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Building Procurement. Edition No. 3

  • Book

  • 416 Pages
  • March 2021
  • John Wiley and Sons Ltd
  • ID: 5840440

As an industrial process, construction is unique. The procurement processes used to achieve the successful completion of built assets requires a different approach to that adopted in most other industries, due to the design of buildings being bespoke and the sites being geographically varied. The procurement process is central to the success of any construction project and many of the problems which impact construction projects can be traced back to the procurement phase, so a good understanding of the methods of procurement, the development of a procurement strategy and the influence it has on project success is essential for all those working in the industry.

Much has changed in the global construction industry since publication of the second edition of Building Procurement, for example the increase in debt burden of many major economies, widespread adoption of Building Information Modelling (BIM) Technology in the industry and the United Kingdom's exit from the European Union. This new edition has been rewritten to take account of these significant developments, but at its core it continues to provide a critical examination and review of current procurement practices in the UK, continental Europe (including EU procurement procedures), China, Middle East and Sub-Saharan Africa and the USA. It retains its original strong emphasis on the need for clients to establish achievable objectives which reflect the project business case and focuses on development of suitable strategies and management structures to meet those objectives in the current construction climate.

Building Procurement will be essential reading for senior undergraduate and postgraduate students of construction management and practitioners working in all areas of construction management.

Table of Contents

Preface to the Third Edition xvii

1 Introduction 1

References 5

2 Procurement Strategy: A Literature Review 7

Introduction and Early History 7

Procurement Route Selection Models 8

Towards a Broader View 9

Defining Project Success 11

Team Relationships, Supply Chain Management and Communication and Their Effect on Project Performance 12

Teamwork and Team Performance 12

Partnering: Introduction and Early Development 14

Partnering: A Critical Review 14

Partnering Variants 17

Partnering Dissected 17

Procurement and Multicultural Teams 18

Supply Chain Management 19

The Role of the Client in the Procurement Process 20

The Interrelationship Between the Components of the Overall Procurement Approach: Strategic Procurement Management 21

Legal and Contractual Issues, Including Public Sector Procurement Legislation, and Their Effect on Project Performance 22

International Procurement Comparisons and the Impact of Cultural Differences 24

Risk Allocation and Reward 26

Bid Evaluation Techniques 27

Environmental and Sustainability Issues and the Procurement of Construction Work 29

