Procurement Strategy for New Student Accommodation Building

EXECUTIVE SUMMARY:

The client desires to develop a new student accommodation building by demolishing the empty Technopole office block which is located at the Newcastle king’s manor business park. The client proposed this project over an area of 0.325ha site. The main purpose of the project to give an outline of the procurement strategy and assign a suitable procurement route for the completion of the project. It is recommended to produce in a built environment project.

The client is advised to opt for a general contracting/ traditional method in order to fulfil the requirements and analysis of the project. By comparing the benefits and risks of the other procurement methods, it is recommended to go for the traditional method which is fairly good and it is easy to change and it is most favourable method which is suitable for this project. The benefits of the traditional method is to bring out the quality and cost performances of the project. However, the client lacks in technical construction expertise and they suggested to select a project management consultant, construction contractors and other specialists to carry out the high specs, cost, construction works and overall management in the project.

Finally, the client wants to ensure that the scheme must be completed within the time and budget in order to avoid the tarnished reputation and loss in profit which is experienced in previous student residence.

1. Introduction:

The Adderstone group is driving forward plans to demolish the technopole building and restore it with student accommodation buildings. The buildings would be a standing height of 8-12 stores. The buildings have a mixture of studios and 2,3,4,5 and 6-bedroom apartments. The client is eager to maximize the return on the investment by maintaining the construction cut down but without compromising the high standards which has to be expected in today’s student accommodation. The client has a requirement on the high spec, cost and time. The project should be completed on time September 2022 and the budget of the project is £40M according the reports and planning council.

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In one hand, the scheme design is not fully completed and the client is unsure whether to retain the Ryder architecture or else to go with some different arrangements and on the other hand some of the detailed designs are outstanding. IQ student accommodation are the developers, employed a project manager to perform the duties as a liaison officer to assure their mutual benefits. The formal response has received from the planning council i.e., 20/12/2017 and the current design fulfils the RIBA stage (2013) of plan work 2.

2. Procurement Strategy and Procurement Route:

The procurement strategy can be described that the construction project is one of the pathway for delivering the solution to an organisation either on expansion, efficiency or an investment in the project (Morledge and Smith, 2013 p. 110-117). It helps in finding out the key priorities and project objectives and as well as high risks to the organisation or clients. It involves a separate method for designers and constructors to assign an integrated approach. Therefore, most of the clients wants to achieve the targets within the time and budget allotted.

The strategic procurement cycle involves in 5 stages;

      Articulate vision mission and goals: to achieve the goals and mission and establishing alignment procurement with the strategy of the organisation.

      Analyse situation: To analysing the key objectives and priorities in the procurement.

      Develop procurement strategy: In this stage, the missions and goals are delivered when the resources and context are available in which organisation operates.

      Implement procurement strategy: During this stage, all goals and missions of the procurement strategy are to be achieved at the right time.

      Learn and improve: Finally, to evaluate the results of the implementation process to make sure in gaining the knowledge and implemented in the next planning cycle (Christopher et al., 2018)

Procurement of building project shows a different practice’s in the UK construction system. They are various types of arrangements used in the construction process i.e., (Hibberd and Djebarni, 1996). The following characteristics of different types of methods as shown in below table.

(Source:Procurement route options pros and cons, 2019).

Table 1: Indication of characteristics of type of contract Methods

By comparing these procurement routes and the project priorities and risks, the client is advised to go for the traditional method arrangement which is fairly good in price, better quality and cost, easy to change in design, low price level (Inc. fee) and suits the design and quality set by the contract documents. However, the chances of time overrun is high due to client and designer-initiated changes.

2.1.1 Traditional Method Setup:

Basing on the project analysis and requirements, the client is advised to opt for the traditional procurement route. In this method, the design is fully developed by the design team, prior to going out to tender documentation and the main contractor is with the construction contractor to carry out the construction works. These contractors are employed directly by the client. Client has an authority on the design development in order to meet their requirements. A high specs and construction is feasible is attained when the contractor is reported straight away to the client. Changes in the work can be simplify easily without having any excessive time or cost. Nonetheless, the client must have an expertise in the main contractor as well as the resources of other consultants. The project can delayed longer if the designs are not fully designed before the project goes out in competitive tender (construction procurement handbook-govscot, 2019).

2.1.2 Project Management Consultant:

The role of the project management consultant is to advise the client in the key issues such as project feasibility, initial planning, estimating of cost and supervision of works etc. and also perform the duties of construction administrator during the construction of the project. Therefore, the client is suggested to opt a project management consultant in order to manage certain services on behalf of their contract basis (Chitkara, 1998 p.7).

