Changing Client Role in Emerging Construction Procurement
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1 Changing Client Role in Emerging Construction Procurement Francis Tekyi Edum Fotwe, Dept of Civil and Bldg Engrg, Loughborough University, UK (f.t.edum Antony Thorpe, Dept of Civil and Bldg Engrg, Loughborough University, UK Ronald McCaffer, Dept of Civil and Bldg Engrg, Loughborough University, UK Abstract The client in the construction sector has a pivotal role in the successful delivery of projects. The role performed by clients in this regards has been undergoing transformation over the past two decades in response to demands for improvement and innovation to achieve better value for all the stakeholders involved in the delivery of projects. A review of some of the principal models for managing the procurement of projects provides an insight on the nature of transformation in the role performed by clients. The subsequent sections of this paper provide an outline of four procurement models that provide a context for exploring the change in role performed by the client. The subsequent analysis evaluates the role and requirements placed on the client by the criteria of managerial capability. The analysis shows a growing transition from a passive to an active role for clients in the management of the procurement process. Keywords: construction, client, procurement, projects, management 1. Introduction The role of the client in construction projects has been going through a transition over the last two decades (Cawthra, 1991; Technology Foresight, 1995; DTI, 2002). A significant outcome from this transition is a shift in the power balance in favour of the client (Ling and Lau, 2002; Liauw et al., 2003). In attendance to the shift in power balance is a change in the nature and capability for managing the delivery of projects that clients are required to display in. The conventional approach for the delivery of construction products relies on methods that are rooted in the separation of responsibility and production activity for the different phases or tasks that make up the project (Anderson and Tucker, 1994). This naturally creates interface constraints as well as a limitation in optimising the functional, economy and production of the constructed product. Contributing to the interface constraints is the juxtaposing of different organisation systems and cultures, which often impact negatively on the productivity of the project. The solution to minimising the interface and optimisation constraints is considered to be in the adoption of a process orientation for all the activities connected with the delivery of construction products 149
2 (Cooper, 1994; Cooper et al., 1998). The process approach emphasises the integration of the contribution rather than the task output from each of the different stakeholders. McCaffer and Edum Fotwe (2003) provide an illustration for considering construction from such a process perspective and identify interface between principal phases as key constraint to attaining optimum efficiency. The consideration of construction projects as production process induces a realignment of roles performed by the different stakeholders. The pivotal role played the client in conventional projects makes any such change in their role pertinent to successful delivery of future projects. To provide some boundaries to the nature of change in client role four procurement models are explored for the nature and role required of the client. Two of the procurement models are extensively employed in construction, and the other two are emerging alternatives that are finding increasing utilisation within the sector. The analysis shows a potential trend of a transition from a passive to an active role for clients in the management and technical requirements they have to address in the procurement process. 2. Construction Procurement Models The subsequent sections of this paper provide an outline of the procurements models that are employed to provide a context on the way the management of procurement has been changing with regard to the role of the client. These comprise two established models of procurement and two emerging ones. The two established models which are designated in this paper as traditional are drawn from engineering construction, and building sub sectors, while the emerging models reflect the stage gate process approach, and the use of framework arrangements. 2.1 Traditional models Engineering construction model (civil works) The delivery of construction projects in this model is represented as a six phase linear process as shown in Figure 1. Pre project planning Detail design Procurement Demolition/ Abatement Construction/ Production Start up/ Commission Figure 1. High level process outline for engineering construction The main benefit of this model is to provide clarity in the way the project delivery is structured, and as a consequence, lead to the identification of potential difficulties early enough to mitigate incidences of low productivity. Table 1 depicts the six phases with typical participants in each phase. This model is usually not applied to infrastructure and building projects procured in a traditional competitive tender or the increasingly popular design and build arrangements as the process assumes an internal client and supplier. 150
3 Table 1: Role of parties in engineering construction model for projects Project Phase Pre Project Planning Detail Design Procurement Demolition /Abatement Construction /Production Start up/ Commission Typical Participants Client Planning Consultants Constructability Consultant Alliance / Partner Client s Design Constructability Expert Alliance / Partner Client Design Alliance / Partner Alliance / Partner Client General Demolition Remediation / Abatement Client Design (Inspection) Construction & subs Client Design Construction Training Consultant Equipment Suppliers However, the coverage of a start up/ commission phase makes this model of delivering construction suitable for projects procured by turnkey arrangement and private finance initiative as well as alliance projects. While the engineering construction project model presents a clear involvement by the client or its, in reality that role is often passive, as the key activities undertaken reflect approvals and control RIBA Plan of Works (building works) The RIBA Plan of Work is a robust procurement management approach which describes the activities from appraising the client s requirements through to post