Sustainable Procurement for Construction Projects 31

Conclusion 32

References 33

3 Principles of Strategic Procurement 49

Introduction 49

Procurement: A Review of Theory and Practice 52

A Strategic Approach to Procurement 54

Components of the Procurement Process 54

Functional Needs Analysis 55

Development of an Overall Procurement Philosophy 55

Components of a Collaborative Relationship 57

Detailed Design of the Procurement Approach 59

Formalisation of Contractual Relationships 59

Selection of the Most Appropriate Partners 60

Implementation 61

Collaborative Procurement in the Public Sector 61

Conclusion 62

References 63

4 Public Sector Projects 65

Introduction: Why Should Public Sector Projects Be Different? 65

What Constitutes the Public Sector? 66

Central Government 67

Government and the Construction Industry 68

Building Information Modelling 70

Responsible Agencies 70

The Gateway Process 70

Local Government and Other Bodies Governed by Public Law 72

Best Value 73

The Public Contracts Regulations 2015 74

References 74

5 Project Initiation 77

Introduction 77

Strategic Fit 78

Payback 79

Assessment of Options 82

Achievability 83

Affordability 83

Defining the Project 84

Prioritisation of Objectives 84

Conclusion 86

References 87

6 Briefing and the Design Process 89

Introduction 89

Project Briefing: An Overview 89

Types of Construction Client 91

Questions to Determine the Type of Client 93

Time 93

Cost 93

Quality 94

Likelihood of Post-Contract Client Changes 94

Degree of Accountability Required 94

Project Complexity 94

The Briefing Process 94

Briefing: A Historical Perspective 95

Different Briefing Approaches 96

The Generic Types of Brief 97

Developing the Strategic Brief 98

Developing the Project Brief 99

The Project Execution Plan 100

What Issues Does the PEP Need to Address? 101

When Should It Be Prepared? 102

Who Prepares the PEP? 103

How Is the PEP Prepared? 103

Project Briefing: The Case of Hospitals 104

Critical Factors for Success in the Briefing Process 105

References 107

7 Procurement Strategies and Procurement Routes 111

Introduction 111

Procurement Strategy 117

Developing a Procurement Strategy 120

Procurement Routes 121

Factors to Be Considered in Selecting a Procurement Route 122

Factors Outside the Control of the Project Team 123

Client Resources 123

Project Characteristics 123

Ability to Make Changes 123

Risk Management 124

Cost Issues 124

Project Timing 124

Construction Times 125

Performance 126

Selection of a Procurement Route 126

Procurement Routes: A Review 130

Traditional (Design-Bid-Build) 130

Design and Build 133

Measurement (Remeasurement or Measure and Value) 138

Construction Management 139

Management Contracting 141

Design and Manage 142

New Models of Construction Procurement 143

Cost Led Procurement 143

Two Stage Open Book 144

Integrated Project Insurance 145

Adoption of the New Models of Construction Procurement in the Industry 145

References 146

8 Project Team Selection 149

Introduction 149

The Selection Process 151

Prequalification 151

Production of the Tender List 154

Tender Evaluation 154

Price 155

Technical Evaluation 155

Commercial Evaluation 155

Interview 155

Award of the Contract 156

Selecting a Consultant 156

Selecting a Contractor 159

Early Contractor Involvement 160

References 160

9 Managing the Procurement Process 163

Introduction 163

The Project Manager 164

First Tasks of the Project Manager 166

Developing the Project Execution Plan 166

Identifying the Project Team 167

Implementing the Procurement Strategy 167

Project Resources 167

Financial Resources 167

Human Resources 168

Physical Resources 168

Temporary Organisational Structure 169

Contractual Arrangements 169

Systems and Controls 170

Time Management 170

Design Management 172

Design Risk 173

Cost Management 174

Quality Control 177

Change Control 178

Commissioning 179

Occupation and Take-over 179

Building Information Modelling 180

The Construction Act 183

Social Value in Construction Procurement 184

Health, Safety and Wellbeing 186

Conclusion 187

References 187

10 The Value of Design 191

Introduction 191

Considering Value in the Business Context 192

The Value of Good Design 193

Managing Value 196

Value Management 196

Value Management Workshops 198

The Benefits of Value Management 199

Value Engineering 200

Application of Value Engineering in the Construction Industry 200

Value Engineering Workshops 201

References 201

11 Risk Management 203

Introduction 203

Risk and Uncertainty 204

Types of Risk 205

Risk Management Strategies 205

Identifying Risk 206

Assumption Analysis 206

Checklists 207

Brainstorming 207

Delphi Technique 207

Cause and Effect of Risk 209

Other Risk Identification Techniques 209

Examples of Risks 209

Analysing Risk 210

Qualitative Assessment 211

Quantitative Assessment 211

Sensitivity Analysis 212

Probability Analysis 213

Decision Trees 214

Choosing a Risk Management Strategy 216

Risk Management Strategies 216

Risk Avoidance 216

Risk Reduction 216

Risk Transfer 216

Risk Sharing 217

Risk Retention 217

Risk Allocation 217

The Empty Chair Theory 218

Monitoring and Controlling Risk 219

References 220

Further Reading 220

12 Partnering Culture and the Management of Relationships 221

Introduction 221

The Latham Review and Subsequent Developments 221

The Rise of Collaborative Approaches to Procurement 222

Collaborative Approaches to Construction Work 223

Contractual Approaches to Collaboration 224

The Joint Contracts Tribunal Forms of Contract Including the Standard Form of Building Contract 224

The New Engineering Contract Engineering and Construction Contract Edition 3 224

The Association of Consultant Architects Project Partnering Contract 225

Perform21 Public Sector Partnering Contract 225

Target Cost Contracts 226

What Advantages Does Partnering Bring? 227

Managing a Successful Partnering Arrangement 227

The Role of the Workshop Facilitator 228

Facilitation Guidelines 229

Agenda 229

Structure and Climate 229

Regular Summaries 229

Control of Phases 229

Gatekeeping 229

Team Composition 229

Managing Relationships 230

Why Is Relationship Management Important? 230

Establishing the ‘Cultural Fit’ 231

What Is Culture? 232

Understanding Culture 232

Achieving Cultural Fit 233

Mutual Objectives 234

Team Development 235

The Nature of Trust 237

Maintenance of the Relationship 238

The Project Supply Chain 240

The Holistic Approach 241

The Bicameral Approach 241

The Unilateral Approach 242

The Collaborative Approach 242

A Case Study: Procurement of a Long-Term Multi-Project Alliance - Sheffield Hallam University 243

