Definitions for Construction Procurement Systems The framework within which construction is brought about , acquired or obtained.

. ( CIBW92,1991) The organizational structure adopted by the client for the management of design and construction of a building project.( Masterman, 1992) An organizational structure that arranges specific responsibilities and authorities to participants and defines the relationship of the various elements in the construction projects. ( Love et al.,1998) Categorization of Construction Procurement Arrangements

Common Distinguishing Criteria of Procurement Systems Responsibilities and the authority of the parties Relationship of different elements of the projects Required skills and capacities of the participants Objectives To identify the Characteristics Advantages and Disadvantages Relationship of Parties

Performance criteria on cost, time , quality, etc. Suitable project scenarios Suitable contractual arrangement and standard forms of contracts Payment methods Selection methods

Variants Appropriate Situations in each procurement system

Separated Systems
Known as Traditional Systems Separation of Design and Construction Process Appointment of Consultants

Relationship of Parties

Advantages Competitive tendering is possible with detailed documentation High quality of functional standard are possible There is cost certainty at the start of construction Independent advice is given on most aspects of the process BOQs make for ease of valuation of variations and high level of cost control and monitoring There is a flexibility for design changes in the construction stage There are clear lines of accountability A combination of the best design and construction skills is possible Disadvantages Decision processes are slow and convoluted Total project time is the longest of all options and no parallel working is possible No integration between design and construction process leads to reduced team spirit & tend to cause problems at construction stage The exclusion of the contractor from the design phase eliminate the scope to improve buildability The clients liability & risk is significant where the client is inexperienced Due to time pressure in the pre contract stage,the documentation may have errors Cost overruns Not appropriate for complex and large construction Variants To Separated Systems Based on Documentation Based on Tendering Two stage tendering, negotiates contracts, Serial contracts Based on Payment

Lump Sum: Contract sum is agreed before the construction start and risk is very high to the contractor Measure and Pay :The work has been substantially designed but final details have not been completed. The contractor is paid according to the amount of work as measured after the physical completion Prime Cost: The contractor receiving only what is spent plus an agreed amount to cover profits and overheads (Ex.Cost plus contracts, target cost contract, fee contracts)

Appropriate Situations Programme allows sufficient time Consultant design is wanted Client wishes to appoint designers and construction separately Price certainty is wanted before the construction Product quality is wanted Balance of risk to be placed between the client and the contractor

Integrated Systems
Identified as Design and Build One contracting organization offers to undertake the sole responsibility of design and construction of a project. Normally on lump sum fixed price basis

Advantages There is a single point responsibility Offer shorter overall time Fixed priced bids are used. So financial commitment known by client early in the process. Achieve high level of buildability Reduce variations and destruction to the original design Design becomes a competitive element Client's financial risk is minimal Client involvement in the process can be minimized Direct communication between the client and contractor enables contractor to respond to clients needs promptly. Disadvantages Comparison of bids can be complicated There are lower level of competitions at the tender than in other arrangements It requires a detailed brief The tender process can be expensive to bidders There is a lack of independent professional advice to the client at the time of tender These forms often lack broad experience or expertise Change can be expensive as valuation of variations Aesthetically important buildings are not recommended to procure this method. Variants to Integrated Systems Package deal feasibility also done by contractor & client is able to see the actual examples before making decision. Turnkey under this form , contractor undertakes all components of work of the project.

Design & Build Where the contractor provides the design and construction under one contract. Concession Contracts (Private Finance Initiative: BOT, BOO,BOOT etc.

Appropriate situations A building functional rather than prestigious A brief for scope design is unlikely to change A firm price is needed in advance before starting the construction Where clients needs a faster building Where client wishes to give a single organization to both design and construction responsibility Best suited for construction of office building, warehouse, factories rather than residential

Management Oriented Systems

The separation of management function from design and construction. Client enters into a contract with an external organization , which is responsible for management and coordination of design and construction of work. Common variants to MOS Management Contracting Construction Management Recommend for Complex and large scale building

Advantages It provides early starts to the construction work Quick total; project times are possible Value management and buildability are emphasized There is flexibility for change and last minute decision

Disadvantages There is no firm price at the start of the construction The extra layer of management leads to extra costs Conflicts between professional participants may occur as a result of changing roles More risk is taken by the client Collaborative Systems The collaboration between two or more parties to achieve successful project objectives through fair dealings, commitment, and shared investments. Various forms of joint ventures through combine investment of capital and expertise to undertake the works are also considered as CS. Example for Collaborative Systems 1. Partnering Advantages Low risk of cost and time overruns, reduced exposure to litigations Better quality products Quicker start and improved efficiency of human and other resources Disadvantages The lack of commitment by all parties

Cultural issues Higher risk involved and loss of control over dishonesty

2. Joint venture The most suitable approach for high- value , high- risk construction projects. Factors affecting the changes in the use of Procurement systems Economical and market aspects Technological aspects Government policies Financial aspects Socio Cultural aspects