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22/01/24

Procurement blues

Procurement blues

Why isn't it like it used to be? 

I’m sure some of the readers can remember the ‘good old days’ when the design and specification for a new project were fully complete before even the mention of tender preparation was made, knowing full well that the Quantity Surveyor would be able to prepare a bill of quantities (BQ) without numerous queries and clarifications, more commonly referred to as Traditional Procurement.


Author: Mark Blackmore, Associate Director, Coventry, Driver Trett UK


The architect’s drawings would be fully coordinated with the structural engineer’s and the mechanical and electrical designs, even more remarkable in a time before BIM1 (and most of the time you even got a builder’s work schedule to produce the relevant section within the BQ!).

I started off my surveying career working at a small PQS practice, where the ‘cut and shuffle’ method of measurement and boq preparation was used, normally worked on by the whole office, and the hundreds of slips of paper containing quantities and codes were input into the software by the one user; and using the same one computer that had the only internet connection in the office!

Timescales were more realistic; the Client understood that the design works would take a minimum period, then the production of the boq would take a further period before the tender was ready for final coordination and issue to the selected contractors. 

The tender period was long enough for the contractor to obtain quotations from several subcontractors, ensuring usually that the tender would be compliant with the requirements and competitively priced.

Bills of quantities can sometimes be criticised as representing an ‘us and them’ mentality, as when used conventionally they can only be properly prepared at the end of the design process and reduce the opportunities for contractor input / involvement. A counter to this criticism is that the production of the bills can also provide an audit of the design information; if there is insufficient information to produce a bill of quantities there would arguably be insufficient detail to construct the project.

The fact that the tenders were based on the same document enabled the QS to review and make a proper recommendation of the best suited contractor to carry out the works.

There are a number of advantages and disadvantages of using such a traditional procurement strategy. 

Advantages: 

  • Maximum control of design and specification(s).

  • Design to be complete prior to tender enabling maximum cost certainty.

  • Original design team retained client side for duration of the project.

  • Suited to complex design projects and those requiring extensive client consultation.

  • Complete design enables preparation of bill of quantities and maximum cost breakdown / transparency for valuing change and for evaluating interim payments.

Disadvantages

  • Project programme can be lengthy as design must be complete prior to tendering.
  • Client retains risk / responsibility for design.
  • Full design costs incurred prior to tendering.
  • Does not easily allow for contractor buildability proposals.
  • Not normally suitable for fast-track projects.

Everything then changed (starting in the 1980s); gone largely were the days of fully compliant designs and bills of quantities being prepared for projects and design and build, with outline designs and minimal quantities becoming the norm – a Design and Build Procurement.

Unless the tendering contractors agreed to have a bill of quantities jointly prepared, every tender would be submitted in a different format, with varying quantities and extent of pricing information, making the adjudication and review of the tenders more challenging. Without a common basis for pricing, the phrase 'comparing apples and pears’ springs to mind.

Advantages of using a design and build contracting procurement strategy: 

  • Enables contractor buildability input into design.
  • Has programme advantages as enables tendering earlier and design can continue during construction.
  • Greater risk transfer and single point of responsibility during the construction phase.
  • Reduced pre-contract fees / costs for client.

Disadvantages of using a design and build contracting procurement strategy:

  • Less flexible / more costs associated with post-contract changes.
  • Less suited to more complex design and stakeholder engagement projects.
  • Risk of disjointed approach to design due to split preparation of same / or change of client mid-project (if design team novated).
  • Client  expectations of a gold service; with contractors having priced for a bronze one.

The move away from traditional procurement to a design and build approach has been seen by some in the industry as part of efforts by parties to work more collaboratively and proactively, as advocated within the Latham Report.2

The increasing use of BIM ought to further enhance collaborative working, with projects at Level 3 being fully integrated, utilising 4D construction sequencing, 5D cost information and 6D project lifecycle management information. Tender analysis can then be focused on comparative rates, overheads and preliminaries costs as all contractors will be using the same base information for pricing and planning purposes.

My personal feeling is that the procurement process in general has changed over the last two to three decades for the following reasons:

  • Clients no longer wish to go to the time and expense of producing a full design and bill of quantities to put out to tender their projects.
  • Design teams no longer as a matter of course carry out the full-design work and have less expertise in producing a complete design package.
  • Fewer surveyors are having to produce detailed measures and full bills of quantities and may even just work on discrete packages rather than projects as a whole, leading to their skills / ability to measure lessening.
  • Software development, including BIM, is making the design process more integrated, where changes are identified immediately, making for what should be a smoother executed and better administered project.
  • This does, however, have its own costs / challenges in that new investment in IT and associated skills is required.

Having spoken recently to two, large national contractors, engaged in both civil engineering and building works, they have made the following comments in respect of traditionally procured projects:

"Two Nr. projects recently completed which have been a challenge since commencement as no one takes responsibility for discrepancies or changes."

"No-one wants to provide the complete design and bill of quantities due to the ‘blame game’ where liability sits squarely for errors with the design team."

The traditional procurement approach obviously worked and operated for a long time before Latham and Egan.3 Done correctly, it ought to, in my experience, lead to less design and scoping issues arising throughout the course of a project, but it requires a full and complete design and tender preparation to be commissioned and paid for at the beginning by the Client. Could it be that traditional procurement now actually fits better with Latham and Egan? As stated above, cost surety was given with traditional procurement. The design was “audited” through the production of the BQ and everyone priced on the same basis.


 This article was written for issue 26 of the Driver Trett Digest. To view the publication, please visit: www.driver-group.com/digest-issue-26


1. Building Information Modelling.
2. Constructing the Team, Sir Michael Latham, July 1994.
3. 
Rethinking Construction, Sir John Egan November 1998.

 

Articles  /  Digest  /  Europe

Articles  /  Digest  /  Europe

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