Which procureme

method?

In some instances the procurement m thod wil ready bee( decide,

architect is appointed, either as the resu of mpa uthority laid
or because circumstances or co tra s ve
I lirri tions,
choice has already been made `y the clie a ise a le su
the Architect.
It is generally accepted th ree ethod curement currently
practised in this country. Th raditid onv ti al app ach, in which at least
in theory design and constructi epar ents, design and build,
which implies a mor integra ap roach; nag ent, by which either the
1

ial
client or a contract r assumes he cen responsibility. There are in
addition many varia its, h rid and compnc hese methods. Moreover there
have been many r cent developm s, w Ithough possibly termed a
procurement mig more cu ra described as an approach to
procuremen For e Cam e mo part ring arrangements are an over-arching
agreement hich comDa one or er co tracts let under one of the three key
methods. imilarl is it is freq ently possible to identify contracts let
on a desig sand b ,nageme It is therefore useful to start by clearly
(DD

differe e three prj cipal i ods, before moving on to discuss some more
rece
r+.
od is Fikely to rove the most appropriate in a given situation
natu and sc pe of the work proposed, how the risks are to
+-V

and wh sponsibility for design is to be placed, how the

±-'

ated, and on what price basis the contract is to be awarded.

,-r

remember is that the choice of form (or forms) of contract

+-'

po rta n
led til the procurement method and the type of contract have
been established' twill can considering the following:

`s defin d as devising an arrangement, then specifying the components

t at arrangement, and lastly detailing a method of joining or
realise
ponents. Design can mean the overall concept or form of the
building, it can relate to the component parts including specialist installations, or can
be the result of meeting specified criteria for durability, performance etc.

It is important to establish:

how, if at all, design responsibilities are to be apportioned between the Architect as

31
3 Which procurement method?

lead designer, other consultants, the contractor and t

,_+

suppliers;
what contractual provisions will apply to the desi
Coordination responsibility
This might include responsibility for workm nship, g
3-l

methods, programming, ordering, general coo

+(O

It is important to establish:

what contractual arrangements will ap fort

whether the Works are to be car, i c
combination of separate contracts either

A contract might be let on t e basis of not possible or

,-+

sum is
i^.

desired, then measurement o som option.

inly practical
Alternatively a cost-plus app ach ight be appro altho h there is the risk that
the final figure could di gr tly fr' m the fire! The questions of what
tendering methods ar sui and what ocuments will be needed, will
rest on the choice o procu r men

Plan of Work
The procurement thod fbe ad typeof contract will have implications
,-r

vim,
d a d
fl)

for the 'plan is logical n f

roject into stages was devised by the
RIBA inthe 960s an ince be accept d throughout the building industry.
The Outli e Plann Work move from re-design stages (Feasibility) through
design a d con u ti n (Pr Cons ction P iod) to post-construction (Construction
Period) acts ies. It been (widely a t as the basis for calculating consultants'
fees Ives very usef description of work stages, particularly in traditional
I

m thods of procu ent.

e appointed professionals are involved throughout
fro

but the desi uction work stages are separated as is usual with
i,Q,nal procure is in a linear pattern (see Figure 3.1).

Itho gh similar work stages are still present, they are not so
r will normally be involved at design stage, to an extent
he contrac
muc he is responsible for scheme design as opposed to
t.0

Q-0

developing a design already produced by the client's consultants and embodied in the
client's requirements. Some of the work stages are arranged in a different sequence,
,O+

permitting parallel working or fast tracking to save time overall. The contractor will
((DD

normally continue detailed design during construction stages (see Figure 3.2).
Plan of Work is still relevant to management procurement, whether management

32
Which procurement method? 3

contracting or construction management. nu re

simplified picture of operations. On a large roject ere ,bight; le,
or more works or trade packages and t operA n cz beco
complex. There needs to be considerable 7b oratii tw
consultants and the managing contra allel vv6
and abortive work can easily occur.

Procurement using traditionaleth

In the traditional approach, th client a th ons appointed for

--0
design, cost control, and con ct atminis` +-- ion, d t the contractor is
responsible for carrying out Th onsibili atter extends to all
u..

workmanship and material inclu rk b contra and suppliers.

in some cases the client will sele some s to be engaged by the

contractor (variously r erred -t ed, n re-selected). In such cases

the contractor may ake full res onsibiNY- for t ance, or the contractor's
responsibility may be limite me way, in hich e a collateral warranty between
client and sub-contr ctor ill be esse con ractor is usually chosen after
competitive to nd o uments ete information. However, the
contractor ca be a e d ea r, eit ugh negotiation or on the basis of
partial or n 4ional i

t sing o stage endering or negotiated tendering, is

erred IV as thee AcceI r`aditional Method'. By this variant, design
an run i parallel' imited extent. Whilst this allows an early start
cost.

