Professional Documents
Culture Documents
UN0603 Project Management v2019.1 Part3b
UN0603 Project Management v2019.1 Part3b
Procurement Management
Your company wishes to develop such a product for future program use, or as a new √
6
market entry
7 Having it subcontracted could establish others as future competitors to you √
You have the internal resources to develop it. Will not deflect from your current √
8
program attention, or eat up resources.
9 Is doing it in-house being pushed by engineering or R&D? √
These are just a few of the thoughts one might have when deciding on “make or buy”. The bottom line
would seem to be, if your company will be stronger, and the project will be less risky (overall), by doing
a make, then do so. However, if the customer has any hesitation about your in‐house capability in
respect of this item, and you cannot make a water‐tight case for doing so, better seek a way to
outsource.
1
Courtesy of Terry Ussher, formerly of Spar Aerospace, Program Manager for the Canadarm
Considers inflation
This process may pit the design consultant against the general contractor in the case of disputes or
conflicts between the design objectives and the project objectives of time and cost.
Design‐Bid‐Build Schedule
Start
Design
Procure
Award
Construct
Complete
Design‐Build
The owner signs one contract with the contractor.
The contractor is responsible for developing the design and
constructing to the design. As with the design‐bid‐build delivery
strategy, the contractor signs contracts with various vendors and sub‐
contractors specializing in particular aspects of project delivery.
This approach has regained popularity since the 1970’s. It tends to be
used more in the private than public sector, industrial rather than
building projects, and in larger rather than smaller projects. For
Owners, Design‐Build offers better performance on “schedule, changes,
re‐work and practice use”, in accordance to the Construction Industry
Institute (CII).
If the contract is awarded on a fixed price basis, cost performance can
be quite good or even better than the design‐bid build delivery
strategy, as the designer and builder are motivated to be cost‐conscious in the design. Schedule
performance tends to also be better than design‐bid‐build if design and construction can be performed
concurrently.
To apply the design‐build strategy, there should be:
For good cost performance, in additional to the above bullet points, there should be also good pre‐
project planning and the owner should not meddle in the relationship between the designer and
constructor.
Dispute resolution can be more efficient as only two parties are legally involved in any dispute.
As an example, a developer might sign a contract with
a municipality, gas supplier, pipeline and electrical
utility. The developer is then responsible for the design
and build but in this case hires a constructor to design
and build on a fixed price basis with tight performance
specifications and liquidated damages.
Design‐Build Schedule
Start
Specify
Procure
Award
Design
Construct
Complete
Public‐Private Partnership
This project delivery strategy has been developed to reduce financial risk for the owner, usually a
government entity. A long‐term partnership contract is signed between the owner and contractor. The
contractor is responsible for the financing, design and construction, and remuneration from the owner is
linked to performance criteria. Under this arrangement, the owner may sign a design‐build‐finance,
design‐build‐finance‐maintain contract or a design‐build‐operate‐finance‐maintain contract.
Remuneration is awarded with any combination of completion, maintenance and operate phases. These
arrangements motivate a contractor to build quickly and minimize the “total cost of ownership”.
Key elements for these arrangements are:
These projects can suffer from poor maintenance, especially towards the end of contract term.
Project Management
The owner signs a number of contracts:
With the design consultant
With the project manager
With specialty vendors and contractors
Engineer‐Procure‐Construct (EPC)
This strategy is similar to the design‐build project delivery
strategy in that the owner signs one contract with the EPC
vendor, who is responsible for the design and engineering as
well as the construction. The EPC contractor engages the
specialty vendors and subcontractors.
2
Thanks to Michael Stefanovic, Procept Associates Ltd.
All bidders will be treated equally and fairly. For example, they will each be provided the same
information and the same opportunities.
A non‐compliant bid (one that fails to meet a mandatory requirement) will be rejected.
The customer promises to follow whatever process it described in its procurement documents.
For example, if evaluation criteria are described, then they must be followed.
The customer promises to award the Contract B according to the process described, usually by
accepting the lowest compliant bid, or the proposal which offers the best value to the customer.
The bidder goes to some trouble and expense to prepare the bid, and promises that:
The bid is irrevocable (cannot be withdrawn) for some period of time specified in the bid
documents.
An owner is allowed to reject all the bids and award it to no‐one, if it has said so in the procurement
documents.
3
adapted from The Legal Edge newsletter, published by National Education Consulting Inc.
4
Paul Moloney, Toronto Star, July 2003
The following is adapted from a Government of Canada request for proposals. It provides a good
example, and it illustrates a way to include both quality and price into a single figure comparison. Note
that if we specify our solicitation and evaluation process in our procurement documents, then we must
follow that process.
4. Compliance with the terms and conditions of the Request for Proposal. The
Proponent must sign and return a copy of page one (1) of the RFP (or equivalent
form)
1, TECHNICAL PROPOSAL
c) references 8.0
3. ORGANIZATION
5
from a Government of Canada RFP, 2002
b) time management, including work schedule and commitment to completion dates 10.0
MERIT: Proponent’s Overall Total Point Score/Highest Overall Total Point Score X 80
EVALUATION
Each evaluation criterion has a point allotment that reflects its importance in personal submissions. The
degree to which the proposal satisfies the requirement of each criterion will be assessed and a score will
be assigned ranging from 0 to the total point allotment meaning the proposal fully meets the outlined
criterion.
