The design and build procurement route changes the traditional sequence of work. It answers the Employers wishes for a single-point of responsibility in an alleged attempt to reduce risks and overall costs. It is now commonly used in many countries and forms of contracts are widely available.
Design-Build is sometimes compared to the "master builder" approach, one of the oldest forms of construction procedure. Comparing design-build to the traditional method of procurement, the authors of "Design-Build Contracting Handbook" noted that: " from a historical perspective the so-called traditional approach is actually a very recent concept, only being in use approximately 150 years. In contrast, the design-build concept -- also known as the "master builder" concept -- as been reported as being in use for over four millennia." (Songer,1996).
The disadvantage of the traditional procurement method had been identified in many reports. According to Lathem Report (1994), it stated that the traditional method has the problem of adversarial and inefficient way of doing things and separation of the roles and responsibility of team members. According to the Construction Industry Review Committee Report (2001) stated that a high degree of fragmentation with an adversarial culture and a contractual and confrontational culture would be developed.
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The alternative procurement method would be sought for solving those problems.
Describing "Design and Build" as a "viable alternative method", Songer and Molenaar (1996) concluded that there are a number of advantages associated with Design and Build such as: cost savings, improved constructability, time savings and claim reduction. From the Employer's perspective, the single point of responsibility is the most attractive benefit derived from the D&B procurement approach (Chan 2000). With the support of case studies and quantitative data, Hale et al. (2009) pointed out the Design and Build is superior to the traditional procurement system hence recommended to use Design and Build approach in both public and private sectors. Levy (2006, p.197) even suggested that "the design-build delivery system appears to be a perfect vehicle by which to pursue sustainable or green building construction".
According to Chan and Chan (2004), the completion time as it relates to speed of a project depended on the procurement method adopted for the project. They attributed the slow delay observed in one of the projects to be due to the use of the traditional procurement method. However, they recognize the possibility of other factors playing a role that it was noted as the project who has suffered delays; obtained better results in terms of cost compared those obtained through the method of design and build method.
The increasing the complexity of the project, the Employer would be hesitated to how to reduce the time for design and the time for construction. The Employer was willing to seek for the alternative method to reduce the time of the design stage and the construction time and improve the performance of the projects. There are many alternative procurement methods have been developed in recent years such as Novated Design and Build and Enhanced Design and Build. The traditional procurement method is not the only choice for the Employer. Design and build is now one of the most frequently used procurement routes in construction and it is a radical departure from the traditional design-bid-build method. The use of design and build is on the increase with many Employers perceiving it as providing better value for money and giving rise to less disputes than other procurement methods. As per the surveys of Royal Institution of Chartered Surveyors, 2004 , new procurement trends can be identified which may be associated with the boom period in construction in the early part of the decade and it clearly shows that the design and build has become the single dominant method since the previous survey in 1995, it was the traditional method. Under a design and build contract the contractor assumes primary responsibility for the design of the development, in addition to its traditional role to supply work and materials. The contractor engages the design consultants, or more usually, has the appointments of the design Consultants novated to him.
2.2 THE DEFINITION OF THE DESIGN AND BUILD PROCUREMENT METHOD
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"Design and build is and arrangement in which a building contractor enters into a contract with you to design and construct your new building. It is the simplest approach, as one firm is responsible for producing the building you want rather than this responsibility being divided amongst several firms, as is the case with every other approach." (Sarah Peace and John Bennett, How to use a design build approach for a construction project, CLOB, P2)
Masterman(1992) state that the term Design and Build has almost been unanimously interpreted and defined as being an arrangement where one contracting organization takes sole responsibility, normally on a lump sum fixed price basis, for the bespoke design and build of a Employer's project. This contains three main elements: the responsibility for design and build, contractor's reimbursement is generally by means of a fixed price lump sum and the project is designed and built specifically to meet the Employers' needs.
According to David Chappell (1997), Design and Build contracts place responsibility for both design and erection in the hands of the contractor one point of responsibility for everything. In this system contractor will carry out two functions: design and construct.
In other definition, design and build is an arrangement where one organization design and build to the firm order for the Employer to a single financial transaction. The Chartered Institute of Building (CIOB-1983) defines Design and Build as the process where the Employer deals directly with the contractor for the complete building and it is the contractor who is not only responsible for but also coordinates the separate design and build process, including engagement of the design team who are, therefore contractually linked with the contractor and not the Employer.
The diagram below shows the contractual relationship in the design and builds procurement
In-house designers or
Figure 2.1: How to use a design build approach for a construction project ( Source: Sarah Peace and John Bennett, CLOB, P2)
In practice, Design and Build procurement is generally structured in one of two ways;
The Employers employ a dedicated Design and Build organization with its own in house design team.
The Employers engage a general building contractor who employs external design consultant members of the contractor's team for the duration of the project.
2.3 STRENGTHS OF DESIGN AND BUILD PROCUREMENT SYSTEM
As the Design and Build defined, it is therefore important to reveal the strength or advantages
of Design and Build as procurement system.
One of the prominent feature of Design and Build is to provide a single point responsibility. This is achieved by allocating all design responsibility and liability to the contractor alone. The owner may have more design options to choose from the respective design builders who enter the tender. Owner will tend to have variation of design ideas together with the expected cost that was proposed based on his requirements. Unlike traditional approach which only appoint a single unit of design team to come out with the design ideas, Design and Build will produce much more different design ideas from the design builder who enter the tender (P. Chan et al.,1997).
