Unit 1: Construction Project Participants D39PZ: Procurement and - - PowerPoint PPT Presentation

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Unit 1: Construction Project Participants

D39PZ: Procurement and Contracts

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Construction project parties

• Construction projects are complex collaborations of many

specialised organisations:

• Some provide advice
• Others do the physical work
• Procurement is concerned with structuring the

relationships of these collaborating organisations

• The role and responsibilities of each must be understood

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Construction project “stakeholders”

Who is a stakeholder?

(Discuss with the colleague next to you within a minute)

…………………………………………………………………… ………………………………………………………………… Who are the stakeholders of a construction project?

(Discuss with the colleague next to you within 2 minutes)

………………… ………………… …………………

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Construction project “stakeholders”

Employer/Client

Architect

Provide advice

Contract administrator Engineer Quantity Surveyor Project Manager Building Surveyors

Physical construction

Contractor Sub-contractor Clerk of Work Engineer QS Project Manager BS

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Construction project “stakeholders”

Identify 2-3 responsibilities of each project stakeholder listed below:

1.

Employer (All)

2.

Contractor (All)

3.

Subcontractor (All)

4.

Contract Administrator (All)

5.

Clerk of work (All)

6.

Architect (AE students only)

7.

Project Manager (CPM students only)

8.

Building Surveyor (BS students only)

9.

Quantity Surveyor (QS students only)

Work in groups of three in each. 15 minutes

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The Employer

• The legal entity that employs the Contractor to complete

the Works

• May be an individual, firm, company, plc.
• Basic responsibilities:
• To define what must be done
• To appoint the Contractor
• To make decisions and provide information when required
• To pay the Contractor
• May be quite distinct from the individual or group of people

acting as the “client.”

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The Architect

• Employed by the employer to provide overall project

guidance, design expertise and to (usually) administer the contract

• Brief responsibilities:
• extracting and understanding the client’s requirements
• developing a design response
• ensuring the design is constructed (contract administration –

administering the Contract between Employer and Contractor)

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The Contract Administrator

• Traditionally, this role is performed by the Architect but

any suitably competent organisation can do it

• Ensures the overall project process is legally appropriate
• Ensures the contract is applied (i.e. “administered”) to the

project correctly

• Acts as the Employer’s agent
• makes decisions on their behalf
• “certifies” key events in the project, usually to resulting in a

payment from the Employer to the Contractor

• can vary the contract by issuing instructions

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The Project Manager

If appointed by the Employer, the project manager may:

• Co-ordinate the general flow of the project
• Ensure programmes are realistic
• Facilitate the flow of information between organisations
• Co-ordinate site activities
• Ensure the quality of workmanship and materials
• Ensure good health and safety practice

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The Building Surveyor (the client’s BS)

• Provide solutions to building failures
• Preparing condition surveys of existing buildings
• Preparing conceptual and technical design proposals
• Managing the design and delivery of construction projects
• Preparing management plans for real estate assets
• Running construction contracts

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The Quantity Surveyor (the client’s QS)

• Advises the Employer on procurement route and selection
• f contract
• Provides budgeting advice
• Prepares bills of quantities and compiles the tender

documentation

• Co-ordinates the tendering process and reports on tenders
• Ascertains the value of the Works during their construction
• Ascertains the value of any claims from the Contractor
• Agrees the Final Account with the Contractor

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The Clerk of Works

• Appointed by the Employer as an experienced set of “eyes

and ears” on site

• Responsible for monitoring workmanship to ensure

compliance with the preambles and general good practice

• Can reject work if not of sufficient standard
• Signs the Contractor's Daywork sheets, if produced.

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The Contractor

• Appointed by the Employer to construct the Works in

accordance with the Contract Documents

• The Contract Documents contain:
• the Architect’s design and specification (including the

preambles);

• the bills of quantities priced by the Contractor
• the contract itself
• The Contractor usually appoints a series of subcontractors

to complete the Works on its behalf.

• Subcontractors (usually) have no link to the Employer

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Subcontractors

• In practice, the subcontractors do the majority of the work.
• The contractor is vicariously liable for all subcontractors’

performance

• Subcontractors are typically specialised (although there

are also labour-only subcontractors)

• Specialised by trade
• Specialised by technical expertise
• Usually entirely of the contractor’s choosing

“Nominated” subcontractors no longer exist.

