Microsoft PowerPoint - Chapter 5b - CONTRACTUAL ARRANGEMENT - Procurement.

7/29/2019 Microsoft PowerPoint - Chapter 5b - CONTRACTUAL ARRANGEMENT - Procurement.

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PROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE I

[QSD 289][QSD 289][QSD 289][QSD 289]

1MohammadMohammadMohammadMohammad NasharudineNasharudineNasharudineNasharudine ShuibShuibShuibShuib


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SECTION DESCRIPTIONS LINKS

1 INTRODUCTION2 GENERAL MATTERS

3 STANDARD FORM OF CONTRACT

4 METHOD OF PRICE DETERMINANTION

2

5 CONTRACTOR SELECTION & APPOINTMENT

6 PROCUREMENT OPTIONS

7 CONTRACT STRATEGY

8 CLIENT PROCUREMENT NEEDS


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Client organizations are divided between those inprivate and public sectors although this distinction is

becoming more difficult to define since theprivatization of many national bodies.

The private sector includes industrial, commercial,social, charitable and professional organizations, and

.

The public sector is taken to mean governmentdepartments, nationalized industries, statutoryauthorities, local authorities and developmentagencies.

The experience which a client has of buildingprocurement ranges from extensive, in the case of aclient with a project management team, to none,where a private individual may want a developmentonly once in a lifetime.

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The traditional method of organizing

construction work starts with appointing aconsultant designer, usually an architect or

engineer, or both. Other specialists may be

,

appointed to provide cost information,

prepare bills of quantity, compare bids and

maintain financial management during

construction.

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BASE ON METHODOF PAYMENT

CONTRACTUALARRANGEMENT

BASE ON METHODOF PROCUREMENT

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Measurement

Cost

Reimbursement

Conventional

Design and Build

ManagementContracting

Others


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BASE ON CONTRACTPRICE

CONTRACTUALARRANGEMENT

BASE ONCONTRACTORSOBLIGATIONS

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Fixed Price

Cost

Reimbursement

Conventional

Design and Build


Others


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PRO ECT DELIVERY:PRO ECT DELIVERY:PRO ECT DELIVERY:PRO ECT DELIVERY:

Conventional /

Traditional

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EXTENT OFCONTRACTORSOBLIGATIONS


Others


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Procurement is the process that is used to

deliver construction projects. As part of the initial stages of a project, one

of the principal tasks of the project team is

o eve op e o e

adopted.

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TRADITIONALCONTRACTMANAGEMENT

CONTRACTING

DESIGN AND

BUILD, OPERATE &TRANSFER

CONTRACT (BOT)

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PROCUREMENTMETHODS

BUILDCONTRACT

CONTRACT

BUILD, LEASE &TRANSFER

CONTRACT (BLT)

PRIVATE FUNDINGINITIATIVE

CONTRACT (PFI)


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CONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODS

TRADITIONALCONTRACT

MANAGEMENTTYPE

PACKAGE DEAL

MISCELLANEOUSMETHOD

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BUILD, OPERATE &TRANSFER CONTRACT

(BOT)

BUILD, LEASE &TRANSFER CONTRACT

(BLT)

CONTRACTING

MANAGEMENT

DESIGN & BUILD TURNKEY

PRIVATE FUNDINGINITIATIVE (PFI)


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APPORTIONMENT OF


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The procurement system, and associated

contractual arrangement, will dictate thefinancial and other risks borne by the parties

to the contract.

s canno e e m na e y c oos ng a

particular form of contract, but will be

shifted towards one party or the other.

A guide to how the risks are divided for each

contractual arrangement is given in Fig. 2.1.

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CONVENTIONAL


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The traditional structure for project procurementshown in Fig. 2.2 is a sequential method because the

employer takes his scheme to an advanced stage withhis professional team before appointing a contractor.

The consultants role is seen as an independent one.

The designer is employed to advise the client, design,ensure t e wor s ept w t n t e cost m t ancomplies with the standards required.

A quantity surveyor can be engaged to give guidanceon design costs and budgets, prepare bills ofquantities, check tenders, prepare interim valuations

and advise on the value of variations. Consultant structural and services engineers may be

employed either by the client, or his advisers, todesign the specialist parts of the project.

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DESIGN & BUILD


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The design and build arrangement is anattractive option for clients.

It simplifies the contractual links between theparties to the main contract (see Fig. 2.3)because the contractor acce ts the

responsibility for designing and constructing. The benefits include: single-point

responsibility, prices which reflect moreclosely the final cost to the client, inherently

more buildable designs and an overlap ofdesign and construction phases leading toearly completion.

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During the 1980s, clients were attracted tomanagement contracting because it offeredearly starts to large-scale and often complexconstruction projects.

The mana ement contractor is a ointed to

work with the professional team, tocontribute his construction expertise to thedesign and later to manage the specialistpackage or works contractors.

He is responsible for the smooth running ofthe work on site so that the contract can befinished within time and cost.

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In the USA, where the roles of the professionalsare different, the client or his project managerwill take a more active part in the construction

phase. A construction manager is appointed as a

professional consultant with powers to inspectwork on site and issue instructions (see Fig. 2.5).

The client has a greater control over fundsduring construction because he has a contractwith all the trade and specialist contractors.

These contractors welcome the direct links withthe client partly for the higher status this brings

but more importantly because the lines ofcommunications are clearer and payments aremade sooner

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The UK government is committed to PFI for

major projects.

This procurement option has been successfulin delivering high quality facilities for public

services since the early 1990s.

By June 2003, over 280 projects had beensigned with a total value exceeding 35

billion.

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BILLS OFQUANTITIES

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CONTRACT

RATES

DRAWINGS &SPECIFICATIONS

BILLS OFAPPROXIMATEQUANTITIES


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COST PLUSPERCENTAGE

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REIMBURSEMENTCONTRACT

COST PLUSVARIABLE FEE

COST PLUS FIXEDFEE


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There are essentially two (2) ways of selecting a

contractor: through competition or by

negotiation.

This will apply to any working arrangement,

including strategic partnering.

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SELECTIVECOMPETITION

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SELECTION

TENDERING

COMPETITION

NEGOTIATEDCONTRACT

TWO-STAGETENDERING

Microsoft PowerPoint - Chapter 5b - CONTRACTUAL ARRANGEMENT - Procurement.

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