Quantity Surveying Practice Procurement And Principles Construction Essay

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The change from pre-contract to the post-contract stage reflects all the preparation required to define your project that allows the construction work to start on site. The following procedures need to happen to achieve a successful project.

Pre-start Meeting

This meeting takes place to establish roles and responsibilities, lines of communication, proper working arrangements and health & safety issues. The arrangements for quality control are clarified.

Design Management

This can be a demanding and complex process. The Project Manager should clarify the responsibilities of the lead designer and other project team members and should formulate a design management plan as a basis for managing and controlling the design process. The lead designer will be responsible for the coordination and integration of the work of all design consultants.

Project Coordinator

The Project Manager should arrange and convene regular progress meetings to review the project status and identify any actions necessary to deliver the design management plan. Follow up actions are controlled by the issue of minutes to all parties. The lead designer will convene, chair and minute all design team meetings. The cost consultant will attend these meetings to advise on costs, update the project cost plan and monitor design development against the agreed budget. The Construction Design and Management Co-ordinator will attend these meetings to advise on the health and safety aspects of the project. Client approval and sign off to the design will be required at the conclusion of the process.

Site Establishment

Once the contract has been signed the contractor can start on site. The Project Manager should agree operational procedure and site administration issues, for example:

Clarify site boundaries, survey adjacent properties. Note: a party wall surveyor may be required to agree any restrictions and or awards.

Risk Management

Formal risk management should continue into this stage and will seek to identify and mitigate specific construction related risks such as:

Disruptive activities with the potential to delay and/or add cost

Health and safety on the site personnel and for the general public

Time, Cost and Quality Management

The main contractor will have the responsibility for managing the works on site to meet the contract requirements. They should provide, and update when necessary, a detailed construction programme to allow the project to be monitored and regularly report on progress. Although the contractor has the responsibility to supervise the works, the Design Team has the responsibility for inspecting the works. Where the Design Team have been novated to the contractors team under the contract, the Project Manager should agree alternative arrangements for these inspections.

Project Monitoring

The Project Manager should report regularly to the Client to an agreed structure including the following issues:

Overall project status

Current expenditure

Anticipated final costs

Variation and the reasons for same

Updated cashflow

Existing and anticipated problems with proposed mitigation, risk register update

Planning status

Team performance

Quality management

Approvals as required

Change Control

Time and cost implications of introducing variations to the contract requirements increase exponentially as you move from the design stage and through the construction stage. As such, the project should be clearly defined prior to contract signature and any changes avoided if at all possible, during the construction stage. Strict change control procedures should be applied to minimise the impact of any unavoidable changes and should include client approvals informed by accurate assessments of time, cost and quality implications.

Disputes Management

Disputes are generally avoided through well-defined projects, clear briefing, contracts that openly identify the risks and a culture of co-operation and trust. Problems can still arise though and a staged approach should be adopted to deal with them. The following is a generic approach to dispute resolution stages.

1. Discussions should take place between Principals.

2. A mediator should be appointed. Settlements through this process should be agreed in writing. (Note: A mediator has no powers of enforcement).

3. Appointment of an independent adjudicator. The right to appoint an independent adjudicator is provided under the Housing Grants, Construction & Regeneration Act 1996 and can give recourse to a quick decision on an identified dispute.

4. Formal arbitration or litigation â€" these are usually long and costly processes and should only be used as a last resort.

Process of Claims and Arbitration

Given the importance of contract law in structuring commercial relations, it is surprising that those procuring and providing work in the construction industry often deal inadequately with the formation of their contracts. This leads not only to uncertainties about what was agreed and when, but also to disputes about whether a binding agreement was concluded at all and whether legally enforceable obligations are created to provide work or’ to pay for it. Such disputes can arise during the work as well as after it is completed. Some disputes can escalate and this can lead to arbitration and finally court action if not settled by mediation and arbitration.

JCT 2005 Standard Building Contract, Section 9 and JCT 05 Standard Building Sub-Contract, Section 8 gives guidance procedures on how to settle disputes by mediation and arbitration.

In a claim the following steps need to be taken:

Negotiation

Mediation and conciliation

Adjudication

Independent expert determination

Arbitration

Litigation

2. OUTLINE

Role of Supply Chain Management in claims and arbitration.

Supply chain management is a means of bringing together all the team members under a common goal, allowing involvement in the entire project lifecycle and developing the benefits of better management and more innovative solutions. The key to its success is the development of an open culture, involvement in the team process and sharing of rewards. By implementing a fully integrated supply chain within the business, it is possible to improve project processes, relationships and benchmark performance.

As competition intensifies across the recession-hit construction industry, and fewer orders for companies the need for supply chain partnering is an important step forward to improve performance and deliver even higher standards.

With less work to win across the industry, competition for the large infrastructure projects has intensified between the major contractors. Customers are also choosing to work with fewer contractors on long-term framework agreements that deliver cost savings and consistency of service.

Contractors are relying heavily on a selected number of key customers to deliver first time, deliver safely, with the right level of quality, no defects, and to the right cost. As

more than 80 per cent of construction work is subcontracted to supply chain partners, the need to monitor performance, develop productive partnerships, keeping costs down; delivering consistency of service, safely, to quality, time and within cost; deploying the best team possible; and maximising the benefits of long-term partnership.

The industry has changed in that there are a lot more opportunities for collaboration with suppliers and customers. Everything is much more transparent. The industry has moved on from the days of fixed price lump sum contracts where cheapest was best. It is now building up target costs and Early Contractor Involvement (ECI) tenders with customers and gets suppliers involved from cradle to grave.