2.1.3 Other Key Specialists:

A. Architect:

As earlier, the client mentioned about the Ryder architecture who developed the concept design and given some detailed outstanding designs. So it is advised to retain them because change in architect results in duration of procurement. (Chitkara, 1998 p.7) says that the architect-engineer firms are often co-ordinated with the construction manager/consultant who knows about the project needs and analysing the designs and drawings form the construction point of view.

B. Structural Engineering Firm:

To come up with a structural design consultancy services in order to withstand all the loads and analyse the building performance.

C. Quantity Surveyor:

Quantity surveyor is required to evaluate the cost, cost control and monitoring the work strategy day by day. Some of the responsibilities are: update the cost records, provide information about the cost control during the construction stage and prepares the final account (Cartlidge, 2009).

D. Building Services Engineers (MEP Consultants):

The building services engineers are part of the design team who involved in the design and the maintenance of the building systems like design of HVAC (sort of heating, ventilation and air conditioning), plumbing, electrical, condensation in building, room acoustic and fire safety services (Cartlidge, 2009). The client is advised to go with the trusted MEP services.

E. BIM Consultant:

BIM strategy and BIM execution plan (BEP) is required for the development of overall BIM contexts and BIM implementation of the project. As per this document client is currently facing the inexperienced expertise and they advised to opt BIM consultant. This will help in development of the project and shows how BIM is used in the project.

F. Cost Consultant:

The client is advised to appoint a cost consultant and to make sure the approval of the budget is £40M as per the planning council report and complete the project within the budget.

G. Sustainability Consultant:

Built environment is one of the important factor of the project. So client is advised to appoint a sustainability consultant specialist in order to develop the sustainability strategies i.e., rain water harvesting, efficient energy and water systems, solar design, sewage treatment and solid waste management system.

H. Facilities Management Consultant:

The client is advised to appoint the facilities management consultant during the design of the project. The main aspect of Facilities management consultant is to verify whether the design is optimum for the building maintenance and operations. 

3. Tendering Process:

The main objectives of the tendering process is to select a contractor who accepts the potential offer and attains the goals of the project objectives and execution of work. The suggested procurement method for this project is traditional method, client is advised to go for the selective tendering process which has two stages i.e. 1. Single stage tendering 2. Two-stage tendering. This selective tendering process is needs careful application but it is appropriate method in most cases.

Single stage tendering: In this stage, an organisation or company can satisfy the selection criteria of tender process depending upon the supply of goods and services or obtaining the price for the whole construction work. This is usually done in the RIBA stage 4 and receives more information based on their bid. It is used to calculate the practical price when the tender commence. These are analysed in terms of coat and quality and an invitation is issued to the potential suppliers which include the information about the supply of goods and services. Tenders are prepared and returned by the suppliers. These tenders are compared and assessed to meet the client’s requirements and negotiations opened. Basing on the outcome of negotiations, the favourable tender is appointed (Single stage tender, 2019).

This tender process has more traditional route and client is suggested to go for the single stage tendering process. The competitive tender should have the following criteria; A. Design specifications B. Drawings and Schedules C. Bills of Quantities and D. BIM Models. The tenders should thoroughly checked and verified before issuing the tender. The client is advice to select the pre-qualified contractors to manage in bidding process. 

Whereas the two-stage tendering is used more common in recent years and illustrates the process where the contractor is appointed at initial stage before completing the required information and entitles a fixed cost. In the first stage, a contractor is appointed for one operation and the contractor sum is agreed in second operation. This method of tendering is unsuitable for the contractors to calculate the potential price which adopted in design and build project (Two-stage tender, 2019).

3.1.1 Tender Evaluation:

Tender evaluation is a process of identifying the preferred tender to meet the client’s requirement and offers the good value for the money. In this process, the client advised to compare the necessary documents with each other’s bids and find out the how they are priced. The tender evaluation should follow the following criteria: (Tender evaluation, 2019)

• Understanding the client’s requirements
• Technical skills to carry out the construction work
• Compliance with the requirement set out in the invitation of tender
• Management skills and systems
• Resource availability
• Proposed methodology

4. Contract Type:

In the contract type process, the employer should provide essential bills of quantities, drawings and quality of work. The payment structure is based on the lump-sum with monthly interim payment invoices. The client is recommended to use the JCT Standard building contract with quantity (SBC/Q) to bind the contractors. This contract is referred as standard form of contract in traditional procurement addresses all the key information of the construction contract in the traditional method such as contractor’s obligations, payments, insurances, taxes, sub-contracting, design faults, performance bonds, practical completion, defects and errors (Standard Building contract with Quantities (SBC/Q), 2016).

