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Methods of Construction Procurement The term 'construction contract' now has a statutory definition, covering most but not all types of construction work, and including both building and engineering work. However, the different types of contract used in the construction industry are numerous and varied. At the root of all construction contracts lies the method of procurement: the contractual methods by which construction projects are to be set up and constructed. There are four common methods of construction procurement used in the UK. This is before taking into account the different financing options available (e.g. project finance), which will also impact on the procurement method selected (although the procurement will probably still be based on one of the methods below). The contractual impact of the procurement method that is ultimately selected is most clearly seen in the main building contract and the appointments of the professional team, although it will also affect the form of subcontract that is used. Traditional Procurement This covers the situation where the employer employs the main contractor to undertake the construction of the works only, and does not require the main contractor to take responsibility for the design of those works. The main contractor is contractually responsible for undertaking the whole of the construction but will typically appoint several sub-contractors to undertake individual works packages. The design of the works is solely the responsibility of the professional team, who are also employed directly by the employer. The employer will also appoint his own quantity surveyor, and the architect usually acts as the contract administrator and issues the interim certificates. This method allows careful planning of the design, the build and health and safety, and also allows the employer closer control of the works. The risks are that it is unlikely to be the cheapest method of procurement, there are many points of responsibility and it may need long lead-in times. Design and Build ('D&B') This method of procurement does exactly what it says on the tin: the employer employs a main contractor who is responsible for not only the construction of the works but also the design of those works. The professional team is either appointed directly by the main contractor or is initially appointed by the employer to put together the scheme and then the appointments are novated to the contractor. 'Novation' is a process whereby the rights and obligations of the employer under the appointment are transferred to the contractor. The appointment continues in full force and effect but the obligations on the professional team to perform the design services are owed to the contractor, who in turn is obliged to pay their fees. Either way, the design consultants are ultimately answerable to the contractor and not the employer, with the contractor as the single point of responsibility in the event of a defect in the design or workmanship of the project. Nevertheless, the employer will usually require collateral warranties from the design consultants as a second tier of contractual protection in the event that the employer has to bring a claim and the main contractor has ceased trading. The works are not supervised by the architect but by an employer's agent who issues the interim certificates. The quantity surveying role is usually performed in-house by the contractor. The advantages of D&B are that there is one point of responsibility for the employer, and this method of procurement can be the cheapest option with the shortest lead-in times. The major disadvantage is that the employer has less control over the works and so their quality can suffer. The process whereby the appointments of the professional team are novated from the employer to the contractor can also cause problems from a project

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management perspective as this is where disputes over the allocation of the designers' roles often occur. Resolving this can be costly in terms of time and professional fees. As a very rough rule of thumb, if a project is worth around 1m or more then a D&B procurement method is likely to be more suitable than a traditional method, unless the design is very simple (e.g. an unsophisticated industrial warehouse). Management Contracting The contractual structure of management contracting appears similar to traditional procurement: the employer appoints a management contractor who appoints works contractors to carry out individual works packages, and the professional team is appointed by the employer. The crucial difference is that the management contractor does not take any responsibility for undertaking the works. Rather the works contractors undertake the entirety of the works, and the management contractor manages them in return for a fee. He also issues the interim certificates. The management contractor undertakes no work himself and is liable to pay the employer damages for breach of contract only to the extent that he can recover those damages from a works contractor, unless the management contractor himself is in breach of contract (unlikely). This artificial contract structure means that there are no real advantages to using this form of procurement. The fact that it is now rarely used means that most people are unfamiliar with it, with a resultant increase in costs for anyone who selects it. Construction Management Here the contractual structure is essentially similar to management contracting, but the management contractor is removed and the employer employs the works contractors directly. The works are managed by a construction manager (the same company may offer both management contracting and construction management services) appointed by the employer. Unlike a management contractor, the construction manager does not have any contractual link with the works contractors - they are responsible directly to the employer. The construction manager issues the interim certificates. This method of procurement can be highly flexible, efficient and cost effective. However, unless the employer is very experienced, construction management can be a dangerous tool. If the project is not managed well then cost and time overruns are virtually guaranteed, which raises the risk of multiple claims both by and against the employer.

DESIGN-BUILD ISSUES new page

The rebirth of design-build as a project delivery method for government-sponsored infrastructure projects can be attributed to a number of complementary factors. First, design-build has its roots in the genesis of infrastructure development going back millennia when design and construction functions were integrated by the design-builder position. Second, in times of war or natural disaster the urgency to expedite projects has caused government agencies to suspend traditional procurement and contracting methods and permit alternative approaches such as design-build. Third, budget and personnel shortages or other constraints in the public sector and competitive pressures in the private sector have caused project sponsors to seek more cost-effective ways to deliver projects. Indeed, fiscal and national crises have often been the driving forces behind efforts to permit government to innovate and become more cost-effective. Design-build is viewed by many as one of the most promising "innovative" approaches to build highway infrastructure faster and cheaper without sacrificing product quality.

