Procurement Methods for Construction Projects

Procurement report

This 2000 word report should describe and analyse the positive and negative aspects of three different procurement methods for construction projects. Benefits and problems for the client/developer, the consultants, the builders, the subcontractors and the end-users should all be considered. 

Table of Contents

Executive Summary. 2

Introduction. 4

Traditional procurement method. 5

Advantages of Traditional procurement method. 6

Disadvantages of Traditional procurement method. 7

Design and construct procurement method. 8

Advantages of Design and construct procurement method. 9

Disadvantages of Design and construct procurement method. 10

Management procurement method. 10

Advantages of Management procurement method. 11

Disadvantages of Management procurement method. 12

References. 13

Introduction

Approaches used in the construction industry procurement have not had significant changes in the last quarter century (Davis, Love and Baccarini 2008, p.3). Nevertheless, time and cost overruns remain high in the industry. To monitor and reduce the implications caused by time and cost overruns, might lead to disputes that limit the success of the project. Resultantly, various forms of procurement have emerged to secure the interests of different stakeholders in particular occasions. The appropriateness of an acquisition method is dependent on the goals and priorities established by the client (Civil Contractors Federation 2008, p.1). Fundamentally, factors such as policies, resources, organizational structure, and contractual relationships influence the type of procurement chosen by the developer. For most projects, the client initiates the procurement process individually or through the help of consultants or design teams.  There is need to identify the opportunities, challenges, and financial implications the activities have depending on the procurement method embraced. Appealingly, the goals and priorities of the customer need to be in line with the supply system. Among the most common procurement approaches in Australia are the traditional method, Design and construct method, and the management procurement. All methods present varying advantages and disadvantages to various stakeholders that include the client, consultants, builders, subcontractors, and end users. Appealingly, a strategic approach to procurement entails the clients and the advisors to review the most appropriate method to use depending on the project. According to Austroads (2014, p.10), employing the best strategy allows the customer and consultants to reduce the financial risk by increasing the value-for-money and is effective in managing contractual disagreements, increases efficiency in the timing of projects.

Traditional Procurement Method

The traditional procurement approach entails the client accepting that design aspects are separate from construction. Consultants that include architects, engineers, and quantity surveyors are employed for designing and cost management. Contractors are responsible for the development of a design and budget that meets the client’s needs. Traditional procurement extends to the workforce and the materials used, influencing their possibilities of the subcontractors and suppliers.  Ones the design is satisfactory to the concerned parties, the consultants acquire the most competent constructor through a tendering process with full information concerning the project (Rowlinson and McDermott 2005, p. 190). Nevertheless, appointments can be made where negotiations are to be done with partial or complete details of how the project will be carried out. The clients make decisions on the most suitable prices according to the suggestions raised by the contractors (Staples and Dalrymple 2015, p.225). It’s not necessary that the price is the lowest, but should be the most appropriate for the project…..

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