PROFESSIONAL PRACTICE I [QSD 289]

Mohammad Nasharudine Shuib

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DESCRIPTIONS INTRODUCTION GENERAL MATTERS STANDARD FORM OF CONTRACT METHOD OF PRICE DETERMINANTION CONTRACTOR SELECTION & APPOINTMENT PROCUREMENT OPTIONS CONTRACT STRATEGY CLIENT PROCUREMENT NEEDS

LINKS

Client organizations are divided between those in private and public sectors although this distinction is becoming more difficult to define since the privatization of many national bodies. The private sector includes industrial, commercial, social, charitable and professional organizations, and individuals. The public sector is taken to mean government departments, nationalized industries, statutory authorities, local authorities and development agencies. The experience which a client has of building procurement ranges from extensive, in the case of a client with a project management team, to none, where a private individual may want a development only once in a lifetime.
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The traditional method of organizing construction work starts with appointing a consultant designer, usually an architect or engineer, or both. Other specialists may be needed, in particular a quantity surveyor is appointed to provide cost information, prepare bills of quantity, compare bids and maintain financial management during construction.

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CONTRACTUAL ARRANGEMENT

BASE ON METHOD OF PAYMENT Measurement Cost Reimbursement

BASE ON METHOD OF PROCUREMENT Conventional Design and Build Management Contracting Others
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CONTRACTUAL ARRANGEMENT

BASE ON CONTRACT PRICE Fixed Price Cost Reimbursement

BASE ON CONTRACTORS OBLIGATIONS Conventional Design and Build Management Contracting Others
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Conventional / Traditional PROJECT DELIVERY: EXTENT OF CONTRACTORS OBLIGATIONS

Design and Build Management Contracting Others

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Procurement is the process that is used to deliver construction projects. As part of the initial stages of a project, one of the principal tasks of the project team is to develop the CONTRACT STRATEGY to be adopted.

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MANAGEMENT CONTRACTING DESIGN AND BUILD CONTRACT

TRADITIONAL CONTRACT

BUILD, OPERATE & TRANSFER CONTRACT (BOT) TURNKEY CONTRACT

CONTRACT PROCUREMENT METHODS

PRIVATE FUNDING INITIATIVE CONTRACT (PFI)

BUILD, LEASE & TRANSFER CONTRACT (BLT)

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CONTRACT PROCUREMENT METHODS

TRADITIONAL CONTRACT

MANAGEMENT TYPE

PACKAGE DEAL

MISCELLANEOUS METHOD

MANAGEMENT CONTRACTING

CONSTRUCTION MANAGEMENT

DESIGN & BUILD

TURNKEY

BUILD, OPERATE & TRANSFER CONTRACT (BOT)

BUILD, LEASE & TRANSFER CONTRACT (BLT)

PRIVATE FUNDING INITIATIVE (PFI)

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APPORTIONMENT OF RISKS

The procurement system, and associated contractual arrangement, will dictate the financial and other risks borne by the parties to the contract. Risk cannot be eliminated by choosing a particular form of contract, but will be shifted towards one party or the other. A guide to how the risks are divided for each contractual arrangement is given in Fig. 2.1.

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CONVENTIONAL METHOD

The traditional structure for project procurement shown in Fig. 2.2 is a sequential method because the employer takes his scheme to an advanced stage with his professional team before appointing a contractor. The consultants role is seen as an independent one. The designer is employed to advise the client, design, ensure the work is kept within the cost limit and complies with the standards required. A quantity surveyor can be engaged to give guidance on design costs and budgets, prepare bills of quantities, check tenders, prepare interim valuations and advise on the value of variations. Consultant structural and services engineers may be employed either by the client, or his advisers, to design the specialist parts of the project.
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DESIGN & BUILD METHOD

The design and build arrangement is an attractive option for clients. It simplifies the contractual links between the parties to the main contract (see Fig. 2.3) because the contractor accepts the responsibility for designing and constructing. The benefits include: single-point responsibility, prices which reflect more closely the final cost to the client, inherently more buildable designs and an overlap of design and construction phases leading to early completion.
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During the 1980s, clients were attracted to management contracting because it offered early starts to large-scale and often complex construction projects. The management contractor is appointed to work with the professional team, to contribute his construction expertise to the design and later to manage the specialist package or works contractors. He is responsible for the smooth running of the work on site so that the contract can be finished within time and cost.
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In the USA, where the roles of the professionals are different, the client or his project manager will take a more active part in the construction phase. A construction manager is appointed as a professional consultant with powers to inspect work on site and issue instructions (see Fig. 2.5). The client has a greater control over funds during construction because he has a contract with all the trade and specialist contractors. These contractors welcome the direct links with the client partly for the higher status this brings but more importantly because the lines of communications are clearer and payments are made sooner

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The UK government is committed to PFI for major projects. This procurement option has been successful in delivering high quality facilities for public services since the early 1990s. By June 2003, over 280 projects had been signed with a total value exceeding 35 billion.

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BILLS OF QUANTITIES

MEASUREMENT CONTRACT

SCHEDULE OF RATES

BILLS OF APPROXIMATE QUANTITIES

DRAWINGS & SPECIFICATIONS

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COST PLUS PERCENTAGE

COST REIMBURSEMENT CONTRACT

COST PLUS FIXED FEE

COST PLUS VARIABLE FEE

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There are essentially two (2) ways of selecting a contractor: through competition or by negotiation. This will apply to any working arrangement, including strategic partnering.

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SELECTIVE COMPETITION

SERIAL TENDERING

CONTRACTOR SELECTION

OPEN COMPETITION

TWO-STAGE TENDERING

NEGOTIATED CONTRACT

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