Problem Formulation And Procurement System Construction Essay

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Nowadays, the construction industry is evolving towards a stage whereby cost, time and quality are being stressed and remain the main requirements from the end user. Although the use of traditional method to implement project has been there for many decades, recent years, as projects getting more complex and require fast track which demand greater emphasis on management techniques and engineering skills, the traditional approach to implement those project were found to be not effective (Bahari Mohd. Ali,1986). (Collins A, 2009) Construction industries in Ghana are facing looses delays and poor quality of a project and most of the contractors are not performing well due to their poor quality workmanship. According to (Nicco-Annan, 2006), Clients are incurring cost overruns of between 60 - 180% (exclusive of inflation) and time overruns of 12 - 24 months on construction projects in Ghana today.

Despite the fact that, the traditional procurement system has been practicing for quite a long time, and not only that but also since different procurement systems differ from each other in terms of allocation of responsibilities, sequence of activities, process and procedures etc, some of them still have quite a number of short comings and conditions which turns to affect project performance.

Besides the above short comings, in my point of view, some procurement systems have been classified as best among the other once since it renders the procurement system process more open and transparent and not only that but also, it thus reduces the possibility of bid collusion and determines project success.

The main focus of this report is effective implementation of design and builds procurement system in Ghana. The report will go on by giving a clear understanding of how effective Ghanaian construction industries can implement procurement effectively. In addition to this, the first part of this argument will be basing on the general description of procurement system.

The argument will emphasize on different types of procurement systems within the context of both traditional and design-build procurement system in Ghana.

Precisely, the second stage of this report will elaborate on making some little comparisons of the traditional and design-build procurement system thus finding out the advantages and disadvantages of both.

After this, the report will be focused on the challenges of design-build procurement system and how design-build procurement system can be implemented effectively in the Ghanaian construction industries.

This done, more light will be thrown on the analysis and discussion. The report will then be concluded by answering all the questions raised in the research questions and it will serves as a beneficial to make right decision in terms of choosing the right procurement system.

KEY FIGURES: Traditional procurement, design-build procurement, advantages, disadvantages, effective and implementation.

INTRODUCTION:

Construction industry is the backbone of many countries, in this respect, the importance of a healthy construction industry is beyond doubt. (Riaz, 2004). According to Collins A, 2009), the Construction industry world-wide is undergoing a lot of transformation especially in the area of procurement due to the ever changing customer requirements; desire to reduce cost and production time.

Design and build procurement system is not new to Ghanaians but very small changes is taken place in design-build procurement system. Most of the construction companies are still delivery through the design-bid-build method refusing to know that the traditional procurement systems are known as causing conflict and division among the contractors which has generated to poor performance, low profit margin and poor morale among consultants, contractors and suppliers.

However, the reason is that, the traditional procurement system for instance, has been examined and its short coming has also been noticed, criticized and confirmed in the areas of bid collusion, long procurement time, arbitration and perhaps more expensive in all cost and this problems has been defined as inevitable and nothing seems to change this practices. As a result of these, clients from both public and private sectors are not satisfied due to poor performance and they cannot predict the future.

On the other hand it is very important to implement design-build procurement system to Ghanaians so that it can replace the traditional procurement system. And also, it is very necessary to identify the problems facing the Ghanaian construction industries concerning the implementation of design and build procurement systems. Meanwhile, this thesis would go ahead by giving more ideas about the implementation of design-build project in Ghana, as well as giving some reflections on whether the construction industries in Ghana are ready for the effective implementation or not.

More importantly, this research can serve as revision for the Ghanaian construction industries which are still working with the traditional procurement system to develop on a more practical and comprehensive procurement system which can bring more asset especially to the public sectors.

Methodology:

In order for this research to achieve its aims and objectives, the method used will be base on existing information's, general observation and other internet sources which will be very useful to the topic. However, this research will be limited within the information gathered on the internet, general observation and existing information from the researchers and will provide answers to the questions in the problem formulation.

Research questions:

What are the challenges in the implementation of design and build procurement system in Ghana?

How to identify the success factors in practicing design and build procurement systems

How can effective implementation improve quality, reduce cost and save time in the design and build procurement systems in Ghana?

