Most Appropriate Procurement Method for University of Salford

1.0 Introduction

The University of Salford is a leading UK university close to the city centre. They aim to become the very best UK universities and recognized internationally by 2017. A strategic plan has been developed. To response to achieve the strategic plan, the School of the build environment is to deliver its core course provision within a prestigious bespoke facility and expand its role to include architecture. A new state of the art development is proposed on the existing campus which will replace an older building which has become available.

I have been appointed as a main consultant to the client and required to advise the client on the most appropriate procurement method.

The proposed site will require demolition of existing structures and the new facility will contain

State of the art lectures theatres

Meeting rooms

Extensive classroom and studio facilities

Office accommodation

Laboratory accommodation

Learning resources units

External works

In the University policy on sustainability, the client needs the building to be carbon neutral. In addition, the university facility should make a clear architectural statement and must be constructed to the highest aesthetic and qualities standard. The budget to cover the total development cost, inclusive of construction works, statutory and professional fees approximately A£20 million. The completion is critical, as the building requires handover by 1 august 2012 at the very latest, to accommodate the new academic year.

2.0 Procurement

The process of the procurement is acquiring goods and services, covering both acquisition from third parties and form in-house providers. The process span the whole life cycle from the identification of needs, to the end of a services contract or the end of the useful life of an asset. If they didn’t have any recognize, they will be not allow to follow the next step.

Once they have been recognized, it is important to succeed the information of what will lead to satisfaction. From there, it is a matter of determining what features are preferred, as well as determining an approximate amount of money that the consumer is willing to pay. If they can provide the following requirement, they can involve the evaluation of potential suppliers.

The evaluation suppliers will involve knowing more about the seller who can supply goods or services which can meet their requirement. This may involve negotiating prices or accepting proposals. Once the final decision is made between the two remaining suppliers, they can involve the final process. The final procurement process involves taking control of the good or service, ensuring the item is in agreement with all the claims which prepared by the supplier.

There has been change in procurement such as;

Government intervention

The PFI(Private Finance Initiative) projects have been increase and expand the PFI policy.

Technology

The client need responsibility

The influence of developments in education and training

from research studies into contracting methods

3.0 Procurement strategy

Contract strategy

The contract strategy is to promote effective procurement across the whole organization. In this method, it is necessary to match the need of the client with the most suitable, to enable this, the client objective and the operation and relative attributes of the available procurement and method of appointment, is required.

Project Size

The Small project is not suitable on detailed form of contractual arrangement. That means, some of the procedures will unlikely to be cost effective, Open tendering or design and build most will be suitable for small project.

Client type

Clients who carry out the construction work are much better to be informed on their development their own preference and will not require building occasionally. In this result, the quantity surveying need to give some advice to the client the adoption and appropriate methods. The client with experienced have a working strategy of the construction industry, so the client can contribute to the process throughout. The client without knowledge will need quantity surveyor advise and they can’t contribute in the construction process.

4.0 Client Procurement needs

The three main factors that need to be considered in the most suitable procurement system is the cost, time and quality which reflects each in either way.

4.1 Time

The time completion or the project duration is seen as a major criterion of project success by the clients, contractors and consultant, most client likely to have an early building completion or on time, and that concerted management effort will help to control the cost and quality. it also very important to decide the true need since attempt to meet the objective is expected to have consequences on other requirement.(Allan Ashworth & Keith hogg,2007)

4.2 Cost

Cost is the most important under client procurement need, Client have been increasingly concerned with the overall profitability and the accountability of project. the factors to be considered for the cost are the price negotiations, fixed price arrangements, price certainty, price forecasting, contract sum, payment and cash flows, life cycle cost, variations and final cost ,Client also need cost if the project get delays, they are some project with unusually short project period tend to incur some form of cost penalty. The introduction of conditions to the client, or the imposition of higher standard of workmanship than normal, will also push up costs. The cost are certainly is required prior to commitment to project completion or construction. (Allan Ashworth & Keith hogg,2007)

