Procurement in Construction

Types of integrated procurement systems

1. Conventional design-and-build:

The Contractor assumes full responsibility of the design and implementation of the project and aims at meeting the Employer’s Requirements or Client’s Brief. The contractor is then in a position to prepare its proposals for both the design and construction of the project within the bounds of the client’s brief, ascertain the time it will take to carry out the works and prepare a cost estimate.

2. Novation design and build:

The Client appoints an architect to prepare concept design. Once the contractor is chosen, the architect is passed on to the contractor, under a novation contract, to carry out detailed design and remains the contractor’s consultant until the completion of the project.

3. Develop and construct:

The contractor inherits the design that has been prepared by the client’s consultants, to a partial stage. The contractor has to develop such design to detailed stage, and construct the works.

4. Package deal:

In addition to the design and construction of the works, this system may include the provision of site pursuing and purchase, acquiring planning permission and building regulations approval, financing facilities, leasing etc…

5. Turnkey method:

This system is, as the name implies, a method whereby one organisation, generally a contractor, is responsible for the total project from inception, design and through to the point where the key is inserted in the door’s lock.

Appropriateness

• If there is a need to make an early start on site – can overlap design and construction
• Where clients desire to minimise their risk on and control over responsibility for design
• For technically complex projects which can benefit from the contractors’ expertise

Advantages:

• A single point of responsibility for clients with one design-and-build organisation
• Early price certainty, generally a lump-sum value
• Client and contractor have a direct line of communication
• Concurrent design and construction and earlier commencement on site lead to reduction of the project duration
• Since the design is carried out by the contractor, variations are restricted. This mitigates time and cost overrun; and disruption of the works.

Disadvantages:

• Client may have difficulty preparing a sufficiently comprehensive brief
• Harder to compare tenders and determine if they offer value for money
• Client may have to commit to an early concept design
• In conventional design-and-build system, client has no control over the design
• Variations from the original brief may be difficult to assess