Initial Preparation Procurement Paths

Published Date: 02 Nov 2017

The organisational and financial methods employed to undertake a construction project are known as Procurement paths. There are three main types of path:

Traditional

This set up is mostly used on larger project and consists of the Client, Engineer and Contractor Model. All design information and site conditions are normally well established prior to the start of contract - which is normally either a Bill of Quantities or Schedule of Rates.

Advantages

In this path all contractors will be tendering on exactly the same specification and contracts.

Also the Client will also have had advice from the engineer regarding the project design and will have discussed changes before the contract documents are sent out to the possible contractors.

The competiveness of the process allows for a degree of accountability.

Clients can be confident of the final cost at the beginning of the contract.

This procurement route allows for a greater degree of flexibility when it comes to making changes.

This is a well-known, well trusted procurement route within the industry.

Disadvantages

The contract documentation can often take a long time to produce and any attempt to tender from an unfinished design can lead to lead to arguments, thereby wasting more time and increasing costs further.

The fact that the building process cannot begin until the design process is completed can often mean that this procurement route takes longer than other routes.

Commonly used when:

Design is required by a consultant.

Time is not an overriding issue.

The design and Construction team are employed separately

Absolute certainty is required before a shovel is lifted

The quality of the final build is of upmost importance.

Risk is shared between the Client and Construction team.

Construction Management

In this system the client employs a Construction Management Consultant who advises and supervises in matters relating to construction, budget control and contractual arrangements. The whole project is controlled by an independent Construction Management firm who will act as a focal point between the engineer and contractor. All Control of progress and inter relationships between parties will be vested in the Construction Management Organisation. Cost Reimbursement contracts are generally used in this path.

Advantages

The client deals with only one company as communication is facilitated between the client and one joint Design team/Contractor.

Speed of construction can be achieved by the overlapping of the design and building phases.

The Contractor is responsible for ensuring that design processes are properly integrated with the construction phase.

Having the Constructor involved in the design process improves the end product and helps to ensure the project goes smoothly.

All parties are fully aware of their roles, their duties and the risks that they are exposed to

This is a flexible procurement route that allows for changes to be made to the initial design.

Disadvantages

There is always an uncertainty about the final price until work has been completed

There is a duty on the client to be hands-on and well informed.

It is vital that there is an emphasis on time management and good communication.

Generally used when:

The project is large, intricate and fast paced.

The completion of the project is required as soon as possible.

There is a large degree of trust between all parties involved.

A quality project manager is available from the very beginning of the project

The client is flexible regarding the end design of the building – providing that costs are strictly controlled.

Design and Build

In this path the contractor carries out both the design and construction of the works. This system is normally used when certain aspects of the work are undetermined or the contractor is a specialist in his field. Normally Cost Reimbursement or Schedule of Rates contracts are used in this procurement path.

Advantages

Communication is far easier between the client and one joint Design team/Contractor.

Again, Clients can be confident of the final cost before work even starts.

A price cap, coupled with the sharing out of any savings made can often drive all parties to innovate, be more efficient, and keep any unnecessary costs to a minimum.

The fact that the Construction team is involved in the design process can lead to less duplication of work, a reduction in the length of the project and most importantly a far superior end product.

The Client also benefits from a particular area of expertise that a contractor possesses.

Disadvantages

A client may find it difficult to specify an appropriately wide-ranging and complete brief

Changes made later on by the client can often prove to be very expensive

As each design will be different in some way it is difficult to compare fully compare each bid.

A client often has to commit to an uncompleted concept design.

Design liability is limited to the standard contracts that are available.

Commonly used when:

The functionality rather than the grandeur of the building is the most important factor

The construction process sticks to tried and tested techniques rather than try to invent new ways of doing things

There may be a change to the brief scope

When speed of construction is required and an overlapping of the design and building phases can save time.

Risk is required to be meet by a single organisation.

Contract Types

There are two main types of construction contract – Measurement and Cost Reimbursement.

Measurement can be further divided into:

Bill of Quantities – This is the most common type of contract for construction projects in the U.K. Tenders made by contractors all use the same qualitative and quantitative data therefore they are only distinguished by their price.

Drawings and Specification - This is a relatively simple type of contract and is only really suitable for simple or small projects. Each contractor measure the quantities from the drawings and interprets specification to calculate the tender sum, however interpreting the specification can be risky even for the most experienced of estimators.

Schedule of Rates – When it is not possible to estimate the full extent of building works that has to be undertaken it is often best to form a direct link between quantity and price, therefore a Schedule of rates may be used. This contract is similar to a bill of quantities but without any actual measurement. It is prepared using the rules of method of measurement and contractors are invited to insert their rates against these items. These rates can then be compared to decide who to give the contract to. There is a disadvantage of using this contractual arrangement in that it cannot predict the contact sum or indicate the actual final cost of the project.

