Country Club Development

Contracts & Commercial Practice

SUBMITTED BY:

Submission Date: 18th NOVEMBER 2021

 Contents
1. Introduction....................................................................................................................... 3
2. Procurement Arrangements..............................................................................................3
2.1. Traditional Procurement Method – Cost & Time certain 3
2.2. Design & Build Option – Relative Speed & Early Start 4
2.3. Management Contracting – Less Employer Involvement 4
2.4. Integrated Contracting – More collaboration 5
3. Recommendation of Procurement Strategy......................................................................5
4. Conclusion........................................................................................................................ 7
5. References....................................................................................................................... 7
1. Introduction
Deciding on a procurement strategy is a significant role in laying out the project management
objectives of any construction project. (Designing Buildings UK, 2021).

With a good procurement strategy in place, the project management can have clear
objectives for the tendering, procurement and eventual construction processes.

This report is prepared by CostWise Consultants, who have been appointed as independent
consultants to advise on a procurement strategy for the Wedding and Country Club
Refurbishment.

The main consideration which will govern the choice of a contract is the time required to
renovate the old building, the cost of renovation including replacing the vandalized items and
fire damage, and the quality required of the finish, especially the ornate interiors, car park
and modern finishes for the country club. The client also has to take into consideration the
risk factors, especially since the building has undergone a fire disaster.

Refurbishment is a complex venture and it requires an optimum procurement strategy in the

selection of the main contractor, the designers, suppliers and subcontractors for a successful
project.

2. Procurement Arrangements
Different procurement arrangement options are available for the clients of construction
projects to select from. (Morledge & Smith, 2013). For the case of the Country Club &
Wedding Venue project, some of these options are identified and discussed below, and the
contractual links are illustrated in Appendix 1 and 2.

2.1. Traditional Procurement Method – Cost & Time certain

In the ‘traditional’ procurement method, the Client will appoint a design consultant to prepare
the detailed designs, including the first and second-floor plans, the wedding, roof design, car
park area, mechanical and plumbing features and interior finishes. This design will then be
passed on to bidders who are to give their cost and technical proposals for executing this
work. As such, the owner has a contract for design and another for the
renovation/construction works. The payment will be done in a lumpsum manner, that is for
the entire renovation works. The client may split this payment into milestone payments: upon
completion of the first floor, the second floor, roofing, interior finishes, car park, mechanical
and lift, landscaping and finally fire protection.

Advantages:

 There is a certainty of cost and time. The client can budget for the wedding venue
especially because the antique finishes are expensive and time is short or else the
venue is in danger of being lost.
 Client risk is minimized. The client’s risk such as the ground conditions is minimized
and most of it is shouldered by the contractor. For this case, the water ingress on the
interior surfaces is indicative of difficult soil conditions.
Disadvantages:

 The burden of risk for the complex conversion of a 19th-century building to a 21 st-
century building is upon the contractor. The contractor will quote highly to cover this
risk.
 The survey report is not conclusive, and the contractor may be forced to carry out
further investigative tests.

2.2. Design & Build Option – Relative Speed & Early Start

In this strategy, the Client will issue the project requirements to the Contractor, who then
carries out the detailed design. Since the building is in danger of being lost, time is of the
essence therefore a design and build contract will offer relative speed. (Gransberg, et al.,
2006)

The Contractor will entirely be in charge of the design or may subcontract it to a

specialist firm. It is recommended to subcontract the design to an architect specialized in
the refurbishment of antique buildings to ensure the aspect of quality is maintained.

Advantages:

 Need to start early before the building is lost. Renovation works can be ongoing,
while other drawings are being prepared.
 There is no design responsibility on the part of the client.
 This method is suited for the complex many facets such as fire damage repair and
special fire escape strategy.

Disadvantages:

 The contractor will find it difficult to understand the client’s specifications because the
recreation of the ornate interiors is complex.
 The client does not have any technical knowledge to prepare the design brief and
needs to hire a consultant for that purpose.

2.3. Management Contracting – Less Employer Involvement

This method of procurement is where a construction manager is appointed to run the

project (Towey, 2013). Separate trades will be appointed for the installation of the
personal lift, the repair of the roof, the fire escape strategy and other major aspects.

Advantages:
  The contractor will have practical knowledge and experience, especially with the
supply chain. Procurement of the ornate interiors is the most challenging part of this
project, and this will need experience.
 Management Contracting will fast track the project, so the building may be saved
before the Authorities demolish it.

Disadvantages

 Although the project is fast-tracked, there is limited cost certainty. The management
consultant will only pay the contractors based on their quotations.

