As an industrial process, construction is unique. The procurement processes used to achieve the successful completion of built assets requires a different approach to that adopted in most other industries, due to the design of buildings being bespoke and the sites being geographically varied. The procurement process is central to the success of any construction project and many of the problems which impact construction projects can be traced back to the procurement phase, so a good understanding of the methods of procurement, the development of a procurement strategy and the influence it has on project success is essential for all those working in the industry.
Much has changed in the global construction industry since publication of the second edition of Building Procurement, for example the increase in debt burden of many major economies, widespread adoption of Building Information Modelling (BIM) Technology in the industry and the United Kingdom's exit from the European Union. This new edition has been rewritten to take account of these significant developments, but at its core it continues to provide a critical examination and review of current procurement practices in the UK, continental Europe (including EU procurement procedures), China, Middle East and Sub-Saharan Africa and the USA. It retains its original strong emphasis on the need for clients to establish achievable objectives which reflect the project business case and focuses on development of suitable strategies and management structures to meet those objectives in the current construction climate.
Building Procurement will be essential reading for senior undergraduate and postgraduate students of construction management and practitioners working in all areas of construction management.
Table of Contents
Preface to the Third Edition xvii
1 Introduction 1
References 5
2 Procurement Strategy: A Literature Review 7
Introduction and Early History 7
Procurement Route Selection Models 8
Towards a Broader View 9
Defining Project Success 11
Team Relationships, Supply Chain Management and Communication and Their Effect on Project Performance 12
Teamwork and Team Performance 12
Partnering: Introduction and Early Development 14
Partnering: A Critical Review 14
Partnering Variants 17
Partnering Dissected 17
Procurement and Multicultural Teams 18
Supply Chain Management 19
The Role of the Client in the Procurement Process 20
The Interrelationship Between the Components of the Overall Procurement Approach: Strategic Procurement Management 21
Legal and Contractual Issues, Including Public Sector Procurement Legislation, and Their Effect on Project Performance 22
International Procurement Comparisons and the Impact of Cultural Differences 24
Risk Allocation and Reward 26
Bid Evaluation Techniques 27
Environmental and Sustainability Issues and the Procurement of Construction Work 29
Sustainable Procurement for Construction Projects 31
Conclusion 32
References 33
3 Principles of Strategic Procurement 49
Introduction 49
Procurement: A Review of Theory and Practice 52
A Strategic Approach to Procurement 54
Components of the Procurement Process 54
Functional Needs Analysis 55
Development of an Overall Procurement Philosophy 55
Components of a Collaborative Relationship 57
Detailed Design of the Procurement Approach 59
Formalisation of Contractual Relationships 59
Selection of the Most Appropriate Partners 60
Implementation 61
Collaborative Procurement in the Public Sector 61
Conclusion 62
References 63
4 Public Sector Projects 65
Introduction: Why Should Public Sector Projects Be Different? 65
What Constitutes the Public Sector? 66
Central Government 67
Government and the Construction Industry 68
Building Information Modelling 70
Responsible Agencies 70
The Gateway Process 70
Local Government and Other Bodies Governed by Public Law 72
Best Value 73
The Public Contracts Regulations 2015 74
References 74
5 Project Initiation 77
Introduction 77
Strategic Fit 78
Payback 79
Assessment of Options 82
Achievability 83
Affordability 83
Defining the Project 84
Prioritisation of Objectives 84
Conclusion 86
References 87
6 Briefing and the Design Process 89
Introduction 89
Project Briefing: An Overview 89
Types of Construction Client 91
Questions to Determine the Type of Client 93
Time 93
Cost 93
Quality 94
Likelihood of Post-Contract Client Changes 94
Degree of Accountability Required 94
Project Complexity 94
The Briefing Process 94
Briefing: A Historical Perspective 95
Different Briefing Approaches 96
The Generic Types of Brief 97
Developing the Strategic Brief 98
Developing the Project Brief 99
The Project Execution Plan 100
What Issues Does the PEP Need to Address? 101
When Should It Be Prepared? 102
Who Prepares the PEP? 103
How Is the PEP Prepared? 103
Project Briefing: The Case of Hospitals 104
Critical Factors for Success in the Briefing Process 105
References 107
7 Procurement Strategies and Procurement Routes 111
Introduction 111
