1. business and industrial
2. construction

School of Architecture and Building Engineering
Rethinking Construction
Review of traditional construction
models and a comparison of
product development processes
with other industries
Procurement
What is procurement?
Procurement is defined as the process from the completion of design to the
successful handover of the building. It is also the contractual and financial
arrangements between the parties.
Types of procurement
Some examples of procurement…….
-- Traditional procurement
-- Management contracting
-- Design and Build procurement
Traditional procurement
The traditional form of procurement is where
the designer does not have a direct link with
the specialist and all communication is via the
main contractor who in many cases will not
accept design liability
Traditional procurement
The basic hierarchy
CLIENT
ARCHITECT
SPECIALIST
CONSULTANTS
TENDERING STAGE: SELECTION OF PRINCIPAL CONTRACTOR
PRINCIPAL
CONTRACTOR
DOMESTIC SUB
CONTRACTORS
NOMINATED SUB
CONTRACTORS
Traditional procurement
Key features

Professionals are empowered to use best practice
defined by their own professional bodies and
education
 The basic workforces in general play an inactive
role towards the design and planning process
 Such an environment generally encourages an
adversarial attitude among the design teams.
 In terms of cost benefits, reduction of up to 30%
can be achieved. While a reduction of 40% in
delivery, time can be achieved but there is a little
change in the quality of the product
Innovative Construction
Procurement

Gives the client more input into cost and quality
 Client needs a management with strong leadership
and teamwork qualities in order to produce what is
expected. Hence, the client, in terms of design and
construction, has only one organisation to deal
with. Such procurement was introduced to
accommodate forever increasing diversity,
complexity and standardisation of building
techniques
Innovative Construction
Procurement

Direct involvement of the manufacturer in terms
of design, costing and logistics
 There is also a close relationship between the
manufacturer and the main contractor in terms of
delivery and site installation
 The management structure of this form of
procurement is organised hierarchically according
to the stages of product development.
Innovative Construction
Procurement
Key points



Key decisions need to be made early in the procurement
process to avoid expensive alteration to the design
Decisions also need to be made on environmental
implication and site related benefits in order to reduce its
impact on neighbouring properties and site traffic
It is important to note that because this system of
procurement rely heavily on the prefabrication process,
therefore the initial space planning, subsequent detailed
design, service integration and co-ordination are critical.
The design needs to be completed prior to the
commencement of manufacturing
Integrated procurement
systems

Integrated Procurement System is defined as an
arrangement where one contracting organisation
takes sole responsibility, normally on a lump sum
fixed price basis, for the bespoke design and
construction of a client’s project (e.g. D + B).
 The fundamental characteristics of this system are
the responsibility for the design and construction
lies with one organisation, reimbursement is
generally by means of a fixed-price lump sum and
the project is designed and built specifically to
meet the need of the client
Integrated procurement
systems: advantages



Single point of contact between client and contractor
If client’s requirement is accurately specified,
certainty of final project cost is achieved then the cost
would is then less when compared with other
procurement methods
Design and construction is overlapped which results in
improved communications being establish between
contractor and client. These two characteristics enable
shorter, overall project periods to be achieved and
project management efficiency to be improved
Integrated procurement
systems: disadvantages
The client’s brief is often ambiguous and does not
convey exactly what he is proposing to the
contractor.
 The absence of a bill of quantity makes the
valuation of variations extremely difficult and
restricts the freedom of clients to make changes to
the design
 The client’s control over the aspect of design and
aesthetics of the building is less when compared
with other methods of procurement

Management-Orientated
Procurement Systems

This system is defined as a process whereby
an organisation, 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
Management-Orientated
Procurement Systems
Key points

The contractor is appointed on a professional basis
as an equal member of the design team providing
construction expertise
 Reimbursement is based on a lump sum or
percentage fee for management services plus the
prime cost of construction
 The actual cost is carried out by works or package
contractors who are employed, co-coordinated and
administered by the management contractor
Management-Orientated
Procurement Systems - advantages

Commencement of the project is accelerated, which in turn, should
enable earlier completion to be achieved.

Early advice can be obtained from the contractor/manager on design,
buildability, 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.
Management-Orientated Procurement
Systems - disadvantages

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.
Management-Orientated Procurement
Systems - disadvantages

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.
Lean Principles

Task time production
 One-piece flow
 Pull Production