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Management method of procurement is a system that that focused in the management and integration design and construction projects. Besides that, it is a method that construction work is completed by using several separate works or trade the contract which the main contractor is responsible for managing. Normally, the contractor does not do the physical work, instead is gave a sum for the managing the project due to the various jobs in packages.
Besides that, the employer will starts to appoint consultants such as architect, engineer and quantity surveyor and a contract administrator to prepare the architectural drawings, a project specification and cost plan. Moreover, the employer has taken over the control of the project design through their professional team. The contractor is appointed by negotiation or tender, and interview. The works packages are usually let by competitive tender. This method also can be said that is act as " fast track" method within procurement method.
Therefore, it is beneficial for the proposed contractor to be involved as early as possible as they provide professional in terms of programming and build ability of the jobs packages. The graph below is show the process of the procurement method that used Management Method.
In general, there are three types of procurement method in the management, there are management contracting, construction management and "design and manage".
The management contracting and construction management contracting are the client is contracted and paid the fee to manager to manage and supervise the construction of a project to build the project that he or she needs. Besides that, the actual construction works is divided to many package which various specialist contractors.
Under these consequences, the management contractor is hired as a construction consultant to be the part of the client's team. The most difference between both management contracting and construction management is the management contracting actually ensure the management contractor face a little bit financial risk for the performance of others while the Construction Management is no general contractor in the construction work. The management contraction is usually let on the cost-reimbursable basis, so the agreement of the management contraction will included the cost-reimbursable.
( Hughes, W. (Ph.D.), Greenwood, D. , Hillebrandt, P. ,2006)
The design and manage system is not so common in Malaysia. It is actually a single organization that is commissioned by the client for the designing the project and managing the construction. In their process, the firm is carrying out the work itself, but it also contracted out to some package contractors who already enter the contract with the client. So, they are actually become the consultant for the client and become member of the project.
Management Contracting and Professional Construction Management Systems
The procurement method of Management Contracting and Construction Management are emphasize based on the contractor of these projects has the knowledge, has many experiences and also high competitive strength for greater the design and construction for a project. Because of the characteristics above, so there are more efficient and effective coordination of work, materials, manpower and plants, so it make the time of construction become shorter compared to other procurement systems.
The management contractor also can manage and contribute to the design development. The system also allows the construction works start early compare to the procurement system with traditional method. The simple and basic tender's preparation, shift of the process of schematic and detail design to construction phase allow for the early stage of the construction. As a conclusion, these factors are the reasons of reduce of overall time project compared to traditional and design and build procurement method.
The project's cost procured using this system is able to be lower than those using other procurement method. The cost of the project is actually are the total sum of price which quoted by the package contractors. Because the management contractor is also act a consultant, so that is no extra cost is added up for the main contractor's profit margin. The additional cost only is the consultant fee that the client should be pay to the management contractor or to the construction management consultant.
The management contractor or the construction manager able to be more serious with the standard and quality of the work done than the package contractors because they are act as the agent responsible for the construction. Normally there are very experience so that they can be more proficient and more effective in maintain and make sure the high quality works in the construction. They have the knowledge that make them more be careful in selecting the construction materials and equipment that needed in the tender. Besides that, they are also tends to be more take a heart in every steps they do during the construction start. Thus, these factors have made this procurement method become a better standard and quality in the completion of the construction work done.
1. The management contractor participates during the early stages of the RIBA plan of work, so he has a close integration and co-operation among the management or design team. He provides information in build ability, cost, time, productivity and functionality of the building. In others works, he assists in realizing the feasibility of the construction projects.
2. Management contractor provides wider services than a Traditional main contractor. He needs to be an efficient programmer, co-ordinator, manager, experienced contractor and designer to ensure innovative design quality, fast completion and achieve economy.
3. The management contractor, like other consultants, act as a professional agent of the client. The management contractor ensures that his management expertise is directed to maximize the client's benefits rather than his own profit.
4. The management contracting promotes the equality between team member and foster teamwork spirit. Team, members without conflict of interest, can works in harmony to remove the Traditional barrier between the contractor and design team members is removed.
5. Management Contracting is a fast build method to achieve minimum project time. Work packages can progress earlier on site as soon as each package design is completed and work package tenders awarded.
6. Management contracting work very successful with large and complex projects, which require greater flexibility and technical expertise. Achievement through structured and integrated project management services may not be possible without the client's participation, which shall give quick response to any questions or problems arise.
7. With the reduction of some portion of the Architect's responsibility, the client is happy to enable the Architect to concentrate on the design rather involves in contractual matters.
8. Management Contracting provides greater competition particularly when trade work package contractors whom many are experienced and large contractor become specialist sub-contractors. Thus, they are able to quote a realistic and economical price for work packages.
9. The work contractors are selected through joint decision of the professional team, the client and the management contractor, using wider expertise and experience to achieve better price and quality for each work packages.
10. Selective tendering to ensure satisfactory performance on the construction program and management system often carries out the appointment of the management contractors. With subsequent tendering, a cheaper price can be achieved.
