Vergabeformen Building Procurement - Contract Strategy: Judit Gyulay

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
Building Procurement Contract strategy

Right Building Right Time Right Place
Successful Investment
Budapest University of Technology and Economics Department of Construction Technology and Management
Judit Gyulay 05.06.2007
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


Idea
Investment Process
Area Money
Initiation
Hand-over and use
Civil Engineer/Architect is involved the process in different phases in different roles
Common goal of participants to perform a building
Meeting the clients requirements, ensuring completion On time Within cost To required quality standards
Cost
Cheapest Economical Adequate
Quality
Best
Reasonable
Fastest
Time
(The incompatibility of cost, quality and time) (Kharbanda et al. 1980.)
In
addition: participants individual interest

Participants of a construction project
Directly involved Indirectly involved
client, designer, contractor advisor, project manager, supervisor bank, authority

External
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.
Analysis
Not clear understanding peculiarities of that specific procurement and contracting system
Responsible parties Does not recognise or Does not want to accept
responsibility
Lack of identification of own interest leads to one-sided contract
The Client
Shares:
activities responsibilities risks
with the partners
Will choose procurement system and contract form
Idea Hand-over and use
Procurement:
Total management process used when obtaining a building System of contracting among client, designer, and contractor
To produce /create/perform
a building a bridge a road
Project Has to be managed
Planning Organising Leading Commanding Controlling
Who will manage? In which system ?


Client Project manager Quantity surveyor
Engineer
Architect
Contractor(s)
Typical management structure with project manager

Client
Project co-ordinator Quantity surveyor
Engineer
Architect
Contractor(s)
Typical management structure with project coordinator

Budapest University of Technology and Economics Department of Construction Technology and Management Judit Gyulay 05.06.2007
(Roger Waterhouse)
Clients 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

Turnkey Package deal
Management
Construction Management Management Contracting Others
Building Procurement Contract strategy More complex
Need of change in procurement methods

Traditional
Client Designer Client Project Management Designer
projects Lack of time
Project Management
Contractor
Contractor
Preparation Design Tender/bidding Construction
Preparation Design Tender/bidding Construction

Procurement/project delivery system

Improper choice or misunderstanding generate conflicts Traditional procurement system Design and build, turnkey or others Management type
Traditional procurement system characteristics
Long construction period Consecutive organisation Clear contracting relations
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
Client needs representation/protection by neutral expert

Traditional delivery system
Client
Designer Contractor Designer Subcontractors Inspector Supervisor Q.S.
Design and build Turnkey, Package deal

Client
Inspector Supervisor
Contractor
Design and build turnkey/package deal

Preparation Design
Tender
Contract
Construction
Cost Characteristics Single point responsibility Can be overlapped Client can be sure of maximum cost before final commitment
costs should be lower Thus shorter time on site (Savings are not passed to the client in lower prices)
Integrated design and construction Improves buildability Fits to constructors expertise, working condition, organisation
Construction Management CM
Client Designer Inspector Supervisor Construction Manager Contractors
Management Contracting MC
Client
Inspector Supervisor
Management Contractor Designer
Contractors
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
Comparison of procurement systems, source of risks and conflicts
Responsibility for decision

Preparation Design
Tender
Cost
Traditional system
Construction is being started knowing the construction costs
Construction
Start
Preparation
Design Tender
Cost
Modern managerial typed system
Construction
Start
Constriction is started without knowing the construction costs

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
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
Proper choice and fully understanding of delivery system
Procurement
Can help to reduce conflicts on construction projects

Vergabeformen Building Procurement - Contract Strategy: Judit Gyulay

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Judit Gyulay

Vergabeformen Building Procurement Contract strategy

05. 06. 2007

Building Procurement Contract strategy

Right Building Right Time Right Place

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Participants of a construction project have different interests

Of choice the procurement system

Building Procurement Contract strategy

Hand-over and use

Civil Engineer/Architect is involved the process in different phases in different roles

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Common goal of participants to perform a building

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

addition: participants individual interest

Building Procurement Contract strategy

Participants of a construction project

Directly involved Indirectly involved

client, designer, contractor advisor, project manager, supervisor bank, authority

Building Procurement Contract strategy

Participants common goal

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Lack of identification of own interest leads to one-sided contract

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

activities responsibilities risks

with the partners

Will choose procurement system and contract form

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Idea Hand-over and use

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Project Has to be managed

Planning Organising Leading Commanding Controlling

Who will manage? In which system ?

Building Procurement Contract strategy

Typical management structure with project manager

Project co-ordinator Quantity surveyor

Typical management structure with project coordinator

Building Procurement Contract strategy

Clients main decisions:

Organisation for the Management of the Project

Design and build

Building Procurement Contract strategy More complex

Need of change in procurement methods

projects Lack of time

Preparation Design Tender/bidding Construction

Preparation Design Tender/bidding Construction

Building Procurement Contract strategy

Procurement/project delivery system

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Traditional procurement system characteristics

Long construction period Consecutive organisation Clear contracting relations

Judit Gyulay 05.06.2007

Building Procurement Contract strategy

Innovative Project delivery systems

Judit Gyulay 05.06.2007