Effect Of Procurement Systems On Performance Of Projects Construction Essay

The procurance of building undertaking is huge in range because it involves the assemblage and organizing of myriads of separate persons, houses and companies to plan, manage and construct building merchandises such as houses, office edifices, shopping composite, roads, Bridgess etc. for specific clients or “ clients ” . Procurement comes the word procure which literally means “ to obtain by attention or attempt ” ; “ to convey about ” and “ to get ” . System is about “ organized method, attack, technique, procedure or process ” . In this context, undertaking procurance is really much concerned with the organized methods or procedure and process of obtaining or geting a building merchandise such as a house, shopping complex or route and breakwater. It besides involves set uping and organizing people to accomplish prescribed ends or aims. The Aqua Group ( 1999 ) described procurance as the procedure of obtaining or geting goods and services from another for some consideration. Masterman ( 1996 ) described project procurance as the organisational construction needed to plan and construct building undertakings for a specific client. It is in a sense really true because the procedure of “ obtaining ” a edifice by a client involves a group of people who are brought together and organized consistently in term of their functions, responsibilities, duties and interrelatedness between them.

Today, there are several types or fluctuations of undertaking procurance systems being widely used in the building industry. They range from the traditional system to the many fluctuations of “ fast- trailing ” systems such as prison guard, design and physique, build-operate-transfer, direction catching, cost-plus catching etc. The debut of many fluctuations of undertaking procurance system was induced by the pursuit for more efficient and rapid undertaking bringing system and better undertaking public presentation. They are inventions to the traditional bringing method aimed at run intoing the altering demand of clients or clients. The different procurance systems present have brought alterations non merely to the procedure and process of undertaking bringing but besides the facets of direction and organisation.

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Performance has been described as “ the grade of accomplishment of certain attempt or project ” . It relates to the prescribed ends or aims which form the undertaking parametric quantities ( Chitkara, 2005 ) . From undertaking direction position, it is all about meeting or transcending interest holders ‘ demands and outlooks from a undertaking. It constantly involves puting consideration on three major undertaking elements i.e. clip, cost and quality. ( Project Management Institute, 2004 ) . It has been pointed out that, in today ‘s extremely competitory and unsure concern environment, the client who is the major stakeholder, want speedier bringing of their undertaking with early start of building work, certainty of public presentation in term of cost, quality and clip, value for money for their investing, minimum exposure to hazard and early verification of design and monetary value or cost ( Centre for Construction Strategic Studies, 1998 ) . Although many tend to concentrate on the elements of cost, quality and clip, all others are besides of import parametric quantities of undertaking public presentation.


As mentioned earlier, the debut of different “ fast-tracking ” undertaking procurement systems is the effort by the industry to supply better trade to its clients or clients, who are progressively take a firm standing for “ better value for money ” from their undertakings in term of cost, clip and quality. The different undertaking procurance systems present different methods, procedure and process of planing and building of undertakings for the client. These different systems besides prescribe the fluctuation of the organisational construction of the undertaking squads in term of function, duty and authorization. So how make the different procurement systems affect the undertaking public presentation given that the method, procedure, process and organisation vary harmonizing to the systems? This paper looks at the different procurance systems and their properties and how each of them affects the undertaking public presentation.

There are many procurement systems, as will be highlighted subsequently, being used in the building industry now yearss. However the focal point is merely on the type of procurement systems that normally

used in Malaysia now yearss i.e. traditional system ; design and construct method, direction catching method and professional building direction method. The parametric quantities for the measuring of undertaking public presentation are many, but in this instance consideration is given to merely three elements – clip, including velocity of bringing, cost and quality


Before discoursing the consequence of the different procurance systems on undertaking public presentation, it is most appropriate to familiarise ourselves with the construct and operation of the different undertaking procurance systems.

Mastermann ( 1994 ) classify undertaking procurement systems into several classs based on the relationship and critical interaction between design and building duties. The classification of the assorted procurement systems are as follows ( mention Figure 1.0 ) :

Under this system, the duties of planing and building of the undertaking are separated and are carried out by different independent organisations viz. the interior decorators and contractors. It is sometimes called linear or consecutive catching system or multiple duties undertaking attack. It is a system where the undertaking development activities that start from feasibleness survey, preliminary design, certification to building and manus over, are carried out consecutive one after another. Traditionally, the complete on the job drawings or design has to be prepared by the interior decorators before stamp and building activities can take topographic point. It is sub-divided into 2 sub-categories – Traditional System and Variants of the Traditional Systems. The Variant System is farther sub-divided into ( I ) Sequential Method, and ( two ) Accelerated Method.