2.4. Integrated Contracting – More collaboration

This is also called Partnering Contract. Integrated contracting frameworks are becoming
more popular (RICS, 2015). In this case, the client will work in partnership with the main
contractor, the mechanical subcontractor (lift and fire strategy) the plumbing and sanitary
subcontractor and the interior designer (wedding venue, restaurant area) to share the risk
and responsibilities.

Advantages

 There is more collaboration with a common goal among the parties. The employer
can be certain that the time of construction, the cost and the quality will be well
balanced.
 The cost is significant in this case because of the complex nature of the
refurbishment and the additional features required.
 There is more transparency between the architects, interior designers, builders and
subcontractors.

Disadvantages

 This type of contract is not well suited for this project. Although it is a complex
project, it has many different partners required. This places the client at a
disadvantage because there will be many competing interests.
 This mode of contracting is fairly new and highly complicated. It is more suited for
high capital projects like public projects, and not a private project like the construction
of a country club.

3. Recommendation of Procurement Strategy

The recommendation for the country club will be informed by answering the following
questions:

1. What suppliers are needed?

Suppliers for the ornate interiors are required. The covered walkway will need steel
designers. The supply of rainwater goods and timber roofs may need to be modified
for the 21st-century design. Many different suppliers are required. A management
 contract is suitable in this case. However, a management contract will not give the
owner certainty of price. Other options should be considered.

2. What information is ready at the tender stage?

A preliminary design has already been done. Drawings for the existing and the
proposed first floor and the wedding venue are available. A survey report is available.
Even so, a full structural report will need to be carried out to ascertain the extent of
the fire damage. For this case, a traditional lump sum contract where the owner has
a consultant and a contractor is suitable. The consultant will carry out all additional
required designs and investigations and the contractor remains to build it.

3. What are the contractual relationships?

The client needs to consider how they wish to structure the team. The refurbishment
could be under one main contractor and the other aspects such as wedding venue,
car park, and fire escape are all allocated to other trades. The client will only focus on
management and make payments. In this case, a design-and-build contract is
advisable. But the client does not have technical expertise, especially for the complex
19th-century interiors which he wishes to retain. So, the better option is to engage a
design consultant. This makes the traditional lumpsum contract.

4. Which Conditions/Form of Contract are available?

The Joint Construction Tribunal (JCT, 2021), the New Engineering Contracts (NEC,
2018) and the FIDIC contracts are examples of contracts that may be applied. Each
of these has a contract that suits the needs of the client in this case. However, proper
legal advice is required on the contractual implications. For example, Brexit will make
it difficult to apply FIDIC contracts because of changes in legal jurisdictions. On the
other hand, the NEC contracts do not have many provisions to protect the client in
terms of Force Majeure.

5. Who takes the Risk?

The client has to balance between cost and risk. This also affects the reimbursement
method. For example, a design-and-build contract will give the client a low risk with
the cost fluctuations that may occur with the damaged floors (unforeseeable physical
conditions) and the barrier-free access to the ground floor. But passing on the risk to
the contractor in a design and build contract increases the cost for the client.

Based on the above analysis, it is recommended that the project is contracted on a

Traditional Lumpsum Contract. It is well suited because it will give the employer some
assurance about the final cost, reduced responsibility on the risk of construction and more
financial and quality control.
4. Conclusion

The success of the project highly depends on proper selection of a good form of contract.
The cost of refurbishment, the ornate interiors, the new roofing and installation of car park
and covered walkway will affect the cost. On the other hand, the urgency to renovate the
building before it is lost has an impact on time. The required level of finishing has an impact
on quality. These three aspects will govern the type of contract to be selected.

A good contract ensures that all the parties share the risk and responsibilities evenly. This
report has analysed all these and given a recommendation.

5. References
Designing Buildings UK, 2021. Procurement Route. [Online]
Available at: https://www.designingbuildings.co.uk/wiki/Procurement_route
Gransberg, D. D., Koch, J. E. & Molennar, K. R., 2006. Preparing for Design-Build Projects:
A Primer for Owners, Engineers, and Contractors. s.l.:ASCE Press.
JCT, 2021. About Us: Joint Construction Tribunal. [Online]
Available at: https://www.jctltd.co.uk/
[Accessed 17 November 2021].
Morledge, R. & Smith, A. J., 2013. Building Procurement. s.l.:Wiley-Blackwell.
NEC, 2018. About-NEC: How-NEC-Contracts-Works. [Online]
Available at: https://www.neccontract.com/About-NEC/How-NEC-Contracts-Works
[Accessed 17 November 2021].
RICS, 2015. Sector Standards. [Online]
Available at: https://www.rics.org/globalassets/rics-website/media/upholding-professional-
standards/sector-standards/building-surveying/contract-administration-1st-edition-rics.pdf
[Accessed 17 November 2021].
Towey, D., 2013. Cost Management of Construction Projects. s.l.:Wiley-Blackwell.