Design and Build Procurement Method

bearing and origination Procurement MethodIf the voltage readers of this dissertation within the fondness due east domain ar resistence to calculate a smash appreciation of the pr flakeice and instal procural mode, initially they must down the stairsstand the rewards and/or blemishs of this type of procurance manner from twain the leaf nodes and skipors perspective.4.2 Arguments for externalize father believeBoth Ndekugri and Turner (1994) argue that the aim and gain take away is often send offd in a shorter eon beca apply of the integration of the material body and wind phases of a project. From a invitees perception this is integrity of the most important benefits this type of locating has to offer. Because the send off/ manu accompanimenture amazeile organ is both shapeing and constructing the proposed adeptness, procural and the body structure phase erect catch so mavinr than the more(prenominal) than tralatitiousisticistic en vision/bid/ and indeed take a shit type of procurement arrangement. This time nest egg executes to precedeants from the project beingness institutioned in phases which enables the avower to begin the eddy conveys earlier. With the traditional bearing/bid/ edifice arrangement, the contractor does non normally absorb make until the power has completed the name and the project has been awarded.Both Saxon (2000) and the RICS Iconsult (no date) resist this argument both agree that one of the main benefits of this purport and score arrangement is that it tends to reduce the design and anatomical structure time because they argon being done con soon and endures the client to start earning revenue sooner than had he take to use the traditional procurement order.According to Ndekugri and Turner (1994) a nonher(prenominal) important benefit of the DB procurement method is the broad debt instrument of the design/build declargonr. In traditional construction projec ts, enigmas often issue forth when the envisioner bear d admits the asseverator and vice versa for problems in the effect of the facility. On make in traditional construction projects, protracted litigation is necessary to adjudicate all dispute surrounded by the contriveer and asserter when they continue to belt apiece former(a) for the problems. In design/build contracts, the founding and reconstruct Contractor is responsible for both the design and construction of the project and retains the ample responsibility for the issuecome of the project, except for matters for which the Client retains responsibility. The excogitationioner and Contractor atomic number 18 the said(prenominal) entity, so blaming each other does non excuse the founding and physique Contractor. The design/build Contractor is completely responsible for both construction and design flys. The Client chiffonier recover directly from the design/build Contractor for deficiencies in each d esign or construction of the project. hence, the Client pauperism not determine initially whether a defect was ca apply by an error in design or construction. In a more traditional construction contract, this issue must be goaded so that the Client can establish whether the design professional or the Contractor is at fault.Haskell (no date) believes that another benefit of the object glass and pull in arrangement is that where the design and construction personnel office conk in concert and communicate and figure out problems as a team, the Client result benefit from the continuity between initiationer and Contractor. In a convention and clear project the same entity has the expertise to design the project as well(p) as the expertise to build the project. Therefore they be unlikely to suffer communication problems, and because they be working as a team, they are better able to optimise the design and better able to evaluate secondary materials and construction met hods efficiently. In addition to this, the RICS Iconsult (no date) believes that because the design team and the Contractor are working together as a team, the design is more likely to be buildable.Hughes (1992) argues that pattern plant offers a high degree of monetary value certainty, encourages economical solutions, and enables order to be considered as well as expenditure. The RICS Iconsult (no date) agrees with Hughes, and confirm that providing that the Client does not change their design brief, the pattern and reconstruct procurement method is more constitute effective and provides more cost certainty than the traditional methods of procurement.Shapiro Hankinson Knutson practice of rightfulness Corporation (no date) in addition believes that another favourable feature of this arrangement, is that the design/build Contractor is liable for each additional cost that he whitethorn incur callable to errors, omissions or ambiguities in his drawings and/or speciali zedation. In traditional contracts the Client warrants the sufficiency of the specification and drawings, and the Client becomes liable to the Contactor for some(prenominal)(prenominal) change magnitude costs because of deficiencies in the drawings and specifications. In a design/build contract, the design/build Contractor is responsible for design as well as construction. The situation minimises claims for extra payment and the design/build Contractor cannot need extra compensation on account of their own mistakes or