Procurement systems:

Who said this,

Procurement of construction project is extremely large because it consist of the act of obtaining something like suppliers for an army or other organizations, it also involves the act of gathering different individual, shopping complex, bridges, roads etc. for a "client or a customer's".

On the other hand, procurement comes from the world procure which has different meanings such as; "to acquire", "to gain", and "to obtain". System is a way of working, organizing and doing something which follows with a fixed plan or set of rules. System can at the same time mean an organized scheme, process or procedure and technique. Besides all the above definitions project procurement is all about an organized scheme, process or procedure of acquiring a construction project such as schools, shopping complex, offices, houses, bridges and roads etc.

(Masterman1996) described project procurement as the organizational structure needed to design and build construction projects for a specific client. It is in a sense very true because the process of "obtaining" a building by a client involves a group of people who are brought together and organized systematically in term of their roles, duties, responsibilities and interrelationship between them. Whiles, the Aqua Group (1999) described procurement as the process of obtaining or acquiring goods and services from another for some consideration.

Design and Build:

Design and build form of contract is the type which has a single entity, normally a contractor will take responsibility for the design in whole for construction and completion of a construction project. Design and build does the right thing it is asked to do, the employer will employ a main contractor who will be responsible for not only the construction part of the work but also the design aspect which means it taken the responsibilities of both the construction to the completion of the work.

Turner (1990) and Jansen (1991) supported that Design and Build contractor is supplying the procurement option of "buying" a finished building. While according to (Masterman 1992) 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 construction of a client's project. Masterman went to say that, this contains three main elements: the responsibility for design and construction, contractor's reimbursement is generally by means of a fixed price lump sum and the project is designed and built specifically to meet the clients' needs.

In this case, it is a form of procurement in which the contractor will design and construct the project. However, a qualified team is appointed either directly by the main contractor or an initial appointment will be novated. "Novation" is the process whereby the rights and obligations of the employer under the appointment are transferred to the constructor. The appointment will still continue in it full implementation and effect but the contractor are owed with the obligation of the team to perform the design services, who in turn is obliged to pay their fees.

Beside, the design consultant is accountable to the contractor and not the employer; with the contractor as the single point of responsibility in the event of a defect in the design or workmanship of the project. Not only that but also the employer will normally require an assurance warranties from the design contractual protection in the event where the employer has to bring a claim and the main contractor has to culminate trading. The construction projects are mostly not supervised by the architect but by an employer's agent who will issue an interim certificate

Advantages of design and build:

Single point of Responsibility: Design and build procurement is well known to provide a single entity responsibility which means that it is carried out without any middleman or an mediator like a consultant. Not only that but also, the single point of the contact is between the client and the contractor, in this case; the client has the responsibility in dealing with one single organization who will have the responsibility of all the other aspect of the project. Besides, the need of dealing with the designers and the contractors separately is definitely going to be reduce; again, it also helps by allocating all the design responsibility and liabilities to the contractor alone.

Price Certainty: Perhaps, the burden of the owners may reduce due to the fact that, the design and construction procurement service is put into the hands of a single selection process. Not only that but also after the awarding of the design and build contract, the owners will not be needed to spend time and effort been a middleman and coordinating design and construction contracts. Whiles (P. Chan et al. 1997; Dennis Turner, 1986) gave a confirmation that, the process does require the owner to provide prudent oversight of the design and construction process, this responsibility is considerable less time consuming and exposes the owner to far fewer risks than the traditional approach.

Effective communication: is one of the important factors in terms of design-build procurement system. There is the need for direct linked between the client and the contractor which can create a room for a good communication in the design-build procurement system. If the client and the contractor are able to communicate well during the project stage it will enable the contractor to respond quickly to the need of the client.

Disadvantages of design and build:

Higher costs: Design-build procurement system is known to be less expensive than that of traditional procurement on a given contract but there is still some uncertainty in the mind of contractors. On the other hand, design-build focus on given a design flexibility and efficiencies which means that most builders reflect more in reducing cost but rather turn to increase rick which sometimes result in a higher contract prices.

