Procurement in Construction Design-Bid-Build
Genesis
The system is the first type of procurement used before the end of 18th century and the beginning of the 19th century, when clients used to appoint craftsmen to carry out construction works under the direction of a surveyor or mason. Later on, clients depended on the Architect or consultant to design and manage their construction projects with the aim to meet the required quality at the stipulated time and cost.
Definition of the procurement method
This procurement method is also called ‘conventional’, ‘traditional’ or ‘separated’ The special characteristic of this procurement category is the separation of the responsibility for the design of the project from that of its construction.
Apart from the separation of design and construction, the conventional procurement system shows a number of other basic characteristics:
- Project delivery is a progressive process.
- The design of the project is mainly completed before work commences on site.
- The responsibility for managing the project is divided between the client’s consultants and the contractor and there is therefore little scope for involvement of either of the parties in the other’s activities.
- Reimbursement of the client’s consultants is normally on a fee and expenses basis whilst the contractor is paid for the work completed on re-measurement or lump-sum basis.
Types of ‘Design-Bid-Build’ Procurement
- Re-measurement Contract with approximate Bill of Quantities:
Generally, the design will, relatively, be complete when the Bill of Quantities is prepared. Tendering on the basis of an approximate bill of quantities can allow early selection of the contractor and so an early commencement on site.
- Re-measurement Contract with Schedule of Rates:
A schedule of rates is a list of specific and described items, but do not contain any quantities and is typically used when the nature of work required is known but it cannot be quantified, or if continuity of programme cannot be determined.
- Cost Reimbursement:
A cost reimbursable contract or cost-plus contract is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This type is used where the nature or scope of the work to be carried out cannot be properly defined at the outset, such as, emergency work (urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction). Tendering may proceed based on an outline specification, any drawings and an estimate of costs.
Advantages and disadvantages
Advantages:
- The system is widely understood by most clients. This helps defining roles and tasks for all parties of the project team.
- Providing that the design is detailed and completed without, with minor or no uncertainties, the system can help establish a lower project final cost when compared to other procurement systems.
- Bills of quantities in the re-measured type of this system help an easy and straight forward assessment of variations, usually by using pre-determined rates of items described in the bills of quantities.
- Clients have a close involvement in and more control on quality, performance and line of communication.
Disadvantages:
- The system is long and slow due to the sequential process and the separation of design from construction.
- Incomplete designs are attributed with inaccurate bill of quantities and hence indicative final cost. The client, who is often unaware of this, becomes exposed to extra reimbursement of additional costs associated with design changes.
- Lack of contractor’s involvement at design stage usually may lead to problems of buildablility, separate responsibilities, variations, blame, poor communications, claims and disputes.
- Risk is generally transferred to the client.
Second Edition (May/June)
Procurement
Mohammed Elaida MCIOB
Mohamed holds a Master’s degree in project management; he is a chartered construction manager, a chartered commercial manager, examiner and Malta representative of the CICES.