Engaging the supply chain early in the procurement phase can help avoid delays, spiralling costs and legal disputes. Early involvement in building up a target cost means transparency and far fewer surprises later in the job. Supply chain will create a team approach with suppliers from the outset, working in a culture of mutual understanding that helps resolve problems as soon as they arise.

3. UNDERSTANDING PROCEDURES

Arbitration was always the forum for disputes involving specialist or technical knowledge. The most important legislation was the Arbitration Act 1996.There is no compulsion to enter into arbitration unless a term within a contract states that the parties must do so. If arbitration is accepted as the method of ADR (Alternate Dispute Resolution) then legal action cannot take place until the process is complete. The arbitrator is appointed on the basis of their expertise in the subject of the dispute and who is independent of the parties concerned. Both parties must also agree the appointment of the arbitrator.

Advantages

Less expensive than a court procedure

Faster than court

Hearings are private and confidential. Bad publicity can be avoided.

Timing and place can be arranged to suit the parties involved

Arbitrators have expertise in the subject matter.

The parties can insist that the arbitrator visits the site and sees any disputed matters first hand.

Disadvantages

Courts are experts in law, and arbitrator may not be and may need to seek legal advice.

Arbitrators cannot compel a third party to attend the proceedings against their will.

Mediation and Conciliation

Mediation and conciliation are similar techniques and the terms are often used interchangeably.

The reasons for the dispute are explored under the chairmanship of an independent facilitator.

The aim of the process is to find a resolution to the dispute that both parties can accept.

Conciliation can also refer to a process similar adjudication. The difference is that a non-binding decision is made by the facilitator.

The construction industry resorts to these techniques early in any developing dispute, as a quick and inexpensive way of finding a solution before the project or relationships become damaged.

The mediator is most likely to be an experienced professional from the construction industry’s

Mediation is offered as a service by a number of organisations

Mediation is relatively informal and is often the best way of settling disputes

If a solution cannot be found using mediation or conciliation then the dispute can be escalated to a more robust ADR or to litigation.

Mediation Procedure

Mediation is a flexible process and the procedures adopted are different for each kind of dispute. It is important, therefore, that the rules are agreed from the start.

Negotiations are conducted by the mediator (a neutral third party), who establishes the rules and ensure that all parties understand the rules.

The negotiations are informal, confidential and without prejudice

The mediator chairs the discussion to establish the principal facts of the dispute and disregard any extraneous matters.

The representatives of each party must have the authority to settle, negotiate so that reference to a higher authority is minimised as this would slow down the process.

Matter may be discussed with the mediator by one party without the presence of the other party. This may be done to avoid revealing confidential material to the other party or to explore options for a settlement.

Legal advisers may be present but are only there to give advice

The proceedings must be immediately recorded

Any settlement reached must be recorded appropriately

Even if the mediation is abandoned a record should be kept as the discussions so far may have clarified the issues.

The Process of Mediation

The parties agree to mediation, are invited, and are directed to mediate by contractual conditions or by a court.

A suitable mediator is agreed, appointed by a mediation service or recommended by a professional institution such as the ICE, CIOB, RICS. The parties need to agree the appointment.

Before any meeting both parties must submit a summary of the matters at issue.

4. POTENTIAL DISPUTES

Due to the diverse and complex nature of the construction industry there will always be disputes of some kind. There are various types of potential disputes in construction the magnitude and frequency and their subsequent impact will no doubt be influenced by the procurement method and the conditions of contract which are selected. Types of potential disputes are:

Poor design

Change orders (Variations)

Material shortage

Contract documents

Communication

Payment

Negligence

Quality and administration

Contract terms, payment, time

Disruption, acceleration and termination

Errors, defects and omissions in the contract documents, underestimating the real cost of the project in the beginning, changed conditions and stakeholders involved in the project.

Legal, technical and quantum

Management, culture, communications, design,

Tendering pressures, unrealistic expectations, contracts and workmanship

Case Study (using mediation)

Dispute between local builder 'Samson Construction' and homeowners Mr & Mrs Dawson

(Whilst the names are fiction the underlying disputes are considered as real examples.)

The Dawsons' had looked forward to their retirement and had planned a large 2 storey building and conservatory extension to their home. Architect plans were drawn up, planning permissions gained and quotes received from various builders. Samson Construction whilst not providing the cheapest quote were able to start straight away and came recommended as they had over 25 years of local experience.

Work progressed well for the first couple of weeks but in the 3rd week work significantly slowed down due to lack of workman. Completion deadline reassurances were given and work continued at a slow rate. Despite this the Dawsons' added extra work which was outside of the contract. After 3 months the two parties were in dispute, accusations were exchanged, agreed payments not made and the workman were pulled off site; leaving the Dawsons' with a half complete extension.

On advice of friends the Dawsons' asked Samson Construction if they would agree to refer the dispute to mediation. As this was a potentially highly damaging dispute for Samson in terms of local relationships they also agreed. The dispute took all day and parts of the night to settle as many new issues unknown to each party were identified. Through better communication and with the aid of the professional mediator each party regarded the mediation as a success as a settlement agreement was achieved.

Work resumed, the contractor got paid and as a goodwill gesture offered to carry out a re-landscaping of the garden free of charge; all issues were resolved to enable the Dawsons' into their refurbished home prior to their daughter's wedding.

CONCLUSION

As competition intensifies across the recession-hit construction industry, and fewer orders for companies, implications of claims and disputes are likely to occur therefore the need for supply chain partnering is an important step forward to improve performance and deliver even higher standards. Contractors need to improve the procurement of contracts and the way they are worded as many contracts are not correctly set out and there are implications on contracts which will lead to disputes and arbitration and some cases to litigation. Mediation is the most favoured way forward for contractors as they need to protect their reputation with clients and also to gain future work.

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