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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, …show more content…
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 …show more content…
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.
1.0 Main procurement issues and Project success standards The prime Main investment for DeMere Group in the Sri Lanka needs investigating a number of key features before investigating the principal procurement problems for their upcoming projects as shown below: The extended view of the group in Sri Lanka is to build five-star hotels; three hotels are in the immediate future and last two are planned for long-term. Assumption made for project locations as the first hotel is located in Kandy (Project 1). Second (Project 2) and third (Project 3) hotels are located in Colombo and last two (Project 4 and 5) will be in Galle, with the total budget 50 million US dollar for each project.
Tendering method: • Opening tendering - The employer advertises his proposed project, and permits as many contractors as are interested to apply for tender documents. Open tendering has been criticised for attracting tenders / expressions of interest from large numbers of suppliers, some of whom may be entirely unsuitable for the contract and as a result it can waste a great deal of time, effort and money.
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
As a project manager, one must understand the procurement concepts, regardless of whether you are a buyer or a seller. Needless to say, procurement management helps identify a suitable supplier or contractor to procure goods or services. In most cases, a procurement contract is created. A procurement contract is an agreement in which the buyer agrees to acquire goods or services from a seller in exchange for consideration. A contract is a legally binding agreement between two or more parties. Usually, one party is known as a buyer and the other as the seller. This binding agreement is the key to the buyer and seller relationship and this provides the framework for how they will transact with each other. These contracts are mostly
While there are positive takeaways from all aspects of the project, better strategies and approaches could have been taken to manage the human resources and procurement phases of the project. The success of the integration aspect was in part due to proper profiling and characterization of the project. A positive lesson learned about communication with clients was to define the scope of the project with full transparency to the client. The frequent communication with the client and soliciting their involvement in important decision making throughout the project allowed for mutual understanding of project
Particularly, the construction industry has shown a lot of difficulties to be able to cope with the increasing complexity of projects, there’s need to be a change from the traditional approach to deal with future challenges and requirements (Cooke-Davies, Cicmil, Crawford, & Richardson, 2008). Each building constructions just happens once, in other words, there doesn’t exist the same situation
Typically, project managers will be appointed at the beginning of a project and will assist the client in developing the project brief and then selecting, appointing and co-ordinating the project team. He or She will then usually represent the client throughout the full development process managing the inputs from the client, consultants, contractors and other stakeholders.’
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).
The Procurement Process model shows the various steps and stages that a particular procurement activity follows in meeting operational requirement these stages have detailed action which need to be done before continuing to the next stage. Emmett and Crocker (2008), argue that the procurement process model for most areas depicts like the figure below;
The procurement approach for this project was chosen based on the project management. The process of selecting the (construction) project management contractor (Siemens) as well as its team was significant as the key in producing an effective project with regards to quality and cost in this approach relies on the management team’s experience and knowledge in all aspects.
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.
Design and build is a contractual arrangement where the Contractor offers to design and build a construction project for a contract sum which is inclusive of both the design and construction costs.
Among the issues of concern to the procurement officer which are being addressed in this study are; the level of accountability, the adherence to professionalism and ethics and the adoption and use of ICT technologies in the organization. There is a direct influence on the profits because procurement stands for such a large part of the company’s costs. There is also an indirect influence on the performance due to the large part of the internal costs affecting what happens in the interface between the company and its suppliers (Gadde and Hakansson,
Therefore, it can reduce the time overlap of the design and the construction, and it will not waste time to wait the design. The client willing to solve any problems with the contractors when compared with the other contracts, therefore, the decision of any changes can be more efficiently. Moreover, the contractor early to participate in the combining design and construction stage, it enhances the buildability and lets the progressive planning to achieve a faster construction. The client and the contractors are pre-agreed the arrangement of the changes, therefore it can reduce the claims and the disputes between