Introduction 243

The Campus Development Plan 243

Procurement 244

The Stradia Brief 245

The Contractual Relationship 246

Organisation and Management 246

The Contractor Selection Process 247

The Written Submission 247

The Financial Submission - Tender Cost Models 247

Behavioural Assessment 248

Insurances 248

Selection of the Consultancy Group 248

Conclusion 249

Acknowledgements 249

References 249

13 Privately Financed Public Sector Projects 251

Introduction 251

Historical Development 251

Modern Models for Privatisation 254

Outright Privatisation 254

Participative Privately Financed Techniques 255

Corporatisation and the Use of Semi-Private (Mixed) Companies 256

Publicly Owned Corporations 256

Semi-Public Corporations 257

Management Contracts 257

The Leasing or Build-Lease-Transfer Model 258

Pre-Financing 259

Mixed Models 259

Concession-Based Methods 260

Build-Operate-Transfer 260

Build-Own-Operate-Transfer 261

Build-Transfer-Operate and Build-Transfer-Service-Maintain 262

Build-Own-Operate 262

Lease-Renovate-Operate-Transfer 262

Design-Build-Finance-Operate 263

Design-Construct-Manage-Finance and Design-Build-Finance-Operate-Manage 263

Public Private Partnerships 264

The Private Finance Initiative 264

Genesis 264

Problems 265

Understanding the Rules 266

High Bidding Costs 266

Risk 266

Refinancing 267

Value for Money 268

Design 270

The Relationship Between PFI Client and Contractor 270

Small Projects 273

Concession Agreements 273

Current Developments 277

Conclusion 279

References 279

14 Construction Procurement: Europe 283

Introduction and Background 283

The Development of the Professions 285

Europe 286

The European Union 286

European Procurement Practice 287

The French System 287

The Architect 288

Contractors 288

The Client 288

Contractual Approaches 289

Tender Documentation 292

Contracts 292

Contemporary Developments 294

The Northern European Approach 294

The Mediterranean Approach 296

Greece 297

Italy 297

Spain and Portugal 298

Procurement Rules: European Union Principles and Procedures 299

Non-discrimination and Transparency: The Role of the EU 299

EU Directives 300

The Supplies Directive and Amendments 301

The Works Directive and Amendments 301

The Utilities Directive and the Utilities Remedies Directive 302

The Services Directive 302

The Public Sector Directive 303

Tendering 303

Value Thresholds 304

Tendering Procedures 305

Open Tendering 305

Restricted Tendering 305

Negotiated Tendering 305

Competitive Dialogue 306

Framework Agreements 307

Electronic Auctions 308

Sustainability and Environmental Issues 309

Specifying Sustainability Requirements and the Selection of Tenderers 310

Sheltered Workshops 310

Use of Variant Bids 310

Use of Contract Award Criteria 310

Timescales 310

Award Procedures 311

The Remedies Directive 313

Enforcement of EU Directives 313

References 314

15 Construction Procurement: USA, the Middle East, Africa, and China 315

Introduction and Background 315

Construction Procurement in the USA 316

Introduction 316

Procurement Routes 316

Design-Bid-Build 317

Design-Build Process 317

Construction Management 318

Construction Management at Risk 318

Job Order Contracting 319

Time and Materials Contracting 319

Best Value Selection 319

Summary 320

The Middle East 320

Construction Procurement in Sub-Saharan Africa 322

Introduction 322

Procurement Approaches 323

Public Private Partnerships 325

The Influence of Chinese Investment on Procurement in SSA 327

The People’s Republic of China and the Hong Kong Special Administrative Region 328

The Chinese Construction Industry 329

The ‘External’ Construction Industry 329

The Indigenous Construction Industry 330

The Construction Professions 330

Opportunities for Western Companies 331

References 332

16 Procurement of Work to Heritage Buildings 335

Introduction 335

The Heritage Challenge 336

Procurement: The Heritage Context 337

The Value of Built Heritage 341

The Importance of Cultural Significance 343

Statutory Protection for Heritage Buildings 345

Listed Buildings 345

Conservation Areas 346

Scheduled Monuments 346

World Heritage Sites 347

Managing Change in the Historic Environment 347

Planning for Conservation 347

Conservation Plans 347

Conservation Statements 348

Asset Management Plans 348

Heritage Impact Assessments 348

The Planning Process 349

The Role of the Conservation Advisor 349

Procurement Processes and Procedures 350

The Investigation Contract 351

A Case Study in the Procurement of Work to Historic Buildings: The Derby Roundhouse 351

The Existing Buildings: Historical Background 353

The Genesis of the Project 358

The Final Scheme 359

Site Surveys and Pre-tender Investigations 363

The Tender Process 364

The Partnering Process 365

Post-contract Processes 366

Practical Issues on Site 366

Repairs to Historic Structures 366

Integration of Building Services 367

Project Timeframe, Costs, and Team 367

A Case Study in the Procurement of Work to Historic Buildings: The Belton House Stables Project 368

The Existing Buildings: Historical Background 368

The Stables Building 369

The Stables Scheme 370

Feasibility Studies and Project Design 372

Site Surveys and Pre-tender Investigations 374

Procurement Approach 375

Post-contract Processes 375

Practical Issues on Site and Variations 376

Programme and Cost 377

Summary 378

Acknowledgements 379

References 379

17 Summary 383

References 386

A Procurement Route Selection Checklists 387

Checklist 1: Time 387

Checklist 2: Design 388

Checklist 3: Cost 388

Analysis 389

Index 391 

Authors

Roy Morledge Professor of Construction Procurement and Director of Postgraduate Studies for the Faculty of Construction & the Environment. Adrian J. Smith College of Estate Management. Samuel Y. Appiah