Examining The Impact On Project Performance Construction Essay

The traditional method has been in usage in the UK since the early 19th century. Under this attack, the client normally enters into a separate contractual relationship with different design advisers and a contractor. In theory, reimbursement of the design advisers is on a fee and disbursals footing whilst the contractor ‘s monetary value is a lump amount or based on work completed on an admeasure footing. It is assumed that all the elaborate work will be completed before the contract paperss are prepared ( Rougvie, 1987 ; Morledge et al. , 2006 ) . One of the indispensable features of this attack is the stiff separation of the design and building procedures. The procedure begins with a client who may hold a demand for a edifice. After corroborating the demand for a new edifice, the client briefs an designer who will so help him/her to develop a concern instance for the undertaking and rede on other advisers required. The design advisers produce design drawings, specifications and contract paperss, upon which competitory stamps are obtained from contractors. The successful contractor is so appointed by the client to change over the design into a finished installation, under the supervising of the designer who normally acts as the lead adviser and contract decision maker.

The two discrepancies of this attack are:

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i‚· Sequential: Where completed design drawings, specifications and cost paperss are prepared for contractors to offer, by and large, in competition ; and

i‚· Accelerated: Under this attack, the contractor is appointed earlier in the sequence of design based on partly developed design information, either by dialogue or in competition ( Turner, 1997 ) .

The procedure follows a purely consecutive way with each of the activities involved carried out in isolation. This frequently leads to hapless communicating, undermine relationships between undertaking squad members and bring forth jobs of buildability ( Masterman, 2002 ) . Rougvie ( 1987 ) points out a mismatch between the contractual system and the communicating system. The client is in direct contract with the contractor but has no rights of communicating or direction under the contract. Similarly, the designer is expected to command the other members of the design squad, without holding 6

any contractual influence or authorization over them. Historically, the traditional procurance method has been prone to extended confrontation, adversarial relationships and a civilization of judicial proceeding ( Hardcastle & A ; Tookey, 1998 ) . However, the traditional attack has been in usage in its present signifier for over 150 old ages ; it is good understood in the industry. It can offer a high grade of certainty in footings of cost and specified public presentation at contract award.

The traditional procurance is a low-risk option for clients who wish to understate their exposure to the hazard of cost overproduction and design failures, as it offers cost certainty and clip predictability. It is suited for both experient and inexperient clients and for undertakings where functionality is a premier aim ( Constructing Excellence, 2004 ) . The accelerated option is best applied for big or complex undertakings, where the solution may non be derived without specialist building input, or when it is necessary to speed up the building programme ( Cox and Townsend, 1998: p.37 ) . Harmonizing to Murdoch & A ; Hughes ( 2008 ) , the traditional procurance scheme is selected when the client makes no expressed pick and the advisers do non raise the issue. In other words, it is adopted when no 1 plans the agencies of procurance.

4.2 Integrated Procurement Strategy -Design and Build

Under the design and physique ( D & A ; B ) attack, the contractor takes full duty for the design, direction and building of the undertaking. It has become one of the most popular procurance methods in the UK edifice industry ( Loptun, 2009 ) . The procedure starts with a client placing a demand for a edifice and using design advisers to fix outline design and/or public presentation specifications for invitation of commands from contractors. Once appointed, the successful contractor so goes on to develop the design and concept the edifice.

Several discrepancies of the D & A ; B attack have been identified by recent research workers ( Chapell, 2007 ; Hughes et al. , 2006 ; Knight et al. , 2002 ; Masterman, 2002 ) , including:

i‚· Novated design and physique: The client employs the services of design advisers, who are assigned to the contractor on their assignment. This means that the original contract between the interior decorators and client is replaced by a new one between contractor and design advisers ( Knight et al, 2002 ) ;

i‚· Package trade: Under this, the contractor provides standard edifices or system edifices, which are adapted to accommodate client demands. It peculiarly refers to systems of industrialized edifices, which are normally purchased and erected as a ‘package ‘ ( Chappell, 2007 ) ;

i‚· Turnkey contract: The term ‘turnkey ‘ agencies that after completion, when the client takes ownership of the edifice, all that remains to be done is to turn the key. The contractor


accepts duty for everything required for the design, building, completion, committee and manus over of the installation ; and

i‚· Develop and concept: The client appoints design advisers to fix conceptual design drawings or studies. Once appointed, the contractor will finish the design and concept the undertaking.

