By Louise Collins
Clients all over the world are debating what are the best procurement methods
Clients all over the world are constantly talking about the
best procurement route for construction. The truth is, there is not one
solution, and each solution must be tailored to meet the client’s unique
requirements. The key factors for any procurement route are usually schedule,
cost and quality. Construction management is a fast-track procurement method
which enables work to begin early, while the design and documentation of
later-stage trade packages are being finalised. It was developed to permit some
overlap in the design and construction phases, and to obtain significant
constructability input during the design phase of a project.
Construction management at risk is a project delivery system
where the owner contracts separately but somewhat simultaneously with a
designer and a contractor. Construction management is useful in volatile
economic and industrial climates, helping to reduce the time and cost of project
delivery. Clients can modify specifications of later trade packages according
to changing project requirements. If you are a client who is dependent on
having a fixed price before you start, you do not choose the construction
generally engage consultants to design and document projects. In the bid phase,
the owner submits the plans and specifications to one or more prime
contractors, who either submit bids as part of a competitive award process, or
submit proposals to the owner for negotiation. The client then uses the
completed documents as a basis for inviting tenders.
After an evaluation process has been completed, the client
enters into a contract with a main contractor for an agreed lump sum. Payment
is made in installments and controlled by the principle consultant within a
specified time, cost and quality target.
Design-and-build has been touted as the contracting method
for the future, eliminating disputes and hastening the design and construction
process. It is fairly new in the Middle East,
but as we see more of this method, the roles and responsibility of the
contractor will become clearer. The client needs to ensure the right contractor
is used, with enough experience and resources to enable them to complete the
project to the quality required.
The building criteria
must be very clearly laid out ahead of appointing the contractor, as the client
may lose design control once a fee has been agreed upon.
A lump-sum cost approach will cause the design/build to
include broad budgets for items of uncertainty. According to the Design/Build
Institute of America, more than 40% of non-residential design and construction
in the US
is provided through the design-build process. By 2015, this number will grow to
more than 50%. There is currently no recorded data available for the Middle East.
All of these procurement methods can be structured in a
variety of frameworks, and on more than one tier of performance responsibility.
The scope of work and obligations undertaken by each party under each contract
is determined by the contractual agreement between the parties set out prior to
It is almost
impossible to compare costs of each of the procurement routes, as this depends
on how the contracts are administered. Traditionally, clients in the UAE prefer
lump-sum contracts, as they allow design control.
Each route has its own advantages and disadvantages.
Regardless of the method chosen, if the right team is not in place to manage
and deliver the project, the client runs the risk of running over budget,
behind schedule or both. We would advocate that the client spend as much time
focusing on the team as they do on the procurement methodology.
Louise Collins is an
associate director at Ramboll, and has been based in the Middle
East for six years.