Evaluation Of Procurement Routes Construction Essay

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Antoinette Consultant has been appointed by Cinnamon Grand, who is a renowned hotel chain in the UK to be the main consultant of the reconstruction of the three hotels, which have suffered from catastrophic damages recently. Part of AC's role is to evaluate the procurement strategies with a focus on Client's objectives. The purpose of this report is to appraise and evaluate suitable procurement routes and make recommendation to CG.

CG wishes to turn disaster into opportunity by seizing the chance to bring up their hotels up to today's standards. With growing global concern on sustainability, environment-friendly design and construction practices will be incorporated into existing buildings at different phases of development to prolong building life cycle and maximize building usability, without compromising the special characteristics of the historic buildings. CG has adapted the UK framework for sustainable development and helps to contribute to the overall goal by implementing adaptive measures in administrative, engineering and personal behavior.


Cinnamon Grand's Profile

Cinnamon Grand is a privately owned organization and has a good level of knowledge and experience related to construction of hotel buildings and building refurbishment. However, there is no in-house team to provide professional advice, nor overseeing the project.

2.2 Objectives

Cinnamon Grand is interested first and foremost in ensuring that the finished product fulfills their general requirements in terms of time, cost and quality. Their aim is to attract tourists, business travelers, and even local with its new lavish and historic décor, provide accommodation with a good comfort level and amenities, and coupled with modern facilities.

CG has allocated £120 million to this project. The process will be undertaken in two phases:

Phase One - Time & Quality are essential

Target Start Date : 1st March 2014

Handover Date : 28th February 2015

Scope of work:-

Promptly demolish unsound structures and reconstruct it, repair damaged roofs and replace waterproofing membranes, façade restorations, repair and replacement of wall insulations, renovation of restaurants, and repair of swimming pools.

Phase Two - Guests' safety & comfort is first priority

Target Start Date : 1st May 2015

Target Handover Date : 30th August 2015

Scope of work:-

To construct dance studios, health and fitness centre, and business centres.

CG will hire a remodelling design professional to design the key elements of the hotels and produce & finalize drawings at the earliest possibility for the appointed Contractors tender and make arrangements.

Designer and Contractors must plan for integration of the necessary building services for the new facilities to be constructed in Phase Two.

CG's Procurement Criteria

The hotel management board has developed the following agreed priorities:

Speed in completion

Design & construction process is only given one year to complete. All three hotels have to be prepared for partial reopening by 1st April 2015

End product should be of good quality

Client will compile output specification of the main elements and reserve the right to make minor amendment where necessary

Predictability of Cost

Final cost should be identified at earliest possibility

Keep variation orders to the minimum

Transference of Risk

CG wants minimal risk

Value For Money (VFM)

Appointed Contractors are also expected to include the maintenance and operation requirements within the contract and adopt innovative solutions that provide greater value for money when considering whole-life costs

4.0 Procurement Options

Based on the identified priorities, we have identified four procurement routes that we deemed appropriate for this project, which are:



Suitable for all clients & complex projects

The design process is separate from the construction

Client bears the design risk


Control over design process

Certainty of final cost (lump sum contract)

No built in contractor risk premium


Design quality may not be up to the mark

Requires high levels of commitment and participation from Client

Majority of the risk is being held by client

Lack of integration between the design and the construction and the separate responsibilities

Construction Management:


Suitable for experienced clients & complex buildings

A construction professional is appointed to manage the whole process

Fast track strategy


Client bears low time & cost risk

Able to start early on site as the project is being broken down into trade packages

Design and construction process are fully integrated


Client bears the associated risks (i.e non-performance of appointed contractors, performance of design team)

All contracts are between the Client and the trade contractors

Requires in-house expertise as Client has to be involved in both design and construction phase

Management Contracting


Suitable for experienced clients & complex buildings

A building contractor will be appointed to manage the whole construction process for a fee

100% sub-contracting

Client manage work contracts with the Contractors directly

Fast track strategy


CG has control over design quality

Fast completion

Better supervision and coordination

Early completion is achievable

Independent architect and design team


CG to approve terms and conditions of the work contracts before the packages are sub-contracted

Less price certainty

Unable to accommodate major changes

All the risk is held by the Client

Design and Build


Suitable for all clients & less complex buildings

Develop and construct

Fast track strategy


Single point responsibility

Simplified contractual arrangements

Integrated design and construction

Contract sum is known at the outset

Well-designed and aesthetically pleasing buildings can be obtained

Majority of the risk is being transferred to the Contractor

High operational efficiency

Offers greater control to the services sub-contractors


Accommodates only minor changes during the process

Concise output specification is required in order for the contracting organization to call for tender

There is a risk that the design and quality of the completed facility (Phase Two) may be compromised if a detailed output specification is not provided

Our Analysis and Recommendation

Quality + Time

Cinnamon Grand's Key Aim

To have an outstanding project delivered quickly at a reasonable cost.

An assessment of various procurement routes has been done to find the most appropriate procurement approach. The evaluation of the four procurement routes is presented in the following table:




Design & Build

Reason For Selection:

1. CG has a good grasp of the business requirement of the hotel industry. With objectives that are realistic, only minor changes are expected during the course of the project which also translates to lower possibility of time & cost overrun.

2. Contractor is only responsible for secondary elements of the design, hence the design risk is greatly reduced and cost predictability is enhanced through this.

3. Building services cannot be designed and installed independently. The integrated process will enable contractors, specialists, and suppliers from Phase One to comprehend CG's requirement better. With properly installed building services and strategic planning done before hotels are back in business, Phase Two works can be carried out without causing much disruption to guests.

4. Using the same team for both phases will help in eliminating or reducing material waste.


Management Contracting

Reason for Non-Selection:

1. This method requires client to take an active role in the process.

2. In order for this approach to function properly, everyone involved must have clear understanding of Client's requirement and good coordination skill is vital.

3. Final costs are not known until the last trade contract is let.


Construction Management

Reason for Non-Selection:

1. CG does not have any in-house expert to manage the contracts.

2. The open-end nature of the contractual agreements will cause cost uncertainties.

3. It is not possible to establish guaranteed maximum price due to short timeline.



Reason for Non-Selection:

1. This method is good if only the predictability and accountability were most important.

2. Sequential and consequently slow process.

3. The lack of integration of design and construction process also translates to medium/high potential of time & cost overrun and difficulty in achieving whole-life cost saving.


6.0 Conclusion

This report has outlined the suitability of various procurement routes through analysis of its advantages and disadvantages suited to CG's requirement and strategic objectives for this project.

Design & Build is found viable for this project because of its ability to deliver quality project within short timeline, integration of design and construction that enables time and cost savings, as well as transference of risk and liability.

There is no "One-Size-Fits-All" approach, therefore Design and Build method is not a panacea and has its drawbacks and limitations. Coordination problems would still exist, but to a lesser extent in D&B due to the integration of design and construction.