There are several procurement routes open to an individual or organisation commissioning a construction project. Depending on the type of project one may be more appropriate than another. In the small to medium scale sector of the construction industry, two of the most common procurement routes have been Traditional Procurement or Design & Build. However, these come with some significant disadvantages. Rice Projects provides an alternative - Construction Management – which we believe offers many advantages for both experienced and first time clients.
The following is a brief break down of how these different procurement routes work.
Construction management – Rice Projects preferred route
Over the last twenty years, the Construction Management procurement route has provided great advances in efficiency, flexibility, value and time scales in large scale construction projects. Our experience is that these advantages apply equally when a Construction Management route is utilised on smaller scale projects. A Construction Manager is appointed by and reports directly to the client. The Construction Manager is responsible for tendering packages of work to multiple sub contractors and then managing their work on site, however, the contractors are appointed directly by the client. The role generally goes beyond that of a traditional contractor. Clients can benefit from the following:
- Lower overall build costs as a result of:
- No main contractors profit – typically 10% – 20% of build cost.
- Savings made during the build can be fed back into the project.
- Ability to closely manage cost during design and procurement
- The Construction Manager is employed directly by the client, as a result, we are focused on meeting client’s needs rather than maximizing profit for a main contractor.
- The client retains a continuing involvement in and management of the cost plan along side Rice Projects ensuring there are no unexpected cost implications.
- Management focus on design and construction quality, programme, sequencing and buildability.
- Within defined limits the design process can continue during the construction allowing a potential reduction in the overall programme.
- Specialist trade contractors can advise and input into the design and construction process.
- Creation of a collaborative, problem-solving and less adversarial culture between the design consultants, the client, and the trade contractors led by Rice Projects.
- Integration of design and construction skills.
- Increased flexibility to make and manage changes during the construction phase.
- Flexibility of client involvement. The client can be actively involved in the selection of trade contractors and design decisions if they wish or they can take a more back seat role.
The Traditional Procurement route involves the design team producing full design documentation to a final detail level. This package is then put out to tender to Main Contractors who will quote to complete the entire project. This route requires less involvement from the client and can appear to provide cost certainty but it has several significant drawbacks including:
- The Primary objective of a contractor is to make a profit, which may produce outcomes that are not in the client’s best interests.
- The contractors cost plan is a closed book to the client.
- Any savings made during construction will generally not be passed on to the client whereas extra costs are inevitably always passed on to the client.
- Administration of a traditional contract can often be slow and labour intensive.
- Any changes that the client wishes to make during the build will generally be charged at a high rate.
- The above points lead to reduced flexibility for the client during construction.
- Overall project programmes are generally longer as design, tender and construction processes are sequential and do not overlap.
- There is a split between design and construction.
- The division between designers, contractor and client often leads to claims and contractual disputes resulting in an adversarial process.
Design & Build
The Design & Build Procurement route involves the main contractor assuming much of the design responsibility for the project. The contractor usually engages the services of their own design consultants or on larger scale projects may provide these services in-house. This procurement route is quicker than the traditional one and the contractor takes on many of the design liabilities, which can result in fewer claims and contractual disputes. However there are also significant disadvantages, including:
- The employer and design team loses a large degree of control over design and quality, which can be frustrating for the client and architect.
- The tender price can often be high to cover the risk of design liabilities.
- This process downgrades the value of the architect and the design they have developed with the client.
- Design decisions are more significantly affected by cost considerations and the experience of the contractor in certain types of construction.