Also, in this type of procurement it is not possible for the client to get the lowest price expected of the project because design-build contract is normally done through negotiation rather than bidding for a competitive price or the lowest price.

Team works: design-build procurement system is aim at working as a team but there are times when problems or error may occur in the drawings, there will not be no one to blame due to the fact that design-build work as a team. In this case, this could result in losses. Although, design-build focus on delivering fast and cheaper project, it is not all design-build project that is able to accomplish that due to the fact that, it is a team work so no finger will be pointed any one. Besides, according to Bread, et. al. (2001), the single-source approach of Design and Build consists of a firm or team of architect, engineer, and contractor professionals who are at risk for the cost, schedule, quality and management of the project. Therefore, a though study on the risk must be identified, examined and analyzed to ensure the success of the project procurement method.

Limited access Design-build contract, deal mostly with awarding contract based on qualification and experiences. These systems have the tendency to work against the newly established contractors who do not have the experience, the qualification and can reduce the likelihood of the contract. This can however, lead to the limitation of competition in the public section in construction aspect of contracts.

Traditional Procurement.

Traditional procurement is the act in which the employer employs the main contractor to work on the construction aspect of the project only, which does not need the main contractor to take responsibilities for the design part. Even though, in this type of procurement the main contractor is responsible for the construction work, he still will have to appoint other sub-contractors to undertake individual tasks.

Advantages of traditional procurement

Produces lowest bid: in this system of procurement, the lowest bid is normally the winner basing on the kind of rules placed in the tendering process by the owners. Traditional procurement also know as design bid build systems give chance to competing for bidding for contract unlike the design-build which deals through negotiation of contract.

Assuring quality control: traditional procurement deals more with quality control, meaning that quality in project can be controlled in a form of working drawings and specifications, which deals with the basis of the contract between both the organization and the contractors. This on the other hand opens ways for the organization to compare the different materials and workmanship of the project under the construction with that of the requirement.

Disadvantages of traditional procurement

Builders not involved in design process: with traditional procurement, the builder does not have any part to play in the construction until after the design aspect of the work is completed and bid submitted not only that but also after the awarding of contracts. Meaning the design part of the project cannot blend with any input by the contractor on the construction material which may cause delay and reduce cost.

Slow: this system is normally known to be very slower than that of the design-build procurement system and it is mainly because of the nature of the work. Traditional procurement system takes lots of time on it working process unlike the design-build which is known to be the fast-track method. This is because usually in the traditional procurement method the project cannot start or proceed until after the contract of the document has been signed.

Potential adversarial: another disadvantage of the traditional procurement consists of a potential for adversarial relationships between the contractors and the architect. Mostly, there can be cases that, the architect and the contractor will not agree with each other. In traditional procurement, there is lack of team work which can sometimes bring about communication problem which on the other hand cause delays and cost overrun.

Challenges in design-build procurement system

Construction industry in Ghana is facing lot of challenges in the design-build procurement system. Basically, construction project going on in Ghana at the moment is experiencing cost overrun, low productivity or poor quality work and delays. All this challenges are due to the following factors;

Client related factor: the first challenge in design-build procurement is lack of client knowledge related to an alternative procurement system. Clients finds it very hard to obtain another knowledge concerning a new procurement system since most of the clients are non professional (laymen) and the contractors are not ready to conduct any form of programmes to educate the client regarding the innovative procurement method. Due to this, clients are not in any way ready to adopt any other form of procurement expect that of the traditional.

Contractor factor: contractors are also not very well experience in terms of design-build procurement system, this is because Ghanaian contractors usually practices traditional procurement and that is has already dominated in the market sector. Perhaps, the public sectors are seriously using the measurement pay rewarding method for design-build system instead of the lump sum method which is normally used for design-build system. Most of the private organizations, are also inexperience with the design-build procurement because of the control traditional procurement system have in the market; in view of this most of the contractors finds it very difficult to work for the design-build procurement project. This on the other hand, has stopped the growth of design-build construction in Ghana.

