Building Procurement

ABOUT THE AUTHORSRoy Morledge is Professor Emeritus of Construction Procurement, Nottingham Trent University.Adrian Smith is a Senior Consultant in Procurement and Project Management at Stradia Ltd, Sheffield and former Visiting Professor at Nottingham Trent University. Adrian is also a Tutor at the College of Estate Management, Reading.Samuel Appiah is a Director at Stanwell Consulting Ltd and Principal Consultant at HLN Ltd. He is also a Part-time Tutor at Nottingham Trent University.

• Preface to the Third Edition xvii1 Introduction 1References 52 Procurement Strategy: A Literature Review 7Introduction and Early History 7Procurement Route Selection Models 8Towards a Broader View 9Defining Project Success 11Team Relationships, Supply Chain Management and Communication and Their Effect on Project Performance 12Teamwork and Team Performance 12Partnering: Introduction and Early Development 14Partnering: A Critical Review 14Partnering Variants 17Partnering Dissected 17Procurement and Multicultural Teams 18Supply Chain Management 19The Role of the Client in the Procurement Process 20The Interrelationship Between the Components of the Overall Procurement Approach: Strategic Procurement Management 21Legal and Contractual Issues, Including Public Sector Procurement Legislation, and Their Effect on Project Performance 22International Procurement Comparisons and the Impact of Cultural Differences 24Risk Allocation and Reward 26Bid Evaluation Techniques 27Environmental and Sustainability Issues and the Procurement of Construction Work 29Sustainable Procurement for Construction Projects 31Conclusion 32References 333 Principles of Strategic Procurement 49Introduction 49Procurement: A Review of Theory and Practice 52A Strategic Approach to Procurement 54Components of the Procurement Process 54Functional Needs Analysis 55Development of an Overall Procurement Philosophy 55Components of a Collaborative Relationship 57Detailed Design of the Procurement Approach 59Formalisation of Contractual Relationships 59Selection of the Most Appropriate Partners 60Implementation 61Collaborative Procurement in the Public Sector 61Conclusion 62References 634 Public Sector Projects 65Introduction: Why Should Public Sector Projects Be Different? 65What Constitutes the Public Sector? 66Central Government 67Government and the Construction Industry 68Building Information Modelling 70Responsible Agencies 70The Gateway Process 70Local Government and Other Bodies Governed by Public Law 72Best Value 73The Public Contracts Regulations 2015 74References 745 Project Initiation 77Introduction 77Strategic Fit 78Payback 79Assessment of Options 82Achievability 83Affordability 83Defining the Project 84Prioritisation of Objectives 84Conclusion 86References 876 Briefing and the Design Process 89Introduction 89Project Briefing: An Overview 89Types of Construction Client 91Questions to Determine the Type of Client 93Time 93Cost 93Quality 94Likelihood of Post-Contract Client Changes 94Degree of Accountability Required 94Project Complexity 94The Briefing Process 94Briefing: A Historical Perspective 95Different Briefing Approaches 96The Generic Types of Brief 97Developing the Strategic Brief 98Developing the Project Brief 99The Project Execution Plan 100What Issues Does the PEP Need to Address? 101When Should It Be Prepared? 102Who Prepares the PEP? 103How Is the PEP Prepared? 103Project Briefing: The Case of Hospitals 104Critical Factors for Success in the Briefing Process 105References 1077 Procurement Strategies and Procurement Routes 111Introduction 111Procurement Strategy 117Developing a Procurement Strategy 120Procurement Routes 121Factors to Be Considered in Selecting a Procurement Route 122Factors Outside the Control of the Project Team 123Client Resources 123Project Characteristics 123Ability to Make Changes 123Risk Management 124Cost Issues 124Project Timing 124Construction Times 125Performance 126Selection of a Procurement Route 126Procurement Routes: A Review 130Traditional (Design–Bid–Build) 130Design and Build 133Measurement (Remeasurement or Measure and Value) 138Construction Management 139Management Contracting 141Design and Manage 142New Models of Construction Procurement 143Cost Led Procurement 143Two Stage Open Book 144Integrated Project Insurance 145Adoption of the New Models of Construction Procurement in the Industry 145References 1468 