PROCUREMENT

Procurement and management of construction module

Procurement and Management of Construction Module

Background Literature Review

In the business environment, procurement has been functioning as an important support function of the organization that could be critical to the enhancement of the project or program delivery (content.undp.org). It is true that procurement is the essential part of the supply chain system of an organization, and the proper analysis of the SCM provides the understanding of the exposed procurement risks and defines the procurement strategies and planning.

The various procurement methods have been classified into seven broad groups including the traditional procurement which has been one of the most commonly used approaches to the procurement and construction management (Anonymous, 1997, p. 2). In this class, the work is done by the contractor as per the defined scope of work for a fixed lump sum price. The client assumes the responsibility for the design and the project team and a number of standard forms of building contract might be followed in this method. In the second method of procurement which is design and build, the contractor is appointed by the client and made responsible for the construction and design. The negotiation or tender process might be chosen to select a contractor and the construction work might be monitored by the client's appointed consultant (designguidance.skillsfundingagency.bis.gov.uk).

The two stage tendering procurement involves the process of selecting the contractors. At the initial stage, the appointment of a contractor is based on the overhead level and profit for each contractor. In the second stage, the contractor and project team works in coordination to develop the design and to outline the detailed costing for separate work elements of the project. The process is composed of the fixed price based on the detailed design. The start on site occurs later than normal due to the length of time required at the second stage work. The public private partnership projects are comprised of the expensive tendering process as these would be based on the negotiation among the participants. For this particular method, the time duration from the project commencement to start on site would substantially be longer (Anonymous, 1997, p. 2).

A fast track strategy to overlap the design and construction stages is the management contracting method of procurement. This method would allow the early elements of the construction process to commence even before the design has completed. In this type of procurement method, the management contractor charges fee for managing the overall contract and hence, he or she might be appointed early in the design. The management contractor may provide assistance and advice on the build-ability and programming. The development cost is controlled by the utilization of the cost plan which is based on the estimated values of cost (Anonymous, 1997, p. 2).

In the construction management, the individual project elements will be let before the design of the later elements is completed. The construction manager is appointed by the provider to manage the overall work in return for management fee. The sub contractors' contracts will be placed ...