Consultant rule: consultants also have a role to play in the challenges facing Ghanaians' in the construction industry. There is a considerable effect of the consultant own interest in the selection of the type of procurement through the development of design-build system. The reason been that, most consultants will want the use of a well ordered procurement system for the selection criteria for the project. Consultants mostly take the decision of selecting the traditional procurement because they will not want to take additional risk by selecting another unfamiliar procurement system, however, this can lead to reduction in profitability in the use of design-build system.

Capacity restraints: design-build is known to be working as a team but one of the most difficulties Ghanaian local industries are going through is inadequate staff of project team work. Most of Ghanaians working in the construction sector comes to work at their own time which does not bring about good management team. Besides, inadequate staffing includes the need of technical experts within which the government can assigned for the project.

Government and political environment: The construction sectors in Ghana are complaining because government is contributing very little in the development to the growth of design-build procurement. Usually, the government of Ghana awards the contract to their own selves or contract cannot be awarded to you if you not relate to anyone in the government. And this sometimes discourages most of the people involved in the construction industries.

Most construction companies in Ghana are sole owners, headed by entrepreneurs without expertise in construction, and with an interest in many other fields. Contracts are often awarded not to the expert in the industry but people with political, social and 'old boy' linkages that lack management, planning, cost control and site management skills. Many of the contractors cannot interpret the architectural, engineering drawings and specifications by the design consultants and these results in construction problems.

Surprisely, the construction industry is now aware that government goes into the design-build procurement just to gain advantage from it fast tracking system process and somehow excludes the advantages it can provide without thinking of any other efficient review. This practice of the government is affecting the use of design-build procurement for most projects.

Effective implementation of design - build procurement

In order for Ghanaian construction to be implemented effectively in design-build procurement system, there are some factors which need to be put in to consideration. Even though, the construction industry in Ghana is very buoyant and a significant contributor to the national economy in terms of it grosses domestic productivity. Government has still not done enough to improve upon the research as such, planning, training of professionals, educating contractors, project team commitment and good communication etc.

Planning: planning should be the very first aim of very country as far as the building industry is concern. Besides, according to the dictionary, planning is said to be the method of achieving something that you have worked out in detail beforehand. In my point of view, the build industry in Ghana can be implemented effectively in the design-build procurement system if contractors are able to plan and make good predictions for the near future. Effective implementation can be achieved if governments provide enough tools for the builder in the industry to make planning easier for them. However, there is the need for good planning to be made in the beginning of very project and also the need to follow the plans made for the progress of construction which can help enhance the implementation of effective design-build procurement. Early planning help identify risk and adopt god strategies to fix the risk involve. In recent times Ghanaians are experiencing lots of fire breakout in most of the build and if good planning ware made on this builds it will be easier for it identification. Good effective implementation will be achieved if all this point is avoided.

Education and training: Precisely, Collins, (2003) define ''education as teaching people various subjects, usually at a school or college, or being taught whiles elaborating on training as the process of learning the skills that you need for a particular job or activity''. A study on ducted by (Luis, 2007) indicated that, education and training employees in an organization are best defense for safety and security awareness and it must therefore be implemented to enhance the progress of the organization objectives. To make proper effective implementation in design-build procurement, contractors should be well educated on the different procurement method and so be made aware of the risk involve in de construction industries so as to avoid unnecessary error in both the drawing works and specifications. Contractors should be train and educate so as to avoid ineffective slow decision-making in all projects, within the developer's team, consultant's team and the contractor's team is major difficulties confronting the construction and building industry. If Ghanaians are able to avoid these things design-build can be effectively implemented.

Project teamwork commitment: project teamwork commitment is very important in the design-build procurement project and build project in design-build consist of both the designer contractor working as a team. Building industries in Ghana should know that for them to be able to implement design-build effectively they should let their customer be their first priority not only that but also to focus more on the customer's satisfaction and to have customers interest at heart. Meanwhile, Ghanaians in the building industry should be a team and cooperated fully to the project without having to feel that the project normally doesn't belong to them so they will put less effort to work. This done can't not bring about effective implementation.

Effective communication: communication in the construction industry is one of the important aspects in the design-build project method. Normally the project team consists of different people from different home with different ideas However, in order for communication to be implemented effectively in Ghana to the design-build procurement

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