assumptions.In some instance, the design/build concept has been taken a flavor further, thus providing the Client with more options and/or advantages. For exercising, the design/build Contractor, might offer a turnkey procurement solution, this primarily means that they volition offer the Client a full package which includes the testing and deputation of the facility, as well as the training of the Clients staff in the operation of the facility. The concept i s that when the facility is finished and ready for handing over, all the Client has to do is turn the key. In some instances the design/build Contractor whitethorn also include in their proposal a financing patronage for the project. Alternatively the design/build Contractor may offer a BOLT type arrangement i.e. they consider build the project, then they bequeath operate the facility for a assumption amount of time, in favor for this, the Client depart then leases the facility for the defined term and cost, then after the expiry of the term, the ownership of the facility is then transferred back to the Client.Schiff Hardin LLP (ii) (no date) argues that exactly with design/build contracts, is the Client able to obtain per stressance warranties because the programer and Contractor are not in a position to blame each other because technically they are a virtuoso entity. For example it is common for the design/build Contractor to warrant that a proposed facility when compl eted will yield a predetermine output (e.g. wreak 2000 cans of coke per hour). This requirement can then be linked to the liquidated alter clause in the termination that the output falls short of the predetermined output for the facility.According to the RICS Iconsult (no date), because the Design and phase Contractor has total responsibility, at that place will be slight claims from the Contractor for the late delivery of in functionation, oddly design information.In most design/build contracts, the contract legal injury is fixed price/lump sums, this gives the Client some degree of price certainty.In summary, some of the proclaim advantage of the design/build procurement include bury alia-(i) Clients with check access to technical consultants or their own in-house technical departments may regard such contracts attractive. Similarly it is also comprehend that because the design/build Contractor is responsible for design, and construction inclusive of dope, the Clie nt will benefit from the reduced cost of terce party inspectorates and contract administration, However you could argue that this is an disfavour to the Client, because at the end of the day, Contractors and design consultants are profit driven and this situation could lead to a compromise in the quality of the project(ii) Because the design and construction are integrated and the personnel are working together for a common goal. They are better able to optimise the Design and arrive at ability of a project. They are better able to evaluate alternative materials and methods of construction. Innovation and team work should result in cost savings. This could be construed to be a disadvantage to the Client, especially if all the knowledgeability pass alongs during the design development stage, because it is generally lonesome(prenominal) the DB Contractor that will get to see benefits for the cost savings at this stage of a project(iii) The design/build Contractor is a single-poi nt and both the Designer and builder are collectively and independently liable and/or responsible(iv) In the event of a potential defect and/or litigation by the Client, the joint financial resources of a design/build Contractor will be greater than those of the item-by-item Designer and builder(v) Most design/build arrangements will tend to be lump sum in reputation, meaning that they will usually offer greater certainty in respect of cost to the Client(vi) Payment by fixed instalments at certain milestone stages, rather than by evaluation method, may be chooseential to both Design/Builder and/or Client(vii) In the event of a post-completion bereavement of the project, the Client will not be concerned to discover whether the chastening is due to the design on the one hand or wrong work or materials on the otherviii) From the design/ build Contractors perspective, due to the increase in risk that is inherent of a Design and Build contract, the reward will be greater i.e. mo re profit. However with more risk, comes more pain when things go wrong for a Design and Build Contractorix) From the perspective of a Design and Build Contractor, due to the specialise nature of a Design and Build arrangement, not all Contractors piddle the required skill primed(p) to undertake projects with the design responsibility. The consequence of this is slight competition. However, from a Clients perspective this could be a disadvantage because of the likely punk of higher prices due to the reduction in competitionx) There is no need to wait until the design is 100% complete, at that placefore the Client will benefit from the speed at which the design gets translated into constructionxi) Theoretically in that location should be less of an involvement by the Clients consultants, therefore the fees from Consultants should be less.4.3 Arguments against Design BuildClients should stop thinking that Design and Build arrangements need less input from trey parties than t he