m approlrr quires the production of a full set of documents

vited. Adequate time must be allowed for this.
raditio ment method assumes that design will be by appointed
vii
E

nts, of generally imply that the contractor has any design

n
-t,

oiigations. If th e case, for example with specialist sub-contract work or

erforma k, express terms should be included in the contract.

oints consultants to advise on all matters of design, and cost,

y retains co trol over the design and quality required.
--c

There is certaty-ecost, to the extent that a lump sum is known before work begins,
even if it has to be adjusted during the construction period as provided for in the
contract.
The contractor depends heavily upon the necessary information and instructions from
(-r

Q-3

the architect being issued on time. There is a risk of claims if they are delayed.
E

33
3 Which procurement method?

Information release dates are sometimes agreed

contractually binding can cause problems.
The client may decide which specialist firms the
contractor will require certain safeguards relati
All matters of valuation and payment are the

If it is impossible to define precisely the qntit

still possible to adopt a traditional met
provisional sums or cost reimburse
solution: the fuller and more accuratethe
of the lump sum approach.
There are widely accepted codes
tendering, whether competitiv,
be used whenever possible.

Figure 3.1: Plan of Work4stages'fi-iditional

Pre-design /"DXesn Pre onstr ion Construction

1 AB

3 F

4 5 H

6 J

7 K
L

Consultan s

Contractor

Key
1 Appraisal and strategic briefing work by consultants
2 Outline and detailed proposals by consultants
3 Final proposals and production information by consultants

34
 Which procurement method? 3

4 Tender documentation by consultants

5 Tender action -appointment of contractor
6 Mobilisation by contractor
7 Construction to practical completion and after comp

Procurement using design and b

The client may need to appoint consult ments and
costs, if he does not have this, contractor is
responsible to a greater or lesser g out the work
and may appoint its own consu fc,'r'total design and
construction, or for design ation based on a
scheme design supplied by
Figure 3.2: Plan of Work sta

Pre-design Desig XPre-nstru-'o Construction

1 AB 2 C

D 5 H T__ E

6 F 6 F

7 J

8 K
L

Consultants

Contractor

Key
1 Appraisal an tegic iefing work by consultants
2 Outline proposals/client's requirements
3 Detailed proposals by contractor
4 Tender action including contractor's proposals
5 Final proposals by contractor and specialists
6 Production information
7 Mobilisation by contractor
8 Construction to completion and after completion

35
3 Which procurement method?

-0O
The contractor may be appointed either by comp eti veent t
+-I

ten er or the

T-0
negotiated agreement. Where a design and build agr, errs
,.+

ne ate c

contractor, it is sometimes referred to as 'Single rect D ign nd 'Id'. ere

approach is made to a number of contractors, ev is is a o stag opera io it
only the most promising proceeding to the sec
,-+

e, he agree ent is om
referred to as 'Competitive Design and Buil . It tend o f e sligh ger, b I

usually results in a more developed design and cost and timid

r;,
Frequently, in deign-build procurement e cn he req cont ctor to
appoint some or all of its consultants at e time the a uild
i
tra is entered
fl,

into. This process is usually referred vati r co ulta t itchi, t requires a

complex tripartite agreement to ee
c
sultant and
,-f

een cli
E+-

into
contractor. In addition to the c t-arch d ctor-a' itect terms of
appointment published by the RIBA, th IC pu ita b or novation and
collateral warranties.

Watchpoints
Inthe most straightforward de 'gn and burnt
theory there is usually
a single point of respo si ility. he cli t there re ha thevantage of only one firm
15.

to deal with and -

e fi rm to me ings o wr ng. In practice, however, the
i

client's requireme s are ten de led to extent that the contractor's design
contribution, an theref re lick lit, is diminished.
The client lacks c trol or detai ects T design; however, this might be
acceptable road lin eme are satisfactory and the detail
relatively le,

Constru early as a reat deal of detailed design work can

proceed contr, ctor, however, who benefits from the
opera

ponsibilit on time rests wholly with the contractor. There should

littl allegations that information from the client is late.
is oon ation is
on t h c
one of the
to be responsible for the flow of his necessary
active features of design and build.
There is -certain of c st, even to the extent that, if required, responsibility for
investigating sit a-n-c Jb-soi conditions can be made entirely the contractor's. Any
significant chan s in the cli nt's requirements will affect the Contract Sum however,
and are likely to pro'

Often the client requires that the contractor appoints the client's consultants to develop
the design under a consultant switch agreement or by novation. If this is not the case,
+.V

it is always advisable to ask for information about who the contractor intends using as
E

designer. Adequate professional indemnity insurance should always be a requirement.