Although the contractual relationships among the parties seems simplified when compared with other procurance methods, Masterman ( 2002 ) declares that this simpleness is delusory and that ‘a elaborate analysis of the procedure reveals the fact that the assorted component parts are, in themselves, comparatively complex and incorporate a figure of booby traps for the unwary and inexperient client ‘ ( p42 ) . Parallel working is facilitated in the D & A ; B scheme, doing it correspondent to facets of the concurrent technology in the aerospace and other industries ( Hardcastle & A ; Tookey, 1998 ; Anumba & A ; Evbuomwam, 1997 ) . The most of import factors impacting the pick of a D & A ; B attack are individual point of duty ; the demand for guaranteed maximal monetary value ; and the transportation of design and building hazards ( Cox & A ; Townsend, 1998 ) . D & A ; B is suited for all clients, including inexperient clients. It is besides suited for cost certainty and fast path undertakings, but non suited for a underdeveloped client brief.

4.3 Management-orientated Procurement Strategies – Management Contracting & A ; Construction Management.

This class of procurance methods place the accent upon the overall direction of design and building of the undertaking with the ulterior facet being carried out by plants or bundle contractors ( Chan, 1995 ) . The procurance methods, which are considered under this class include Management Contracting, Construction Management and Design and Manage procurance. However, the most normally used are the Management Contracting and Construction Management.

Management Catching: Where a direction contractor is appointed to ‘provide direction services to command and organize all site activities, sub-letting the existent plant to box contractors on a competitory footing ‘ ( Cox and Townsend, 1998: p38 ) . An of import characteristic of this attack is the assignment of the contractor alongside the design squad to develop a programme for building and to lend to the design and costing of the plants ( Constructing Excellence, 2004 ) . The mechanism of payment is normally on a cost-reimbursement footing plus a direction fee, doing this a low hazard option. The RICS Contract in Use study ( 2010 ) reveals a systematically worsening tendency in the usage of this attack, proposing that it is losing out in favor of other procurement methods such as the Construction Management.

Curtis et Al. ( 1991 ) provides counsel as to the best conditions for using this attack: 8

i‚· on big and complex undertakings, where there is possible demand to alter demands during building ( flexibleness ) ;

i‚· where there is a demand for early completion ;

i‚· where there is concern for labour handiness, stuff and transit, and local labor dealingss ;

i‚· where the client and advisers have deficient in-house direction resources ; and

i‚· where a big figure of different contractors are required, ensuing in many interfaces for co-ordination.

However, this attack is less suited for inexperient clients, cost certainty before beginning of building and for clients who want to go through hazard to the contractor ( Constructing Excellence, 2004 ) .

Construction Management: This attack is similar in construct to the Management Contracting Strategy. However, under the Construction Management attack, the client enters into a separate contract with the design advisers, bundle contractors and a building director who provides direction services on a consultancy footing.

Construction Management attack is best used when the client wants to hold:

i‚· separate contractual duties for the professional direction and the design of a building undertaking ;

i‚· flexibleness to utilize competitory tendering and/or dialogue for securing separate elements of building ;

i‚· an early start on site and a fast-track undertaking ;

i‚· a less adversarial signifier of contract ; and

i‚· range for fluctuations throughout the undertaking.

( Cox and Townsend, 1998 )

The Construction Management scheme requires changeless engagement by the client, so it is merely suited for experient clients.