4.3 Quality

The quality for the client defined as one of the components that contributes to “ value for money”?, the quality is influenced by several factors such as the briefing process; the suitability of materials and the quality control procedures that are in place during both design and construction. they have 3 way quality mananagement must be achieved, they are integration of the project team so they have a objective and a common culture, A customer focus for the team thereby facilating the provision of products and services and a process of improvement in the management of the construction project. If they can achieve the 3 successfully quality management, the project will begin to realize significant and improvement in the attainment of the clients ‘objective’ (allan ashworth & keith hogg,2007)

5.0 Partnering

Partnering define as “a management approach used by 2 or more organizations to achieve specific business objective by maximize the effectiveness of each participants resources. The approve is based on mutual objectives, an agreed method of problem resolution and an active search for continuous measurable improvement”?

They have three main components according to the definition above; they are mutual objectives, agreed method of problem resolution, active search for continuous and measurable improvement.

Partnering is a form of collaborative working between the client and contractor, partnering is characterized by a greater degree of openness, teamwork, trust and sharing information.

The aims of partnering arrangements are often expressed in terms of business outcomes rather than specific outputs or improvement; the partnering success will depend on the people and relationship aspects. (Allan Ashworth & Keith hogg,2007)

The process of partnering

When the client and contractor agree to partnering each other, the procedures of partnering will involve a selection procedure, initial partnering workshop and a project review.

The client and contractor can be partner is because they can trust each other and committed to the arrangement is fundamental to the process. The client and the contractor allow using traditional procurement in the initial selection stages.

During this project implementation, the performance will be regularly reviewed. This will include all important project matters including quality finance, programmed, problem resolution and safely. (Allan Ashworth & Keith hogg,2007)

Project partnering

Decision stage- The project team which involves in the partnering process is essential, once all of the parties have made the decision in the partnering process, they can go forward to the establishment of working stage.

Establishment of working practices – In this stage, all the project teams have to identify the mutual objective and have to solve the problem during the duration of the project. Later, all the project team have to involved in the partnering process when the decision has been made, they will determine how the project team will implement the project together and to improve relationship. The final task will consist of formulate a partnering chapter, a document with no legal standing, once all the parties have signed the document, it is exhibited in the office of all the participating organizations and they can go forward to the implementing partnering practices stage.

Implementing partnering practices- the meeting will take place at intervals, during the meeting, they will solve the problem which they have during the implementation of the project and to ensure that the previously agreed continuous improvement have been made. Over the often lengthy implementation period, the project team enable to establish the relationship improvement, teamwork and the trust during meeting.(Masterman,2006)

Strategic partnering

Strategic partnering involves in the long term issues of partnering by two organizations to carry out more than one construction project. The benefits for strategic partnering is they can build a long term relationship which can include their establishing common facilities and systems, and understanding or known well for the partner longer term business. (Allan Ashworth & Keith hogg,2007)

Advantages of partnering

disputes reduction

time and expense in the settlement of disputes reduction

cost reduction

quality and safely will improved

the design and construction times will improved

the income will be more stable

better working environment

(Allan Ashworth & Keith hogg,2007)

Disadvantages of partnering

initial costs

complacency

Single source employment- strategic partnering could result in both party becoming very dependent on one client and thus becoming very weak should this source of work be threatened.

Lack of confidentiality of client or contractor processes and system – disputes could occur in the event that information, which may be regarded as commercially confidential, were to be withheld from one or more of the partners.

Lack of competition – the accepted route to securing a ‘good value’ price is through the competitive tendering process.

Absent of partnering through the chain – the benefits of partnering seem to be lacking from the contractor- subcontractor relationship.

