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Various procurement methods pros and cons
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Findings in the document
It states in The Charter institute of Building that the document they have provided has researched how people involved in construction business understand the procurement methods. As this document tries to explain why most of the works has been ending up over budged, outside of timeframes and even poor standard they do not provide a sufficient explanation what should be changed in industry to prevent those situations.
Procurement methods
The Charter Institute of Building has provided 6 procurement methods and explained it briefly stating that each of the method has different strengths and weaknesses. Such as: Traditional/ Conventional
(This method of procurement has separate processes for the design and construction,
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It is important for the contractor to be involved in the project at early stage as he will provide expertise in terms of buildability and programming for works planned.
Client has to appoint consultant and a contract administrator to prepare drawings, a project specification and cost plan. He would have a control over design of the project through professional team. It is obligation of the contractor to complete works in the time given as the extensions of time wont be given without permission of contract administrator.)
Management procurement generally works on the basis of two different methods:
• Management Contracts (the employer appoints a professional team and a management contractor who will be responsible for managing project.)
• Construction Management (the employer will appoint a professional team with either an in-house manager, or enters an agreement with a construction manager to oversee the work)
Discussion
The need of procurement method is established by the project requirements, objectives, and different clients and operating in a changing environment. Each of methods has its own advantages and disadvantages, but all of them most of the time has some negatives to the client. For
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The problem of understanding procurement methods is recognized and that the guidance is needed. But they do not provide sufficient explanations to the clients about all the terms and actual responsibilities and disadvantages of each method which hugely has impact on projects and all parties involved in process. This may lead to a non understanding of the contract and a failure of the project, some times high costs and expansions of time.
It is important to improve the communication between parties involved during the procurement process as most problems arise at the end of the project when nothing can be changed and it mostly impacts the clients. Another problem arises when the client wasn’t aware of the responsibilities which he agrees to put on the contractor such as design of the project. In this case work may not be done to the standard or design idea of the client and it is not possible to change because of the chosen procurement method.
Overall conclusion would be that the procurement method in industry is not explained properly to the client which arise issues and misunderstandings between parties involved in the
Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved.
The overall job description of a construction project manager is simple, they plan, coordinate, and supervise construction projects from their development to their completion. However, the job is much more demanding and descriptive than that. Construction managers must prepare a variety of cost estimates, budgets, and timetables. They are responsible for contracting out specific jobs to skilled tradesmen such as the electrical, plumbing, masonry, and carpentry work. They must ensure all work on the job site complies with city legal requirements, safety codes, and other regulations. Throughout this entire process, they collaborate hand in hand with architects, engineers, lawyers, other construction managers, and clients. As one can see, the job of a construction project manager is incredibly descriptive and requires a variety of skills, but perhaps the most important of these
The findings of this research had shown both the progress of BIM implementation that have taken place over the years and at the same time the limitations to BIM usage in the management of projects. In the view of the limitations, this researcher is of the opinion that certain steps can help to improve the efficiency and effectiveness of BIM implementation in construction projects. The research results had suggested that BIM is applicable and beneficial to all stakeholders in all phases of construction projects. It is also found that BIM have collaboration, legal and implementation problems of which this researcher recommends as follows;
Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making process over resource allocation. In this case, to fulfill the requirements, the firms have other option to employ the capacity to do construction project themselves, instead of purchasing from other parties. This situation is correlated with “the paradigm problem” of TCE to “make or buy” decision as the key point to which decisions between market and hierarchical governance structures are made (Williamson, 1981; Klein and Howard, 1996). In conclusion of this situation, TCE is applied in construction procurement in the decision-making process whether the infrastructure projects are procured or self-managed by the firm.
By eliminating uncertainty and ambiguity between the contractor and the contracting officers, the government could get rid of the divergent interpretations that inflate the cost. Realizing it is to the contractor’s advantage to pass on all expenses it can to the buyer in order to maximize profits every opportunity to clarify criteria for cost, reduce disagreement, and set clear limits are necessary. The difficulty in writing a contract to get rid of all unexpected cost is evident but doing it will cut down on the confusion over the life of the agreement. Defining costs allowed and which are not along with potential penalties for delayed service delivery will yield a better
In general, there are different types of procurement type for various situations, due to no one method can be suitable under the all different construction project. In this case, there are four procurement paths, which are traditional, design and build, management and design and manage, which will be advised to use. However, each method has different advantages and disadvantages. First, traditional path is the tender documents have been prepared and then invite the tender and the employer appoints the contractor to construct the project. There are several advantages of this traditional route in the construction industry.
In construction industry there are numbers of standard construction form, models, templates are available, and choosing a particular contract is depending on type of procurement strategy that been selected by the clients and other parties. Generally the all contractors are containing the appliances for determine and conveying the situation while the contractor in a position to entitled for additional payments more than the real value of the project work.
All construction work carried out is under the contractor's responsibility and contractor necessary, satisfy the condition that stated in the contract. Contractors that completing construction work will get consideration or profit that is shaped payment from a client or owner of the building. Payment imposed, this is in return for contractor's service and it was upheld approval from both parties. The agreement will exist with condition particular condition between contractor, employer and a few other parties which involved under construction.
Once the need has been determined, the actual design starts concordantly with the procurement. The design phase aims to generate technical specifications and drawing needed, whereas procurement refers to the purchase of the work (Nordstrand, 2008).
It includes market sizing of upcoming project pipeline at most granular level and provides forward-looking analysis on top clients, contractors, consultants/ PMcs, other civil contractors / suppliers with their respective working or partnership model. Furthermore, it shows the new and recent trends in the industry and how it may impact the business decisions of the involved
This paper examines the legal aspects of procurement management and specifically how procurement management can be used as an effective tool for the overall management of a project. This paper focuses on the basics of common contract laws, the basics of agency law, the Uniform Commercial Code (UCC), and some aspects of that pertaining to the Federal Acquisition Regulations (FAR). A summation of the company’s position in relation to a given supplier (provided the company decides not to procure all of the material in a contract) will be examined along with how that position is strengthened by understanding the legal aspects of procurement management. Finally, the paper will analyze how the project manager is supported by the contract management function. Fleming (2003) posited that there is a clear and important distinction that should be made that delineates the work of the project from the inside work of the company.
Specifications are usually used by many parties such as contractor, consultant and etc. The installation method of all the sections for the construction such as foundation, windows, door etc. are all clearly described in the specification. Specification is often abbreviated as spec; it may refer to a detailed set of requirements to be fulfilled by material, design, product, or service. If so a material, product, or services fail to meet one or more of the required specifications, it may be referred to as being out of specification. A specification is a type of technical standard. Specifications are also used for controlling the quality of the overall project. Budget is also one of the main key parts in a project that can be managed and controlled with the use of specification. Contractors who can’t meet the requirements for the specs need to consult with the architect before bidding. If the contractor ...
This phase is very significant in the procurement process cycle because this resolute the excellence of the output (product) to be obtained. Suppliers are asked to give information on the following: details of the organization, financial details, equipment and facilities, management skills and reference to assess the capabilities of that particular source before it will allow providing information (quotation or tender) on the product or
Definitions of procurement are abundant. For the sake of this paper, I will use the definition given by BusinessDictionary.com, which states that procurement is the act of obtaining or buying goods and services. The process includes preparation and processing of a demand as well as the end receipt and approval of payment. Procurement may be further classified according to the sector that it serves such as public or private.
Management in any company must understand the art of obtaining products and services. The procurement or purchasing cycle considered as one of concepts of purchasing that taking orders and activities from suppliers and transfer it to the final destination and follows specific steps for identifying the need of the company through the final step of the contract admin.