Procurement Strategy 117
Developing a Procurement Strategy 120
Procurement Routes 121
Factors to Be Considered in Selecting a Procurement Route 122
Factors Outside the Control of the Project Team 123
Client Resources 123
Project Characteristics 123
Ability to Make Changes 123
Risk Management 124
Cost Issues 124
Project Timing 124
Construction Times 125
Performance 126
Selection of a Procurement Route 126
Procurement Routes: A Review 130
Traditional (Design-Bid-Build) 130
Design and Build 133
Measurement (Remeasurement or Measure and Value) 138
Construction Management 139
Management Contracting 141
Design and Manage 142
New Models of Construction Procurement 143
Cost Led Procurement 143
Two Stage Open Book 144
Integrated Project Insurance 145
Adoption of the New Models of Construction Procurement in the Industry 145
References 146
8 Project Team Selection 149
Introduction 149
The Selection Process 151
Prequalification 151
Production of the Tender List 154
Tender Evaluation 154
Price 155
Technical Evaluation 155
Commercial Evaluation 155
Interview 155
Award of the Contract 156
Selecting a Consultant 156
Selecting a Contractor 159
Early Contractor Involvement 160
References 160
9 Managing the Procurement Process 163
Introduction 163
The Project Manager 164
First Tasks of the Project Manager 166
Developing the Project Execution Plan 166
Identifying the Project Team 167
Implementing the Procurement Strategy 167
Project Resources 167
Financial Resources 167
Human Resources 168
Physical Resources 168
Temporary Organisational Structure 169
Contractual Arrangements 169
Systems and Controls 170
Time Management 170
Design Management 172
Design Risk 173
Cost Management 174
Quality Control 177
Change Control 178
Commissioning 179
Occupation and Take-over 179
Building Information Modelling 180
The Construction Act 183
Social Value in Construction Procurement 184
Health, Safety and Wellbeing 186
Conclusion 187
References 187
10 The Value of Design 191
Introduction 191
Considering Value in the Business Context 192
The Value of Good Design 193
Managing Value 196
Value Management 196
Value Management Workshops 198
The Benefits of Value Management 199
Value Engineering 200
Application of Value Engineering in the Construction Industry 200
Value Engineering Workshops 201
References 201
11 Risk Management 203
Introduction 203
Risk and Uncertainty 204
Types of Risk 205
Risk Management Strategies 205
Identifying Risk 206
Assumption Analysis 206
Checklists 207
Brainstorming 207
Delphi Technique 207
Cause and Effect of Risk 209
Other Risk Identification Techniques 209
Examples of Risks 209
Analysing Risk 210
Qualitative Assessment 211
Quantitative Assessment 211
Sensitivity Analysis 212
Probability Analysis 213
Decision Trees 214
Choosing a Risk Management Strategy 216
Risk Management Strategies 216
Risk Avoidance 216
Risk Reduction 216
Risk Transfer 216
Risk Sharing 217
Risk Retention 217
Risk Allocation 217
The Empty Chair Theory 218
Monitoring and Controlling Risk 219
References 220
Further Reading 220
12 Partnering Culture and the Management of Relationships 221
Introduction 221
The Latham Review and Subsequent Developments 221
The Rise of Collaborative Approaches to Procurement 222
Collaborative Approaches to Construction Work 223
Contractual Approaches to Collaboration 224
The Joint Contracts Tribunal Forms of Contract Including the Standard Form of Building Contract 224
The New Engineering Contract Engineering and Construction Contract Edition 3 224
The Association of Consultant Architects Project Partnering Contract 225
Perform21 Public Sector Partnering Contract 225
Target Cost Contracts 226
What Advantages Does Partnering Bring? 227
Managing a Successful Partnering Arrangement 227
The Role of the Workshop Facilitator 228
Facilitation Guidelines 229
Agenda 229
Structure and Climate 229
Regular Summaries 229
Control of Phases 229
Gatekeeping 229
Team Composition 229
Managing Relationships 230
Why Is Relationship Management Important? 230
Establishing the ‘Cultural Fit’ 231
What Is Culture? 232
Understanding Culture 232
Achieving Cultural Fit 233
Mutual Objectives 234
Team Development 235
The Nature of Trust 237
Maintenance of the Relationship 238
The Project Supply Chain 240
The Holistic Approach 241
The Bicameral Approach 241
The Unilateral Approach 242
The Collaborative Approach 242
A Case Study: Procurement of a Long-Term Multi-Project Alliance - Sheffield Hallam University 243
Introduction 243
The Campus Development Plan 243
Procurement 244
The Stradia Brief 245
The Contractual Relationship 246
Organisation and Management 246
The Contractor Selection Process 247
The Written Submission 247
The Financial Submission - Tender Cost Models 247
Behavioural Assessment 248
Insurances 248
Selection of the Consultancy Group 248
Conclusion 249
Acknowledgements 249
References 249
13 Privately Financed Public Sector Projects 251
Introduction 251
Historical Development 251
