Methods of Procurement in The UK

+Shared profit.

-Shared risk.

+Quality of the construction industry has improved.

+New financial schemes take the pressure away from finding and securing capital.

-Management and repairs of buildings can become expensive over time.

+Rent agreed at the beginning so financial situation identified early.

+Protection from fluctuations in prices – under a lump sum situation, if a change of price for materials occurred, contractor would have to pick up the bill.

+In partnerships, costs are fully monitored by more than one party.

+Payment plans allow future costs to be considered and covered by the rent. Smaller continuous payments, rather than being hit with a huge bill.

+An improvement in quality of components / work can be made with small payment increases in the rent rather than paying as little as you can just to get the thing done – value engineering.

+Value Engineering looks at the scope of the project. Because the client will be paying rent for years to come, they want to know how the build will be in years to come.

+In rent schemes, higher construction costs may reduce other costs factored into the rent – power repair etc. This is investing in the building for future plans.

Clients now no longer accept the lowest price as a right. They look for value and something they can invest in, as well as someone that they want to work with. They must feel a commitment to partnerships and are beginning to enter into framework partnerships. This is where ongoing work is done and provided for each other as preferred partners. This saves time and money for tendering everything. Mutual trust and a sense of loyalty grow. They want to see each other grow and get better to bring in more money. Quality assessments will now be done on all projects costing over £250,000.

These quality assessments must be precise so that they are fair and contractors are not unfairly forced out of contracts. These assessments will be scrutinised especially if the lowest price is rejected. Contractors will want to know why they have not got the job. This will allow the industry to improve overall.

The role of project managers has changed and they now need new skills. They must be able to identify quality control measures and they must be able to justify their decisions around quality.

Contractors are now brought in earlier to have an input in projects, and they can help with the value engineering ethos. The contractors, designers and client will pitch presentations to one another more often, and this will allow communication of information and ideas throughout the partnership. Everyone will know what they are working towards and they will have a shared interest. This also allows for the sharing of expertise amongst departments, and therefore, more informed decisions.

Conflicts can, and will come up. These must be managed and compromise don in order for the partnerships to work. One party may try to play one off against the other, or may form a collation against one party.

Each party will be tied to the maximum target price, and will aim to be as low as possible underneath this ceiling. This is because each will receive a share of the profits made if the price is lower. The client will save money, and the contractor will get a bonus. However, over this, and the contractor will have to pick up the bill as the client and the contractor both agreed the price. The contractor will not mess around to try and make more money.

References

Notes formed and processed by the author following lecture series by Martin Bradburn at Teesside University

Chudley and Greeno – Building Construction Handbook