The owner's administrative burdens may be reduced because the procurement of design and build services is consolidated into a single selection process. After award of the Design and Build contract, the owner will not be required to spend time and effort coordinating and arbitrating between separated design and build contracts. While the process does require the owner to provide prudent oversight of the design and build process, this responsibility is considerable less time consuming and exposes the owner to far fewer risks than the traditional approach (P. Chan et al.. 1997; Dennis Turner, 1986).
Figure 2.2: (A): Single point responsibility - D & B Contract ,(B): Fragmented
responsibility - traditional contract (Source: Bennett and Grice, 1992)
In addition to the single point responsibility, cost and completion time is firm in the Design and Build procurement method. This means the Employer knows his total financial commitment in the initial stage of the project, provided he does not introduce any changes throughout the project.
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The Design and Build entity is responsible for quality, budget, schedule, and performance of the completed facility. With the single point of contact, Employers can concentrate on definition of needs and timely decision-making rather than on coordination between designer and contractor. Besides, the Design and Build entity has total responsibility for the finished product and cannot shift design errors of construction defects to another party.
Therefore, it will likely to end up with the expected or higher quality of end product. Unlike Design and Build approach, traditional approach contracts rely on restrictive wording, adversarial audit and inspection requirements and the legal system to attain project quality (Jeffrey L. Beard et al., 2001).
Cost has always become the key considerations affecting adoption of Design and Build procurement method. Whilst project time is relatively easy to interpret and potential savings clearly identified, project cost is more ambiguous and therefore difficult to evaluate. A prominent consideration for the Employer, in any procurement form, is that final cost does not exceed the project budget. In this respect, Design and Build certainly presents a better chance of the Employer obtaining his completed building within budget. Jerry Adanison (2001), explained that several financial considerations make Design and Build desirable. Private sector have implement Design and Build for financial reasons. Completing a project quickly can save Owners used to finance projects.
On the question of cost, real cost savings can also be made in Design and Build. According to Mastermann (1992), when using this system, the initial an final costs are lower than when using other methods of procurement because of diminished design costs, the integration of the design and build elements and in built build ability of the detailed design. Cost savings may also result in timesaving. The overall effects is reduction in the Employer's financing charges, lesser effect of inflation and faster building operation, which, in a commercial context, produces an earlier return on the capital, invested, (Frank 1998).
2.4 FACTORS CONSIDERED IN PROCUREMENT METHOD SELECTION CRITERIA
2.4.1 REQUIREMENTS OF THE EMPLOYER
The successful of the procurement method should fulfill the requirements of the employer. The objective of the Employer should be identified. Employer would require the best design for their project and meet his requirement stated in the Employer's requirement. Time should be as fast as possible for the construction period. The cost of the building should be as lower as to satisfy his requirement. The Employer would prefer to minimize the contractual risk to avoid the unnecessary trouble.
As time is money, the duration of construction period of the project is very important. "Time at large", the time spending on the planning, construction and development would affect the economic scale of the Employer. The Employer would seek for the shorter construction period to earn for the greatest profit. The time- related cost item such as the cost of site office, human resources would increase as the duration of the construction period become longer. The early release the building, the greater profit for the Employer.
The quality of the workmanship and the quality of material is one of the main concerns for the Employer in general. The quality of the building should meet the requirement stated in the specification of the contract.
The development cost, the construction cost and the operation cost are the concern of the Employer. They totally affect the profit of the Employers. The construction cost is the cost for the building construction such as material cost, plant cost, labour cost. The operation cost is the running cost for the building such as maintenance cost, management cost. The development cost is the land cost, construction cost and other all expenditure which has paid for the development.
One of the major reason for choosing design and build arrangement is to benefit from the good communication that can occur between the design team and the construction team (Gould, 2003). Many of the large design and build companies specialize in particular areas and have developed a smooth flow between the design and build phases of the project. This collaboration allows the project to be easily fast-tracked, cutting down on overall schedule for the project.
Direct contact between the Employer and the contractor as provided a Design and Build system lines of communication and enables the contractor to adapt more promptly to the Employer's needs. Integration and encouraged inherently within the system (Griffith, 1989).
The Employer and contractor will communicate closely during the process of the project. Communication between them will start at the beginning stage of the project. Therefore, in design and build it provides the Employer and contractor an opportunity to interact more often and more directly than traditional contract. In general, this arrangement allows easier incorporation of changes due to scope or foreseen conditions since their coordination occurs within the same contractual entity. The Employer is less heavily involved and sits outside the direct day to day communication between designer and constructor. This keeps owner staffing to a minimum and puts the full responsibility for good communication and problem solving.
The Design and Build contract transfer more risks to the contractor than any other construction contract. Among a variety of risks, a contractor usually takes on many speculative risks. Risks that can vary in incidence between the parties as they wish.
Speculative risks can be within or out with the control of a contractor (Turner 1990). However, the suitability of a project to the Design and build approach must be carefully undertaken by ensuring that the contractor is able, willing and has relevant experiences to control the risk satisfactorily, otherwise they may pass these back to the Employer (Hogg & Morledge, 1995)
Figure 2.3: Risk allocation for each type of procurement system (Hogg & Morledge, 1995)
2.5 THE FACTOR AFFECTING THE SUCCESS OF THE DESIGN AND BUILD
2.5.1 THE PROJECT CHARACTERISTIC
Large and complex projects take longer construction durations. It is difficult to use the design and build procurement in such projects. Because it is unfair for the contractor to take risk on the material inflation on the lump sum fixed price contract. Therefore, the size and the complexity of the project should be considered.
