Download Procurement Selection

Procurement Selection
1.0 Introduction
Macclesfield Cricket Club Ltd is going to rebuild, refurbish or relocate its clubhouse. The proposed budget for this
project is £800,000. The client has allocated a construction period of 12months for the on-site works associated with
the construction of a new clubhouse. A further period of 9 month is available for the pre-construction phase
involving planning, building approvals, sub-contractor selection, design development, method planning and
mobilisation. Handover of the completed building would be before February 2013.
2.0 The Eternal Triangle
In a construction project, the three most important criteria for a client to take into consideration are cost, time and
quality. It is at the client’s interest to achieve the highest quality, at the lowest cost, in the shortest time (The Aqua
Group, 1999). These three criteria can be demonstrated in a triangle as the figure shown below.
Cost
Time
Quality
Figure 1.0 The eternal triangle. (The Aqua Group, 1999)
The Aqua Group (1999) found that if these three factors are kept in balance, with appropriate quality being achieved,
at an acceptable price, in a reasonable timescale, the triangle would appear equilateral. It is therefore essential to
get the client’s priority right at the first place as the criteria is related to each other and criteria that are of lower
priorities are possible to be managed well.
2.1 Radar Chart
Below is a radar chart (Cox and Clamp, 2003) for Macclesfield Cricket Clubhouse which presents the three elements
of cost, time and quality in terms of contract priorities and client priorities. (Priority = 0 lowest – 5 highest scale)
Cost
Cost (Total - 12)
C2
C1 – Lowest possible capital expenditure. (4)
C3
C2 – Certainty over contract price, no fluctuation. (5)
5 C1
4
C3 – Best Value for money overall. (3)
3
2
1
Time (Total – 5)
0
T1
Q3
T1 – Earliest possible start on site. (1)
T2 – Certainty over contract duration. (4)
T3 – Shortest possible contract period. (1)
Quality (Total – 7)
T2
Q2
Time
Quality
Q1 – Top quality, minimum maintenance. (2)
Q2 – Sensitive design, control by employer. (3)
Q3 – Detailed design not critical, leave to contractor. (2)
T3
Q1
3.0 Procurement System Selection Matrix
The requirements of client
(Macclesfield Cricket Clubhouse)
Client’s
priority
Traditional
Sequential
Design and build
Accelerated
Direct
Competitive
Highest
5
3
Utility
Score
Utility
Score
Utility
Score
Utility
Score
10
30
50
150
100
300
90
270
5
90
450
40
200
100
500
100
500
4
100
400
90
360
30
120
30
120
3
40
120
20
60
20
60
10
30
3
100
300
60
180
40
120
70
210
5
50
250
30
150
100
500
90
450
Is completion within budget
important?
5
30
150
30
150
100
500
100
500
Division of responsibility
2
30
60
30
60
100
200
100
200
Is direct professional
responsibility wanted?
3
100
300
100
300
10
30
10
30
Risk
3
30
90
30
90
80
240
100
300
Time
Is early completion required?
Cost
Is a firm price needed?
Flexibility
Are variations necessary after
work has begun on site?
Complexity
Is the building highly specialized,
technologically advanced or highly
serviced
Quality
Is high quality important?
Certainty
Is completion on time important?
Is single-point responsibility
wanted?
Is transfer of responsibility for the
consequence of slippages
important?
Total of Results
Rank Order
2150
6th
1700
7th
2570
2nd
2610
1st
The requirements of client
(Macclesfield Cricket Clubhouse)
Client’s
priority
D&B
Develop
construct
Management
and
Management
Contracting
Construction
Management
Highest
5
3
Utility
Score
Utility
Score
Utility
Score
60
180
100
300
100
300
5
90
450
20
100
10
50
4
40
160
80
320
90
360
3
40
120
100
300
100
300
3
70
210
90
270
100
300
5
70
350
90
450
90
450
Is completion within budget
important?
5
50
250
70
350
60
300
Division of responsibility
2
70
140
30
60
10
20
Is direct professional
responsibility wanted?
3
50
150
70
210
100
300
Risk
3
70
210
30
90
10
30
Time
Is early completion required?
Cost
Is a firm price needed?
Flexibility
Are variations necessary after
work has begun on site?
Complexity
Is the building highly specialized,
technologically advanced or
highly serviced
Quality
Is high quality important?
Certainty
Is completion on time important?
Is single-point responsibility
wanted?
Is transfer of responsibility for the
consequence of slippages
important?
Total of Results
2220
Rank Order
5th
2450
3rd
3.1 Speculative Risk
Contract Type
Client
Design and build
Complete ‘package’ by supplier
Design and build
Design input by contractor
Traditional Lump sum
Fixed price
Traditional Lump Sum
Fluctuations
Traditional measurement
Bill of approximate quantities
Traditional measurement
Fixed fee prime cost
Traditional measurement
Percentage fee prime cost
Management contracting
Risk
Contractor
2410
4th
4.0 The Requirement of Client
4.1 Time
The project does not need earlier completion time, but need to complete on time. Certainty over project duration is
very important.
4.2 Cost
Firm price is needed because the project must complete within the budget £800,000. The client might have limited
funding and price must be firmed before operations start on site.
4.3 Flexibility
Flexibility is needed when the client decided to make variations during the construction process. There may have
variation for allow more sport facilities.
4.4 Complexity
Club house is simple project but needed to achieve all client requirements. Off site construction method may be
used for this simple project. Club house does not need to be high aesthetic designed and achieve sport activities
requirement is more important.
4.5 Quality
The clubhouse must provide all the facilities for sport and leisure purpose. Clubhouse must be designed base on
standard sport activities requirement.
4.6 Certainly
The project must complete before Feb 2013 and within the £800k budget. The client might have limited funding and
require the reassurance of a fixed price with no risk of fluctuation.
4.7 Division of responsibility
It is believed that client has experience involve in construction project. Thus, the division of responsibility is not an
essential factor. Risk may transfer to contractor by using design and build procurement.
5.0 Recommendation
In my opinion, the identification for selecting a proper procurement system is through the procurement system
selection matrix which in this case, the design and build has found to be more suitable for this project.
Procurement - Design and Build
Pre-tender time largely depends on the amount of detail in the client’s requirements. Construction time reduced
because design and building proceed in parallel. It is efficient single contractual arrangement integrating design and
construction expertise within one accountable organisation. There is a guaranteed cost and completion date. This
procurement is benefits in cost and time but at the expense of quality.
Advantages –
1. Builder adopts a major portion of the project risk through the design development of the initial concept.
2. Builder can retain control of the design process and has the ability to ‘fast track’ in order to be more cost
effective.
3. Single point of responsibility from the client’s perspective.
Disadvantages –
1. Cost pressure on builder’s side can lead to short cut in the design, and designing only to meet the minimum
performance requirements of the contract.
2. Promotes cheapest capital cost options which could have significant life cycle ramifications in terms o cost
and durability for the client.
Type of Contract – JCT form
Design and build procurement method gained acceptance in the early 1980s with the introduction of a ‘with
contractor’s design’ variant of the standard JCT form. Recently it has been endorsed by the public sector as a
preferred procurement option, and most publishers of standard forms now produce documents which allow for a
contractor’s design responsibility.
The contractor may have responsibility for some or all of the design of the project. The contract wording must
expressly refer to this, and the extent of the design obligation needs to be set out as clearly as possible.