Proclaimed Advantages of Design-Build Project Delivery

Proponents of design-build contracting proclaim a number of advantages over typical contracting arrangements such as design-bid-build including:
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Time savings through: o Early contractor involvement that enables construction engineering considerations to be incorporated into the design phase and enhances the constructability of the engineered project plans; o Fast-tracking of the design and construct portions of the project, with overlapping (concurrency) of design and construction phases for different segments of the project; and o Elimination of a separate construction contractor bid phase following completion of the design phase. Cost savings from: o Communication efficiencies and integration between design, construction engineering, and construction team members throughout project schedule; o Reduced construction engineering and inspection (CEI) costs to the contracting agency when these quality control activities and risks are transferred to the designbuilder; o Fewer change and extra work orders resulting from more complete field data and earlier identification and elimination of design errors or omissions that might otherwise show up during the construction phase; o Reduced potential for claims and litigation after project completion as issues are resolved by the members of the design-build team; and o Shortened project timeline that reduces the level of staff commitment by the designbuild team and motorist inconvenience due to reduced lane closures. Improved quality through: o Greater focus on quality control and quality assurance through continuous involvement by design team throughout project development; and o Project innovations uniquely fashioned by project needs and contractor capabilities.

In a design-build project development process, the procurement of the design-build contractor through a request for proposal (RFP) process might actually require substantially more time than the invitation for bid (IFB) process used to retain the construction contractor. However, overall time savings result from not having to go through two separate procurement processes, one for the design team and one for the construction team.

Proclaimed Disadvantages of Design-Build Project Delivery

Design-build contracting is also one of the most controversial of the innovative highway project delivery approaches, since it changes the fundamental way key stakeholders in the highway construction industry compete and cooperate with each other . Critics claim that design-build:
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Reduces competition for construction services by excluding smaller firms unable to lead the larger projects most amenable to the design-build approach; Favors large national engineering and construction firms in competing for larger design-build contracts that are too big for smaller local or regional firms to pursue; Provides an opportunity for favoritism to enter into the contract award process by including non-price factors in the basis for selection; Undermines the inherent checks and balances between design and construction teams in the traditional delivery systems, with the design team no longer independent of the construction contractor; Strikes at the foundation of the traditional quality assurance/quality control roles through the combination of engineering and construction; and Increases project costs due to the elimination of the low bid contractor selection criteria.

In considering alternative project delivery approaches, proponents of more traditional approaches question whether adequate checks and balances are provided to ensure product quality, integrity in the procurement function, and fairness to established businesses that compete for these contracts. Others ask whether any one method of project delivery is preferred for all types of projects and situations, or if a portfolio of alternative approaches should be available to suit different situations and project types.

Gareth Williams research or design and build

4 EVALUATION CRITERIA FOR ASSESSING DESIGN-BUILD PROJECT DELIVERY

Past research has considered a number of performance criteria when analyzing the implications of design-build contracting as shown in Exhibit II.4. This study characterizes the implications of design-build project delivery versus the traditional design-bid-build project delivery in terms of selected project characteristics and relevant/measurable performance criteria that directly relate to the issues posed by Congress in framing the requirements for this study.
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Exhibit II.4: General Criteria for Evaluating Design-Build Project Delivery

Source: AECOM Consult Pertinent literature on design-build project delivery reveals that proponents and critics use similar criteria for judging the applicability and effectiveness of design-build and related approaches to project delivery. These criteria relate to performance objectives that proponents seek to achieve and performance standards that critics fear will be jeopardized by using design-build. Expanding on the general criteria shown in Exhibit II.4, this study used the following criteria to assess the advantages and disadvantages of using design-build versus design-bid-build: Duration of project development, comprising the following two phases: o From concept to contract award o From contract award to completion Total cost of project development, including the following: o Project planning o Project administration o Design o Construction o Quality assurance and quality control Quality of the completed facility, which can be measured in both quantitative and qualitative terms, including: o Owner satisfaction - meet or exceed expectation o Meet or exceed standards o User satisfaction

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Equity of the procurement process for prospective bidders including: o Individual firms or teams providing planning, architecture, design, construction, and inspection services o Large, medium, small, and disadvantaged firms o Domestic or international firms or teams Competition among prospective bidders in the highway design and construction industry including: o Individual firms or teams providing planning, architecture, design, construction, and inspection services o Large, medium, small, and disadvantaged firms o Domestic or international firms or teams

Among these factors, proponents generally agree that project duration or speed of delivery is the most significant factor motivating project sponsors to try design-build, particularly when an emergency or other urgent condition exists. Cost control is the next most frequently cited reason for using designbuild, particularly for contracting agencies who wish to minimize the extent and impact of change orders on project costs. Quality is the one feature of a project that both proponents and critics agree must be preserved regardless of the applied delivery approach. Where warranties are included as a part of the contract, the emphasis on project quality takes on even more significance due to the added cost exposure of the project delivery team. Equity and competition are both important issues in the design-build versus design-bid-build debate, prompted largely by a concern that innovative project delivery is merely a way to get around current regulations that protect the interests of and promote continued competition among competent project design and construction firms in the United States. A prevailing complaint is that innovative contracting approaches will change the competitive landscape for companies involved in a particular state's highway development program by placing local firms at a distinct disadvantage to larger national firms that have significantly more experience in successfully responding to these kinds of procurements in states with laws, regulations, and institutional context more favorable to alternative approaches. Another concern is that increased use of design-build will lead to fewer business opportunities for small businesses, including disadvantaged business enterprises, minority-owned firms, and female-owned firms. Other performance indicators for judging the success of design-build contracting include: Integration of various functions that constitute the project development process by establishing singular responsibility for project design and construction; Transfer of project risks to the design-build team; Reduction in administrative burden following contract award; and Application of innovative techniques and products.

Each of these features can be measured by the five primary performance criteria listed above. Indeed, these five criteria reflect the specific areas of focus established by Congress in TEA-21 for this study, based on the results of the literature search, SEP-14 program and project surveys, and project databases available to the research team.

Gareth Williams research or design and build