2.5.2 THE CONTRACTOR SELECTION
According to Sarah Peace and John Bennett, it is very important for the selection of the contactor to process the design and build project. From the figure shown that the design and build project in increasing because of the government is willing to use Design and Build procurement method. As the adopting design and build procurement method by the Government, there is the system for selection of the Contractor as per the "Procurement Guide Lines"
The selecting the Contractor is not only concern the tender price, but also the quality Time, Contractor's financial status, potential contractor with good reputation, manpower good record for the previous project as per the pre-qualification marking scheme of National procurement guide lines. Therefore, the contractor who meets the Employer's requirement for time and quality at the best price would be selected.
2.5.3 THE EMPLOYER'S REQUIREMENT
The Employer should fully state their requirement, idea and specification of the workmanship in the Employer's requirement. The more detail of the Employer's requirement is, the fewer disputes will be occurred in the later stage. The design of the building and the standard of the building is according to the Employer's requirement. The Employer should understand what he needs in the building and the idea should be fully explained in the Employer's requirement.
The proposal responded from the Contractor should be carefully checked by the Employer's representative. Once the Employer accepts the proposal from the Contractor, the contract will be formed between them. The design of the building and the construction method will not be changed which stated in the contractor's proposal. The changes by the Employer would cause the great amount of the variation. Therefore, the accepted proposal should be fully understand by the Employer which is suitable to his ideas.
According to Ashley et al. (1987) identified 4 factors contributing to project success and grouped them into five areas including (1) management, organization and communication; (2) scope and planning; (3) controls; (4) environmental, economic, political and social; and 5) technical. The implications of the Employer should develop a thorough project plan in which the scope of work is clearly defined, and the contractor should understand and commit to the achievement of project objectives. The contractor's capability and experience in managing Design and Build project is critical to project success and project team members' commitment toward the project goals is also important.
Songer and Molenaar (1997) identified 15 characteristics of successful Design and Build. They found that the top five important project characteristics were well-defined scope, shared understanding of scope, owner construction sophistication, adequate owner staffing, and establish budget.
Although the Design and Build projects are expected to deliver the project faster and cheaper as compared to the traditional bid and build projects, not all the Design and Build projects can really accomplished it. Many empirical studies have been conducted to examine the impact of various project success factors such as the study of factors for a successful public sector Design and Build projects by Songer and Molenaar (1997), study on architects' and builders' views on Design and Build procurement method in Hong Kong by Mo and Ng (1997) and many others (Albert P.C. Chan et al., 2001).
Accordingly Chan et al., (2001) has developed a series factors contributing to the success of Design and Build projects. These factors are the duties, responsibilities and capabilities of different project participants including end-users, contractor, architect and design consultants in Design and Build projects.
The intention of this chapter is to present an overview of the literature published on the subject of 'selecting the procurement method from the current construction industry'; The objective of the Employer in terms of time, cost, quality and risk would be found out also. And the factor that may determine the successful of the procurement method would be identified. They are the project characteristic, the contractor selection and the employer's requirement.
In general, it can be summarized that Design and Build provides single point responsibility for the whole design and build. Contractors, who are responsible for the implementation of the project, have power to control all over the projects. This nonetheless does not deter the involvement of the Employer. The Employer's need and requirements are always been taken into consideration, which this consequently presents uniqueness of the system.
In conclusion, it is essential that whoever really want to procure Design and Build method need a thorough understanding of the types and characteristics of that kind of procurement. Therefore, benefits of Design and Build can be exploited. Many studies also showed that the characteristic of Design and Build that make Design and Build different from other procurement system in offering single point responsibility, fixed time and money, communication, allocation of risks and others. Getting success in Design and Build projects enables an assurance of getting the project completed at the right time and within allocated budget. The Design and Build procurement system has better time performance and cost benefits, which are essentially what the end-users are concerned about. This research can be a
key to assessing the performance level of Design and Build projects, and the project participants can learn about the important factors for setting up an effective management system to turn Design and Build projects with excellent performance.
CHAPTER 3 DESIGN AND BUILD PROCUREMENT METHOD IN SRI LANKA AND RESEARCH PROJECT FORMULATION
In this chapter, first, the state of design and build procurement method in Sri Lanka is discussed. Based on this discussion and literature review presented in chapter 2, the main research questions are formulated. Then, details of the research methodology used to investigate these questions are presented.
3.1 TRENDS PROCUREMENT SYSTEMS IN SRI LANKA
The allocation of risk in a construction contract is a function of the system of procurement. Traditional system has always be the choice of procurement in Sri Lankan construction industry. The traditional system has not only be the dominant procurement system in Sri Lanka but also other countries such as United Kingdom, Malaysia, Australia, Indonesia and Singapore. There is no doubt that traditional system is still be the most preferred system in construction industry. The advantages of this system gives a credit for this system to become a popular choice among construction players especially Employer. This system is already establish, more familiar and comfortable to apply as it has been practice for a very long time. It meets the key requirement of transparency and accountability. The Employers especially still would like to involve in the project especially when it involves lots of money in the project.
The lengthy and adversarial nature of the traditional system and the increase in the project complexity prompt the use of the design and build. Since the system is relatively new in Sri Lanka and majority of the design and build contractors do not have their own in-house designers, they employ design consultants to prepare detailed design and specifications. Only contractors with a high level of financial, technical and management capabilities would be able to provide full design and build contracting services.
3.2 THE DESIGN AND BUILD PROCUREMENT METHOD IN SRI LANKA
Design and build is the procurement system which the Employer buys the product from the producer who manages the aspects of design and build. In the design and build procurement process, the employer should describe the requirements for the project and stated it in the employer's requirement. The contractor should respond those requirements in the contractor proposals including all production method and its work. Once the employer accept the contractor proposal, the contractor is responsible for all design work and construction work. Therefore, the design and build become the responsibility of one organization. The contractor is responsible for the design and the construction in the progress. The Employer has only one organization to deal with. It is single responsibility of the contractor. Since Sri Lanka is a developing country that requires high efficiency and effectiveness for the construction, design and build can provide this package to the Employer. Design and build is the fast track procurement method which the contractor involves in design and build process.
