Course Title

Professional Engineering Practice and Ethics

Course Code
0404401

Course Leader:
Prof. Alex Opoku (PhD, MSc, BSc (Hons), PGCHE, FHEA, MCIOB, FRICS)
Professor of Sustainable Built Environment
© Dr Alex Opoku
Procurement
 Learning Outcome
This lecture discusses procurement
methods/routes used in the construction industry

By the end of the session, students should be able

to identify and understand the various
procurement methods used in construction
Meets Course Learning Outcome 3 & 4
1. Understand the needs and responsibilities in the relationship of client and
architect, and employee and employer
2. Understand the importance of marketing and cash flow for that business
3. Understand the professional and ethical responsibilities of architects when
conducting that business
4. Understand the role of the architect in the construction process
5. Understand how to manage that business and the associated risks.
 What is “Procurement”?
Procurement: the process of obtaining a
product or service; a way of allocating
design and construction responsibility on a
construction project

This is a complex process that requires

careful planning and co-ordination

© Dr Alex Opoku
 The Procurement Route
Selection of the right procurement route is
critical. The procurement route determines:

which organisations will be involved in the

project
how organisations will work with each other
what contracts are to be used
the responsibilities of each organisation
the distribution of risks between the client
and construction industry members
© Dr Alex Opoku
Basic Procurement Route Options
Traditional route

Design and Build route

Novation

Management route
Management contract
Construction management

© Dr Alex Opoku
 The Traditional Procurement
Route

© Dr Alex Opoku
 The Traditional Route
Main features:
Design is completed before the contractor is
appointed, preventing inclusion of the
contractor’s design expertise
Reliance on competitive tendering to appoint
the contractor (usually with the lowest cost)
Client controls the design through its
consultants, client retains all design risk
Provides reasonable cost certainty
A contract administrator runs the contract
© Dr Alex Opoku
 The Traditional Route

© Dr Alex Opoku
 Traditional

© Dr Alex Opoku
 Traditional Procurement Route
Advantages: Disadvantages:
 Competitive fairness  Slow to start on site (no
 Relatively low tender concurrent working)
preparation costs  Open to abuse when
 Satisfactory public design incomplete
accountability  Poor buildability as
 Procedures are well contractor is not
known involved in design
 Changes are  Potential for adversarial
reasonably easy to relationships
implement  Design risk lies with
client
© Dr Alex Opoku
 The Design and Build
procurement route

© Dr Alex Opoku
Design & Build Route
Main features:
 Suited to all clients, including inexperienced
 Suited to clients requiring cost and time certainty
 Not suitable for complex or high quality buildings

 Design and build reduces variations

 Design responsibility lies with the
Contractor
 Reduced change brings cost and time
savings (compared with traditional
procurement)

© Dr Alex Opoku
Design & Build Route
Advantages: Disadvantages:
 Client interacts with a  Client needs to appoint
single point of Contractor before design
responsibility is complete

 Inherent buildability  No design overview

unless Consultants are
appointed by Client
 A firm price can be agreed
prior to construction
 Difficult for clients to
prepare adequate brief
 Shorter overall duration
(compared to traditional)
© Dr Alex Opoku
 Pure Design & Build
D & B Contractor tenders lump sum price
based on contractor proposals for design
& build in response to “employer’s
requirements”

D & B Contractor employs in house

designers or outsources design to a
consultant architect

D & B Contractor subcontracts most (if not

all) construction work
© Dr Alex Opoku
 Pure Design & Build

Client

Employer’s
representative

Design &
Build
Contractor

Subcontractor Subcontractor

© Dr Alex Opoku
 Pure Design & Build

Pure Design & Build Employer

Arch
Design Team

Design and
QS Build Contractor

Eng

SC SC SC

Contract

Information
© Dr Alex Opoku
 Novated Design & Build
Client employs consultants to produce outline
design and employer’s requirement document

D & B Contractor tenders lump sum price for

detailed design and build

Consultant designers are novated to the D & B

Contractor: i.e. they are contracted to the D & B
Contractor who takes responsibility for
developing the detailed design and building

© Dr Alex Opoku
 Novated Design & Build
Client

Novation is a process by which

contractual rights and
Design Team
obligations are transferred from
one party to another

