5/21/13 PROCUREMENT 5/21/13. Agenda. Common Tendering Systems Procurement Methods

Transcription

1 PROCUREMENT 5/21/13 Agenda Common Tendering Systems Procurement Methods 1

2 Agenda Common Tendering Systems Procurement Methods Common Tendering Systems Competitive / Open-bid: (Qualified) contractors are invited to bid for the construction of a designed facility. Final bids are: n Lump sum: total price to complete work n Unit price: a set of prices per unit quantity of task n Used when there is a lot of uncertainty in quantity of material and labour required. 2

3 Common Tendering Systems Competitive / Open-bid: Negotiated Contract: Negotiation with one or more contractors selected by client, based on: n Trust, Reputation, Expertise, Etc. Flexibility in Tender Price n Tender Price = Direct Cost + Fee n = Target Estimate = Fixed % = Fixed Fee =Variable Fee n = Guaranteed Maximum Price/Cost Flexibility in Start Time n Construction may start before design is finished. Agenda Common Tendering Systems Procurement Methods Traditional Procurement Design-Build Management Contracting Professional Construction Management Private Finance Initiative (PFI) Prime Contracting Partnering 3

4 Traditional Procurement Traditional Procurement Known Lump sum cost Best contract price Firm completion date Client retains control over design and quality. Variations and contract changes are identifiable. Design, then Bid, then Build Too often, delays Too often, budget is overspent Too often, disputes 4

5 Design-Build Also called Design-Bid-Build Design-Build Early higher certainty in price Early decision on completion date Risk transferred to contractor Single point of contact High price (risk) Difficulty in comparing tenders Long tender period Less control on design Potentially expensive design changes 5

6 Management Contracting Management Contracting Optimal overlap between design and construction Early completion date Risk transferred to contractor Single point of contact High price (risk) High uncertainty in cost Less advantageous cash-flow situation for contractor -> delay in payments of subs. 6

7 Professional Construction Management Professional Construction Management Optimal integration of design and construction High level of quality Improved buildability (v. Management Contracting) Less adversarial relationship with contractor. High uncertainty in cost 7

8 Private Finance Initiative (PFI) Private Finance Initiative (PFI) Financing projects that would otherwise not be possible Design-Build-Operate advantages (quality) High risk for contractor -> High tender price Long bidding process Complexity Differed cost Quality risk at transfer period 8

9 Prime Contracting Owner has many projects continuously happening. Strategic initial selection of Prime Contractor Prime Contractor fully integrates the Client s team Examples of clients: NHS, Department of Defence Prime Contracting Long-term savings on contractor selection and procurement High integration between client and contractor Flexibility in contractual arrangements for each project High risk concentrated at initial selection stage No flexibility in case of problems 9

10 Partnering Not really a procurement method: A structured methodology for organizations to set up mutually advantageous commercial arrangements, either for single projects (project partnering) or in long-term strategic relationships (strategic partnering), which help their people work together more effectively. [CIB] Defines mutual objectives, non-conflictual methods for problem resolution, continuous improvement, shared losses and gains Example: Marks & Spencer and Bovis Controversial idea 10