Basically there are 3 kinds of design and build methods in Sri Lanka including Pure Design and Build, Enhanced Design and Build and Novated Design and Build. They have different features which can be applied in the project by the needs of the Employer.
3.2.1 PURE DESIGN AND BUILD
Pure design and build is the procurement method which the contractor is responsible for the design and build of a project. However, Janssens (1991) differentiates pure Design and Build into two categories; Single stage tender and two stages tender.
Figure 3.1: Pure/Traditional Design and Build: Contractual relationships (Mosley 1990)
3.2.2 ENHANCED DESIGN AND BUILD
Enhanced design and build is the procurement method that the contractor is responsible for design and build, but the initial design is provided by the Employer and his design team. The detail design and build of the project will be produced by the contractor afterwards. The contractor is responsible for detail design in the design and build.
Turner (1997) has described how in this type , consultants design the building to a partial stage, often called 'scope design', and competitive tenders are obtained from contractors who develop and complete the design and then construct the building.
Figure 2.2 shows the relationship between the Employer, design and build contractor and other professionals involved in enhanced design and build contracts.
Figure 3.2: Develop and construct: contractual relationship (Turner, 1990)
3.2.3 NOVATED DESIGN AND BUILD
Novated design and build is the procurement method which the Contractor is responsible for design development and construction. The design will be provided by the Employer. Novation may be defined as a form design and construct agreement, in which the Employer initially employs the Consultant team to carry out design and documentation to the extent that the Employer's need and intent are clearly identified and documented. Based on these documents, tenders are called and a building contractor is selected. Then the design team will transfer to the Contractor for the design development. The detail design will be provided by the Contractor afterwards.
Siddiqui (1996) notes that the Employer initiates the project by commissioning design consultant to develop the project brief and to commence design work The terms the engagement of the consultant are specified by an agreement between Employer and Consultant. The contractual arrangement before novation is shown in figure 2.3.
Figure 3.3: Pre novation contractual arrangement (Siddiqui, 1996)
Figure 3.4 shown the post novation contractual arrangements where the contract between the Employer and the design consultants is novated to the contractor after the award of the building contract. The contractor is required to keep the Employer informed on design matters, while still maintaining prime responsibility for meeting the performance criteria set down in the design brief (Siddiqui, 1996)
Figure 3.4: Post novation contractual arrangements (Siddiqui, 1996)
3.3 THE TREND OF THE DESIGN AND BUILD PROJECT IN PUBLIC SECTOR AND PRIVATE SECTOR
According to the research conducted by Rameezdeen and Ratnasabapathy (2006), the traditional system dominates the Sri Lankan construction industry, but decrease in certain periods opening the way for other systems. The Majority of public works in Sri Lanka found to be using to these methods by considering accountability and transparency. The statistic from the survey result of trend procurement systems in Sri Lanka, the figure shows that the design and build procurement system had a usage rate of 20% to 35% during the 1977 to 2003.
Figure 3.5 The survey result of trend procurement systems in Sri Lanka (Rameezdeen and Ratnasabapathy,2006)
Currently, design and build procurement is widely employed by the construction agencies of the government sector. Adaptors of design and build method do so in anticipation of achieving higher construction project performance in 4 main areas: time, design, development cost, and utilization of technology. The intended advantages with respect to these four factors are discussed below:
3.3.1 TIME SAVING
It state that time is the main concern for the government as some estates has an urgent demand in last 2 years because of the post war development was highly increasing in recent years. The demand for the new investment such as hotels, mix developments, housing estate was increased and the design and build method can provide building quickly as it is fast tracking capability. When the demand is increasing, increasing the supply must be the resolution method to resolve the increased demand. That the principle of design and build is the contractor is responsible for design and build. The shortened construction time is caused by the overlapping of design and build. Time consuming in design period is the reason for the longer completion of the building. The overlapping of the design stage and construction stage can lead the shortened the total project duration.
3.3.2 COST OF DEVELOPMENT
The cost of the design of the project would be the factor for the selection criteria. The competition between the Contractors may lead to a more economical design of the building. The Employer can have more choice to select the design of the building from the various Contractors' design since the Contractor has the responsibility to produce the drawing to the Employer. The Employer can select the drawing from different Contractors to obtain the most economical design for the building.
3.3.3 CONTRACTOR'S TECHNIQUE APPLICATION
The special skill and technique of the Contractors would be the factor for the selection criteria. Some special design from the Contractor would need a special skills and plants to construct. The skill and technique from the Contractor would facilitate the building construction as fast as possible. The deep understanding of the design of the building would favor the construction progress. As the detail design drawing is produced by the Contractor, the best method of the construction would be adopted by the Contractors since they are fully understanding of the design of the building.
3.4 RESEARCH PROJECT FORMULATION
As discussed in the preceding section, design and build method is gaining popularity in Sri Lanka. As the construction projects are complex and consume a significant amount of time. The construction industry also relies heavily on experience, knowledge, and work styles of its practitioners. Therefore, any changes to the state of the art methods utilized in the industry merits investigations to assess the level of success of alternative methods. Such studies could provide valuable insights that could contribute the advancements of the industry.
