements for the proposed project. Furthermore, this document must also identify any specific requirement in relation to the project. In a design/build, the contractor’s objective is to satisfy the client’s performance specifications rather than to adhere rigidly to the design professional’s plans and specifications. In addition to this, the contractor remains responsible for any faulty workmanship in construction; the contractor is also liable for any deficiencies in design under this arrangement.

It has been suggested by the New South Wales Government of Australia (2008) and/or the JCT (2008) that this form of procurement method should be used in the following circumstances:-

the client wishes to determine the concept design;

the requirements for the developed design can be clearly described, for example through established standards for products and materials, details and finishes;

a fully developed design would introduce risks associated with buildability or the coordination of design and construction;

there are proprietary designs or construction processes that may offer advantages over special one-off designs; or

the Client does not have sufficient time to manage the design to completion.

The pure design and build management process can be illustrated as follows

Client

Contractor

Construction

Designer

Figure 1 – Mosley (1990)

3.3.2 Integrated design and build

With integrated design and build which includes “Design and Manage” and “Develop and Construct”, similar to management contracting, the main contractor is paid a fee to assume the responsibility and to manage the subcontractors as well as the designers.

Design and manage

With this form, the contractor assumes more of a management role, although design is still the responsibility of the contractor. The contractor does the design and then manages all other aspects of the project.

It has been suggested by the New South Wales Government of Australia (2008) that this form of procurement method should be used in the following circumstances:-

there are many or significant unknown factors, such as undefined scope, unpredictable risks and changeable project objectives, that cannot be resolved before it is necessary to let a contract in order to meet the project program;

project threats and opportunities are complex and require management collectively by the contracting parties and other participants;

there are many complex or difficult stakeholder interfaces and relationships;

the interests of key participants need to be brought together early in the project;

industry input and innovation during the design stage are desirable, for example to take advantage of emerging technology, specialist construction expertise or other opportunities;

completion times are tight and fixed;

project funding is fixed.

Develop and construct

With this form, the main contractor inherits a partially designed structure to which he has to complete in accordance with the requirements of the project. The Contractor is free to develop this design either using his own in-house design team or he can appoint a designer of his own. The contractor is not forced to use the designer who prepared the concept design and this is where this type of arrangement differs from the Novation type of arrangement.

It has been suggested by the New South Wales Government (2008) of Australia that this form of procurement method should be used in the following circumstances:-

the client wishes to determine the concept design;

there is a significant risk of delays or changes to the project scope as issues are resolved with stakeholders or investigations are completed, and the client is best placed to manage these activities;

the requirements for the developed design can be clearly described, for example through established standards for products and materials, details and finishes;

a fully developed design would introduce risks associated with buildability or the coordination of design and construction;

there are proprietary designs or construction processes that may offer advantages over special one-off designs;

The client does not have sufficient time to manage the design to completion.

This integrated design and build management process can be illustrated as follows:-

Client

Other Consultants

Design Build Firm

Construction

Design

Figure 2 – Integrated Design & Build - Mohamed (2005)

3.3.3 Fragmented design and build

Package deal

The RICS COBRA (2004) confirms that this procurement method is suited to repetitive scope of work i.e. where the contractor will provide standard buildings and/or systems that are adapted to suit a client’s needs.

This form of procurement method should be used in the following circumstances:-

The scope of work from one project to the next is repetitive i.e. supermarkets, cinemas etc.

Design, Manage and Construct

This form is closely resembles the design and manage arrangement. The fundamental difference is that the Contractor undertakes some of the construction and not the whole process. He essentially co-ordinates all the functions even those that are not his responsibility.

This fragmented design and build management process can be illustrated as follows:-

Client

Contractor

Builder

Subcontractors

Designer

Figure 3 – Fragmented Design and Build - Mohamed (2005)

3.3.4 Novation design and build

The client engages the services of a designer to design the project to the extent set out in the design service agreement. The client then enters into a design and build arrangement with a contractor. When the construction contract is let, the client novates the design service agreement to the contractor. The Contractor then assumes the responsibility for the completion of the design as well as construction.

It has been suggested by the New South Wales Government (2008) of Australia that this form of procurement method should be used in the following circumstances:-

the agency wishes to control the concept design;

the project has special design needs;

there is significant extra benefit in making the contractor responsible for all design and documentation, and giving the contractor full access to the original designer and its knowledge of the design issues;

the specifications for the developed design can be clearly described, for example through established standards for products and materials, details and finishes.

The novated design and build management process can be illustrated as follows:-

Client

Builder

Designer

Fig 4 : Novation design and build system Wadani (2004)

3.4 Other forms of Construction Procurement Methods

In order for any would be Client to decide which is the right construction procurement method for them, first of all they need to have a basic understanding of all the different types of the contracts and/or procurement methods that are available to them today other than the traditional and/or design and build methods of procurement.

Therefore, we will take this opportunity to briefly discuss the various other options available to the Client.

