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In the current financial climate, much has been made of the effect on the construction industry, particularly the housing market. This is not new; construction has always been affected by the financial markets.
When it comes to project procurement, another unchanging factor is that the client always wants a quality result constructed at breakneck speed for a knock-down price. This needs to be dispelled at the outset.
Construction projects are complex and involve many different trade and occupations; frequently they also involve high risk activities. The work is more likely to be done safely and on time if those doing the work have suitable management arrangements in place throughout the whole project. The type and level of checks needed depend on the work being under taken and the risks involved.
Notifiable Construction Projects:
Work lasting longer than 30 days or involving more than 500 persons day of work, need to do the following arrangements.
Appointment of a CDM co-ordinator.
CDM co-ordinator advise and assist CDM duties on notifiable jobs, they will
Advise about selecting competent designer and contractors.
Help identify that information will be needed by designers and contractors.
Co-ordinate the arrangements for health and safety during the planning phase.
Make sure that the health and safety executive (HSE) in notify of the project.
Tell about if the initial construction plan is suitable and prepare a health and safety file which contain useful information needed to enable future cleaning, maintenance and alterations to be carried out safely.
CDM co-ordinator is appointed as soon as possible but no later then the initial design / preparation stage
CDM 2007 does not require the CDM coordinator to supper wise or monitor work on site.
Appointment of a principal contractor.
A principal contractor is needed to plan, manage and coordinate work while construction work is being carried out on notifiable jobs.
Principal contractors are usually the main or managing contractor of the work.
Appoint the principal contractor at the earliest opportunity. This is so they can be involved in discussions about buildability, usability and maintainability and so they can have time to plan the work properly.
Health & Safety Plan in Place:
The principal contractor has to produce a construction phase health and safety plan outlining the key arrangements to ensure that the work is carried out safely. You should not allow work to start on site until there is an adequate plan.
Health & Safety file:
At the end of the project, the CDM coordinator will give the health and safety file. The file is a record of useful health and safety information and will help to manage health and safety risks during any future maintenance, repair, construction work or demolition. The file needs to be kept safe, made available to anyone who needs to alter or maintain the building and updated if circumstances change.
The purchase of everyday items is relatively simple and usually involves some form of:
However with the acquisition of a building or construction facility there are significant factors associated with your choice of procurement method which will impact on the success of your building project.
having a clear understanding of project objectives and constraints
defining the roles of the various contracting parties
Considering the fair allocation of risks and obligations between the contracting par ties.
If these issues are managed properly, your project is likely to achieve its time, cost and quality objectives.
If these issues are managed poorly, they may give rise to:
claims and disputes
delays in completion
a failure to achieve project objectives.
Traditional: In which, in theory design and construction are seen as separate elements.
Design and Build: Which implies a more integrated approach.
Management: By which either the client or the contractor assumes the central management responsibility.
The selected method will determine how the project will progress, the contractual risk and relationships between the parties involved, as can be seen from these figures:
Contractual Relationship - Traditional:
Contractual Relationship - Design and Build:
Contractual Relationship - Management:
Lump sum Contracts:
Where the contract sum is determined before construction starts, and the amount is entered in the Agreement.
Clients using lump sum contracts generally engage consultants to design and document projects. The client then uses the completed documents as a basis for calling tenders. After an
evaluation process, the client enters into a contract with a builder (generally a head contractor using a number of subcontractors) to construct the works for an agreed lump sum.
Payment is usually made in progressive instalments. It is often the responsibility of the principal consultant (usually an architect or project manager), to manage the deliver y of the
project within the specified time, cost and quality targets.
Quantity Based Arrangements:
Payment = Quantity of work done x Rate
Where the contract sum is accurately known only on completion, and after remeasurement to some agreed basis. This type of arrangements is commonly used where the extent of works has not been or cannot be fully determined eg. Earthwork, foundations, below ground services work, maintenance period contracts.
Input based Arrangements (Cost reimbursement contracts):
This type of contract is used when cost is not the priority e.g. when time and quality are the priority. Where the contract sum is arrived at on the basis of the actual costs of labour, plant and materials, to which is added a fee to cover the overheads and profit.
Partnering Style Arrangements (Target cost contract):
A development of Cost Reimbursable contracts where the Contractor is reimbursed Defined Costs plus the Fee.
Any cost over or under run vs. the target prices is split in pre-agreed proportions.
The target is still adjusted due to client owned compensation events.
In target contracts both parties can and are willing to contribute to managing threat out and opportunity in (that is within the target) &/or when there is likely to be a higher degree of change in client owned risks (because of greater cost transparency).
Partnering Style Arrangements (Project Alliance):
The fundamental characteristic is that each alliance member's objectives are aligned to the success of the project as opposed to just their contract package.
Potential alliance members typically develop scope so can agree an alliance target.
Each contract package is direct with Client
Overarching alliance agreement partly ties fortunes of each member to success of project rather than individual contract.
Alliance Contractual Framework:
In project alliance incentive to partner not just vertically with the Client, but horizontally with other alliance members.
Alliance target rarely adjusted, so includes for substantial threat.
Design and Build:
In Design and Build, the contractor may have responsibility for some or all of the design of the project. The contract wording must expressly refer to this, and the extent of the design obligation needs to be set out as clearly as possible. It is claimed that design and build contracts offer certainty on the Contract Sum and bring cost benefits. The close integration of design and working methods, and the relative freedom of the contractor to use its purchasing power and market knowledge most effectively, might suggest this.
This is suitable for
Fast track project
A developing brief
However it is less suitable for:
Cost certainty before starting construction
Client wanting to pass risk to the contractor.
The client appoints an independent professional team, and also a management contractor. The contractor's involvement at pre-construction stage will be as an advisor to the team, and during construction it will be responsible for executing the Works using direct works contractors. The management contractor will normally make a written submission which includes a proposed management fee, and will be appointed after interviews with the client and the professional team. The fee will include for the total management service expressed as a percentage of the total project cost, and for a service to cover pre-construction stages should the project not proceed to site.
Construction management requires constant involvement by the client, so it is only suitable for experienced clients.
Here again the construction manager is appointed after a careful selection process and is paid a management fee. One basic difference from a management contract is that the trades contracts, although arranged and administered by the construction manager, are direct between the client and the trade contractors. Although in a sense this gives the client a greater measure of control, it also means that he or she accepts virtually all of the risk. The construction manager is a coordinator, and usually cannot guarantee that the project will be finished to time or cost.
Design and construct:
a more recent development of the management approach, offering a total integrated service from a single source. It can be led by a contractor, or by some other professional. The latter is only likely when the design aspects of the project are a high priority.