Project Team Selection 149Introduction 149The Selection Process 151Prequalification 151Production of the Tender List 154Tender Evaluation 154Price 155Technical Evaluation 155Commercial Evaluation 155Interview 155Award of the Contract 156Selecting a Consultant 156Selecting a Contractor 159Early Contractor Involvement 160References 1609 Managing the Procurement Process 163Introduction 163The Project Manager 164First Tasks of the Project Manager 166Developing the Project Execution Plan 166Identifying the Project Team 167Implementing the Procurement Strategy 167Project Resources 167Financial Resources 167Human Resources 168Physical Resources 168Temporary Organisational Structure 169Contractual Arrangements 169Systems and Controls 170Time Management 170Design Management 172Design Risk 173Cost Management 174Quality Control 177Change Control 178Commissioning 179Occupation and Take-over 179Building Information Modelling 180The Construction Act 183Social Value in Construction Procurement 184Health, Safety and Wellbeing 186Conclusion 187References 18710 The Value of Design 191Introduction 191Considering Value in the Business Context 192The Value of Good Design 193Managing Value 196Value Management 196Value Management Workshops 198The Benefits of Value Management 199Value Engineering 200Application of Value Engineering in the Construction Industry 200Value Engineering Workshops 201References 20111 Risk Management 203Introduction 203Risk and Uncertainty 204Types of Risk 205Risk Management Strategies 205Identifying Risk 206Assumption Analysis 206Checklists 207Brainstorming 207Delphi Technique 207Cause and Effect of Risk 209Other Risk Identification Techniques 209Examples of Risks 209Analysing Risk 210Qualitative Assessment 211Quantitative Assessment 211Sensitivity Analysis 212Probability Analysis 213Decision Trees 214Choosing a Risk Management Strategy 216Risk Management Strategies 216Risk Avoidance 216Risk Reduction 216Risk Transfer 216Risk Sharing 217Risk Retention 217Risk Allocation 217The Empty Chair Theory 218Monitoring and Controlling Risk 219References 220Further Reading 22012 Partnering Culture and the Management of Relationships 221Introduction 221The Latham Review and Subsequent Developments 221The Rise of Collaborative Approaches to Procurement 222Collaborative Approaches to Construction Work 223Contractual Approaches to Collaboration 224The Joint Contracts Tribunal Forms of Contract Including the Standard Form of Building Contract 224The New Engineering Contract Engineering and Construction Contract Edition 3 224The Association of Consultant Architects Project Partnering Contract 225Perform21 Public Sector Partnering Contract 225Target Cost Contracts 226What Advantages Does Partnering Bring? 227Managing a Successful Partnering Arrangement 227The Role of the Workshop Facilitator 228Facilitation Guidelines 229Agenda 229Structure and Climate 229Regular Summaries 229Control of Phases 229Gatekeeping 229Team Composition 229Managing Relationships 230Why Is Relationship Management Important? 230Establishing the ‘Cultural Fit’ 231What Is Culture? 232Understanding Culture 232Achieving Cultural Fit 233Mutual Objectives 234Team Development 235The Nature of Trust 237Maintenance of the Relationship 238The Project Supply Chain 240The Holistic Approach 241The Bicameral Approach 241The Unilateral Approach 242The Collaborative Approach 242A Case Study: Procurement of a Long-Term Multi-Project Alliance – Sheffield Hallam University 243Introduction 243The Campus Development Plan 243Procurement 244The Stradia Brief 245The Contractual Relationship 246Organisation and Management 246The Contractor Selection Process 247The Written Submission 247The Financial Submission – Tender Cost Models 247Behavioural Assessment 248Insurances 248Selection of the Consultancy Group 248Conclusion 249Acknowledgements 249References 24913 Privately Financed Public Sector Projects 251Introduction 251Historical Development 251Modern Models for Privatisation 254Outright Privatisation 254Participative Privately Financed Techniques 255Corporatisation and the Use of Semi-Private (Mixed) Companies 256Publicly Owned Corporations 256Semi-Public Corporations 257Management Contracts 257The Leasing or Build–Lease–Transfer Model 258Pre-Financing 259Mixed Models 259Concession-Based Methods 260Build–Operate–Transfer 260Build–Own–Operate–Transfer 261Build–Transfer–Operate and Build–Transfer–Service–Maintain 