Under the consecutive method or a individual phase tendering attack, the edifice proprietor will name a squad of advisers to move on his behalf to bring forth building drawings, specification and stamp papers and to administrate the tendering processes to choose a contractor. Once selected and awarded the contract, the contractor will transport out based on the drawings and specification prepared by the client ‘s advisers.

The accelerated method, can be considered as an advanced attack to rush up the choice of contractor and the beginning of building. The method can be divided into 2 sub-categories i.e. two-stage and negotiated tendering methods. Both methods involve preliminary treatment with selected few contractors, entry of fixed stamp and/or cost dialogue.

B ) Integrated Procurement Systems

This system, as the name implies, integrates or combines the duties of design and building of the undertaking ( Ashworth, 2001 ) . Both duties are contracted out to a individual catching administration. It is besides called a analogue or individual duty procurance system whereby the client will merely necessitate to cover with a individual administration for both the designing and building the proposed undertaking. In this instance, the contractor will hold to prosecute and be responsible for design and building squads. Design and construct system falls under this class of undertaking procurance system. Under this system, the client together with is/her advisers will fix a stamp or command papers that include the undertaking brief and client ‘s demands and ask for a figure of contractors to offer. For the intent of subjecting stamps, the invited contractors will bring forth their ain design, building and cost proposal. Very frequently the successful contractor will into a contract based on ball amount monetary value and a fixed continuance ( Ashworth, 2001 ; Edmond, 2003 )

The fluctuation or invention to this manner of undertaking bringing systems includes ( 1 ) Package trade ( 2 ) Turnkey ( 3 ) Develop and concept. These systems that entail the contractor to be responsible for both the design and building of the undertaking, let for the early start of building through the decrease of the pre-tender activities as such they cut down procedure clip.

Package trade or normally called the “ all in ” catching is a type of procurance method where a contractor is given the duty for everything that is required and necessary for the design, building and bringing of the undertaking. Under this system, the services of the contractor will include the readying of undertaking brief, study and concluding working drawings, acquiring all the blessing from governments, undertaking funding, building, trappings and commissioning of all equipments and accoutrements and passing over the undertaking to the client.

Turnkey contract is an American term for “ all in ” or box contract. Under this agreement, a contractor is commissioned to set about the duties for everything necessary and required for the building, completion, commissioning and manus over the undertaking. The word “ prison guard ” means that, upon completion, the client is given the key and he can so come in the undertaking by “ turning the key ” . The contractor will hold to make everything from fixing undertaking brief, acquiring blessing, planing, funding, building, trappings and adorning to commissioning and passing over completed, cleaned and ready for usage undertaking ( Allen, 2001 ) .

Develop and concept is another of the integrated procurance attack which is really much similar to plan and construct. In this instance, the contractor is still given the duty for both the design and building of the undertaking. The difference is that, under this method the client ‘s design advisers prepare the construct sketches or designs and passed them to the contractor who will develop them and produced the elaborate on the job drawings. The contractor will so build and finish the undertaking based on what it has developed and produced.

degree Celsius ) Management Oriented Procurement Systems

It is a system that gives greater accent on the direction and integrating of the design and building of undertakings. Under this system, the direction of the design and building a undertaking is contracted out to a contractor who acts as a direction adviser on behalf of the client. The building itself is commissioned to many “ specializer ” or sub-

contractors who enter into contract with either the direction contractor or the client. This procurement attack that was introduced based on the construct that a builder or contractor has more expertness to pull off the design and building of a undertaking. As direction adviser, the appointed contractor does non itself, carry out the design or building of the undertaking. Its chief duty is to pull off the design and building by the design advisers and the many specializer contractors, severally.

There are three types of procurance method that autumn under the class of Management

Oriented Procurement Systems, they are:

1 ) Management catching

2 ) Construction direction

3 ) Design and manage

Management catching and building direction catching are signifiers of “ fast- trailing ” procurement attack whereby a contractor is contracted and paid a fee to pull off, procure and oversee the building of a undertaking instead than to construct the undertaking. The existent building plants are contracted out to many bundle or specializer contractors. Under this agreement the direction contractor is employed as a building adviser to be portion of the client ‘s squad. The chief difference between contract direction and building direction catching is that in the former, the bundle contractors are in contract with the direction contractor. In the latter, the bundle contractors ( specialist sub-contractors ) are in contract with the client or edifice proprietor.