Various studies reviewed in chapter 2 have provided some insights into the benefits and level of success of design and build procurement method in different countries. However, no structured study on the level of success of the design and build method in Sri Lanka was found in the published literature. It is difficult to the infer the level of success based on studies conducted in other jurisdictions due to the local specificities in the construction industry. This study aims to fill this gap by surveying a wide spectrum of local construction industry professionals. By analyzing the responses obtained, the level of success of design and build method in Sri Lanka is assessed.
The research methodology used for this study is described in the following section. This methodology consists of survey questionnaire design, data collection and interviews, analysis of data, and drawing of conclusions and recommendations.
The author has carried out a qualitative research and literature review available to him in order to obtain the necessary information for the extended study.
There are different source of information and data available to the author for this extended study project. The main sources include published material, private & confidential material, usually generated within organizations, and material generated by the author himself.
By utilizing a number of both primary and secondary research methods it was possible to obtain qualitative research to begin analyzing the proposed hypothesis in detail.
Secondary data - this comprises of data already available to the author and in the public domain. It will take the form of trade journals, articles, published books, internet websites, and online document libraries e.g. CIS or RICS.
Primary research also takes the form of an interview, both phone and unstructured interviews depending on their relevance to the study. These can be considered highly time consuming and often vast numbers must be undertaken in order to gauge true representations of company or industry opinions.
Once these methods have been undertaken, the author has analyzed and evaluated the information gained and assessed, its suitability to the project studies.
This must be carried out in a timely fashion. As this process can often be lengthy and also unsuccessful, meaning, further research may be required.
It is also important to note, that not every form of research is relevant or required for this study and should therefore only utilized if it is essential for completing the study aims and objectives.
The author will now discuss the methods of research that have and will be used in the preparation of this extended study, giving reasons for their use.
3.4.1 HOW TO ACHIEVE THE OBJECTIVES
In order to test the proposed hypothesis in the correct manner, it is essential to answer and meet the tactical objectives highlighted in Part 1.2. In order to do this the correct research methodology must be adopted early on, to ensure that the right data is obtained from the process.
The objective 1,3 and 4 will be achieved by phone interviews and questionnaire from industry professionals such as; Architects, Quantity Surveyors, Project Managers, Claim Consultants, Design Engineer, Builders to understand the trend for the Design and build procurement method in Sri Lanka and advantages and disadvantages of Design and Build procurement path.
To meet the second objective, an extensive literature review has been carried out, providing pre-written in depth information on the subject regarding to identify the factors will be considered before selection of procurement path.
3.4.2 SECONDARY RESEARCH
The research has begun with an initial literature review of public, company and university libraries, as well as Internet resources to establish what has been previously written on the subject. Further information and data has been reviewed through trade journals and manufactures' literature, etc.
3.4.3 PRIMARY RESEARCH
184.108.40.206 PHONE INTERVIEWS
The interview method involves questioning and discussion of issues with people. It is considered to be a highly insightful method of collecting data, and useful in obtaining information. Author has decided to utilize the phone interview technique and made the conscious decision to audio record the interviews.
By utilizing questionnaire, it is possible to tailor the conversation in a particular manner. The questionnaire will be allowed the author to delve deeper into specific areas of the chosen topic. The results of the questionnaire will aim to meet following main objectives of the project:
To identify advantages and disadvantages of D&B procurement path.
To identify success of D&B procurement path in Sri Lanka.
To identify difficulties of D&B procurement path in Sri Lanka.
To identify cost certainty of D&B procurement path
To identify what are the contractual consequences
Which types of D & B method suitable for Sri Lankan construction industry project most suitable for D&B procurement path
It will also allow author to obtain a greater position on their feelings with regards to design and build procurement path in the construction industry. This will be achieved by manipulating the questions in such a manner, to study the subject in deeper.
3.5. SURVEY QUESTIONNAIRE DESIGN
The questionnaire used for this study is formulated based on literature reviewed in chapters 2 and factors specific to Sri Lankan construction industry. Care was taken to ensure that local specificities are captured by the questionnaire. The full list of questions are presented in appendix 1.
3.6 DATA COLLECTION
There are several known modes of data collection: telephone, personal or focus group interviews, or observation. The appropriate modes have to be utilized effectively to gain the expected findings. Every step need to be plan carefully. Data used for this study is obtained using three methods.
Literature review (secondary data)
In person and over the phone interviews
Empirical data collection using the aforementioned questionnaire. The questionnaire was sent to 50 survey participants from the construction industry covering public and private consultancy firms and construction firms. The participants were given 3 weeks to complete the questionnaire.
3.7 DATA ANALYSIS
The gathered data is then qualitatively assessed. Level of success of design and build method is assessed using this analysis. Other factors such as procurement method selection criteria and other concerns of the practitioners are also identified.
The findings of this study may help to identify the factors of causation towards the advantages and disadvantages occurs associated with design and build procurement method.
Traditional system is the most dominant procurement system in Sri Lanka. It is more familiar and establish to the construction player to use it in the construction industry.
Research methodology is essential in providing the valuable results of the study. Methodology used in this study was literature review, data collection, data analysis and conclusion and recommendation of the study. The literature review is used to identification of the issues; questionnaire is used to collect the data while interviews are conducted to collect data related to the case study. Statistical and analysis and qualitative interviewing method were used to analyze data. Finally, the conclusion and recommendation with reference to the objectives are created, subsequent to the analysis from the interviews and questionnaires.
CHAPTER 4 ANALYSIS AND DISCUSSION
4.1 THE RESULT OF THE QUESTIONNAIRE
As the statistic show that the design and build project has been highly increased. The reason for using the design and build procurement method should be investigated by using the questionnaire.
