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QUESTION 1 : Discuss the various procurement systems available to a proposed building project and illustrate with organization chart on the relationship between the parties involved. ANSWER: There are several types of procurement system, which included traditional system, design and build system, and construction management system. Traditional Procurement System • The traditional procurement system remains by far the most popular method, followed by design and build. • Client appoints the project consultant team comprising Architect, Engineers, and QS. Architect and Engineers carry out design and CQS prepare cost estimates, cost advice and tender document.
• Tender evaluation report by CQS follow by tender interviews and with letter oa award issue by the client; contract documentation by CQS. • Contractors, subcontractor, suppliers and specialist subcontractor carry out work on site. • Architect and Engineers are carry out routine supervision, CQS prepares valuation certificates for works done and Architect issue Architect’s progress payment certificates and client make payment to contractor, NSCs and NSs and specialist subcontractor. On completion of project the CQS prepares final account.
The Traditional Procurement Method showing the contractual arrangements is shown below:[pic] Design and Build Procurement System • A design and build contract is a contractual arrangement whereby the contractor offers to design and build a construction project for a contract sum which is inclusive of both the design and construction costs. • Is more suitable for unique and specialized. Contractor is fully responsible for the design and construction of the project; so the contractor needs to have a full team of design consultant with expert knowledge is that area.
• The contractors participated in a D&B tender need to submit their respective feasibility study to the client. • A purpose preliminary outline design will be attach together with their feasibility study. • Outline specification and design criteria/function usage will be issued to the contractors by the client consultant. A detailed submission will be requested by the client from the short lists contractors who have met the specified requirement stated in the prequalification exercise including overall project cost. • Recommendation by client’s consultant team on the selection of the best contractor to undertake the project. The benefits of design and build contracts for clients include:- 1. single-point responsibility for both design and construction; 2. prices which reflect more closely the final cost to the client; 3. inherently more buildable designs and proposals submitted; 4. verlap of design and construction phases leading to early completion on-site and thereby savings in cost. ? A major disadvantage of design and build contracts is the discouragement of possible variations by the client. Where clients consider these to be necessary they often have to pay an excessive sum of money for their incorporation within the finished building. ? Each contractor invited to tender for design and build work is carefully selected not only for its financial standing and construction record but also for its design capability and management structure for the work. A client may not realize the importance of independent professional advice from an architect or quantity surveyor in design and build contracts. ? The selection of a design and build contractor should be based on a brief of the employer’s requirements. ? This brief should ideally be prepared by independent professional advisers and costed by them, so that the contractors are tendering on a brief that is within the employer’s budget. ? It is costly for design and build contractors to tender in competition, as each contractor will have to produce a design to meet the brief and a price for construction.
Tender lists will generally be shorter than for traditional contracts. ? There are distinct advantages with design and build contracts which enables the contractor to use his management skills and experience in the pre-contract period to ensure that the design and performance are more closely coordinated and better related to time and cost. ? Economy and efficiency should flow from the continuity of joint experience. The Design and Build Procurement Method showing the contractual arrangements is shown below: pic] Construction Management System This system is defined as a process whereby an organization, normally construction based, is appointed to the professional team during the initial stages of a project to provide construction management expertise under direction of the contract administrator. The main characteristics of this procurement are: • The contractor does little or none of the construction work himself but sublets it to a number of subcontractors who carry out the work under his direction and control. The contractor is of a organizer, coordinator and manager rather than of the principle contractor of the project. • The contractor provides the necessary facilities such as office, storage and also may provide basic materials such as bricks, cement and sand. • The contractors liaise directly with the client’s consultants. • The contractor is contractually responsible to the clients for the work carry out by the entire subcontractor as in a normal contract. Advantages: The use of this system of procurement enables the commencement of the project to be accelerated, which in turn, should enable earlier completion to be achieved than when using conventional procurement systems. • Early advice can be obtained from the contractor/manager on design, build ability, programming, materials availability and together with general construction expertise. • This system has a high degree of flexibility to allow for delays, variations and rescheduling of work packages. Since the financial structure of this system is fragmented, the monetary failure of any works contractor will only have limited effect overall process. • The application of individual work packages to carry out all construction work ensures that competition can be achieved on up to as much as 90% of the construction cost of the project and makes it possible to adjust the cost, or scope, of uncommitted work should the packages already awarded have exceeded their estimated cost.
Disadvantages: • One of the fundamental aims of this procurement system is the elevation of the contractor to the status of a client’s adviser/consultant with the result that the contractor’s contractual liabilities are limited, in the same way as other members of the professional team, to accepting responsibility of negligence in the performance of his management role. Although the contractor/manager is responsible for supervising construction and ensuring that work is built to the standards identified by the design team, the fact that his obligations are limited to his management capabilities means the client is liable for the cost of remedying any defects resulting from substandard performance of any works contractor who is unwilling, or unable, to rectify his own faults. • The whole issue of maintaining quality control is problematic when using this procurement system.
The client may need to appoint additional site supervision to avoid difficulties in determining the responsibility for defects and to ensure that the specified quality is achieved. • The client does not have a firm price tender available before commencing work although both private and public accountability can be partially satisfied as the majority of the construction cost can be subject to competitive tender. The Contracting Management Procurement Method showing the contractual arrangements is shown below :
Turnkey Contracts/Package Contracts • The contractor provides the client with complete package consisting of a building design to meet the client requirement and financing the project until it completion. • Obtain all necessary statutory approvals. • Also include the provision of a site in a suitable location. • Upon completion; the client will move in and use the building. Built, Operate, Transfer(B. O. T) • B. O.
T is a concept if development where private sector is given a CONCESSION of sponsoring and subsequently operate a certain project (usually infrastructure projects) which traditionally is the domain of the government with their own cost. • The project is then transferred back to the government after the concession period. • The government then may decide whether to further extend the concession to the original promoter with some return or may decide to operate on its own, • Benefits: • Relieving financial burden and public sector borrowing. Economically viable projects are undertaken in the private sector. • Transfer industrial risks (investment cost, operating cost, etc. ) to the private sector. • An exceptional opportunity for the country to recover and explore unused productivity source. • Accelerating growth. • Obtaining efficiency as private sector will apply commercial discipline in the execution of project budget and timetables. • Market competition and commercial management is introduced. • Ensure long term investment by investor • Reducing the size of the public sector. ———————– [pic] [pic]
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