36
Which procurement method? 3

The client should appoint consultants to advise pTeparatTaQ OT t req

-.0
and it is important that adequate time is all hese a-be oerly
The requirements might include specific ?fovisio
generally it is prudent to prescribe pe that a/
,--t
reliance is placed on the contractor.
r-r
-6'

In the absence of any stipulations to the

are absolute. However, they are u
of the professional's duty of us g reason le' kiIIX)-4 carte
Valuation of changes by the rsentir' the rr pon`sftkty o
the client has no quantity s erve

It is oftendifficult to evalua desig ectively where both

schemes and prices ar ender Id be med of the criteria to be

.-+
used, and whether ice is likely e pri ider, tion.
Benefits can arise fro desi neN and estim to work closely together. The
contractor's awaren s of arrent mar and delivery times can ensure
that a contract oth Ieconom
, al editiously.
ent or rrepres tative oul be s ected with great care. He or she can
mber the Jai is organisatio a professional consultant, a project

,-+
9-'

r, dep on t ork, a clerk of works. The extent to

x-r
of th
tis e power, d to for e client needs to be clearly established.

ral v ian of managem nt procurement practised in this country, but

,-+

,-+
T re are
nage nt ontra is an onstru ion management are the two most common.
it ent ntracts lent usually starts by appointing consultants to
.3+

.-+

ana
=+;

v,'

are ro ject dra tings and a project specification. The management contractor is
seec td by roces f tender and interviews, and paid on the basis of the scheduled
e es e sts an management fee.

Its role is literally nag the execution of the work, and he is not usually directly
.-+
,-+

t a of the construction work, which will be done in 'packages'

7c'

involved in g
(.0

un en or ks ontractors usually appointed by the management contractor.

In some o ment arrangements, the management contractor might also accept
Q-0

a design ability. In ' management contracting', works contractors are directly and
contractually nsible to the management contractor. Its coordinated approach
,-r

and potential for flexibility results in greater operational speed and efficiency.

Where the management contractor's obligation is total where, that is, it accepts -
responsibility for both design and construction -
the arrangement is sometimes
(1)

referred to as 'Design, Manage, Construct'. It is usually featured as a contractor-led

37
3 Which procurement method?

procurement method, but there is no real reason t anno quail weft

architect-led. Indeed, where small works are someti d ou nde irect des

fl,
contracts and coordinated by the Architect in the of a ain ntr tor, t

3rD
comes close to being such a procurement mtho a how er, dem d 4
degree of highly specialised expertise and e
operations which most architects are unlikel to poss
'+'

With 'construction management' agreem there

v,'

is usually a lead designer responsible or o esi a c anager

responsible for the management and c ordination rk, ponsible
0-0

for directing the project and entering tra ontrs. contractors

are directly and contractually respo clie e constr anager is in
fl,

some ways less accountable for time gist the'd takes the greater risk.
Watchpoints
Management procurement methods a ebest ited t
projects where early compl Lion i able.

This method of procur ds upon ig f confidence and trust.

There is unlikely to be i cont t pri before the work actually starts
on site, and the d `ision t s go ead ally as to be taken on the basis of an
estimate on proje infor atiork
The manageme contr toVconstr ction
therefore put the cli is interests irst thr,
It is essenti anag"e contr for/construction manager at an early
stage, s edit and experti are available to the design team
throug tion per)
onst
work care
CD-

left to proceed in parallel with the site

-+,

'ration's ackages, thus reducing the time needed before the project
arts on sit atdeal of detailed design will need to be left to specialist
b-c

lient has a consider be of flexibility on design matters. The design can

usted as proceeds, without sacrificing cost control. However,
wore for components or elements can be difficult, with an
costTy abor ve work.
Specialist contractbrrscai:i-be selected and appointed and materials on long delivery
ordered in good time without any of the uncertainties and complexities which attend
traditional nomination procedures.
Although the project proceeds on the basis of a contract cost plan only, effective cost
control is still possible with the help of an independent quantity surveyor.

38
Which procurement method? 3

O..
A competitive tendering element is retained
usually account for most of the overall pri
normally be on a lump sum basis.
This method of procurement is most a le, co ex
that only large construction firms 'th the nce re lik
suitable. At present these are relat ely i
management is only likely to b int est'Ao ex rien
-+0

expertise to undertake the high egret

A management contractor's sta ay la the` e ess eri ce and have difficulty
in adjusting to the idea of a s le vvork- ofi motive in favour of
fl,

FtRq

providing a service in t th nt. Be r6' recommending the

appointment of a managem itise It interview the key staff
+'O

e
involved.
Above all,a manag ment cont actor o onstr nager should be appointed
because of his or h r assu e r preferab rove bility to manage. He or she will
need to use and be milia with a vari istic ted techniques to deal with the
coordination at ofte a large ?Nmb rks contracts.