construction (Phillips, 2000). The stages are also used in the appointing documents to help identify the architect s services. This model of is predominantly applied for schemes that are classified as architectural in outlook. These schemes cover simple private dwelling houses through public sector offices to commercial accommodation such as hotel facilities. The key stages of the plan are outlined below in Table 2. The RIBA plan of works assumes a linear progression from one stage to the subsequent one. Thus, all design inputs are deemed to have been completed when construction commences. This, clearly, does not happen in practice, as several design changes are known to transpire during the construction stage, an indication of the incomplete input for the preceding design stages. The role of the client is equally assumed as passive in conformity with the notion that the client is hardly informed, and the consultant/designer knows what the client should want. The onus is therefore, on the specialist to effectively elicit the requirements of the client and formulate them into a design solution. 2.2 Transition in procurement The need to increase efficiency within construction has occupied the attention of several of its stakeholders over the years (Latham, 1994; Egan, 1998). The inefficiencies identified with projects in the sector have been associated with a lack of a process approach by Egan (1998, 2002). The emergence of knowledge as a prime value in the delivery of design has elevated the role technology could play to ensure the efficient management of knowledge within organisations. 151
4 Table 2: RIBA work stages for project development WORK STAGE WORK STAGE DESCRIPTOR A Appraisal Identification of Client's requirements and possible constraints on development. Preparation of studies to enable the Client to decide whether to proceed and to select probable procurement method. B Strategic Briefing Preparation of Strategic Brief by, or on behalf of, the Client confirming key requirements and constraints. Identification of procedures, organisational structure and range of Consultants and others to be engaged for the Project. [Identifies the Strategic Brief as CIB Guide which becomes the clear responsibility of the Client] C Outline proposals Commence development of Strategic Brief into full Project Brief. Preparation of Outline Proposals and estimate of cost. Review of procurement route. D Detailed proposals Complete development of the Project Brief. Preparation of Detailed Proposals. Application for full Development Control approval. E Final proposals Preparation of final proposals for the Project sufficient for co ordination of all components and elements of the Project. F G Production information Tender documentation F1: Preparation of production information in sufficient detail to enable a tender or tenders to be obtained. Application for statutory approvals. F2: Preparation of further production information under the building contract. [Now in two parts, F1 the production information sufficient to obtain tenders and F2 the balance required under the building contract to complete the information for construction] Preparation and collation of tender documentation in sufficient detail to enable a tender or tenders to be obtained for the construction of the Project. [Solely concerned with the documentation required for tenders. Particularly useful with D+B or management contracts] H Tender action Identification and evaluation of potential s and/or Specialists for the construction of the Project. Obtaining and appraising tenders and submission of recommendations to the Client. J Mobilisation Letting the building contract, appointing the contractor. Issuing of production information to the contractor. Arranging site handover to the contractor. K L Construction to Practical Completion After Practical Completion Administration of the building contract up to and including practical completion. Provision to of further Information as and when reasonably required. Administration of the building contract after practical completion. Making final inspections and settling the final account. [Clearly separated from the construction phase] Knowledge management and sharing can be difficult without clear processes to capture and contain both what is already known, and the new knowledge and skills that are acquired on a daily basis (Lazarus, 2001; Edum Fotwe, et al., 2004). The adoption of the process approach is equally seen as presenting construction with an opportunity for transforming its delivery of products by adopting innovations from manufacturing. This perspective has been championed in the UK by the construction panel of the Innovative Manufacturing Initiative (IMI). The development of a Generic Design and Construction Process Protocol as a direct response to the IMI construction theme has opened up the opportunity for a wider deployment of the process approach to procure construction (Cooper et al., 1998). 152
5 2.3 Emerging procurement options A number of variants of existing models for managing the procurement of construction as well as alternative ones have been employed by different clients and projects. This section addresses the alternative models and comprises the process protocol and framework agreements Construction Process Protocol The construction process protocol is based on the RIBA plan of works and provides a phase process to represent the delivery of construction projects. The protocol provides a departure from the linear approach to modelling the delivery of projects by viewing the interaction of activities within the process in a two dimensional stage gate framework. Using manufacturing principles as a reference point, a framework of common definitions, documents and procedures were developed to help construction project participants work together seamlessly (Cooper, 1994). The design and construction process is mapped into eight sub processes; Development, Project, Resource, Design, Production, Facilities, Health Safety and Environment, Statutory and Legal, and Process Management; four broad stages, as in Pre Project, Pre Construction, Construction and Post Construction; and ten phases (Cooper et al., 1998). The construction process protocol represents for the construction sector, the main generic design and construction process protocol (GDCPP) for the comprehensive management of projects. The introduction of the two dimensional perspective by the process protocol for viewing the interaction of the activities in the delivery