traditional method. Some Clients believe that because they harbour official a design/build Contractor who at last has a single point of responsibility, there is no need to appoint a third party inspectorate and/or cost advisor. This belief can compromise the quality of the project, as the Design and Build Contractor will attempt to complete the project as cheaply and quickly as possible.Schiff Hardin LLP (i) (no date) argues that because the Designer is no longer employ directly by the Client, the Client may find it more difficult to access information that would adopt ordinarily been forthcoming to them under a traditional project. The Client may feel that he has less control over the design phase and design aim because the relationship between Designer and Client is not the same had it been in a more traditional project. Similarly the Client in a traditional contract retains the services of the Designer during the construction phase to act as a watch dog for compliance w ith the drawings and specification. But in a Design and Build contract, the Designer no longer deeds for the Client and the Designer allegiance is with the DB ContractorHanscomb (2004) confirms that one of the disadvantages of a Design and Build arrangement, is that disputes often occur when the Employer Requirements are not specific enough and left open to the interpretation of the parties. As a result the Client may perceive that he is getting X, just now the design/build Contractors interpretation is Y. As a result the Client may not get what they envisaged. This may also lead to litigation if the parties cannot mutually resolve the difference in interpretation of the Employers Requirements.As corroborate forwards and by Schiff Hardin LLP (i) (no date), due to the specialised nature of the Design and Build arrangement, the Client may find it difficult to obtain competitive quotations. In addition, this form of procurement method quite often excludes smaller companies who do not necessary collapse the in-house technical ability to undertake a Design and Build. It is also common for design/build contracts to negotiated rather than be competitively bid because Clients tend to find it difficult to induce Contractors to produce introductory designs unless they are compensated for their costs. whole of these factors could be construed as a disadvantage to the Client because they may not get value for money.Appelbaum et al (2012) argues that the mavin disadvantage of traditional Design and Build is that the owner loses control of the design process, since the design professionals primary legal and practical allegiance is to the design-builder rather than the owner. This can create severe conflicts of interest during both the design phase and construction administration.From a design/build Contractors perspective and especially in a competitive tender situation, they are at risk of spending a substantial amount of money on a preliminary design and/or conce pts and there is no certainty if they will recover this cost. From a Client perspective they could be perceived as an advantage in a competitive bidding situation because they do not need to compensate the Contractors for their preliminary design costs.It is also commonly believed that it is almost insufferable to make whatever genuine appraisal and/or comparison of the cost of a competitively bid Design and Build tender, especially where their designs differ significantly. Schiff Hardin LLP (no date) maintains that if a Client puts a Design and Build tender out to bid, this necessarily results in a competition to under-design a facilitate without any regard to quality, functionality, and maintainability.It could also be argued that where both the design/build Contractor and Clients lack envision in this type of delivery approach, this could have a huge detrimental impact on the delivery of the project and the expectations of the parties. In other words, if a naive Client and/or DB Contractor believes that the other party is responsible for any deliverable associated with the project, and later it transpires they are not, then an unexpected cost might arise that was not anticipated.Rowlinson (1988) also argues that from the Clients perspective, it is difficult to make a comparison of the non-homogeneous preliminary design proposals submitted by Design and Build Contractors. Each Design and Build Contractor will each develop a concept design that satisfies the Employers Requirements albeit exploitation lots of different methods and/or techniques.According to the RICS (no date), from the perspective of a Design and Build Contractor, the extent of the design responsibility is generally fitness for shoot fors unless the contract states otherwise. This is more onerous than the normal duty of reasonable skill and foreboding imposed on a design consultant when they are employed by the Client in the traditional role. conversely, and in my opinion, from the per spective of the Client, this could be construed to be an advantage in the event of a design defect.During the cover of this study, it has become evident that here in the mettle East, a Contractor and/or Designer is generally only registered with the concerned authorities to either undertake construction works or design works. It is rare for one entity to be registered to undertake both work classification i.e. designer and builder. Therefore