(Allan Ashworth & Keith hogg,2007)

6.0 Procurement Option

6.1 Traditional Procurement

Traditional procurement are the most common or popular in procurement, in this approach, the Client commission an architect to take a brief, produce designs and construction information, invite tenders during the construction period and the final account. The client will need some advice to appoint the consultant such as Quantity surveying, structural engineers and building services engineers. But, Quantity surveying is normally the client first choice. When the consultant have been prepare the design, tender document, the client will appoint the contractor to construct the works of the design according to the contract documents, Normally, Most of the works are done by sub-contractor to specialist firm which given by the main- contractor.

The consultants also have to advise the client on progress and stage payment which must be paid by the client. This form of procurement is the separation of separation of design and construction. The main advantages of traditional procurement is

The design can be fully developed and costed in detail after the buildings have been signed.

Low tender price

Procurement route most likely to give a client a much modified building.

Accommodates design changes and aids the cost management process.

The disadvantages of traditional procurement is

Problem relating to design error, the risk relating to the design lies with the client.

Lack of involvement of the construction in the design process.

(Allan Ashworth & Keith hogg,2007)

6.2 Design and build

In Design and build, the client enters into the single contract with one entity who is responsible for both design and construction works of the project, which means, the client doesn’t need to employ consultant and architect, they can directly to employ the contractor to responsibility for both design and construction. The contractor also can appoint some consultant to do the design, most of the construction work will be carry out by sub- contractor. Design and brief is also one of the most frequently used procurement routes in construction,

The contractor tenders against a client brief and will follow an initial concept design prepared by consultants appointed to advise the client.Normally, the contractor will develop the design and the works have to be completed. In a fixed price. Tendering is more expensive so it carries more risk for the contractor than the traditional approach. This is because the contractor has to develop an outline design and a detailed price.

In the develop and construct method, the client have to prepared the conceptual design for the tender documents and ask the contractor to submit the proposal for the development and completion of the design. Construction novation is an approach whereby the client novates the design consultant to the contractors to aid the contractor in developing and completing the design. The main advantages in this design and build is

Single point responsibility – the contractor is responsible for the design and the construction, so the contractor cannot blame the consultant if they have a problem in work and will be motivated toward the reduction of design problem, this is more advantages compare to the traditional procurement when the client have separated the design and construction to the consultant and contractor respectively.

Price Certainty – offer there don’t have any client changes, a high level of price certainty exists, under JCT WCD(JCT 1998 Edition With Contractor’s Design), the contractor cannot claim money for loss and expense as a result of late receipt of instruction from the architect.

Reduced project duration – design and build work on site to start earlier when the design in process when they approve by the contractor.

An improved degree of buildability – the contractor has control the design and construction that means, the building is likely to be more buildable than other procurement methods.

Claims- Claims are less likely to materialize when the contractor responsibility for the design and the construction(Allan Ashworth & Keith hogg,2007)

The disadvantages of traditional procurement is

Design quality – the design and build is not the appropriate procurement method where design quality is a high priority.

Additional design fees- the client have to pay additional design fees if they wishes to take independent advice on design issues following the building contract being entered.

Commitment prior to fully design – the client bought a building which they haven’t fully design. (Allan Ashworth & Keith hogg,2007)

6.3 Management Contracting

Management contracting is to describe a method of organizing project team and the client appoints designers and a contractor separately and pays the contractor fees for managing the construction works. The contractor does not therefore participate in the profitability of the construction work itself.

The management contractor will not carry out on construction work so they don’t need to employ the labour or plant, except they have to involve in the setting up of the site.

There is less price certainty at the outset, because the construction will have to start ahead when many of the work have yet to be tendered. Management contracting will suitable for larger or more complex project, but parallel working can enable the process of procurement to take place faster than traditional procurement. The main advantage of this management contracting is

Early involvement of the management contractor – the contractor is employ on fees basis that means, the appointment can take place early during design stage.

Reduced project duration – construction can start early when the sufficient work has been designed.

Accommodates later design decisions – some design decision relating to work which successively at the end of the construction phase may be delayed due to the letting of work in packages

(Allan Ashworth & Keith hogg, 2007)

The disadvantage of management contracting

Commitment prior to full design – when the design can’t complete at the time of commencement, it will affect the cost, quality and other when the client want to proceed.