The 50 questionnaires were delivered to the respondents who work in construction firms and Consultant firms. They were given 3 weeks to complete the questionnaire and return the questionnaires within 2 week. There are 46 questionnaires were received, the questionnaire were divided into 2 groups, Consultant and Contractor.
There are 28 numbers of questionnaires were from Consultants and 18 numbers of questionnaires from the Contractors. According to these 46 questionnaires, the result is illustrated as follows:
Question 1 - The most common procurement method the interviewees used.
It was found that the most common procurement used is the traditional procurement method in Sri Lanka.
There are 70% interviewees are mostly involved in the traditional method and 23% are involved in the design and build method.
DISTRIBUTION OF PROCUREMENT METHODS IN SRI LANKA
Question 2 - Involved in the Design and Build project.
It was found that all interviewees have been involved in the Design and Build project.
Question 3 - The Design and Build procurement method has been used by which sectors.
It was found that 85% of the design and build project is initiated by the public sector.
Question 4 - The construction period of the Design and Build project the interviews involved.
It was found that 52% is between 1 - 2 years and 48% is between 2-3 years.
Question 5 - The contract sum of the Design and Build project the interviewees involved.
It was found that 8% are between 2000 Million 3000 Million, 61% are between 1000 Million- 2000 Million, 31% is between 500 Million - 1000 Million
Question 6 - The benefit of using Design and Build procurement method.
All interviewees think that the time saving is the most beneficial using design and build procurement method.
Question 7 - The critical factor for the Design and Build project the interviews involved.
It was found that all interviewees from consultants stated that time is the critical factor for the projects, while the interviewees from contractors stated that the cost is the major factor for the project.
Question 8 - The risk is transferred to the contractor when using Design and Build procurement method.
It was found that 91% interviewees think that majority of risk is transferred to contractor when employing the design and build procurement method. Only 9% interviewees think the risk is not totally transferred to the Contractor.
Question 9 - The success of the Design and Build procurement method would be determined by the employer's requirement.
All interviewees think that the detail of the employer's requirement would determine the success of the design and build project.
Question 10- The quality would be improved when using Design and Build procurement method.
It was found that 71% of the projects gave the same quality standard, and 29% gave a decreased in quality standard in using design and build procurement method.
Question 11- Time would be saved when using Design and Build procurement method.
All interviewees gave 100% on the time saving when employing design and build procurement method.
Question 12 - The cost would be saved when using Design and Build procurement method.
90% of the projects gave the same, and 10% gave increased in the cost saving employing the design and build procurement method.
Question 13 - The flexibility would be enhanced when using Design and Build procurement method.
All interviewees from consultant think neither increase nor decrease in the flexibility of the project. All interviewees from contractor gave increase in flexibility in the project.
Question 14 - The number of disputes would be reduced when using Design and Build procurement method.
All interviewees think that the disputes is reduced when using design and build procurement method
Question 15 - The Design and Build procurement method is successful in Sri Lanka.
96% of interviewees think that the design and build method is successful in Sri Lanka and 4% think it is unsuccessful in Sri Lanka
Question 16 - The recommendation for using the Design and Build procurement method.
All interviewees recommend the novated design and build procurement method to be used in the future development project.
It was found that 90% interviewees think that Novated Design and Build procurement method should be used in future development project and 10% recommended pure design and Build system
4.2 SUMMARY OF FINDINGS OF QUESTIONNAIRE
In the questionnaire, it was found that the traditional method is the main procurement in Sri Lanka since this procurement has been used from the early of the construction industry. It is indicated that all of the interviewees has been involved in the design and build project which is initiated by the public sector.
From the questionnaire, the interviewees involved in the design and build project is mostly more than 1 billion in contract sum with the 1-2 year construction period.
From the questionnaire, it was found that the design and build can improve the cost saving or within the budget and the time reduction for the project. The interviewees think that the quality standard basis has no improvement or decreased. Most of the interviewees think that risk was transferred to the contractors in the Design and Build procurement method.
Majority of the interviewees think that the Design and Build procurement method is successful in Sri Lanka and recommend the novated design and build procurement method in the future project.
4.3 ANALYSIS AND DISCUSSION OF THE QUESTIONNAIRE
4.3.1 THE REASON FOR SELECTING THE DESIGN AND BUILD PROCUREMENT METHOD
According to the questionnaire, most of the interviews regard the time is the most important advantage for using the design and build procurement method. As time is money, every Employer is concerned about money returned for investment. For the time basis, the single point of responsibility enable the contractor produce the both design and build for the project. In the design and build procurement method, the contractor should provide a "package" to the employer which is the design and the construction stated in the employer's requirement. The overlapping of the design stage and the construction stage would reduce the time to meet the target completion date. It is because the preparation for tendering is shortened by producing the design detail at the later stage. The early start the construction on site would shorter the construction period of time. The total construction time would be shortened by carrying out the design and build in parallel process. The early completion of the project would give an advantage to the Employer for release the pressure on the interest of the capital which borrowed from bank
Due to the both design and build are carried out by one organization. The communication between the designer and the contractor would be enhanced. The better communication between the designer and the contractor would improve the project performance and the efficiency. The contractor is responsible to produce the design and build in the design and build procurement method. They employ the in-house designer to produce the design which can communicate with the contractor to improve the detail design with their familiar construction way. The designer can fully understand the needs and the difficult of the contractor which would avoid the unnecessary mistake in contraction method by use the most suitable construction method.
The contractors can make use of their resource and specialist skill to construct the building in their own construction way that the detail design is provided by them. It would shorten the time to find out the suitable construction method. As the detail design is produced by the contractor, they can make a better decision on the construction arrangement such as the sequence of the construction works. It would reduce the total construction time resulting from the better arrangement of the construction works.