Under the design and manage system, a individual organisation or house is commissioned to be responsible for planing the undertaking and pull offing its building. The house is does transport out the work itself, but it is contracted out to a figure of specialist sub-contractors or bundle contractors, who enter into contract with the client. A design and manage house or company is engaged as a adviser for the client and go a member of the undertaking squad.


It is appropriate at this occasion to see the procedure or flow of activities of the different procurance systems. They have, to a certain extent, indicated the consequence of the different procurance system on the undertaking public presentation, specifically on the continuance of the undertaking development and the get downing point of the building. They besides show the allotment of responsibilities

and duties between the client, design and building advisers and contractor/s. For comparing intents, delight mention Figure 1.1, 1.2, 1.3 and 1.4 in this and following page.

Undertaking brief Feasibility survey

Concept design

Detail design Tender & A ;




& A ; handover

Client & A ; Advisers duty

Contractor ‘s duty

Figure 1.1 – The Linear or Sequential Process of the Traditional Procurement System

Undertaking brief Feasibility survey

Tender certification

Concept design

Tender and catching

Construction Commission & A ;

manus over

Detail design

Client & A ; Consultants duty Contractor ‘s duty

Figure 1.2 – The Integrated Process of Project Designing and Construction in the Design and Build

Procurement System

Detail design and/or store drawings

Undertaking brief Feasibility survey

Tender physician. & A ;

client ‘s require.

Concept design

Bidding & A ; Contracting

Construction Commission

& A ; manus over

Package Contractors ‘


Client & A ; Consultants duty Management contractor ‘s duty

Figure 1.3 – The Procedure of Project Designing and Construction in the Management Contracting & A ; Professional Construction Management Procurement System

Project brief & A ;

clients require.

Feasibility survey

Concept design

Detail Design

Bidding & A ; Contracting

Construction Commission

& A ; manus over

Design advisers duty Package Contractors ‘ Duties

Construction director ‘s duty

Figure 1.4 – The Procedure of Project Designing and Construction in the Design and Manage Procurement



After holding considered the construct and the on the job procedure and process of the different undertaking procurance systems, allow us now look into the general consequence of the different system on undertaking public presentation. As highlighted earlier, the focal point of this paper in on three procurance systems ( 1 ) Traditional system ( 2 ) Design and Build and Turnkey Procurement Systems ( 3 ) Management catching and Professional Construction Management Systems. The treatment is limited to the chief undertaking public presentation parametric quantities – clip, cost and quality.

1 ) Traditional Procurement System


Due to its linear or consecutive attack, the traditional procurance system has been identified as the slowest undertaking bringing attack. However, this attack is more preferred because it provides clear answerability and better design and building control by the client. Since the pre-contract phase of this system is longer, more clip is available for the client and the undertaking squad to size up and reexamine the design before building.


This system provides more monetary value certainty to the client at the really early phase of the undertaking. It besides gives the client firmer and more competitory monetary value because the design plus the

complete working drawings have been to the full developed and detailed out anterior to tendering. It eliminates any design or building ambiguity or uncertainness which frequently causes the contractors to unnecessarily blow up the monetary value. In the instance where measure of measures is used, the command tend to be more just as such the undertaking cost is besides lower. The system besides better cost control as such cost addition due to fluctuations is minimized, but plants were frequently disrupted when there are excessively many fluctuations ( due to unforeseeable jobs ) and it tend to do the cost to blow up. ( Masterman, 1996 )


The traditional procurance system besides provides a high grade of quality certainty and functional criterions. It is besides a system that provides an chance for the edifice proprietor to unite the best design, direction and building expertness between advisers and contractor. It besides supply more clip for client and advisers to reexamine and to the full develop the design and specification therefore leting better certification readying. However, this system does non supply chances for contractor to lend his building engineering and direction expertness because they merely come into the scene after the design has been to the full developed and approved.

2 ) Design and Build and Turnkey Procurement Systems


Design and physique and prison guard undertaking procurance system are called “ fast-tracking ” or “ build-it-fast ” undertaking bringing system where the design and building are integrated. The design free pre-tender procedure allow for earlier building day of the month. It besides allows the procedure of item design and building to run about in parallel and at the same time to each other, therefore cut downing the overall undertaking development period well. As a individual entity responsible for both the design and building, the contractor is able to command non merely the building clip but besides the clip reserved for the design of the undertaking, therefore cut downing the overall contract continuance. In this type of procurance system, the contractor has ever been selected based on its huge experience, cognition and competence in building, as such by giving it the design duty, the contractor really frequently able to cut down building clip. This is done by him apologizing the design and building procedure and site activities.


