Speed Or Certainty Of Completion Date Construction Essay

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We agreed to reconstruct the three destroyed buildings in August 2012 and have decided to obtain finance from a Commercial Bank which is estimated at 120 million. Design solution will be developed along similar lines adopted for previous hotel building but the intention is to reconstruct the three hotels to a better quality than they were before the severe storm. All sites will require the demolition of a number of existing structures that are not structurally sound enough to retain and reconstruct.

The project will start on 1st March 2014 and handover by 28th February 2015. Therefore the priority should be given to rapid reconstruction of following key areas of the hotels which makes them re-open to business within a short period of time:

In most cases the priorities of the projects will fall into the areas illustrated as B, C or D in the diagram where two of the three criteria are identified as most important to project success. It is rare for time, cost and quality to be equal in either importance or impact. (Output: Constructing Excellence)

According to our scenario outlines of the two most vital parts will be time and cost. As requested the completion date is critical as the buildings will be required to handover by 28th February 2015 and therefore plan to commence for this project will be targeted on 1st March 2014 and the budgeted allowances is estimated at £120 million for the three buildings.

There are generally three accepted standard approaches to construction procurement option:

1) Traditional procurement / design-bid-build

2) Design and build / Construct procurement

3) Management contracting

Analysis of procurement option

Traditional procurement / design-bid-build

This procurement option is fair to all competitors. It will have to be competitively fair to tender the contract and relatively low tender preparation costs. The changes could easily be arranged and valued. However, we have potential for adversarial relationships with contractor. They are not involved in design or planning as well as the design risk borne by us. An architect will be needed for design development where in this part cost and time will be set by the employer. Hence, this will be a sequential and consequently slow process.

Design and build / Construct procurement

The client will liaise in a single point in terms of contract and responsibility. To compare to tradition routes the duration to the total project will be reduce. Due to relative speed and cost, it has resulted to firm price availability to such construction. Hence, there will be difficulty in comparing the bidding prices. The contractor's design liability will extend to include fitness for purpose. Therefore, the contractor's responsibility towards the design will at the same time lose some control over the design process by the client.

Management Contracting

This procurement option will break down the traditional adversarial barriers. Time will be saved potentially for the whole project duration. Good quality project team will also play an important role as well as the speed for this design done by an architect employ by the client. Nevertheless, the cost will be uncertain until completion.

Compare procurement option

Consideration towards price certainty, reconstruct period and high quality is extremely important. With the budgets allowance at £120 million for three buildings, the time frame shall not exceed 12 months in reconstruction and the reconstruction done must be competitive to an existing hotel or better. During construction period noise pollution to all hotel guests shall be the main priority. Conference and meeting rooms must equip with high technology multimedia facilities and airconditioning.

"Traditional Procurement" is certainty of prices. This is a lump sum contract and cost certainty is to ensure before work commence. Proposal on budget and engaging a team of consultants to prepare a design and tender documents will be needed. Once the design is done, a quantity surveyor measures the drawing to compile a bill of quantities. Therefore, timeline will be needed from designing by the architect as there are other process require. Hence this process will require a substantiate timeframe. For such slow process, the contractor has the right to claim for extension. (See figure 1)

Design and build" is cost certainty. The design being developed by the contractor and the works will be completed, usually for a fixed price. This will be a fast process as the designing work and construction work almost synchronous process therefore project duration is fixed. (See Figure 2) The main contractor takes responsibility for both design and construction and resulted to losing some control on the design processing at our end.

"Management contracting procurement" is poor certainty of prices. There is less price certainty at the outset, because construction will commence before of completion of all design stages and there is possibility that some work packages have yet to be tendered. There is good quality due to close link between client, designer and construction. The overall process of design and construction tends to be shorter than in either Traditional Procurement or Design and Build. (See Figure 3)

Assessing the risks

Inherent risks will incur due to the nature of many construction projects. These risks include completing a project which does not meet guideline, which cause late delivery or costs exceeded the client's budget. All these risks can impact the client's core business, seriously. The procurement strategy developed should balance risks against project objectives at an early stage.

As can be seen from Figure 4, the balance of speculative risk will lie almost wholly with the contractor in the case of a design and build contract, where a complete package is supplied. Conversely, the balance is most onerous for the client where the management procurement path is adopted (Source: 1989 Stanley Cox and Hugh Clamp)

Analysis of risk

Type of Risk

Type of procurement option

Traditional procurement / design-bid-build

Design and build / Construct procurement

Management Contracting

Cost Risk

Low cost risk due to lump sum contract

Low cost risk as most contracts will be let on a lump sum basis

Medium cost risk as the actual cost is unknown until the last package is let

Time Risk

Medium time risk due to fixed contract date(but contractor has right to claim extensions)

Low time risk as the design and builder contractor will usually fix the time and be committed to it

Medium time risk as the total construction duration is a consequence of package selection

Quality Risk

Low quality/design risk as the majority of the work is designed by insured consultants working directly for the client

High quality/design risk as when the design and build contractor controls the design there are risks related to both design suitability and to the capacity of the design and builder contractor to perform such tasks

Low quality/design risk because there is a close link between client , designer and constructor

Conclusion:

According to above analysis and table, we are proposing to use Design and build for our project. This method allows the contractor to utilise a fixed price and time. Budgeting control are easier on the allowances at £120 million to reconstruct three buildings and reconstruction period in 12months. Due to lack of experience in-house executive with sufficient time in advising this reconstruction work therefore this option allows the contractor to take responsibility for both design and construction and with the assistance from either in-house designers or consultants to carry out the design. Although it is in high quality/design risk but we have experience in the renovation of buildings, verification with contractor is easier at this stage. Most of the construction work will be carried out by specialist or sub-contractors. Referring to figure 4, this option is the lowest risk for Client comparing to traditional procurement and management contracting. So the best option for this project will be Design and build.

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