Design &
Build
Contractor

Subcontractor Subcontractor
© Dr Alex Opoku
 Novated Design & Build
Arch

Design Team
Employer QS

Eng

Arch

Design Team
Design and
Build Contractor QS

Eng
SC SC SC

Contract
Novation
Information

© Dr Alex Opoku
 Differences between Traditional & D&B
Design and build
Traditional Procurement
Procurement
All design risk is ultimately The major risks lie with the
carried by the client contractor
The contractor assumes
Capable of obtaining the
greater financial risk and
best contract price for the
this is often reflected in the
full scope of the works
price
It is not suitable for fast Suitable for fast track
track projects projects
Client retains control over
It is more problematic to
the design team and
control design and quality
quality can be assured
© Dr Alex Opoku
 The Management Contracting
Procurement Route

© Dr Alex Opoku
 The Management Contracting Route
Main features:
 Management Contractor advises Client on
programming and buildability

 Work divided into series of packages

 Each package is awarded on a lump sum, fixed

price basis to separate Works Contractors

 Construction of each package can start as soon

as the Client approves its design
Design and construction overlap considerably
© Dr Alex Opoku
 Management Contracting

© Dr Alex Opoku
 Management Contracting - model

Arch

Contract
QS Employer
Information
Eng Money

Management
Contractor This is the
Management
Contract
WPC WPC WPC

© Dr Alex Opoku
 Management Contracting
Advantages: Disadvantages:
 Potential to reduce project  Needs a good quality
duration brief
 Concurrent working is
inherent  Poor price certainty
 Opportunities to improve
buildability  Requires a good
 Late changes easily quality project team
accommodated
 Work packages tendered  Difficult to resist
competitively Works Contractors’
claims
© Dr Alex Opoku
 The Construction Management
Procurement Route

© Dr Alex Opoku
 The Construction Management
Route
Main features:
A Construction Manager advises the Client

The Client contracts directly with the

numerous Works Contractors

Shorter communication lines give quicker

responses

© Dr Alex Opoku
 The Construction Management
Route

© Dr Alex Opoku
 Construction Management

© Dr Alex Opoku
 Construction Management
Advantages: Disadvantages:

 Potential to reduce project  No cost certainty at outset

duration  Needs informed client, able to
 Individual packages let take an active role in the
competitively project
 Opportunities to improve  Risks adopted by clients in
buildability return for control
 Concurrent working is inherent Needs a good quality brief
 Clarity of roles, risks and  Requires a competent project
relationships for all team
organisations  Needs effective control of time
 Late changes easily and information
accommodated
© Dr Alex Opoku
 The difference between CM and MC
Management Contracting (MC): A contractor
is paid a fee to procure the construction works
in a number of work packages which they are
then contractual responsible for

Construction Management (CM): A consultant

is paid a fee to procure the construction works
in a number of work packages and then
supervise them on site. The package
contractors are placed in contract directly with
the client
© Dr Alex Opoku
 Pure D&B Novated Traditional
D&B

© Dr Alex Opoku
 Typical Risk Distributions

© Dr Alex Opoku
 References
 Bowley, M (1966) The British Building Industry: Four Studies in Response &
Resistance to Change, Cambridge University Press, London
 Construction Industry Council (2006) Selecting the Team, CIC Publications
 JCT (2016) JCT Contracts 2016 Edition Catalogue 201 at
www.jctcontracts.com
 Masterman, J (2005) An Introduction to Building Procurement Systems, 2nd
ed, Taylor & Francis
 Morledge, R., Smith, A. & Kashiwagi, D. (2006) Building Procurement,
Blackwell Science, Oxford, chaps 2 & 7
 NEC (2013) What is the NEC? at www.neccontract.com
 Rawlinson, S. (2006) Procurement: Two-stage tendering, Building, issue 19
 Rawlinson, S. (2007) Procurement: Target Price Contracts, Building, issue
37
 RICS (2010) Contracts in Use; a survey of building contracts in use during
2010, RICS
 Winch, G (2002) Managing Construction Projects, Blackwell Science,
Oxford, chaps 2 & 5

© Dr Alex Opoku