of construction presents an opportunity for a more effective project management. This can be very useful in achieving the same level of detail for the whole process. The main principles of the GDCPP are summarised below. Whole Project View: This ensures that all the issues are considered from both a business and a technical point of view as well as ensuring informed decision making at the front end of the design and construction development process. Progressive Design Fixity: The benefit of this approach is fundamentally the progressive fixing of design information throughout the Process, allowing for increased predictability of construction works. A Consistent Process: The generic properties of the Process Protocol allow a consistent application of the Phase Review Process irrespective of the project in hand. This together with the adoption of a standard approach to performance measurement, evaluation and control, will facilitate the process of continual improvement in design and construction. Stakeholder Involvement / Teamwork: The pro active allocation of resources to Phases through a stakeholder view should ensure that appropriate participants (from each of the key functions) are consulted earlier in the Process than is traditionally the case. 153
6 Co ordination: The need for effective co ordination between the project team members is paramount and ensures the correct application of the Process Protocol to the project. Feedback: The Phase Review Process facilitates a means by which project experiences can be recorded, updated and used throughout the Process, thereby informing later Phases and future projects. The process orientation presents clients as well as other participants with an overall picture of the project. This provides better opportunity for aligning the different operational regimes and task objectives for the various project participants. The implied assumption underlying the process approach is that client actively engages all the other stakeholders for all the phases of the project Framework Agreements Framework agreements are procurement arrangements made with a single supplier or a number of suppliers with a view to achieving significant savings in cost and eliminate interface constraints to both the client and suppliers. The agreement operates as a continuous contract for the supply of goods and services to the project. There is no requirement for constant re tendering at call off stage as long as the contract conditions are unchanged for each project. This presents opportunities for substantial gains from continuous improvement by eliminating the transaction cost associated with repeat tendering. Where contract terms are changed, mini competitions within the framework will need to take place. Clients may have more than one framework supplier in place for different requirements. However, the resource implications for the client should be borne in mind when deciding whether to appoint more than one framework supplier under a single framework agreement. The use of framework agreements lends themselves to the procurement of projects under the prime contracting and design & builds routes. They can also be appropriate for maintenance requirements of major infrastructure and facilities such as roads and hospitals. It should be noted that there is no commitment under a framework agreement for either party to undertake any business until the first contract is called off. Framework agreements are not usually contracts in their own right as defined in EU Procurement Directives, but agreements to do business under specific terms. Within the framework a contract (call off) is let for each project. This initial call off is no more complex than placing an order because the price structure and conditions of contract are fixed. The client, within a framework agreement is required to engage actively with all suppliers on a continuous basis. This includes providing the framework suppliers with the best information available on annual forecast of anticipated demand, and standardising output specification to improve cost, predictability and maintainability. 154
7 3. Analysis of Client Role in Changing Procurement Regimes The traditional and emerging models of procurement present various levels of involvement by the client in the delivery of construction. To understand the requirements placed on the client within the two categories of procurement models, a simple listing of criteria of three project principals were investigated in two areas, managerial and technical role. The other two project principals are the project sponsor and the project manager. This analysis within this paper is focused on the managerial role. The roles of the two other principals (the project sponsor and project manager) provide representations of the technical and risk requirements that are managed on projects. A comparative evaluation of the role of the client with reference to these roles therefore, provides a rational basis for judging nature of change in role by the client. The managerial roles and requirements were analysed over ten factors as follows: Decision making, Effective critique, Communication, Motivation and drive, Team building, Facilitation, Interviewing, Negotiation skills, Assertiveness and Objective setting. These were derived from earlier work on managerial roles in construction (Songer et al., 2004; Vossoughi, 1998; Pugh, 1991). Figure 3 presents the analysed role of the client vis à vis the role played by the other two principals for the managerial attributes required of them in their functions they perform. These have been organised as essential and desirable criteria. Desirable criteria are capabilities that the client or the principal is not required to exercise to perform their role, but may assist with the performance of other related activities. The essential criteria however, are a must, as they form the basis of the involvement of the client or principal in the project process. The role of the client under the traditional procurement regime had focused on four key functions as essential requirements. These are decision making, communication, negotiation skills, and objective setting. This is naturally so as the client traditionally relies on the expert inputs from the other two principals to manage the project. Roles such as decision making, communication, and objective setting are pertinent to the establishing the expectations of the client, and as such cannot be delegated to the other principals. It is easy to appreciate