Although the cost is fixed at the stamp phase and is capable to plan alterations, it is frequently higher than the traditional catching system. Apart from the fact that really limited contractors are invited to subject stamps, the deficiency of design and specification detailing during stamp, has made the contractors to jack up the monetary value to let for many uncertainnesss. This is because one time accepted, the stamp monetary value will be the concluding contract amount. It is non capable to alter, unless there are fluctuations required or instructed by the client. Such extra cost can non be avoided because under this procurance system the contractor will to take much of the fiscal hazard.

However, as many have claimed, the important cost economy in this type of procurance system is made through the decrease of the overall development period. The cost of contractor ‘s uncertainness can be set-off by the decrease in loan involvement and early fiscal return or benefits.

Cost economy may besides be made when the contractor applies his building cognition and experience to simplify design and work. At the same farther cost economy can be made when the client offer the contractor some signifier of inducement if he is able to salvage a important sum of cost.


The integrating of design and building allows the contractor to use his cognition and experience to develop much compacted and consistent work plan and to develop more efficient design and undertaking control programme. At the same clip it allows the contractor to be advanced to further better the building procedure and techniques therefore leting for better work and procedure quality.

However, it is more frequently found that the quality of work under this catching system tend to be questionable. The assignment of the designing and building to a contractor has caused the client to free control of the design and supervising of the work. This is particularly so when the client does hold his ain squad of advisers. As far the contractor is concerned, they tend to cut corners in order to maximise their net income, particularly when they feel that they have under monetary value their citation during when tendering for the work.

3 ) Management Contracting and Professional Construction Management Systems

( Both systems operate about on the same construct, except that in Management Contracting, the bundle contractors enter into contract with the direction contractor. In Construction Management System, the Package Contractors enter into contract with the client ) )


As mentioned earlier, the kernel of these two methods of undertaking procurance is that a contractor has the cognition, experience and competence to better pull off the design and building of a undertaking. It is a factor that allows for more efficient and effectual coordination of plants, stuffs, manpower and workss, therefore doing building clip shorter compared to other procurement systems. This is particularly so, given the fact that the same direction contractor is able to pull off and lend towards the development of the design. It allows the direction contractor to better buildability or constructability.

At the same, the system besides let for early start of building compared to the traditional attack. The readying of simple or basic stamp ( offering ) papers and the displacement of the procedure of conventional and detail design to building stage, let for an early start of building. As pointed earlier, under these two systems, the item design ( shop drawings ) is carried out ( either by the adviser or bundle contractors ) during the building phase. All these factors brought about a considerable decrease of the overall undertaking clip compared to the traditional or even design and construct undertaking systems.


The cost of the undertaking procured utilizing this system tends to be lower than those utilizing other procurement attack. This is because the cost of the undertaking is really the amount of monetary values quoted by the bundle contractors. With the direction contractor being the adviser, no excess cost is being added up for chief contractor ‘s net income border. The lone extra cost is the adviser fee that the client has to pay to the direction contractor or to the building direction adviser.


As an agent responsible for the building, the direction contractor or the professional building director tend to be more serious with the criterion and quality of the work done by the bundle contractors. Their experience as contractor or building director made them more adept and more effectual in guaranting high quality plants. Their

cognition and experience besides made them more expert in choosing stuffs and constituents of the right type and quality. These factors have contributed to a better criterion and quality of the completed building merchandises.


Cost, clip and quality are the three most of import parametric quantities of undertaking public presentation. It has been stressed that in today ‘s extremely competitory and unsure concern environment, clients are demanding for better value from their investing. They want their undertaking to be completed on clip, within the estimated cost and with the right quality. The usage of the assorted undertaking procurance systems shows that the building industry is now seeking to run into the clients ‘ demands. This is because the different procurance method will hold different consequence on the cost, clip and quality of the undertaking. Each undertaking procurance system has its ain distinctive feature in term of the pre- stamp and station stamp activities and procedures, division of hazards between client and contractors, and the effectivity of undertaking monitoring and control.

It is really of import at the really beginning of the undertaking to carefully see all factors when choosing the most appropriate procurance attack for a building undertaking. This is because each system has its ain characteristic and distinctive feature that will hold consequence on the cost, clip and quality of the undertaking i.e. the undertaking public presentation.


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