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Contract procurement has an impact on project performance in terms of costs, time and quality. During one of the briefing meetings at the pre-tender stage of a construction project, your Director has interest in collaborative procurement method and need your advice. In addition, your Director has multiple sites going on at the same time and therefore many site offices. Critically explain why collaborative procurement would be beneficial between the site offices to your Director.
Masterman, (2002) defined a procurement system as, 'the organizational structure adopted by the client for the implementation, and at times eventual operation, of a project.'
While Love (1998) adopted the definition such that,
'It is an organizational system that assigns specific responsibilities and authorities to people and organizations, and defines the relationships of the various elements in the construction of a project'.
There has been an increasing recognition that the conventional (traditional) approach to contract procurement is inadequate (Rowlinson, S. 1999). However, it has been noted that there are still relatively few procurement systems for clients to choose from. Each procurement system that is available delivers project success to a variable degree (Bowen, 1997).
In today's context, it can be seen that client's satisfaction is seen to be largely dependent on the selection of the most appropriate procurement methodology, and failure to select an appropriate procurement approach is recognized as a primary cause of a project failure (Masterman, 1996). However, which procurement route to undertake for a particular project be it building or infrastructure works depends on the objective and requirements in terms of its functionality, cost, time and quality set by the client. While the selection of an appropriate procurement system in an essential part of the building process, it is unlikely that an "ideal' procurement system that satisfies is all criteria will be available to ensure success (Winter, 2005).
There are many factors that influence the project performance and contract procurement certainly has an impact on costs, time and quality. However the procurement system will influence whether the project will be a separated procurement system (traditional), integrated procurement system (design & build and its variant), management oriented system (management contracting, construction management), or collaborative arrangement (partnering, Early contractor Involvement, ECI, e-tender). Figure 1 below shows the various forms of procurement systems.
PROJECT MANAGEMENT TEAM OPTIONS
In-house/external/in-house & external
Separated/ (2) integrated/ (3) management oriented/ (4) collaborative
Direct design & Build
Competitive design & build
Develop & construct
(3) Management Oreinted
Deep & Marine
The various procurement options available reflect the fundamental differences in the allocation of risk and responsibility to match the characteristics of different projects and client needs (Winter, 2005). When client select the type of procurement system to be use, strategic consideration must be considered especially at the stage on deciding whether to appoint a designer (architect/engineer), integrator (contractor), manager (project manager) or a group of all 3 working collaboratively.
Under this approach the client can use any of the systems from any of the other categories either singly or in combination, or even a bespoke system of his/her own making but with the choosen systems(s) being implemented within a specific setting controlled by the client.
Collaborative arrangement (Partnering) as required by the director has some benefits especially for multiple sites and with many site offices running at the same time. The benefits of time, cost and quality is explained below.
Benefits of time: several studies have indicated that by using the partnering approach the largest benefit is from the design and management processes were the flow of information between all parties helps to reduce the design times as designers and contractor understand and are more efficient in working together. It allows for faster project times as the selection process is eliminated which can be costly and time consuming. The project can have an early start on site, shorter construction times and lower risk of time overruns. However, using strategic partnering is more beneficial as it can achieve a 50% time saving it firms use the correct management procedures.
Benefit to Costs. As partnering assures certainly in the projects in terms of design and construction results in fewer cost overruns, reduce claims and litigations and the project cost also reduced. This is one of the important part of the project where saving some of the cost can add value to other important works that may be required at the end of the project.
Benefits to quality: Partnering can certainly improve the quality standards in building and there are indications that as a result, there are reduced number of defects, hence less rework is required. This is again another important aspect of the project where quality standard not only maintain but improved. Effective partnering relationships will also benefits from the R&D and innovative thinking which assist to improve productivity and quality.
As part of the pre-tender process for a contract bid document, for multi-storey building projects for various sites, you are required to write a pre-tender method statement. Prepare a pre-tender method statement that you will submit with your bid document.
Pre-tender method statement is one of the important part in the pre-tender process.