Wor*,,stage's a age

Pre ign esign re-construction Construction

1 A 2 CD

3 5 J

4 EF 6 EFG 6 EFG

7 H

8 K
L

Consultants/Managing Contractor
T
Managing Contractor /Works Contractors
I

39
3 Which procurement method?

Key
1 Appraisal and strategic briefing by consultants and contractor
2 Outline and detailed proposals
3 Appointment of contractor and agreement on trade or works a
4 Final proposals and production information (continuing pr,
5 Mobilisation
6 Production information and coordination of works pac
7 Tender action and adjustments (continuing process)
8 Construction to practical completion and after co

Contractual relationships
The pattern of contractual and func fta tionss shifts or cording to
the procurement method adopte 11

Figure 3.4: Contractual relationshi 0 traditiori

(lateral e eem arranty

Collateral
-aqreemen
Contract for ant
services

nt cted Client selected

sub-contractors suppliers
uilding
co act

Consult

tractor.

Domestic
sub-contractors
suppliers

Inthe traditional approach, the client is in direct contractual relationship with the
consultants on the one hand and the contractor on the other. Any contractual links

40
Which procurement method? 3

for sub-contracts or sales contracts will be b)6tween he co actor

question. The consultants have no contract link th
I th,ntr
t, e Architect
or another consultant may be named the ildi con act ontract
administrator'. Where the client selectsny b-con actor' or su
. may be
advisable to recommend collateral en to proZu t the clie 's interests,
particularly in respect of matter rqh
ie idhe ntractor's
responsibilities.
Figure 3.5: Contractual rela

Consultants

sign
) ild

Sub-contractors
suppliers

Contract for services

With de gna d buil , it is likely that in the absence of in-house professional staff,
'm'

the clie will wish o engage outside consultants to advise on the preparation of
r-.

requiremen to evaluate and select tenders etc. Often one or more of these
r+'

consultants will switch from being appointed by the client to being appointed by the
contractor at the time the contractor is engaged. The main contractual link is between
the client and the contractor and if the client's agent or representative has only a
limited role. The contractor might also have a contractual link with his own design
consultants, and with sub-contractors and suppliers. As the contractor is wholly

41
3 Which procurement method?

responsible for their performance, both in terms of esign aAd co tructi 0

might be less need for collateral agreements betwe n them/and e clitot.
Figure 3.6: Contractual relationships: nage epa proAure
management contracting

Ilat I agr en

Client

Contract for
services

ks
contrac s
Manageme
contra t

Works
tract
Consultants

Nominated/
Sub contractors
domestic suppliers

42
Which procurement method? 3

Figure 3.7: Contractual relationshi

construction management

in a management contract is between the client and the

{ with all works contractors in direct relationship with
o be desirable to establish a contractual relationship between
the clie n eac works contractor by means of a collateral agreement. In
constru tion manag ment the contractual relationship is between the client and the
-p'

construc ' man er, with all trades contractors in direct relationship with the former.
,-+

Assessing the risks

building contract there is some degree of risk. People may be injured or property
In every
damaged. This category of risk, often referred to as pure and particular risk, is usually
covered by the appropriate insurance. Contract conditions often make it a contractual

43
3 Which procurement method?

obligation to take out the cover required (for exam againjA pel on
damage to property due to fire, storm, water, collap encepyibra` Qn, et

Another category of risk is fundamental risk. This ill inc e amag due war,

fl,
nuclear pollution, supersonic bangs, etc. Such in is re all t e sub' ct of situ
liability, and no insurance cover is normally av able or n ded. T -third cate
(2'

often referred to as speculative risk, is somethin which ca ortioWin adva

as decided by the parties to a contract. T, include nr
ses ' time or
which are the result of unexpected groun con
unforeseeable shortages of labour or aterials,
a erse w.
%hl
Lt
beyond the control of the contractor, It sen to out
-+,

bear losses arising from such event

With traditional lump sum contracts t intent at sually be a fair
balance of speculative risk be arties' alan be adjusted as
required, but obviously the reater th e` risk`t be a by e contractor, the
higher the tender figure is kely to I -he app ionrri `sk accepted by the
parties also varies considera ending on the ty of co ract.
fl,

As can be see from Fig lance o pec tive-,rAk will lie almost wholly
with the contractor i the' se T a a buil contract, where a complete
package is supplied onver -ely, te e
al ance st on ous for the client where the
management pro reme pat is o d.

44
Which procurement method? 3

Figure 3.8: Speculative risk

Contract Type isk

Client ont ctor

Design and build

Complete 'package' by supplier

Design and build

Design input by contractor
vii

Traditional lump sum

Fixed price

Traditional lump sum

Fluctuations

Traditional measure ent

Bill of approximate qua ities

Traditional mea men

Fixed fee prime wosi

Traditional Ment
Percentage cost ,

Mana nt c
0

45