4.4 Discretionary Procurement Strategies – Partnering Agreement

Partnering has been described as a structured direction attack, which facilitates squad working across contractual boundaries by incorporating the undertaking squad and smoothing the supply concatenation ( Hackett, et al. , 2007 ) . The UK Office of Government Commerce ( OGC, 2007 ) identifies two signifiers of partnering:

i‚· Project partnering involves the incorporate supply squad and the client administration working together on a individual undertaking, normally following a competitory procurance. ; and


i‚· Strategic partnering involves the incorporate supply squad and the client administration working together on a series of building undertakings to advance uninterrupted betterment.

In other words, partnering can be project-specific or for a series, or programme, of undertakings. Partnering is applicable to all undertakings, including those that are really straightforward and limited in range ( OGC, 2007 ) . However, it is said to be peculiarly appropriate in state of affairss where:

i‚· the undertaking is technically complex and concern demands are hard to stipulate ;

i‚· the client has similar undertaking demands over clip, giving range for uninterrupted betterments in cost and quality ; and

i‚· building conditions are unsure, solutions are hard to anticipate and joint job resolution is indispensable.

Harmonizing to Bennett & A ; Peace ( 2006 ) ‘Partnering delivers important betterments in public presentation by authorising interior decorators and specializers to make their best work ‘ ( p.8 ) . However, Samuelsson-Brown ( 2002 ) argues that the full benefits of this attack can merely be realised when the lessons learned on undertakings are transferred to future undertakings.

4.5 Common Variants – Target Contracts & A ; Cost Plus Fixed Fee

Some of the well established procurement methods, such as the traditional and D & A ; B attacks, have produced discrepancies that are common to most of the chief procurance attacks ( Masterman, 2002 ) . Masterman ( 2002 ) identified the UK common discrepancies to be Two-stage Selective Tendering, Negotiated Contracts, Continuity Contracts, Serial Contracts, Cost plus Contracts and Target Cost Contracts. However, judging from the RICS Contracts in Use Survey ( 2010 ) , the most common discrepancies are the Prime Cost plus Fixed Fee and Target Contracts.

Prime Cost plus Fixed Fee

Under this attack, the appointed contractor will be reimbursed by payment of the existent cost of the plants plus a fee to cover operating expenses and net income. It is suggested that the usage of this system can be advantageous to the client when:

i‚· there is unequal definition of the work at the clip of stamp ( Walker & A ; Hampson, 2003 ) ;

i‚· high rising prices is prevailing ;

i‚· the undertaking is highly complex and there is a major or unquantifiable hazard ; or

i‚· an exigency occurs.

Prime Cost plus Fixed Fee would be suited if a figure of these features are in combination within the one undertaking ( Masterman, 2002 ) . The absence of a stamp amount and an estimated concluding cost by and large prevents the usage of this system on undertakings that are capable to stiff answerability demands. 10

Target Contracts

In fixed monetary value contracts, contractors take the hazard of their estimations being incorrect, while the contrary applies to be plus fixed fee contracts where the client is at hazard in relation to the concluding cost. Target contract provides a medium for dividing the hazard between the client and the contractor ( Hackett, et al. , 2007 ) . The client agrees with the contractor to portion any nest eggs or add-ons if the existent cost is lower or higher than the mark cost.

Muriro & A ; Wood 2010

The specification for most of the undertakings reviewed is an norm of three floors, reinforced

concrete strip and tablet foundation, steel frame, face brick/block walls and aluminum


From the staying 49 undertakings 35 were tendered utilizing the D & A ; B procurance method and 14 were

tendered utilizing the traditional method.

Contractor choice methods used was varied across the undertakings reviewed but selected

competition was the most common method used ( 49 % of the undertakings analysed ) followed by

unfastened competition ( 37 % ) , Negotiation ( 12 % ) and Two phase stamp ( 2 % ) as represented in

Figure 1 below.

The high per centum in competitory choice methods used in naming contractors is in line

with perceptual experiences noted in the reappraisal of related literature in which clients are viewed as

seeking to hold their terminal merchandises at the lowest monetary value. Competition, whether selected or unfastened,

is perceived to bring forth this aspiration.


5.5 Causes of Poor Profitability

5.5 Impact on Stakeholders

5.6 Impact on Undertaking Performance

5.7 Drumhead


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