5. Risk Management Strategy:

The important factor in this project is risk management, the main aim is to identify the risk and discover a way to resolve the impact at the initial stage of the project. Implementing and monitoring the risks that are cost efficiently and requires for the successful delivery of the project. ‘Recognising the project risks and quantify the potential cost of each risk and plan for it; or work around it to alleviate the risk’ quoted from the review article (Akintoye and Macleod, 1997). When there is any changes occurs in specific design or in cost, it would results in the vital impacts on the project and results in increasing the cost and delays in time. Errors in the tender documents also causes significant issues during the construction stage.

By keeping this risk management in mind, the client should provide control over the risk in the project, providing proper contingency of planning and also having a responsibility to verify all the information during the design stage only which is provided by the consultant and makes an appropriate measures to reduce the risks.

6. Mechanism for Pricing and Payments:

During the tender process, the pricing is typically agreed depending upon the nature of the contract. The client is advised to go for the ‘lump sum’ contract in which the price for all the work is agreed prior its starts. In lump sum process the contractor is able to calculate the accurate price for the works which is being asked to carry out. It is responsible for the executing the contract work completely for a stated total sum of money (lump sum contract, 2019).

Payments: According to ‘The housing grant, the construction and regeneration act’ the payments are made systematically on time throughout the supply chain. The regularly payments are allowed by the interim certificates and valued by the cost consultant. So, the client must tribute the interim certificates within the period which is designated by the contract and provides less retention (Payment for construction, 2019).

7. Conclusion:

The traditional procurement route provides the desired performances, quality and the cost which are the major perspectives of the client. The project designed composed of project manager, architects, BIM consultants, quantity surveyor, cost contractor and Building services engineer which creates the cooperative and collaborative working techniques and brings output in economy, quality performances, design flexibility and  construction techniques. Nonetheless, all the procurement routes are liable to risks which are not completely solved but the traditional procurement is used to analyse the client requirements and objectives which are involved in this project.

Some of the Key Recommendations to the client:

     The client should be thoroughly participated in each and every of project in order to know about the project updated construction details.

     The client should implement BIM throughout the procurement route, to reduce the risks and delay of work in the project.

     Communication is the main factor and it should be involved everywhere in the project, so that the contractors can share their views, ideas and approach towards the project.

     The client should follows the functional requirements often, maintains the direct contractual relationship with the contractor and carry out the responsibilities in contract which is quietly specialised.

     The client should specifies the quality standards which has mentioned and appoint an inspection staff/inspection consultants to find out whether those standards are obtained or not.

REFERENCES:

• Akintoye, A.S. and MacLeod, M.J., (1997) ‘Risk analysis and management in construction’. International journal of project management, 15(1), pp.31-38. Doi: 10.1016/S0263-7863(96)00035-X.
• Cartlidge, D. (2009) Quantity surveyor pocketbook. Great Britain: Elsevier ltd.
• Chitkara, K.K., (1998) Construction project management. Tata McGraw-Hill Education.
• Christopher, M., Mena, C. and van Hoek, R., (2018) Leading procurement strategy: driving value through the supply chain. Kogan Page Publishers.
• Construction procurement handbook-govscot (2019) Available at: https://www.gov.scot/publications/construction-procurement-handbook/pages/5/#s6 (Accessed: 21 November 2019).
• Hibberd, P. and Djebarni, R., (1996) ‘Criteria of choice for procurement methods’. In Proceedings of COBRA, Vol. 96.
• Lump sum contract (2019) Available at: https://www.designingbuildings.co.uk/wiki/Lump_sum_contract (Accessed: 25 November 2019).
• Morledge, R. and Smith, A.J., (2013) Building procurement. John Wiley & Sons.
• Payment for construction (2019) Available at: https://www.designingbuildings.co.uk/wiki/Payment_for_construction (Accessed: 25 November 2019)
• Procurement route options pros and cons (2019) Available at: https://www.designingbuildings.co.uk/wiki/Procurement_route_options_pros_and_cons (Accessed: 22 November 2019).
• Single stage tender (2019) Available at: https://www.designingbuildings.co.uk/wiki/Single-stage_tender (Accessed: 24 November 2019).
• Standard Building Contract with Quantities (SBC/Q), (2016) joint contract tribunal, London.
• Tender evaluation (2019) Available at: https://www.designingbuildings.co.uk/wiki/Tender_evaluation (Accessed: 24 November 2019).
• Two-stage tender (2019) Available at: https://www.designingbuildings.co.uk/wiki/Two-stage_tender (Accessed: 24 November 2019).