One for the property developers out there, here, we thought we’d explain a little more about the different methods of procurement there are out there for you to run, design and build a project. Our views below focus mainly on the three main routes of procurement.
What is Procurement?
Procurement routes in construction are the methods of running a project. There are numerous ways of doing so, but each has its own advantages and disadvantages which will align with your project aspirations.
Our views below focus mainly on the three main routes of procurement.
1: Traditional Procurement
The traditional procurement route clearly separates design from construction. The architect and design team is appointed on an individual basis all directly to you, the client. The contractor is typically appointed after a competitive tender process and is then allocated the responsibility of coordinating the construction team including all subcontractors.
What are the main advantages and disadvantages of Traditional Procurement?
– One of the main benefits of the traditional procurement route is that it’s been established for the longest length of time out of the three routes. Therefore, most contractors are well versed with this method and the process involved. It also typically holds the architect as a lead consultant role who certifies the contractor's work, this holds the quality of product at the forefront of the project.
– The main disadvantage of this method is the separation between the design and construction team.
2: Design and Build Procurement
The design and build (D&B) route is aimed to encourage team collaboration. In this route, the contractor takes the more prominent role in the team as they are your one point of contact, and all appointments are assigned to them. This makes them the focal point of communication, and their responsibility is to simplify the process for the client.
There are various forms of the D&B procurement route, other than having a D&B contractual arrangement, from start to finish. At times, it can be similar to the traditional procurement route where a project can take place early on in the process. This is often before the design team has been novated to the contractor at a milestone stage during the development, for example – after planning approvals.
What are the advantages and disadvantages of Design and Build Procurement?
– The advantage of this route is that the contractor takes on all risks as they are the only party appointed to you, whilst all other consultants are then appointed by the contractor.
– Payments are simpler as you only have to pay one party.
– On the flip side, being a part of a contractor-led team means that the contractor has the responsibility to factor in time (prioritising ease of build) and costs (potentially reducing the quantity and quality of materials).
3: Contract Management
Contract management is typically suited to developers who have a wide in-house team, experienced in dealing with complex projects. This route typically takes individual trade packages and tenders them out to separate contractor/subcontractor teams which are then directly appointed by the developer.
What are the advantages and disadvantages of Contract Management?
– The main benefit to this procurement method is cost – as it removes the main contractor.
– A disadvantage of this method, is the complexity of the procurement route means that there is inherently more management for the client.
– Hence, the risk is predominately on the client, although each works contractor will be providing you with their own guarantees and warranties. As a result, the risk to the client is typically passed down through the management factor.