ARCHITECTS REGISTRATION COUNCIL

SEMINARS

PROCUREMENT IN THE CONSTRUCTION INDUSTRY

DR PAUL LYAMUYA

PRESENTATION

1. The Public Procurement and Asset Disposal Act, 2001; Regulations, 2006

2. The Local Authority Procurement and Asset Disposal Act, 2008

3. Procurement – Definition

4. Procurement – Criteria

5. Procurement – Systems

6. Procurement - Options

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What is a procurement System?

According to P.D. Rwelamila (2001), It is “The organisation structure adopted by the client to manage all stages of the project from inception to completion and in certain situations including post contract phase(s)”

Some of its aspects includes method by which construction projects are set up, financed and built

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PROCUREMENT 1 Other aspects include:

• The separate or combined relationships between all or any of the participants namely

oPromoters / financiers

oDesigners and contractors

• Another aspect concerns the provision of design services formerly done solely by separate consultants, but now more and more combined with the construction process.

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PROCUREMENT 2

Clients will commission projects which contribute to their wider objectives. Their wishes will normally include the following:

• Built within budget (COST)

• Delivered on time (TIME)

• Fit for the purpose (QUALITY)

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PROCUREMENT 3

There are other wishes which are critical including the following:

• Pleasing to look at

• Free from defects on completion

• Supported by worthwhile guarantees

• Reasonable running costs

• Satisfactory durability

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PROCUREMENT 4

Where both main parties in the process (employer and contractor) are equally matched, the choice of contract conditions may be mutually agreed. In practice, most contract conditions in Botswana are dictated by the employer (here the skewed market forces make the employer dictate contract conditions).

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PROCUREMENT 5

The choice of the type of contract, and the particular terms and conditions, under which the contract will be carried out, will normally be made by the client in the light of advice he receives from his professional advisers. The range of contracts available to choose from is considerable, and within each general type of contract a choice can be made as to the particular terms and conditions which are most suitable to the circumstances

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PROCUREMENT CRITERIA 1

When a client is considering the decision to build, a number of important decisions need to be made in order for the project to have a good chance of a successful outcome. One needs to develop a strategy for the project based on the client’s needs, and the first priority is to decide how to procure the skills and resources needed for the design and construction of the project.

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PROCUREMENT CRITERIA 2

Eight procurement factors have been suggested (NEDO 1985), but three are the main ones namely:

1. Time – the overall timing of the project from inception to completion

2.Quality – the client’s required standards of design and workmanship

3.Cost – certainty of the market price at the bid submission and final account stage

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The procurement of a construction project requires a balance

between time, quality and cost constraints. Five other factors are

also influential on the choice of procurement route, these are:

1. Complexity – of the building design, layout and service

provision

2. Controllable variations – how sure is the client of his

requirements? The cost of variations to the contract may prove

difficult to agree and assess

3. Degree of competition – does the client wish to create

competition at the design and/or construction stage of the

project?

4. Client responsibility – does the client wish to be directly

involved in decision-making during the project or does he simply

to want to wait and come to cut the tape on occupation of the

building?

5. Risk in the project- commercial, occupation, design and

construction

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Taking the above into consideration, decision will have to

be made in relation to:

1. Choose an appropriate procurement strategy for

managing the project

2. Selecting the client’s principal advisor or lead

consultant (architect, engineer, or project manager)

3. The appointment of other consultants

4. Establishing the clients brief and assessing the

project’s feasibility

5. Obtaining the required project finance

6. Choosing how to procure and manage the design and

construction

7. Establishing a realistic time period for the overall

project

PROCUREMENT SYSTEMS

Procurement systems:

1. Traditional / General contracting

2. Design – Build

3. Turnkey / EPC projects

4. Management Contracting

5. Construction Management

6. Private Finance Initiative (PFI) / Public Private Partnership (PPP) and Build Own Operate Transfer (BOOT)

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TENDERING OPTIONS

1. Open Tendering

2. Single-Stage Selective Tendering

3. Two-Stage Selective Tendering

4. Target Cost Tenders

5. Negotiated Tenders

6. Continuity Contracts

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