Procurement And Agreement Advice For Clients Construction Essay

This section of the report describes both traditional and design and build varieties of procurement to aid clients in understanding and selecting the appropriate method.

Traditional Procurement:

The most well known and generally accepted form of procurement in the construction industry. Traditional procurement attracts all sorts of client from individuals constructing a job for the first time too large complex projects where in fact the function of the building is paramount.

Traditional Organisation

Client / Employer

Contractor

Subcontractors

Employer's Agent

Quantity Surveyor

Architect

Civil / Structural Engineer

Other Designers

Contractual LinkThe traditional company diagram shows how contractual links are developed within traditional procurement. As your client you are contractually bound to the look team. This is important and really should be considered seriously as the builder reaches no immediate contractual link to the architect.

The most important procurement method in traditional procurement is the two stages tender. Originally your client must produce a brief which describes what the needs you have. This must include relevant statistics such as budget and time constraints. Now a team of consultants needs to be appointed, this will comprise primarily of any architect who will show you through the design and construction operations. Other members will need to be appointed predicated on the opportunity of the job. Included in these are a volume, structural engineer and a client's representative on larger assignments.

(Stage one) Design and tender documents can now be produced. A go for number of contractors will be asked to tender on the partially completed sensitive documents. This includes an accumulation of the price tag on the project with a report called the costs of amounts.

(Level Two) A service provider is now picked based upon the price and getting the relevant resources required to complete the project. The company now has involvement with the look team to work out a finalised price for doing the building works. Also he can have engagement in finalising the look.

This form of procurement is known as low risk as the potential risks to overspending, delays and failures in the design are reduced. This can only be achieved however, if the look has been completely produced by the architect and completion date targets specified are unreasonable.

Design and Build procurement:

This procurement method varies from traditional procurement as the contractor is largely in charge of the design work. This relieves some of the contractual strain on the client. While using contractor being mixed up in project from the look level it allows their skills to be incorporated in to the design phases. One of the largest advantages to design and build is the reduced time size that jobs can run to. Design information can be still being produced while development work commences. This doesn't come without its hazards however.

Client / Employer

Contractor

Subcontractors

Employer's Agent

Quantity Surveyor

Architect

Civil / Structural Engineer

Other Designers

Design and Build Organisation

Tendering for design and build tasks is more costly than traditional tasks therefore the volume of companies tendering is reduced. That is because of the time and resources it takes for a contractor to produce the relevant design and costing information. Cash flow in a design and build task can be more substantial initially than traditional as the company requires money for the design as well as structure. This is also due to larger risk being imposed on the event of an issue in the design being lifted by your client as the service provider is the first point of contact. This will cover the costs of experiencing to transfer this information. This is not required in traditional forms of procurement as the client is in direct contact with the architect.

Types of Contract

(The info for types of agreement has been cited from "choosing the correct JCT deal 2008" available from the CIS shared by Sweet & Maxwell limited)

Traditional:

Lump sum contracts - The agreed sum of construction is agreed based on a design and specs. A bill of volumes is produced for the contractors to price the works.

Measurement contracts - The finish price of the development works is not arranged until the end of the engineering project.

Cost reimbursement contracts - Price of labour, flower and materials is determined by the end of the project. Overheads and revenue is then added onto this.

Design and Build:

Package deal or turnkey contract - A program is selected usually from a arranged standard of specification from a builder.

Design and Build contracts - This form of deal will cover the contractor's obligations to the look and build of the task.

JCT

Standard building agreement with quantities:

This form of contract is well suited for the traditional procurement method. Your client must appoint an architect, contract administrator and amount surveyor to administer the work. Companies will tender the works predicated on the drawings and a couple of bill of amounts.

Design and build agreement:

Standard form of contract for design and build works. Company is principally accountable for the design and construction of the job.

Partnering:

JCT agreement also has an outline for setting up a partnering agreement between select associates of a structure job. Everyone throughout the supply chain will the arrangement to work collaboratively also to have everyone best interests in mind. This should be looked at as a kind of deal that Hotels R Us should consider in the future when they have sufficient experience in the industry.

ICE

This form of deal is well suited for civil executive works such as bridges, streets and dams. The task will be designed by a team of engineers and qualified contractors will tender for the task. The engineer is the main administrator functioning on behalf of the client.

NEC 3 reimbursement and event clauses

The NEC 3 agreement was produced from Ice form of deal. The concept goals of the NEC agreement are to give a agreement that is adaptable, simple and clear to understand. There are various types of NEC contract which cover traditional and design and build types of procurement. This section is going to cover early alert procedures, compensation and event clauses.

Early caution clauses are available in section 16 of the NEC deal. These are in essence a set of rules that the task manager and service provider must abide by when they are aware of a cost or time concern on the project. It is there obligation under contract to inform one and other and demand an "Early warning conference" which relevant participants should be asked including the consumer, architect or quantity surveyor. During these meeting the problem will be reviewed and the relevant activities that require to be taken should be appointed. The advantages to this system of traditional ways of the company submitting a formal notice is the fact issues can be resolved in the most financially viable method, this offers clients more safe practices in terms of cashflow.

Compensation situations are covered in section 60 of the contract. These are promises made by the contractor asking for either more time or money for the project. The project director can also notify the company if he is aware of such an issue. NEC3 outlines the technique behind compensation happenings, the deal has eight weeks to inform being conscious of a compensation event and must claim within this period.

As a client entering into the development industry for the first time it is often difficult to understand how and why construction jobs can stepped on budget and cost more income. The compensation happenings complete in the NEC3 deal make an effort to justify how such situations can occur.

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