Increase in client risk – the risks relating to additional costs arising, that means all of the works will be delays, defective work and claims.

(Allan Ashworth & Keith hogg,2007)

6.4 Construction management

Construction management offer an alternative to management contracting in terms of the contract relation between the client and the contractor as in construction management, the client has a direct relation with the construction team unlike the management contracting. Means where the management service is provided by a fee-based consultant, a specialist construction manager or a contractor and where all construction contracts are directly agreed between the client and the trade contractors. There is no contractual relationship between the construction management and the trade contractors.

Alike to the management contracting, the design and management can be overlapped, thus shortening the project time. Besides the overlapping process, the practice of having the construction management in the design stage should ensure that the design are more easily built due to the consequent avoidance of unnecessarily complicated work and reduction of overlapping between individual works contractor’s operations. Because of the direct contract is require, the additional client involvement have to be require, unfortunately, the adequate experience and the resources are not recommended. (Masterman, 2006)

`The disadvantage of this system is in terms of the quality of work. But this problem could be overcome by the implementation of the correct quality control procedures during the construction stage to make sure that the performance of the contractor is strictly monitored and high-level quality can be achieved.

7.0 Procurement selection matrix

7.1 Analysis the procurement matrix

According to the matrix system, the best procurement methods so far for this project are construction management. This procurement method will be based on the main factor for the selection of a procurement system which is time, quality and cost.

Based on the time of completion of the project, the construction management could give the project shorter contract period compared to the traditional procurement system. (CIRIA, 2009 )

There is a slight difference in terms of the quality that the construction management based could produce. Construction manager is hired at the earliest stage of the project and it is found that the early involvement would have effect on the buildability of the building during the construction stage. Therefore with high buildability of the building with good supervision and the implementations of correct quality control procedures by the construction manager, the construction management system could achieve a ‘prestige’ level of quality. Comparing the quality of work that a management contracting can produce, construction management could produce a good quality finish compared to the management contracting as the involvement of the management contractor is in a later stage than the construction manager. the management contractor will also need some advice from the design team on all aspects of the project.

Last but not least, the construction management will have to give some advice to the client as the construction manager are involved in the earliest stage even before the design and brief is discussed. This means that the construction manager has more information of the project compared to the management contractor.

8.0 Proposal of the best procurement method

According to my Procurement matrix, it is shows that the most suitable procurement method for the project is the construction management. This is supported by the highest score in the matrix compared to other procurement options, which means construction management meets most of the project needs such as the time of completion and the quality of the university facility.

The reason why I choose construction management compare to other procurement is the quality, quality is very important for this project because of the reputation that the university aims to be ranked amongst the very best UK university and recognized by 2017 and the client requires the building to be carbon neutral and must be constructed to the highest aesthetic and qualities standard.

Secondly is the timing requirement of this project. Construction management is the best choice for the time because the time of completion could give the project shorter contract period compared to the traditional procurement system and other procurement. The reason I allocate more importance on time is because the client need to finish the project as fast as possible and the handover by this project is 1st August 2012 at the very latest is to accommodate the new academic year.

Besides that, as shown in a diagram in CIRIA (2009), construction management is suitable for an experienced client which would want to be involved more directly to the client. As the client have already appointed me to advise the client, I will advise the client to keep involved with the construction management and to have a direct relations with design and construction team so it is easier for them to communicate and allow better relationship.

After all the argument above and in the previous section, it has been clear that the most suitable procurement system for this project is the Construction Management.

9.0 CONCLUSION

As a conclusion to this report, for this project, the most suitable procurement system that could be used to procure the project is the construction management after comparing it with traditional, design and build and the management contracting procurement system. The reason for this is that construction management procurement system satisfies most of the client’s needs compared to the other such as the high quality standard needed for this project and the early completion of time.

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