11. Management contracting is cost effective in teams of reducing the completion time, the financial advantage is clear that the value of money changed, saving over the year, inflation and quick income returns provide a greater benefit to client who has a shorter project duration.
12. Claims are likely to arise and those that do are dealt with more quickly. Moreover, if arise, with one works contractor may not affect the overall work progress.
(Ooi, Lee Yun, 2001)
1. Normally the professional construction manager will accelerated the programs overlapping design and construction for the client.
2. The method of construction management able to closely manage cost during the design and procurement.
3. This method also proactive management of the design and construction process to minimize the impact of change and other causes of disruption such as site access restriction, unforeseen site conditions and late or incorrect design and so on.
4. The construction manager also hands-on involvement of the client on the construction project.
5. Besides that, the professional team including the construction manager had emphasized on meeting the client's needs. The integration of design and construction skills of the construction manager also else and suit the client's need.
6. The full control over the design includes the incorporation of design by specialist contractors.
7. The construction advisers and specialist trade contractors also can be early appointment.
8. There is ability of client to influence the selection of trade contractors, unlike the design and build method; the client only can choose a contractor for the whole construction projects.
9. There are one-to-one contractual relationships. So, the clients can communication easy.
10. The management in this method are focusing on the program, sequencing and build ability of the project.
11. The client has the right of tendering ownership and the contractual arrangements in the project.
12. The client has chance to package the work to suit the capability of the trade contractors while manage on-site interfaces..
13. The client has right to identify and act upon trade contractor performance.
(Langdon, D. and Rawlinson, S. 2006)
1. The management contractor and his work contractors may duplicate pricing the preliminary items. Duplication of site management and her resources such as scaffolds and other services are wasteful, particularly when they may not be used at all. This also creates problem on the budget, established before the program is decided.
2. The work contractors may have to undertake some risk because they are often paid only when the management contractor is paid. Therefore, they must have a well planned cash flow than the traditional method.
3. In management contracting, the client has to bear the financial risk due to the default of the work contractors or the management contractor if a works contractors fails to remedy faulty workmanship.
4. Problems of coordination between increased number of works contractors on lead to production delays and be grounds for contractual claims.
5. Biased contract documentation may be drawn up which unfairly allocates responsibilities to works contractors who may not be fully equipped to perform.
6. Client is not aware of the financial commitment before the commencement of a project on size.
7. In the event of the termination of a works contractors (due to non-performance), the client bears the cost of arranging the completion contract.
8. Client may have no redress against the management contractor in respect of performance and quality, work contractor's work, late completion and recovery of damages for late completion.
9. Management contractors are (sometimes) pressurized to accept some of the financial risks inherent in the production such as maintaining, satisfactory performance and quality of work, time overruns, latent defects and design failures.
10. Client has two set of fees to pay for the professional services of design and construction management.
(Ooi, Lee Yun, 2001)
1. The client has to take risk of the design co-ordination and increased the chances of design change.
2. There are no cost certainties till the all packages are let and no even single point lump-sum cost commitment between the client and the construction manager.
3. The client also exposure to take risk with the construction manager and team performance. The reliance between the construction manager and project team with the client is to correctly forecast consequences of change. The responsibility to fund solutions to problems will the construction manager and project team occur in the construction works also become a problem.
4. The construction manager route has increased administration role for the client. Thus, the construction manager and professional team owe the duty of care responsibility only. So, they are very pressure on their work.
5. The client ownership of risks is high in the design including impacts of late or incomplete and uncoordinated design.
6. The one to one contractual relationships o client is added complexity with all the team members.
7. The reliance on the management performance of the construction manager only.
8. The client is positions on the medium of management requires effective decision-making; unlike the design and build method which is more less decision-making for the client.
9. The client is taking the performance risk and to consequential loss associated with trade contractor default.
(Langdon, D. and Rawlinson, S. 2006)
After finish the entire part of this report, the aim of doing this assignment is to determine the various types of procurement methods that used in construction industry in Malaysia.
We are able to identify the different types of procurement methods that used in Malaysia construction industry; there are Traditional Method, Design and Build Method, Management Method and Integrated Method in the construction industry. The report are emphasize on cost, time, quality, advantages and disadvantages of each method used.
In our observation, the traditional method actually is the most popularly used in Malaysia construction industry due to the client can know all the process of the construction. Design and Build are getting more popularly in these few years. The management method is suitable for the project that is large and complex such as shopping centre and hospital. However, the integrated method is less famous in the Malaysia construction industry.
Besides that, the client's characteristics and the project characteristics are very important because it will affect the selection of procurement method for their project. Thus, the different characteristics of all the procurement method should maintain in the construction industry so the client have vary choices to choose what procurement method they needed.
Lastly, nowadays the choices are become wider and wider, so the selection process have to be carried out in a straight and objective manner and within the structural of the project strategy and project brief. The brief must contain the client's the main objective of the procurement method. The main objective is the overall process of the procurement method is included the functionality, quality, time, cost, advantages and also the disadvantages.