ABEE3002 Practice Management Lecture 4 Quiz

Module Information

• Module code: ABEE3002
• Module title: Practice and Management
• Lecturer: Graeme Barker
• University: University of Nottingham
• Locations: UK, China, Malaysia

Lecture 4: Procurement - Buying a Building

• Week 4 focused on Procurement - How to Buy a Building, specifically the introduction (4.1)
• Procurement includes deciding the strategy for obtaining goods/services from external sources.
• Procurement is the overall act of obtaining goods and services from external sources by reviewing the client’s requirements and their attitudes to risk.
• A major objective of this week is to understand and learn the key procurement methods used in deciding on an appropriate contract.
• The impact of procurement on design is considered throughout the week.

Week 4 Content Overview

• Pre-session:
  • Introduction to procurement and contracts
  • Outline of main contract choices
• Workshop:
  • Exploration of main contract choices
  • Decision-making (justifying procurement choice)
  • Impact of procurement on design

Aims and Learning Outcomes

• Knowledge of component costs of different building costs, construction systems, and specification choices.
• Understanding of the impact of these choices on architectural design.
• Knowledge of the roles of clients, consultants, and contractors under different building procurement methods.
• Learning objectives include key procurement methods, decision-making process for selecting an appropriate contract, and key contract terms and their implications for managing the design process.

CW1 - Fee Proposal

• Assignment requiring students to advise a client on whether to pursue a design and build or a traditional contract, giving three key reasons for the choice.

What is Procurement?

• Procurement is the complex network of relationships between a client, consultants, and construction companies.
• Procurement is the overall act of obtaining goods/services.
• Obtaining goods/services involves reviewing client risk tolerance.

Why Have a Contract?

• The difficulty of relying on gentlemen's agreements is that they depend on the continued existence of the parties.
• The 2011 Construction Act covers verbal agreements, but it's vital to have a written contract.
• Contract variations, slow construction, lack of information provision, and poor specification are common impediments to project progress.

Contract Selection - Cost and Time

• Contract selection needs to consider cost and time
• A tradeoff often needs to be made, where choosing a fast solution could result in issues with quality
• Choosing a high-quality solution could be more expensive.
• Charts demonstrate KPI results for cost and time predictability on building projects completed in previous years; these show fluctuations across different financial years in regards to percentages on budget better or on time or better.

Contract Selection - Key Aspects

• Contracts should provide a clear legal structure for clients, architects, and contractors.
• Covers completion dates and how changes are costed/instructed.
• Sets quality standards, controls monies during work completion, addressing potential contractor defaults and client financial issues.
• Details who is responsible for insurance.
• Describes how and when contractors get paid.

Traditional Lump Sum Contract

• Assumes the whole design will be completed by the Client's design team.

Key Aspects of a Traditional Lump Sum Contract

• Time required for full document production before tender.
• Cost certainty as a lump sum is known before construction.
• A significant amount of time is required by the design team in order to prepare for tender.

Pricing Mechanisms in Lump Sum Contracts

• Fixed price/lump sum contracts
• Re-measurement contracts
• Target cost contracts
• Guaranteed maximum price contracts
• Cost reimbursement contracts
• Cost plus re-imbursement contracts

Traditional Lump Sum Contract

• The architect must ensure they specify exactly what is required (such as windows, materials, finishes, thermal performance, acoustic performance, glass type, frame arrangement & types, etc...).
• Contractors may be limited in their options for finding cost-effective solutions.
• Be aware of potential implications if guarantees are inadequate as clients may seek clarification on issues regarding cost, design, and quality.

Traditional Lump Sum Contract

• Takes the most time.
• Gives the client the most control over the quality of the work.
• Can be relatively costly.
• Less likely to be used for large-scale projects unless client is intent on achieving high quality for the project from specialist builders.

Design and Build Contract

• The architect doesn't develop the entire design but allows the contractor to suggest more cost-effective and time-effective solutions.
• The main contractor is the lead designer and is responsible for project delivery.
• The client has less control over design details.

Key Features of a Design and Build Contract

• The client typically requests the contractor appoint a design team.
• There is significant reliance on Employer's Requirements for contractor performance parameters.

Drawings for Traditional and Design and Build Contracts

• Demonstrates drawings for both contract types and their key dimensions and details.

Early Contractor Engagement / Offsite Manufacture

• Early contractor engagement allows for parallel design and site operations. This is important as procurement timeframes can be reduced without complexities found in traditional contracts.

Design for Manufacture and Increased Offsite Manufacture

• Modern factories allow for offsite manufacturing and industrialization of construction projects.

Assembling a Project Team - Increased Offsite Manufacture

• Use of 3D web interfaces for home buyers to configure what they want.
• Software allows for design and manufacturing to occur in tandem.

Time Cost Quality Management Contract

• Detailed design can proceed parallel with site operations.
• Long lead specialist design sub-contractors can be engaged early, avoiding traditional contract complexities.

Procurement Options - Risk

• A table outlining different contract types (e.g., Traditional, Design & Build, Management Contracting) and associated risks for the Client and Contractor.

Procurement Options – Pros and Cons of Early Contractor Engagement

• Pros: Early access to supply chain, logistics, safety considerations, contractor control over risks and costs, security for client cost and program.
• Cons: Client loses design access early, larger teams are harder to manage, risk-averse contractors can lead, cost obligations may shape the process.

Choosing the Right Option (Risk)

• A table summarizing the strengths and weaknesses of various contract types (Traditional, Design & Build, and Management).

Q10: Client Starting Early but Wants Quality Control (Contract Choice)

• The suggested contract types for an early start extension with quality control are Traditional Lump Sum, Traditional Remeasurement, and Design and Build.

This quiz covers the concepts introduced in Lecture 4 of ABEE3002, focusing on Procurement and the strategies for buying a building. Students will explore key procurement methods, contract choices, and the impact of procurement on design. Test your knowledge of how to effectively manage procurement processes in construction.