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The contracted parties

• We will focus on the main contract between Employer

and Contractor

• Only the Employer and the Contractor are parties to this

Contract

• Other contracts also exist:
• Fee-based consultancy contracts between the client and:
• its Agent (the Architect / Contract Administrator)
• its other consultants (e.g. Quantity Surveyor)
• Lump sum contracts between the Contractor and its

subcontractors

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The devil’s in the details Pay attention to the precise words used

Employer is not the same as client

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What does it mean to procure?

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What does it mean to procure?

Procurement is the management of process complexity

Image: Toby Maloy on flickr. Some rights reserved. Image: www.curtiswoodarchitects.com on flickr. Some rights reserved.

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Procurement issues

To procure a building it is necessary to:

• understand what the client wants
• organise the relationships of many specialised
• rganisations
• allocate each risk to the organisation best placed to

handle it

• agree and document the responsibilities of the

collaborating organisations

• agree how problems will be solved
• organise the exchange of information and money

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Construction and the client’s business

• Commercial clients construct buildings or facilities to

develop their business

• The relationship between the construction project and the

client’s business need must be understood

• It is critical that the construction project is aligned with the

client’s business

• Many clients don’t want to build
• They do so because there is no alternative

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Construction and the client’s business

• The client’s primary strategy directs its business
• Long term goals focus on organisational development and

commercial competitiveness

• The client’s secondary strategies direct its projects
• Short term goals focus on meeting immediate business

needs

• Secondary strategies that involve construction projects are

implemented with the assistance of construction industry professionals

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Construction and the client’s business

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Can you briefly define ‘Procurement’?

• Procurement is not briefing
• Procurement is:
• “the framework through which construction

is brought about, acquired or obtained”

• r
• “the strategy to satisfy the client’s development

and/or operational needs with respect to the provision of constructed facilities for a discrete life cycle”

4 minutes…..discuss with the colleague next to you

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Clients and industry change

• Clients have stimulated change in the principles of the

construction industry due to historically poor performance

• A series of industry initiatives have directed change

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Clients and industry change

• 1994: The Latham Report (“Constructing the Team”)
• Advocated more collaboration and less adversarial working
• 1998: The Egan Report (“Rethinking Construction”)
• Advocated partnering and other forms of collaboration
• Started a series of “demonstration projects”
• 2002: “Accelerating Change”
• Recommended practices and procedures
• Led to “Achieving Excellence in Construction”
• Adopted by the Office of Government Commerce

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Understanding clients

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Understanding clients

Sector

Public Private

Experience in construction

Experienced Inexperienced

• Utilities
• Large commercial
• rganisations
• Retail, leisure &

hospitality organisations

• Property developers
• Small and medium

enterprises

• Private individuals
• Local authorities
• Central government

agencies

(http://www.direct.gov.uk/en/Dl1/Directorie s/A- ZOfCentralGovernment/index.htm?index Char=A )

• National Health

Services

• Small public sectors

bodies/ “single issue” interest group

• Social landlord/Small

housing associations

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Understanding clients

Property and development companies

• Seek to make a financial profit from the process of

development

• Some developers specialise in location or development

type

• Specialisation improves their understanding of risk
• Other developers do not specialise
• They spread their risk by not being too dependent on

any one market

• Developers change their priorities to ensure financial

viability

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Understanding clients

Investors and funders

• Seek financial return, but with a longer term view than

developers

• They will prioritise a secure revenue stream in the long

term

• Prefer to purchase existing or recently completed

buildings

• When constructing, will prioritise quality and

functionality over cost

• They are willing to spend more initially to ensure the

building will continue to perform in the long term

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Understanding clients

Owner-occupiers

• Require a building that suits their individual needs
• Their needs vary widely, from simple warehouses to

highly complex manufacturing facilities

• Their priorities cannot be predicted
• Tend to build infrequently (perhaps “once in a lifetime”)
• Their lack of construction experience can expose them

to inappropriate risk

• They rely on construction organisations for advice

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Understanding clients

Government bodies

• Procurement processes can be complex
• Office of Government Commerce (OGC) requirements
• Policy increasingly requires Government bodies to act

alone

• Some can be inexperienced
• Cost is increasingly important to these clients
• Many public sector projects must be self-financing
• Most Government projects must satisfy multiple

stakeholders

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Understanding clients

I need it now! I don’t know what I want - yet. It can’t cost more than £500k

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Remember to read the full Unit notes and Appendices, and complete your independent study