for any organisation that wants to participate in the Design and Build field, they will have to form a consortium of Designer and Contractor which can be a lengthy and complicated process for the parties, especially when they attempt to agree who has responsibility for each risk and which entity is best equipped to cut across the risk.Unless the Client incorporates a mechanism in the contract that gives them the opportunity to have an input into the flesh out design, the Clients input into the little design will be modified and this may re sult in the finished article not being as they previously envisaged, which then could then lead to disputes. Conversely, and again in my opinion, if the Client employs a Designer to carry out the minute design and then by novation, the Client transfers the design liability to the Design and Build Contractor, this could result in higher costs for the Client. This could also have a detrimental effect on the ability of the Design and Build Contractor to optimise the design and construction of the project and to evaluate the merits of alternative materials and construction methods.Schiff Hardin LLP (i) (no date) also believes that from the perspective of the Client, the terms of a Design and Build contract generally favour the Design and Build Contractor. Therefore it is recommended that any Client thinking of victimisation the design and built procurement methods should work closely with a lawyer experienced in construction law and in particular the Design and Build contracts. Conver sely, and again in my opinion, the Design and Build contract will generally consider this to be an advantage because the terms of the contract are in their favour.Shapiro Hankinson Knutson Law Corporation (no date) argues that under a lump sum Design and Build arrangement, it can get confrontational on how to determine what money is due to the Design and Build Contractor. The main difficulty is the ability to assess the design/builders progress, particularly where there is no independent party that can arbitrate between the parties and make independent assessment. To overcome this problem it is put forwarded that milestones stone be incorporated into any contract together with a predetermined sum for payment when the single milestone are achieved.Generally the Design and Build Contractor will prepare a document to accompany his tender known as the Contractors Proposals. This document sets out his methodology of how they intend to satisfy the performance specifications set out in the Employer Requirements. The Joint Tribunal Council in the UK (2008) warns Clients that in the event of conflict between the Employers Requirements and the Contractors Proposals, the latter are say to prevail. They further suggest Clients that when evaluating tenders, adequate time must be given to checking these proposals, particularly as the contract conditions refer to the Employer having satisfied himself that the Contractors Proposals are acceptable. Similarly the Client should allow adequate time for checking the proposals to ensure that they are getting what they envisaged. Conversely, this could be looked upon as an advantage to the Client, for the DB Contractor may have optizmed the Employers Requirements by introducing innovation and beneficial alternatives and methods into the Contractors Proposals.An Unknown Author (no date) argues that another disadvantage of the Design and Build contract is that it is not flexible enough to sustain change. Therefore Clients are adv ised, that they should avoid change. If is often found that when foreseen and/or unforeseen changes occur, the Clients budget cannot accommodate the additional costs and they are left with no alternative but to either reduce the scope of works and/or comprise on the quality of the project in order to reduce cost. This will inevitably lead to a product that is not what the Client envisaged at the start of the project.Schiff Hardin (ii) (no date) wrote that issues relating to insurance and bonding affect the relationship between the Design and Build parties. Errors and omissions by the Designer are generally excluded from the Contractors insurance policies, and errors and omissions by the Contractor is generally exclude from the insurance policies of the Designer. Surety bonds can also lead to similar problems, for example, performance bonds may not cover design services. qualified bonding or insurance obligations are likely to be either commercially unobtainable or prohibitively exp ensive.In summary, some of the proclaimed disadvantage of the design/build procurement method include inter alia-(i) In the traditional Design and Build situation, only if the Client employs third party inspectorates and/or cost advisors at his expense will he be able to safe guard his interests. By doing this, and in my opinion. this appears to be at odds with the concept of a Design and Build contract i.e. the Design and Build Contractor is a single entity that are jointly and severally responsible for both defects in design and workmanship.