3.4.1 Two Stage Tender Procurement

Simon Rawlinson (2006) confirms that the intent of the two stage tendering process is to competitively appoint a Contractor in the early stages of a project even though the design is not complete and there is a limited amount of design information available. The first stage tendering process is typically split into two parts i.e. a technical proposal consisting of outline programme, method statement and any other deliverable identified by the client; and a financial proposal for design fees, contractor preliminaries and mark-up for the initial design stage. The first stage of this procurement method is generally concluded when a preferred contractor is appointed and both the client and the contractor enters into a preconstruction services agreement.

Simon Rawlinson (2006) also confirms that the second stage is generally managed by both the client and contractor. The client relies on competition between the preferred contractor and other contractors who are invited to tender for the various construction packages that arise during the course of the project. Typically the preferred contractor has an advantage over their competition and they are awarded upto 80% of the value of work packages.

It has been suggested by the New South Wales Government of Australia (2008) that this form of procurement method should be used in the following circumstances:-

When the clients wants to appoint a main contractor ahead of the completion of design, and they require a quicker start on site;

Securing the involvement of a contractor for pre-contract services on a competitive basis, to obtain input on build ability, sequencing and subcontractor selection;

Retaining greater client involvement in the pre-selection and appointment of contractors;

Motivating the designer and contractor to use innovation to minimize cost.

Transferring a greater degree of design and other construction risk to the contractor.

3.4.2 Public Private Partnerships (commonly known as PPP)

Balfour Beatty PLC (no date) describes the PPP arrangement as the bringing together of the public body and a private company for the benefit of the public, in a long-term relationship for the delivery of public infrastructure, community facilities and related services that was originally provided for by the public sector. Drawing on the best of the public and private sectors, PPPs provide additional resources for investment in public sectors and the efficient management of the investment.

A report commissioned by the European Commission (2003) identified four principal roles for the private sector in PPP schemes:-

• To provide additional capital;

• To provide alternative management and implementation skills;

• To provide value added to the consumer and the public at large;

• To provide better identification of needs and optimal use of resources.

3.4.3 Management Contracting

Longworth Consulting (no date) describes the Management Contract arrangement as a two stage "fast-track" procurement method. The client appoints the designer and management contractor separately in the early stage of the project so that they can work alongside each other. The management contractor will also help to develop a construction programme and contribute to the design and costing of the works. The management contractor obtains competitive prices from subcontractors and specialist for each of the proposed work package. The management contractor essentially manages the process. The payment to the management contractor is the cost of the package plus a fee.

It has been suggested that this form of procurement method should be used in the following circumstances:-

Securing the involvement of a contractor early in the design stage, to obtain input on build ability, sequencing and contractor selection;

The client wants an early start with construction whilst the brief is fully developed;

Complex projects.

3.4.4 Construction Management

Teacherweb.com describes construction management as a professional service that applies effective management techniques to the planning, design, and construction of a project form inception to completion for the purpose of controlling time, cost and quality.

The concept of Construction Management is similar to Management Contracting, the Client appoints the Construction Manager to manage the project on their behalf.

It has been suggested by the New South Wales Government of Australia (2008) that this form of procurement method should be used in the following circumstances:-

there are many or significant unknown factors, such as undefined scope, unpredictable risks and changeable project objectives, that cannot be resolved before it is necessary to let a contract in order to meet the project program;

project threats and opportunities are complex and require managing collectively by the contracting parties and other participants;

there are many complex or difficult stakeholder interfaces and relationships;

the interests of key participants need to be brought together early in the project;

industry input and innovation during the design stage are desirable, for example to take advantage of emerging technology, specialist construction expertise or other opportunities;

completion times are tight and fixed;

project funding is fixed.

3.4.5 Framework Agreements

The Regional Improvement Efficiency Committee of the United Kingdom describes the framework arrangement as a long term agreement with a supplier and/or contractor, which establishes the term governing contracts that are to be awarded in the future during an agreed term (duration). The intention of the framework agreement is to bring together suppliers and contractors with the relevant expertise and experience which can result in savings to both parties where a number of projects are involved.

It has been suggested that this form of procurement method should be used in the following circumstances:-

Where there are repetitive works and/or call offs that will occur over a defined duration.

Where there is a need for collaborative procurement and a need for early contractor’s suppliers.

3.5 Outcome

As stated in 1.4, the objective of this chapter was to compare and contrast the traditional design/bid and then build type of procurement method with the design and build method. In addition to this, a further objective of this chapter was to identify the various types of the design and build construction procurement methods; and identify where they are best used.

Having looked at various sources of literature from books, internet websites and journals regarding the design and build and/or traditional procurement methods, it was then consider important to identify other forms of construction procurement methods in order to give any potential reader a brief insight into all procurement methods available to us today.

In summary this Chapter has achieved what was intended and has established a good understanding of the subject area.

The next chapter of the report will critically analyse the benefits of the design and build procurement methods using the literature review methodology.

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