262Build–Own–Operate 262Lease–Renovate–Operate–Transfer 262Design–Build–Finance–Operate 263Design–Construct–Manage–Finance and Design–Build–Finance–Operate–Manage 263Public Private Partnerships 264The Private Finance Initiative 264Genesis 264Problems 265Understanding the Rules 266High Bidding Costs 266Risk 266Refinancing 267Value for Money 268Design 270The Relationship Between PFI Client and Contractor 270Small Projects 273Concession Agreements 273Current Developments 277Conclusion 279References 27914 Construction Procurement: Europe 283Introduction and Background 283The Development of the Professions 285Europe 286The European Union 286European Procurement Practice 287The French System 287The Architect 288Contractors 288The Client 288Contractual Approaches 289Tender Documentation 292Contracts 292Contemporary Developments 294The Northern European Approach 294The Mediterranean Approach 296Greece 297Italy 297Spain and Portugal 298Procurement Rules: European Union Principles and Procedures 299Non-discrimination and Transparency: The Role of the EU 299EU Directives 300The Supplies Directive and Amendments 301The Works Directive and Amendments 301The Utilities Directive and the Utilities Remedies Directive 302The Services Directive 302The Public Sector Directive 303Tendering 303Value Thresholds 304Tendering Procedures 305Open Tendering 305Restricted Tendering 305Negotiated Tendering 305Competitive Dialogue 306Framework Agreements 307Electronic Auctions 308Sustainability and Environmental Issues 309Specifying Sustainability Requirements and the Selection of Tenderers 310Sheltered Workshops 310Use of Variant Bids 310Use of Contract Award Criteria 310Timescales 310Award Procedures 311The Remedies Directive 313Enforcement of EU Directives 313References 31415 Construction Procurement: USA, the Middle East, Africa, and China 315Introduction and Background 315Construction Procurement in the USA 316Introduction 316Procurement Routes 316Design–Bid–Build 317Design–Build Process 317Construction Management 318Construction Management at Risk 318Job Order Contracting 319Time and Materials Contracting 319Best Value Selection 319Summary 320The Middle East 320Construction Procurement in Sub-Saharan Africa 322Introduction 322Procurement Approaches 323Public Private Partnerships 325The Influence of Chinese Investment on Procurement in SSA 327The People’s Republic of China and the Hong Kong Special Administrative Region 328The Chinese Construction Industry 329The ‘External’ Construction Industry 329The Indigenous Construction Industry 330The Construction Professions 330Opportunities for Western Companies 331References 33216 Procurement of Work to Heritage Buildings 335Introduction 335The Heritage Challenge 336Procurement: The Heritage Context 337The Value of Built Heritage 341The Importance of Cultural Significance 343Statutory Protection for Heritage Buildings 345Listed Buildings 345Conservation Areas 346Scheduled Monuments 346World Heritage Sites 347Managing Change in the Historic Environment 347Planning for Conservation 347Conservation Plans 347Conservation Statements 348Asset Management Plans 348Heritage Impact Assessments 348The Planning Process 349The Role of the Conservation Advisor 349Procurement Processes and Procedures 350The Investigation Contract 351A Case Study in the Procurement of Work to Historic Buildings: The Derby Roundhouse 351The Existing Buildings: Historical Background 353The Genesis of the Project 358The Final Scheme 359Site Surveys and Pre-tender Investigations 363The Tender Process 364The Partnering Process 365Post-contract Processes 366Practical Issues on Site 366Repairs to Historic Structures 366Integration of Building Services 367Project Timeframe, Costs, and Team 367A Case Study in the Procurement of Work to Historic Buildings: The Belton House Stables Project 368The Existing Buildings: Historical Background 368The Stables Building 369The Stables Scheme 370Feasibility Studies and Project Design 372Site Surveys and Pre-tender Investigations 374Procurement Approach 375Post-contract Processes 375Practical Issues on Site and Variations 376Programme and Cost 377Summary 378Acknowledgements 379References 37917 Summary 383References 386A Procurement Route Selection Checklists 387Checklist 1: Time 387Checklist 2: Design 388Checklist 3: Cost 388Analysis 389Index 391

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