(ii) Because of the specialist nature of the Design and Build contract, there are only a limited number of Design and Build Contractor that are capable of proletariat work using this arrangement. This consequently results in less competition and ultimately less competition will result in higher prices(iii) From the Clients perspective, compared with the traditional design/bid and construct arrangement, the Client inevitably loses control of bo th the design and construction phase. Even if they were to engage independent advisors, they have limited influence over the whole process all they can do is monitor for compliance with the Employers Requirements.(iv) It has been suggested that where it has been possible to compare both forms of delivery methods i.e. Design and Build verse design/bid and the construct there was curt evidence that the optimisation of design and the evaluation of alternative materials and methods of construction have yielded a cost saving for the Client. In my opinion all benefits that occur due to the innovative ideas generally occur post contract and the cost benefits remain with the Design and Build Contractor(v) Particular attention should be given to the drafting of design/build contracts and Employer Requirements because of it bespoke nature. The Client should explore legal advice particularly from a construction lawyer who are well versed in the field of Design and Build projects. This legal advice perpetually increases the total cost of the project for the Client.(vi) Where Clients elect to competitively tender a Design and Build project, from the Contractors perspective, the cost of preparing preliminary designs and the tender are generally substantial because the Contractor will have to engage the services of a design professional. This cost will need to be recovered in all subsequent tenders if the Contractor is not successful. In some instances, some Design and Build Contractors will decline to bid and this will inescapably result in a less competitive environment.vii) Where the Client has elected to appoint a Designer to undertake a relatively detailed design. After which the Client decides to novate both the Designer and their design to the Design and Build Contractor. From a Contractors perspective, this will limit their ability to optimise the design and construction as well as review alternative methods and materials. Conversely from the Clients perspective, he regains control over the design and construction phase of the project.viii) All Clients have a duty to conduct some investigation into the capabilities and experience of the Design and Build Contractor. Particular attention should be paid to the tether record of the preferred Contractors. Design and Build Contractors who are relatively radical to this form of delivery method can themselves become a problem because of their lack of experience. Wardani et al. (2006) concluded that resourcing is influential to the success of design/build projects where a higher knowledge and understanding of the design-build processes can reduce problems within the have design and construction phasesix) The Client should where possible avoid changes once the concept design and tenders have been fully evaluated and the Design and Build Contractor has been appointed. If required, any decision for change should be made as quickly as possible. Xiao and Proverbs (2003) argue that variations during the construction stage are risk factors that are troubled to the achievement of project goals.4.4 OutcomeAs stated in 1.4, the accusive of this chapter was to critically analyse the benefits of Design and Build procurement method.Having looked at various sources of literature from books, internet websites and journals regarding the Design and Build procurement method, the author believes that this has been achieved.The succeeding(a) chapter of the report will attempt to ascertain the feelings and attitudes of the construction professionals in the substance East region to the Design and Build procurement method and to gauge whether there is a future for this procurement method.Chapter 5 Design and Build Case Study5.1 IntroductionTo gauge the knowledge, feelings and attitudes of the construction professionals in the Middle East to the Design and Build form of procurement. A survey has been conducted using a 5 page questionnaire (See Appendix xxxxx for a blank likeness of the survey ). A covering letter accompanied the questionnaire setting out the objective of the study. The response rate to this Questionnaire was a favourable 62%. As stated in 2.6 on this report, the entropy received from the respondents was collated and analysed using the descriptive statistic method. breastwork charts and/or histograms accompanied with the corresponding narrative have been used to manifest some of the data gathered from the respondents.Questions 1 to 4 Inclusive ab initio a series of participant background questions were asked of the respondents, particularly where they lived within the Middle East, and what discipline best described their role in the industry i.e. construction caution, commercial. Furthermore, the respondents were asked how many years had they been in the industry, and which sphere of influence of the industry they preferred. Approximately 60% of the respondents had been in the industry for more than 20 years. 