Cost Reimbursement Contracts

Cost plus percentage – In this setup the contractor receives the cost of labour, materials, plant, subcontractors and overheads then this sum is added to a percentage to cover profits. This type of contract has a disadvantage in that the contractor’s profits are directly related to their expenditure thereby increasing the chances that the contractor will spend more.

Cost plus fixed fee – The contractors fee is agree from the start thereby giving the contractor an incentive to keep cost relatively low. There may be a disagreement, between the contractors and employers, however, as it is difficult to predict the cost with accuracy before starting work.

Cost plus variable fee – For this system to work a target fee is set at the start of the project and before the contract is signed. The contractor will then receive affixed amount and variable amount. The total fee charged depends on the difference between target cost and the actual cost, thereby providing even more incentive to keep costs low. The main disadvantage being that the target cost can sometimes be quite inaccurate.

Contract Documents

The Drawings – Tender drawings are available to the contractor at the time when a tender is submitted for consideration. The drawings provide a graphical illustration of work that will be carried out under the terms of the contract. Generally these include a site layout and location plan, general arrangements of layout components and detail drawings of the individual components. Further drawings may be commissioned to provide clearer information during the course of the works.

The Bill of Quantities – This is a list of all items that are needed to complete the project. A full description and quantity needed of each item is worked out from the drawings and expressed in the relevant units. Each item is then assigned a unit rate which is multiplied by the quantity needed to give the overall price for that item. The sum of all these items can then be added to the provisional, the prime cost and the contingency sum along with the adjustment item to get the overall price of the project.

The Specification – This is a detailed description of work to be executed, the character and quality of the materials and workmanship and also any additional items that are not covered by the conditions of contract. The order that various jobs are to be completed can be included here along with methodology and temporary works. It is important when developing the Specification to avoid conflict with any provisions in the Conditions of Contract.

The Conditions of Contract – This document defines the terms under which the work is to be carried out, the rights and obligations of the Employer and Contractor, the powers of the Engineer and the method of payment. The I.C.E Conditions of Contract are recommended for use where appropriate.

The Form of Tender – This document contains the Contractors written offer to undertake the work in accordance with the other contract documents. An appendix is included within this document that states – The Works Commencement Date, Time for Completion, Amount of Liquidated Damages and rates of Retention. The Contractors qualification of his offer may also be included.

Procedures for Obtaining and Accepting Tenders

Contractors can be invited to tender by:

Open Tendering – Whereby an advertisement is placed inviting contactors to Tender. This provides real competition in regard to the pricing of the project. This form of Tendering however, lends itself to large amount of Tenders from inexperienced or financially insecure companies.

Invited Tendering – Whereby the completion is limited to only a few select contactors. This methods has its advantages in that it eliminated undesirable contractors applying, but it also has a disadvantage in that reputable companies in that specialise in other areas are restricted from moving into fields that may be new to them.

Negotiation of contract – This tendering process is normally used when there is perhaps only one reputable company available that has the specific area of expertise required to undertake the job.

Tendering Procedure

Once the list of applications for the job has been reduced down to around ten companies, copies of the contact documents are sent out along with a Tendering submission deadline date. If a question regarding the project is asked by telephone or letter then the answer to that question should be circulated to the other interested contractors to ensure fairness of competition.

The contract documents are then studied and questions raised regarding supply, availability, delivery dates, materials costs and cost of plant before rates for each item in the Bill of Quantities are assigned. These rates are then multiplied by the amount of each item to get the overall cost.

The completed Tender should then be returned to the proposed Employer who will record the date of receipt and condition of the sealed envelopes. These envelopes should then be placed in a safe to be removed and opened along with all the other Tenders in front of at least two witnesses/signatories.

The arithmetic of all of the Tenders will then be checked by the clients Engineer who will make amendments a necessary. The Form of Tender should then be signed and a report submitted by the Engineer who will compare the value of the tenders, qualifications of the offer or any alternative designs that are submitted. The report will include a recommendation of acceptance of a contract which does not necessarily have to be the lowest in cost.

A letter of Acceptance will then be sent to the successful contractor, by the Engineer on behalf of the Employer.

Payment of Contactors

One month after the contract starts, and every month after, the contractor submits a statement of accounts which include the estimated value of permanent works completed, the cost of materials, the amounts due for temporary works and other amounts due under the terms of the contract. The Employers Engineer can then verify these figures by measuring himself within 28 days. If the 28 days are exceeded then the Employer must pay the Contractor interest on any money owed.

Once work has been completed the Contractor can submit a final account which states the total amount that is owed. The Engineer then has to issue a certificate verifying these amounts and the Employer has to make payment within 3 months.

Half of the retention money is paid to the Contractor on signature of the Certificate of Substantial Completion of the Works, while the other half is paid after the end of the Defects Correction Period.