Modern Models for Privatisation 254
Outright Privatisation 254
Participative Privately Financed Techniques 255
Corporatisation and the Use of Semi-Private (Mixed) Companies 256
Publicly Owned Corporations 256
Semi-Public Corporations 257
Management Contracts 257
The Leasing or Build-Lease-Transfer Model 258
Pre-Financing 259
Mixed Models 259
Concession-Based Methods 260
Build-Operate-Transfer 260
Build-Own-Operate-Transfer 261
Build-Transfer-Operate and Build-Transfer-Service-Maintain 262
Build-Own-Operate 262
Lease-Renovate-Operate-Transfer 262
Design-Build-Finance-Operate 263
Design-Construct-Manage-Finance and Design-Build-Finance-Operate-Manage 263
Public Private Partnerships 264
The Private Finance Initiative 264
Genesis 264
Problems 265
Understanding the Rules 266
High Bidding Costs 266
Risk 266
Refinancing 267
Value for Money 268
Design 270
The Relationship Between PFI Client and Contractor 270
Small Projects 273
Concession Agreements 273
Current Developments 277
Conclusion 279
References 279
14 Construction Procurement: Europe 283
Introduction and Background 283
The Development of the Professions 285
Europe 286
The European Union 286
European Procurement Practice 287
The French System 287
The Architect 288
Contractors 288
The Client 288
Contractual Approaches 289
Tender Documentation 292
Contracts 292
Contemporary Developments 294
The Northern European Approach 294
The Mediterranean Approach 296
Greece 297
Italy 297
Spain and Portugal 298
Procurement Rules: European Union Principles and Procedures 299
Non-discrimination and Transparency: The Role of the EU 299
EU Directives 300
The Supplies Directive and Amendments 301
The Works Directive and Amendments 301
The Utilities Directive and the Utilities Remedies Directive 302
The Services Directive 302
The Public Sector Directive 303
Tendering 303
Value Thresholds 304
Tendering Procedures 305
Open Tendering 305
Restricted Tendering 305
Negotiated Tendering 305
Competitive Dialogue 306
Framework Agreements 307
Electronic Auctions 308
Sustainability and Environmental Issues 309
Specifying Sustainability Requirements and the Selection of Tenderers 310
Sheltered Workshops 310
Use of Variant Bids 310
Use of Contract Award Criteria 310
Timescales 310
Award Procedures 311
The Remedies Directive 313
Enforcement of EU Directives 313
References 314
15 Construction Procurement: USA, the Middle East, Africa, and China 315
Introduction and Background 315
Construction Procurement in the USA 316
Introduction 316
Procurement Routes 316
Design-Bid-Build 317
Design-Build Process 317
Construction Management 318
Construction Management at Risk 318
Job Order Contracting 319
Time and Materials Contracting 319
Best Value Selection 319
Summary 320
The Middle East 320
Construction Procurement in Sub-Saharan Africa 322
Introduction 322
Procurement Approaches 323
Public Private Partnerships 325
The Influence of Chinese Investment on Procurement in SSA 327
The People’s Republic of China and the Hong Kong Special Administrative Region 328
The Chinese Construction Industry 329
The ‘External’ Construction Industry 329
The Indigenous Construction Industry 330
The Construction Professions 330
Opportunities for Western Companies 331
References 332
16 Procurement of Work to Heritage Buildings 335
Introduction 335
The Heritage Challenge 336
Procurement: The Heritage Context 337
The Value of Built Heritage 341
The Importance of Cultural Significance 343
Statutory Protection for Heritage Buildings 345
Listed Buildings 345
Conservation Areas 346
Scheduled Monuments 346
World Heritage Sites 347
Managing Change in the Historic Environment 347
Planning for Conservation 347
Conservation Plans 347
Conservation Statements 348
Asset Management Plans 348
Heritage Impact Assessments 348
The Planning Process 349
The Role of the Conservation Advisor 349
Procurement Processes and Procedures 350
The Investigation Contract 351
A Case Study in the Procurement of Work to Historic Buildings: The Derby Roundhouse 351
The Existing Buildings: Historical Background 353
The Genesis of the Project 358
The Final Scheme 359
Site Surveys and Pre-tender Investigations 363
The Tender Process 364
The Partnering Process 365
Post-contract Processes 366
Practical Issues on Site 366
Repairs to Historic Structures 366
Integration of Building Services 367
Project Timeframe, Costs, and Team 367
A Case Study in the Procurement of Work to Historic Buildings: The Belton House Stables Project 368
The Existing Buildings: Historical Background 368
The Stables Building 369
The Stables Scheme 370
Feasibility Studies and Project Design 372
Site Surveys and Pre-tender Investigations 374
Procurement Approach 375
Post-contract Processes 375
Practical Issues on Site and Variations 376
Programme and Cost 377
Summary 378
Acknowledgements 379
References 379
17 Summary 383
References 386
A Procurement Route Selection Checklists 387
Checklist 1: Time 387
Checklist 2: Design 388
Checklist 3: Cost 388
Analysis 389
Index 391