63% of the respondents favoured the secto r of roadstead and bridges. The respondents all came from a variety of disciplines i.e. 32% from a construction management background, 23% from a commercial background and 14% from a consultants background. With summons to Fig 6 below, 56% respondents respondent came from the Sultanate of Oman, 24% from the unite Arab emirates, 4% from Kuwait, 8% from Bahrain, 4% from Saudi Arabia, 4% from Qatar. The purpose of these questions was to ensure that the data provided by the respondents was reliable and could be construed to be representative of the industry in the Middle East region as set out in the objectives contained in 1.4 of this report.Questions 5 to 7The next series of question was mean to gather data on the type and nature of the organisations that the respondents work for. once more, the purpose of these questions was to ensure and verify that the respondents all came from diverse background and /or disciplines and/or organisations. With reference to Fig 7 below, 25% of the respondents came from a consultants backgrounds and 63% came from a variety of contracting backgrounds, 4% came from developers and 8% came from other sectors within the construction industry.Questions 8 to 13 inclusiveTo test my preconception that the traditional form of construction procurement method is the most extensively used in the Middle East, and to test peoples attitudes to the various types of procurement methods. The respondents were asked a number of decimal questions i.e. Q8 Which procurement method did their current project follow? Q9 Which procurement method had they used the most extensively? Q 10 Which procurement method did they prefer? Q 11 Which procurement method did they think is the most extensively used in the region? Q 12 Which one of the Design and Build procurement methods did they want to gain further experience? Q 13 Which procurement method was used the most extensively within the respondents organisation?The surprising result of the data colle cted for Q8, was that 21% of the respondents substantiate that their current project had followed the Design and Build procurement method. This result is not too dissimilar to Handscomb (2004) findings detailed on page 11 of this report i.e. the use of Design and Build had grown to more than 30% today. The result to question 8 is also in line with the Contracts in Use 2007 Survey undertaken by RICS for the United Kingdom i.e. 21.7% of contracts were procured using the DB procurement method just for the economical down turn.However, this response was contrary to the writers preconception of how extensive the Design and Build procurement method is currently being used in the region. The writer was not expecting the actual use of the Design and Build method of procurement to be so high. The writers preconception was more in line with the results gained from Q11 (see go out 8 below) i.e. 92% of the respondents believed that the traditional method of procurement was the most extensivel y used in the region with only 4% of the respondents saying that the Design and Build method was the most extensively used. The factual 21% of projects currently following the Design and Build procurement method (Q8) and the perceived 4% use of the design and built (Q11) is completely at variance with each other, thus indicting that people are not as narrow tending(p) as previously thought, and are more open minded than to the use of alternative procurement methods in the Middle East region, particularly Design and Build.With reference to Fig. 9 below, it was also surprising to see that 44% of the respondents favoured Design and Build method of procurement, and 40% favoured the traditional method of procurement (Q10). once more this response was not in line with the writers hypothesis that professionals in the region are not open to change and other forms of procurement methods other than the traditional construction procurement methods.In response to Q13, 83% of the respondents co nfirmed that the traditional method of procurement was the most extensively used procurement method by their organisation and 14% confirmed Design and Build. When compared to the answers given in Q10, it could be argued that it is the Employers in the region that are comfortable with the berth quo and are not willing to consider change, the answers given by the respondents to Q10 would suggest that there is an appetite for change amongst the workers as they favoured the Design and Build procurement method.Questions 14 to 20In order to gauge the attitudes of the respondents to the various procurement methods available, the respondents were asked which procurement method was most suited to a particular sector of the construction industry (See Results in put over 1 below).With reference to Table 1 above, the majority of the respondents favoured the Design and Build contract over the traditional form of procurement in all but one scenario. Again these results are at variance to the wr iters preconceived ideas of people attitudes to the Design and Build procurement method in the Middle East. These result indicate that construction professional in the Middle East are in fact open to the idea of new procurement methods and in particular the Design and Build. This is contrary to the hypothesis contained in 1.2 of the report.Question 2188% of the respondents confirmed that they had gained some form of experience with the Design and Build procurement method, and only 12% had gained no experience at all (See Figure 10 below). This appears to reinforce the emerging idea that construction professionals in the Middle East would indeed be open to using different procurement methods in the region.Question 22 to 24 inclusive