For the Argyle Hotel Project the Following systems will be used.

Procurement Paths – A traditional Procurement path will be employed, however, the project will be split into constituent parts (Road/ Car Park Construction, Bridge Building, Masonry Construction, Temporary Shelter Design) and given to contractors from each field.

Contract Types – A Bill of quantities will be presented to each contractor

Open Tendering – Will be the means that contractors compete for each job.

Post Contract Planning

After winning the contract and before any work commences on site, photographs of existing boundaries, adjacent footpaths and roads at the Hotel Complex will be taken. These may be used as proof against a future disputes therefore they must be date stamped. The Health and Safety Executive must also be informed and a F10 Notification of construction project filed if construction is due to exceed 30 days. As well as all the information supplied in the Bill of Quantities, additional information will be required - such as the names, addresses and telephone numbers of.

Suppliers

Subcontractors

Consultants for the project

Building Control

Nearest accident and emergency hospital

The utility companies (gas, electric, water, sewage/drainage and telephone)

Health and Safety

There are a number of legislative documents that aim to ensure that those working on site and also the general public are protected from accidents or harm from construction activities. These include:

The Health and Safety at Work Act 1974 – The main sections are:

Duties of the employer

Liability to the public

Liability of the main contractors to subcontractors

Liability of supplier of plant and equipment for use at work

Liability of employees

No one to behave recklessly

Improvement notices

Prohibition notices

Offences and type of penalty for each

Construction Regulations – Amongst the areas covered are:

Scaffolding

Accommodation on site

Requirements regarding lifting operations

Safety of excavations

Safety of dangerous substances on site

The Construction (Design and Management) Regulations 2007

Before these regulations were introduced only contactors were responsible for health and safety. However after 1995 - clients, designers, and contractors were imposed with statutory health and safety duties in order to reduce the number of accidents on a construction site. Clients are to make suitable management arrangements which include H&S audits and site inspections. A Co-ordinator can undertake these duties.

Accessibility

During the construction phase a sentry booth and important information regarding site safety shall be will be positioned at the entrance to the site. From the very beginning of the project access to the site shall be the first priority in order to provide admittance to working areas, construction areas and material deliveries.

Site Layout

By organising and planning temporary works or construction of the buildings the whole project will run more smoothly. In order to do this the best site layout must be considered from an operational point of view. To do this the following factors should be considered:

Access to site and to work areas

Storage

Plant

Temporary site accommodation

Temporary services

Fencing and hoarding

Security

Effort will be made to protect the public from any danger during the construction phase. This will be made easier as there is no need for public access to the site before all construction operations are finished - this means that the entire site can be fenced off, with a gate at the main entrance to the country park site. The fencing will consist of prefabricated fence panels which are inserted into precast concrete bases (see below)

http://www.thetempfenceshop.com.au/site/tempfence/templates/grfx/photos/fence-panel.jpg

Prefabricated Construction Fence

With regards to all equipment and plant – a secure compound will be put in place in order to protect against theft and vandalism. This compound will be situated next to site offices, on a derelict piece of land that Glasgow City Council has allowed to be used. This barrier will again, be built from Pre-Fab Construction Fencing. There will also be a storage shed situated within this compound for valuable materials and equipment. As the Hotel complex is situated in a commercial and residential area a night watchman will be employed to protect valuable equipment against theft. He will be stationed in a PORTAKABIN measuring 10m x 3m. A similar PORTAKABIN will be used for site Offices.

http://www.portakabin.co.uk/managed/Image/Products/Portastor/354-portastor-2.jpg

Storage Shed from PORTAKABIN

Portakabin Pacemaker building for hire, compact, functional and delivered fast

PORTAKABIN used for Security/Site Offices

High-quality, compact accommodation for hire

Interior of Site offices PORTAKABIN

Accommodation/Welfare

In accordance of Health and Welfare regulations Construction Workers have to be provided with a number of facilities while on site. The following facilities will be included on site at the Argyle Street Complex:

Toilets/ Washing Facilities – There are now a wide range of portable toilet facilities available. These toilets include use of a flushing facility, a lockable door, wash basins, soap and hand dryers.

Changing/ Storing Areas and Showers - In the event that workers may be exposed to contamination, toxic or corrosive substances the welfare regulations state that showers must be provided. Facilities for Changing of and storing of Clothes and Personal Protective Equipment will be available on site.

In order to provide the above facilities on Site at the Hotel, I have hired a Portaloo/Shower/Changing facility from PORTAKABIN. The Dimensions are 7.48m x 3.27m. (See Below)

Portaloo/Shower/Changing Facility from PORTAKABIN

Site Offices – Although not legally required, site offices shall be provided for the project manager and his team for the duration of the project. The dimensions will be 16 m x 6 m. Again this will be from PORTAKABIN.