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Vergabeformen Building Procurement – Contract strategy

Judit Gyulay. Vergabeformen Building Procurement – Contract strategy. Procurement Systems – an initial overview Proper choice of delivery system can help to reduce conflicts on construction projects. 05. 06. 2007. Right Building Right Time Right Place. Successful Investment. Contents.

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Vergabeformen Building Procurement – Contract strategy

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  1. Judit Gyulay VergabeformenBuilding Procurement – Contract strategy Procurement Systems – an initial overview Proper choice of delivery system can help to reduce conflicts on construction projects 05. 06. 2007

  2. Right Building • Right Time • Right Place Successful Investment

  3. Contents • Participants of a construction project have different interests • Claims and litigations • How to reduce conflicts/risk of construction projects • One area, generate conflicts: Procurement system (project delivery system) • Possibilities • Consequences Of choice the procurement system

  4. Idea • Area • Money Investment Process Civil Engineer/Architect is involved the process • in different phases • in different „roles” Initiation Hand-over and use

  5. Common goal of participants to perform a building Meeting the client’s requirements, ensuring completion • On time • Within cost • To required quality standards

  6. Cost Quality (The incompatibility of cost, quality and time) (Kharbanda et al. 1980.) Cheapest Best Economical Adequate Reasonable Fastest • In addition: participant’s individual interest Time

  7. Participants of a construction project • Directly involvedclient, designer, contractor • Indirectly involvedadvisor, project manager, supervisor • Externalbank, authority

  8. Participants – common goal But Conflicts, claims and litigation seems to be inevitable part of construction projects Areas generate conflicts • One-sided contract (Client drafted contract) • Procurement system (project delivery system) • Site conditions • Site services, etc.

  9. Analysis • Not clear understanding peculiarities of that specific procurement and contracting system • Responsible parties Does not recognise or Does not want to accept Lack of identification of own interest leads to one-sided contract responsibility

  10. The Client • Shares: activities responsibilitieswith the partners risks • Will choose procurement system and contract form

  11. Procurement: Idea  Hand-over and use • Total management process used when obtaining a building • System of contracting among client, designer, and contractor

  12. To produce /create/perform abuilding abridge aroad Project • Planning • Organising • Leading • Commanding • Controlling Has to be managed Who will manage? In which system ?

  13. Client Project manager • Typical management structure with project manager Quantity surveyor Engineer Architect Contractor(s) Client Project co-ordinator Quantity surveyor Engineer Architect Contractor(s) • Typical management structure with project coordinator (Roger Waterhouse)

  14. Client’s main decisions: (Help: principal adviser) Organisation for the Management of the Project • In-house project manager • In-house and external project management team • External project management Organisation for Design and Construction Traditional Design and build Management Turnkey Package deal Construction Management Management Contracting Others

  15. More complex projects Lack of time Need of change in procurement methods Traditional Project Management Client Client Project Management Designer Contractor Designer Contractor Preparation Design Preparation Design Tender/bidding Tender/bidding Construction Construction

  16. Procurement/project delivery system „Improper choice or misunderstanding generate conflicts” • Traditional procurement system • Design and build, turnkey or others • Management type

  17. Traditional procurement system characteristics • Long construction period • Consecutive organisation • Clear contracting relations

  18. Innovative Project delivery systems • Construction management • Management contracting • Project or management service contract and other variations General characteristics • An organisation is employed to manage the project the construction • To coordinate the design with construction • Overlapping between design and construction • Series of tenders: work packages

  19. Client needs representation/protection by neutral expert Traditional delivery Design and buildsystem Turnkey, Package deal Inspector Supervisor Inspector Supervisor Q.S. Client Client Contractor Designer Contractor Designer Subcontractors

  20. Characteristics Single point responsibility Can be overlapped Client can be sure of maximum cost before final commitment Integrated design and construction Improves buildability Fits to constructor’s expertise, working condition, organisation Design and build turnkey/package deal Preparation Design Tender Contract Construction Cost costs should be lower shorter time on site Thus (Savings are not passed to the client in lower prices)

  21. Construction Management CM Management Contracting MC Inspector Supervisor Client Inspector Supervisor Client Designer ConstructionManager Management Contractor Designer Contractors Contractors

  22. Management contracts (CM, MC…) Characteristics • Management team is involved at early stage • Design can be influenced (buildability) • Claims can be solved, delays reduced • Save time – series of tenders, work packages • Flexibility in design to suit the client to suit the budget • More risk in design – higher requirement in design • No assured final cost at the start of construction

  23. Comparison of procurement systems, source of risks and conflicts Construction is being started knowing the construction costs • Responsibility for decision Preparation Design Cost Traditional system Tender Construction Start Preparation Design Cost Constriction is started without knowing the construction costs Modern managerial typed system Tender Construction Start

  24. Consequences • Use of non-traditional delivery system can create greater risk of misunderstanding Scope of work / compensation are changing continuously • Innovative project delivery systems can blur the traditional roles and responsibilities of participants

  25. One step towards a successful project • To choose appropriate procurement system and appoint the manager as early possible for maximum benefit • Characteristics of the delivery system have to be understood by the participants • Contract has to contain reasonable allocation of activities, responsibilities and risk All the participants have to recognise responsibilities, act in partnership

  26. Procurement Proper choice and fully understanding of delivery system Can help to reduce conflicts on constructionprojects

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