Your proposal must meet all of the mandatory requirements set out in the evaluation criteria. Proposals
which fail to meet these requirements will be discarded at this stage without further consideration.
Your proposal will archive a minimum score of 75% of the maximum points available in EACH category
subject to point rating. Proposals which fail to achieve this score will be considered technically
unacceptable and will be given no further consideration.
SELECTION METHOD
The contractor will be selected on the basis of the ASSESSED BEST VALUE to the Crown taking into account
merit and cost factors. Best value to the Crown will be determined on the basis of the highest combined
rating of merit and price. The scoring of merit is done by giving full marks to the highest rated proposal,
with other proposals being given a prorated score. The scoring of price is done by giving full marks to the
lowest price proposal, with the other proposals given a prorated score. The proposal which offers the
highest combined point score for merit and cost will be recommended for award.
CASE STUDY6
Dowler‐Karn, which runs a fleet of oil delivery trucks in London, Ontario, wanted to upgrade its entire
computer system. JDH Microsystems, a Toronto‐based company, was contacted by Dowler‐Karn to
develop and install a custom truck dispatch, route planning and billing system. A fixed‐price contract
was signed, and work began.
Soon after work started, it became apparent that the supplier had grossly underestimated the time and
effort required to develop the custom software. For example, of the amount originally budgeted by the
supplier for writing the program, very quickly the time spent amounted to almost three times that
amount, and still the system did not work.
Several testing/acceptance dates were missed, and it became obvious that major problems plagued the
new system, including the fact that it ran much too slowly on its intended hardware ‐ when it ran at all,
as it had a nasty habit of crashing or seizing.
The user soon had its lawyer send a letter to the supplier requiring a detailed correction plan for the
problems that continued to plague the system. At this point the supplier did a relatively unusual thing ‐
it sued the user for final payment for the system.
[The true case was argued in the Ontario Court of Justice in April 1994, and is recorded in 47 A.C.W.S.
(3d) 282.]
Q. What would Dowler‐Karn likely do at this point?
6
"Crafting effective software development contracts", George Takach, partner in law firm McCarthy
Tetrault, The Legal Edge, Vancouver, June 1995.
7
CCDC2 stipulated price contract, Canadian Construction Documents Committee, 2008.
send a Notice in Writing of reply to the dispute within 10 Working Days after receipt of
such Notice in Writing setting out particulars of this response and any relevant provisions
of the Contract Documents.
8.2.3 The parties shall make all reasonable efforts to resolve their dispute by amicable negotiations
and agree to provide, without prejudice, frank, candid and timely disclosure of relevant facts,
information and documents to facilitate these negotiations.
8.2.4 After a period of 10 Working Days following receipt of a responding party's Notice in
Writing of reply under paragraph 8.2.2, the parties shall request the Project Mediator to
assist the parties to reach agreement on any unresolved dispute. The mediated negotiations
shall be conducted in accordance with the Rules for Mediation of Construction Disputes as
provided in CCDC 40 in effect at the time of bid closing.
8.2.5 If the dispute has not been resolved within 10 Working Days after the Project Mediator was
requested under paragraph 8.2.4 or within such further period agreed by the parties, the
Project Mediator shall terminate the mediated negotiations by giving Notice in Writing to the
Owner, the Contractor and the Consultant.
8.2.6 By giving a Notice in Writing to the other party and the Consultant, not later than 10
Working Days after the date of termination of the mediated negotiations under paragraph
8.2.5, either party may refer the dispute to be finally resolved by arbitration under the Rules
for Arbitration of Construction Disputes as provided in CCDC 40 in effect at the time of bid
closing. The arbitration shall be conducted in the jurisdiction of the Place of the Work.
8.2.7 On expiration of the 10 Working Days, the arbitration agreement under paragraph 8.2.6 is not
binding on the parties and, if a Notice in Writing is not given under paragraph 8.2.6 within the
required time, the parties may refer the unresolved dispute to the courts or to any other form
of dispute resolution, including arbitration, which they have agreed to use.
8.2.8 If neither party, by Notice in Writing, given within 10 Working Days of the date of Notice in
Writing requesting arbitration in paragraph 8.2.6, requires that a dispute be arbitrated
immediately, all disputes referred to arbitration as provided in paragraph 8.2.6 shall be
.1 held in abeyance until
(1) Substantial Performance of the Work,
(2) the Contract has been terminated, or
(3) the Contractor has abandoned the Work, whichever is earlier; and
.2 consolidated into a single arbitration under the rules governing the arbitration under
paragraph 8.2.6.
5
P 9-Sep-19 21-Oct-19 25-Nov-19 16-Dec-19 9-Jan-20 30-Jan-20
F 22-Oct-19 26-Nov-19 17-Dec-19 10-Jan-20 31-Jan-20
3 A 10-Sep-19
LEGEND:
P - Planned
F - Forecast
A - Actual
- Progress bar
APPENDIX: CHAPTER 10