The completion date is fixed because of the fewer claims the extension of time. As stated before, the contractor is responsible for producing the detail design, the extension of time always claimed for the design changes. The less extension of time would be claimed in design and build procurement method which could meet the target completion date.
According to the questionnaire, less than half of the interviewees think that the quality is decreased and more than the half of the interviewees think that the quality is as same as the requirement sated in the specification.
As the quality of work is depended on the specification stated in the employer's requirement, the brief description of works may be resulted to poor quality of works. The misunderstanding the idea between the Employer and the contractor would cause the poor quality of the project also. The specification stated in the employer's requirement should be stated clearly for the workmanship requirement. The contractor has the responsibility to fulfill the requirement stated in the employer's requirement. The contractor should produce the best design for the success tendering; therefore, the quality would have the guarantee.
From the questionnaire, the interviewees recommend the novated design and build procurement method will be used more in the future development. The novated design and build allows the designers and the contractors have the better communication as the design team would transfer to the contractor for the detail design development.
From the questionnaire 90% of the interviewees reported that the cost for the project is as same as the budget of the projects. It means the cost for the design and build procurement method can release the pressure on over-budget. As the time related item is affected by the duration of the construction, the longer the construction period is, the higher the cost for the construction. As the Employer would borrow money for the project via the bank, the interest charges would be higher when the completion date is delayed. As the contractor is responsible for both design and build, the delay of the completion date beyond the control of the employer would be the risk of the contractor. Moreover, the design and build project ensure the completion date is met as the Employer would keep monitoring their progress by submitting the bills for work completed by the contractor.
The optimum design for the project would be selected by the Employer which must be the most suitable design at the economical price. Moreover, the cost saving can be achieved by the better use of the material and the specialist skill as the design produced by the contractor. They can make a good use of their skill to lower the cost of the construction. Therefore, the tender price would be lower bided by the contractor.
The claim of extension of time and variation are reduced as the drawing is provided by the contractor side. Fewer claim of extension of time would be resulted to the fewer claim on loss and expense. So the cost for the building is certainty to lower the chance for the over-budget for the project. As the Employer is concern about the budget of the project, the final contract sum would not exceed the amount stated before by using the design and build procurement method.
From the questionnaire, the 91% interviewees think that the risk is transferred to the contractor and the 9% interviewees think that the risk is not transferred to the contractor.
Risk cannot be avoidable in every procurement method. The potential risk should be identified to eliminate the effect of consequence. In the Design and build procurement method, the Employer should ensure his idea is understood by his design team as the draft design is the fundamental purpose for the contractor to provide the detail design. The final drawing and the idea should meet the requirement of the Employer. The risk occurred in design and build project is usually the building not met with the Employer's objective. The appointment for the experienced architect on the contractor's proposal can eliminate the risk of the misunderstanding between the Employer and the Contractor.
In the design and build procurement method, the risk almost transfer to the contractor as the feature of the single point of responsibility of the contractor. The contractor should take risk on both design and build process. The contractor should guarantee the design is fulfill the requirement of the employer and the workmanship complies in the specification stated in the employer's requirement. Moreover, the contractor should take risk on the performance of their sub-contractor. The performance of the sub-contractor or supplier is the responsibility of the contractor.
The contractor should take care of their workmanship that meet the requirement of the specification stated in the employer's requirement. The over-budget risk would not occurred in the design and build procurement method as the design and build contract is the lump sum fixed price contract. The price of the project would be fixed after award of the tender. The over-budget only occur when the Employer need to change the design of the works. The excessive claim on variation would be caused the over-budget of the project. That the only risk occurs between the Employer and the contractor is misunderstanding in the idea between the Employer and the contractor. The risk would be transferred to the Employer when their idea do not fully describe in the employer's requirement.
The risk for delay completion date would not occur in this method since the single of the contractor enable the project complete on time. The delay of the project would be the fault of the contractor which is the risk of the contractor given that the delay is not the control of the Employer.
From the questionnaire, all the interviewees from the consultant think that the flexibility does not have significant change in the flexibility, but all the interviewees from the contractor think that the flexibility for the project is increased.
As the contractor develops the detail design, the Employer only has the choice to choose the suitable design in the pre-contract stage. In the pre-contract stage, the design of the building may be the concern for the Employer. The Employer has the choice for the different design produced by the contractor in the pre-contract stage. The Employer may find the most suitable design from the various design submitted by the contractor. The Employer can adopt the optimum design for their project with the most economical price which is more suitable to his idea. It is an advantage when the Employer does not have much design for the building chosen.
On the contractor side, the detail design provided by them would be the most suitable way to construct. Therefore, it would maximize the resource and take an advantage on their skill which can reduce the cost for the construction and speed up the time for the construction.
Moreover, the contractor has the choice for selecting the suitable construction method and the material using. It would enhance the quality of the building and the better material to be used in the project.
Furthermore, the co-ordination of the construction works can be arranged in more effective way. As the design and build procurement method allow the contractor arrange the construction work in their own way, the better co-ordination of the works would facilitate the construction flexibility to achieve the most effective way for the construction.
From the questionnaire, all of the interviewees reported that the number of disputes is reduced in their involved project. The contractor is responsible for the both design and build process. It would reduce the chance for the disputing of the design detail. The design and build is the lump sum fixed contract, the budget dispute would be avoidable. The variation order would be less issued because of the detail drawing produced by the contractor. It resulted from less extension of time would be claimed and less loss and expense claims. It would speed up the construction process to meet the target completion date.