that need for the client to clearly and fully define their needs and expectations in the brief, since late changes of mind can prove expensive both in terms of timescale and cost. Equally, the need for effective negotiation skills is essential for the engagement of the principals in the first instance. The role of the client in the emerging procurement model elevates the requirements demanded of the client from the traditional models to include providing effective critique, motivation and drive, team building, facilitation, interviewing, and assertiveness. These requirements clearly call for a hands on approach to managing the whole procurement process for delivering construction projects. It also implies a display of leadership and management skills to ensure a best practice performance by the client. Clearly it demonstrates that the drive for value in delivering construction projects places equal responsibility on the client as it does for the other principals in managing the procurement process. This equal responsibility for example translates in practice to a situation whereby clients are required to display astuteness in ensuring that the right team is appointed (either collectively or individually) to provide advice and to represent the client s interests as well as an active role in the establishment and working of task delivery teams. 155
8 MANAGEMENT CAPABILITY Traditional Project Owner Project Sponsor Project Manager Attribute Desirable Essential Desirable Essential Desirable Essential Decision making Effective critique Communication Motivation Team building Facilitation Interviewing Negotiation skills Assertiveness Objective setting MANAGEMENT CAPABILITY Emerging Project Owner Project Sponsor Project Manager Attribute Desirable Essential Desirable Essential Desirable Essential Decision making Effective critique Communication Motivation Team building Facilitation Interviewing Negotiation skills Assertiveness Objective setting Figure 3: Changing client managerial requirements under different procurement regimes 156
9 It also means that the client is required to exercise more than just a desirable know how of both technical and managerial roles which until the advent of the emerging procurement models had been the sole preserve of the professionals who act as principals. Furthermore, it calls for regular monitoring of the entire development process throughout all of its stages directly by the client, including responding to the reports of gateway reviews carried out at key approval points in the process and carrying out a post project evaluation of the process on completion. Clearly, the deployment of manufacturing oriented methods of procurement is changing the role of the construction client from a passive participant in the project to an active one. Not only is the client owner of the completed product, but the nature of the procurement is demanding a situation where clients take ownership of the whole procurement process. 4. Conclusion The last decade has seen an increasing emphasis on the client s role in ensuring that products and services within the construction sector meet defined needs fully and at the best possible value. This is particularly the case for the UK Government s role as a client for construction projects. The use of more business and manufacturing oriented processes for delivering construction is changing the role of the client in projects. An outcome of these changes is the sector s migration toward a re defined procurement models and a re allocation and alignment of the core functions and role for the different project stakeholders. The role performed by clients in this regards has been undergoing transformation over the past two decades in response to demands for improvement and innovation to achieve better value for all the stakeholders involved in the delivery of projects. In the paper, a review of some of the principal models for managing the procurement of projects has been presented. These provide an insight on the nature of transformation in the role performed by clients and gives an indication of an extended role for the client. The subsequent analysis evaluates the role and requirements placed on the client from a managerial perspective. The analysis shows a growing transition from a passive to an active role for clients in the management of the procurement process. 5. References [1] Anderson, S. D., and Tucker, R. L., (1994). Improving project management of design. Journal of Management in Engineering, ASCE, 10(4), pp [2] Cawthra, D.E.W., (1991). The European construction industry in the 1990s. ECI, Construction in Europe, Report No. C/001/0. 157
10 [3] Cooper, R., Kagioglou1, M., Aouad, G., Hinks, J., Sexton M. and Sheath, D., (1998). The development of a generic design and construction process. European Conference on Product Data Technology (PDT), Building Research Establishment, March, Watford, UK [4] Cooper, R.G., (1994). Perspective: third generation new product processes. Journal of Product Innovation and Management, 11, pp [5] DTI, (2002). The State of the Construction, Industry Report, Available: [6] Edum Fotwe, F.T., Badu, E, Ling, F.Y., Thorpe, A., and McCaffer, R., (2004). Cultivating virtual leadership in AEC project environments. In: Chinowsky P. and Songer, A., (eds), Proceedings of the Specialty Conference on Leadership and Management in Construction, Hilton Head, SC, March, pp [7] Egan, J., (1998). Rethinking Construction. The report of the Construction Task Force on the scope for improving the quality and efficiency of UK construction. DETR, London. [8] Egan, J., (2002). Accelerating Change, A report by the Strategic Forum for Construction, SFC, London. [9] Latham, Sir, M., (1994). Constructing the team: joint review of procurement and contractual arrangements in the United Kingdom construction industry, Final report, HMSO, London. [10] Lazarus, D., (2001). Managing project change: a best practice guide, CIRIA, London. [11] Liauw, A.C.Y., Ling, F.Y.Y. and Edum Fotwe, F.T., (2003). Conceptual model for project design and information management. In: Ofori, G., (ed) Knowledge Construction, Proceedings of the Joint International Symposium of CIB Working Commissions W55, W65, and W107, Singapore, October, Vol (1), pp [12] Ling, Y.Y. and Lau, B.S.Y. (2002) A case study on the management of the development of a large scale power plant in East Asia based on design build arrangement. International Journal of Project Management, 20(6), p
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