microsoft powerpoint - chapter 5b - contractual arrangement - procurement
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PROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE I
[QSD 289][QSD 289][QSD 289][QSD 289]
1MohammadMohammadMohammadMohammad NasharudineNasharudineNasharudineNasharudine ShuibShuibShuibShuib
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SECTION DESCRIPTIONS LINKS
1 INTRODUCTION2 GENERAL MATTERS
3 STANDARD FORM OF CONTRACT
4 METHOD OF PRICE DETERMINANTION
2
5 CONTRACTOR SELECTION & APPOINTMENT
6 PROCUREMENT OPTIONS
7 CONTRACT STRATEGY
8 CLIENT PROCUREMENT NEEDS
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Client organizations are divided between those inprivate and public sectors although this distinction is
becoming more difficult to define since theprivatization of many national bodies.
The private sector includes industrial, commercial,social, charitable and professional organizations, and
.
The public sector is taken to mean governmentdepartments, nationalized industries, statutoryauthorities, local authorities and developmentagencies.
The experience which a client has of buildingprocurement ranges from extensive, in the case of aclient with a project management team, to none,where a private individual may want a developmentonly once in a lifetime.
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The traditional method of organizing
construction work starts with appointing aconsultant designer, usually an architect or
engineer, or both. Other specialists may be
,
appointed to provide cost information,
prepare bills of quantity, compare bids and
maintain financial management during
construction.
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BASE ON METHODOF PAYMENT
CONTRACTUALARRANGEMENT
BASE ON METHODOF PROCUREMENT
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Measurement
Cost
Reimbursement
Conventional
Design and Build
ManagementContracting
Others
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BASE ON CONTRACTPRICE
CONTRACTUALARRANGEMENT
BASE ONCONTRACTORSOBLIGATIONS
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Fixed Price
Cost
Reimbursement
Conventional
Design and Build
ManagementContracting
Others
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PRO ECT DELIVERY:PRO ECT DELIVERY:PRO ECT DELIVERY:PRO ECT DELIVERY:
Conventional /
Traditional
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EXTENT OFCONTRACTORSOBLIGATIONS
ManagementContracting
Others
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Procurement is the process that is used to
deliver construction projects. As part of the initial stages of a project, one
of the principal tasks of the project team is
o eve op e o e
adopted.
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TRADITIONALCONTRACTMANAGEMENT
CONTRACTING
DESIGN AND
BUILD, OPERATE &TRANSFER
CONTRACT (BOT)
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PROCUREMENTMETHODS
BUILDCONTRACT
CONTRACT
BUILD, LEASE &TRANSFER
CONTRACT (BLT)
PRIVATE FUNDINGINITIATIVE
CONTRACT (PFI)
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CONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODSCONTRACT PROCUREMENT METHODS
TRADITIONALCONTRACT
MANAGEMENTTYPE
PACKAGE DEAL
MISCELLANEOUSMETHOD
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BUILD, OPERATE &TRANSFER CONTRACT
(BOT)
BUILD, LEASE &TRANSFER CONTRACT
(BLT)
CONTRACTING
MANAGEMENT
DESIGN & BUILD TURNKEY
PRIVATE FUNDINGINITIATIVE (PFI)
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APPORTIONMENT OF
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The procurement system, and associated
contractual arrangement, will dictate thefinancial and other risks borne by the parties
to the contract.
s canno e e m na e y c oos ng a
particular form of contract, but will be
shifted towards one party or the other.
A guide to how the risks are divided for each
contractual arrangement is given in Fig. 2.1.
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CONVENTIONAL
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The traditional structure for project procurementshown in Fig. 2.2 is a sequential method because the
employer takes his scheme to an advanced stage withhis professional team before appointing a contractor.
The consultants role is seen as an independent one.
The designer is employed to advise the client, design,ensure t e wor s ept w t n t e cost m t ancomplies with the standards required.
A quantity surveyor can be engaged to give guidanceon design costs and budgets, prepare bills ofquantities, check tenders, prepare interim valuations
and advise on the value of variations. Consultant structural and services engineers may be
employed either by the client, or his advisers, todesign the specialist parts of the project.
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DESIGN & BUILD
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The design and build arrangement is anattractive option for clients.
It simplifies the contractual links between theparties to the main contract (see Fig. 2.3)because the contractor acce ts the
responsibility for designing and constructing. The benefits include: single-point
responsibility, prices which reflect moreclosely the final cost to the client, inherently
more buildable designs and an overlap ofdesign and construction phases leading toearly completion.
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During the 1980s, clients were attracted tomanagement contracting because it offeredearly starts to large-scale and often complexconstruction projects.
The mana ement contractor is a ointed to
work with the professional team, tocontribute his construction expertise to thedesign and later to manage the specialistpackage or works contractors.
He is responsible for the smooth running ofthe work on site so that the contract can befinished within time and cost.
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In the USA, where the roles of the professionalsare different, the client or his project managerwill take a more active part in the construction
phase. A construction manager is appointed as a
professional consultant with powers to inspectwork on site and issue instructions (see Fig. 2.5).
The client has a greater control over fundsduring construction because he has a contractwith all the trade and specialist contractors.
These contractors welcome the direct links withthe client partly for the higher status this brings
but more importantly because the lines ofcommunications are clearer and payments aremade sooner
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The UK government is committed to PFI for
major projects.
This procurement option has been successfulin delivering high quality facilities for public
services since the early 1990s.
By June 2003, over 280 projects had beensigned with a total value exceeding 35
billion.
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BILLS OFQUANTITIES
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CONTRACT
RATES
DRAWINGS &SPECIFICATIONS
BILLS OFAPPROXIMATEQUANTITIES
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COST PLUSPERCENTAGE
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REIMBURSEMENTCONTRACT
COST PLUSVARIABLE FEE
COST PLUS FIXEDFEE
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There are essentially two (2) ways of selecting a
contractor: through competition or by
negotiation.
This will apply to any working arrangement,
including strategic partnering.
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SELECTIVECOMPETITION
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SELECTION
TENDERING
COMPETITION
NEGOTIATEDCONTRACT
TWO-STAGETENDERING