Procurement and Contract
There are various procurement systems developed to facilitate the completion of construction projects within the constraints of time and cost to the desired quality. Procurement is about the acquisition of project resources for the realization of constructed facilities. This paper critically analyses the procurement systems in Hong Kong including their advantages and disadvantages.
Procurement Systems and Contractual methods
Although the traditional competitive tendering is being used in the construction industry of Hong Kong, other types of procurement systems that are aimed at incorporating technical know-how and management skills of contractors have been increasingly adopted by the industry. Non traditional contract procurement systems such as management contracting, project management, construction management and design and build are aimed at these objectives and at the reduction of cost of construction and time of delivery. However, it is also necessary to discuss the traditional design/bid/build procurement system along with these new approaches since it is still the most popular in Hong Kong.
Traditional Design/Bid/Build
The traditional design/bid/build procurement system has long been used to deliver projects in order to meet the targets of time, cost and quality. It contemplates that design services will be performed by a design professional directly retained by the client and that construction will be performed a general contractor who is directly retained by the client. This method contemplates that the design, procurement and construction of the project will proceed sequentially with the award of the contract delivered to the lowest possible bidder based on the specifications and completed plans ().
This follows the procedure where the client produces a brief and sets the budget for the project which establishes the scale of a building. An architect is employed by the client to produce outline proposals and sketch a design. In this method, the constructor cannot make his contributions on the knowledge of buildability to the design. Also, the architects may not be aware of the construction methods and may generate a lot of unnecessary non value added costs in the design. If the costs exceed the budget, the architect may refuse altering the basic design, thus, the redesign will involve down grading specifications. On the other hand, if the costs exceed the budget substantially the design concept may have to be rethought completely (, ).
This approach can create tensions between the team due to the separation of design and construction. Such can be derived from (1) low price bid process where the contractor has low margin and little room to be forgiving of problematic design (2) contractor’s lack of influence in the design development process (3) compressed design time and fee constraints faced by the designer in the development of the design which causes errors (4) lack of trust and empathy that designers and contractors have ( & , ).
Management Contracting
This procurement method provide for an alternative way to bring construction knowledge and experience into the design process. The management contractor does none of the construction work but divides it into sub contractors. As such, it provides construction management service to organize, coordinate, supervise and manage the construction work while cooperating with the professional consultants of the client. In management contracting, it is possible to have fruitful cooperation between the design and the production although the clients bear the cost risks. The problem is that projects are often divided into too many deliveries and contracts are entered to a late stage (, 1999, ).
Construction Management
It is a method of project delivery in which the client contracts directly with the series of trade contractors, thus eliminating the role of the general contractor. This method is a solution depending upon the project and the construction management organization that has all the necessary engineering, procurement and construction skills within one team. This has the objective of achieving high quality with minimum costs (, 1999, ). It is the construction manager who is responsible for organizing and managing the construction work on site and arranging it to be done most efficiently. It is his responsibility to work with the designer during the design period. While this method offers numerous benefits, it is also associated with a downside. First, the CM may be involved in the design, but it does not take on the risk of design problems. Thus, the detriments associated with the traditional approach particularly the tensions between the contractors and the designers may also be present.
Project Management
In this method, the client is represented by the project manager who has the authority to organize, plan, schedule and control the field work and is responsible for getting the job done within the limited time and costs. This method is justified if there is a need for overall project management and integration role with other delivery methods. In the fast track method is executed in a phased manner except that the design and construction activit6ies are overlapped to save time. This practice tends to cause sub optimal design, cost and time overruns and lack of teamwork between the designers and the contractors (, 1999, ).
Design and Build
The design and build is a process which integrates the design and the construction services and enables the client to contract with a single entity for project design and construction. This will give the client the benefit of looking one party for project delivery and removes it from the role of intermediary between he architects and the engineers. Most of its benefits are derived from single point responsibility of the design builder.
The benefits include singular responsibility where both the design and the construction are given in the hands of a single contractor. Thus, there is a single point for quality, cost and adherence to schedule. The design builder is responsible for quality, budget and schedule and the performance of the completed project. Any conflict that may arise between the design and construction lies on the design-builder and not the client. Another is that of quality. The singular responsibility in the design build is a powerful quality motivator ( & , 2001, ). Because the design builder is responsible solely for the completion of the project and cannot shift the responsibility to others for defect, it is motivated to develop designs more efficiently.
Project Delivery
Based from the discussion of the different procurement systems, the Design and Build system can serve as the most appropriate method for project delivery. For one, the other methods share the problem of creating tensions between the team members. The division of project deliveries such that in management contracting may cause delays brought about by disagreements between the designers and the constructor. Aside from this, the client also bears the risks of additional costs. There is less coordination due to the decentralization of the work.
On the other hand, the design and build method allow for a singularized responsibility. The implementer is at the same time liable for the design. As designers and contractors, they are able to work side by side in the project possible quality, scheduling and cost problems can be prevented. The client only presents the criteria for the design and approves the design solutions. During the past decade, this method has been widely used in Hong Kong and worldwide to deal with the problems associated with the traditional procurement system (, 2003, ).
The biggest attraction of this method is that the project can be finished at the guaranteed price in response to the tight schedule. To achieve the target of time, cost and quality, the client may impose strict control on the works of the contractor. They have the full capacity to comment on the works of the contractor. Due to the increased involvement of the client in the process, this method can result in reduction in the overall project duration. This method is preferred not only because of its time saving benefit but also its risk transfer feature since the D&B puts the responsibility for design and construction of the project on the contractor. Thus, the burden of coordinating with other consultants is placed on the contractors.
Measures to ensure completion:
- Ensure good design definition with the important elements of the design work completed before the construction starts. Unnecessary differentiation must be avoided and the standard designs must be adopted where possible.
- Establish and monitor the project team. Management structure s with good lines of communication must be established.
- Establish an achievable project plan and drive the project towards that programme
- Apply the proven procedures in design control and goodness of fit and function
- Establish realistic project budget and a control expenditure on these budgets. Contracted parties with proven capability must be sought out.
- Employ contract conditions that will achieve maximum production and specify obligations to the contracted party to promote good relations and minimize work disruption
- Institute quality assurance to ensure that the design details and specifications are practicable
- Measure and monitor the project performance from time to time. Manage project completion and post review of delivery against the set targets
References
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