There is less performance dispute between the Employer and the contractor as the requirement for the project is stated in the employer's requirement. The contractor must fulfill the requirement in the specification to achieve the standard of the project.
Less negligence dispute is occurred in the Design and Build procurement method as the contractor is responsible for both design and build phase. As they act a professional, they have the expertise and skill and plants to build the building resulted from deciding the construction method by themselves.
220.127.116.11 CONTRACTUAL ARRANGEMENT
There is the only contractual arrangement between the Employer and the contractor. It is only the responsibility of the contractor if there is any default on design or construction because of the single point of responsibility of the contractor. The contractor has the whole responsibility on both design and build. They should take care of any problem arising in the design and build.
The Employer would not have any contractual relationship between the Employer and the sub-contractor. Therefore, the contractor should take care of their sub-contractor to meet the requirement of the project. The default of the sub-contractor or supplier would be the responsibility of the contractor too. It will avoid the Employer involve in the contractual relationship between the sub-contractor and the supplier.
From the questionnaire, that the design and build project involved by the interviewees are initiated by the government. It means the design and build procurement method is popular in the public sector rather than using in the private sector. It is because the design for the building is the most concern factor in the private sector for their project.
They are willing to pay the cost on employing the professional design team to design the building. Therefore, the less the design and build project exist in the private sector.
18.104.22.168 THE PROJECT SIZE
The result from the questionnaire indicates that most design and build has the characteristic of medium project size with shorter construction period. The standard repetitive works with less specification can guarantee the time saving and better quality performance. It is because most of the design and build is initiated by Government, which mainly initiated the housing schemes that has the standard plan, and without much specification
4.4 THE ADVANTAGES AND DISADVANTAGES OF DESIGN AND BUILD PROCUREMENT METHOD
From the questionnaire, the advantages and disadvantages can be illustrated as follows:
4.4.1 THE ADVANTAGE OF USING DESIGN AND BUILD PROCUREMENT METHOD
The Employer does not have much experience in the construction industry, they need to appoint the skilled and experienced consultant and architect to handle the problem. Due to their inexperienced in the construction field, they are not willing to move into the construction process. The Design and Build procurement method provide the single point of responsibility of the contractor. The Employer do not involved in the construction process as the contractor is responsible to both design and build.
On the other hand, the contractor can appoint the in-house designers for the project design rather than the other designer who never worked with them. It can enhance the better communication between the contractor and the designer to achieve the efficient way for construction. The overlapping of the design and build would lead to shorter the total construction time. Although the pre-contract stage is longer, the construction time would be reduced by the overlapping of the design and build stage. It will avoid the delay of the completion date of the project.
According to Somers (1993) stated that the cost certainty is the benefit of using Design and Builds procurement method either the tender price is higher or lower than the traditional method. The fewer claims on extension of time or loss and/or expense claim due to less variation order. Since the detail deign is developed by the contractor, the less variation order would reduce the chance for claims. The cost for the construction process would be reflected on the tender price bided by the contractor.
The fast return on the capital would be the benefit of the Employer as the interest charge is high which would reduce the profit of the project. The completion on time would release the pressure on paying further interest charge.
On the contractor side, that the factor which is very important to affect the success of the project is the buildability. As the contractor produces the detail design, the best construction method would be provided. It ensures the building built in the appropriate way. They can utilize their resource and plant to co-operate with the construction method. The best method applied in the construction is not only the time saving, but also cost saving as no excessive material would be wasted.
The contractor enter the design stage may assist the design development for the project as the contractor is act as a builder who fully understand the difficulty of the construction process. The early involvement in the design stage would reduce the disputes between the Employer and the contractor at the later stage.
4.4.2 THE DISADVANTAGE OF USING DESIGN AND BUILD PROCUREMENT METHOD
The main concern factor of the Employer is the cost basis in the construction process. In the design and build procurement method, the Employer cannot have design changes once the award of the tender. The flexibility of the Employer would be limit since the design changes would cause huge amount of variation. The budget would exceed the lump sum fixed price of the project. Therefore, the flexibility for the design and build procurement project would not flavor to the Employer. The Employer cannot change the design without paying any additional charges. According to Pain (1993) stated that the design cannot change in the post-contract period and the most suitable design should be found at the pre-contract stage.
The quality of work is the other problem in the Design and Build procurement method. The poor quality of works would be resulted from the brief specification stated in the employer's requirement. It is the fault of the Employer who does not provide the detail specification stated in the employer's requirement to the contractor. The responsibility of the contractor is to comply with the specification stated in the employer's requirement. Therefore, the poor quality of works may cause the additional money for repairing. It will increase the cost of the project when the employer's requirement do not fully explained the standard of the works.
The idea of the design may find difference between the Employer and the Contractor. The contractor will develop the detail design after the approval of the design drawing by the Employer. Once the Employer approves the design, the detail design would be developed for construction. The detail design cannot change after the approval by the Employer. If the Employer discover the problem on the drawing later, he cannot change the design anymore. The variation would be claimed by the contractor for the change of the design. The variation in Design and Build contracts are difficult to access the changes in exiting construction works and it is difficult to identify the responsibility of any cost implication. Therefore, the Employer do not advised to issue a variation order after the drawing has been approved by the Employer.
Poor quality performance may be occurred when no information for the scope of work and the site condition. The delay the completion date may be occurred when insufficient data and information to the contractor for interpretation for tendering. The tender price they bided does not include the cost for uncertainty. Therefore, their construction progress would be delay and may affect the completion date. However, the contractor is willing to give up the quality performance to catch up the completion date.
According to the questionnaire, it is clearly shows that time i