Procurement strategy is an important consideration when planning a construction project. The selected procurement method can influence the allocation of responsibilities, design development, tendering process, cost management, programme and contractual relationships.
There is no single procurement method that is appropriate for every project. The selection should take into account the project's objectives, complexity, scope, risk allocation, programme requirements and the client's preferred approach to managing design and construction.
What Is Construction Procurement?
Construction procurement refers to the process and contractual arrangement through which a project is designed, tendered, contracted and delivered.
Different procurement methods allocate design responsibility, construction responsibility, risk and contractual relationships in different ways. Understanding these differences is important when establishing a procurement strategy.
Common Construction Procurement Methods
Several procurement approaches are commonly considered for building and construction projects. The terminology and detailed contractual arrangements may vary depending on the project and form of contract adopted.
Design and Construction Procured Separately
Under a traditional procurement approach, the design is generally developed by the consultant team before the construction works are tendered to contractors.
This approach can provide a defined basis for tendering where the design and documentation are sufficiently developed. The client, consultants and contractor have distinct roles in the design and construction process.
Design and Construction Under One Main Contract
Under a design and build arrangement, the contractor is generally responsible for both design and construction obligations, subject to the requirements established by the client and the contract.
This procurement method can provide a single contractual point of responsibility for design and construction, although the allocation of risk and responsibility should be clearly established in the contract documentation.
Management-Led Construction Procurement
Management contracting involves the appointment of a management contractor who manages and coordinates the construction works, with works packages being procured progressively.
This approach may be considered where early commencement and flexibility in procurement are important, although it requires appropriate management, coordination and commercial administration throughout the project.
Direct Management of Trade Contractors
Under construction management, the construction manager provides management and coordination services while the client may enter into separate contracts with trade contractors or work package contractors.
This arrangement can provide flexibility and greater client involvement, but it also requires clear coordination, commercial management and understanding of the risks associated with multiple contractual packages.
Factors to Consider When Selecting a Procurement Method
Procurement selection should reflect the specific requirements and circumstances of the project. Several factors may be considered during the procurement planning stage.
Project Scope
The complexity, size and definition of the project scope can influence the suitability of different procurement approaches.
Design Development
The extent to which the design is developed before construction procurement may affect the appropriate procurement strategy.
Programme
Project completion requirements and the need for early works may influence procurement sequencing and packaging.
Risk Allocation
Responsibility for design, construction, cost and other project risks should be considered when selecting the procurement structure.
Cost Certainty
The client's requirements for cost information and the timing of cost commitment may influence procurement decisions.
Client Involvement
The desired level of client involvement in design, procurement and construction management can also be relevant.
The Role of the Quantity Surveyor
Quantity surveyors can contribute to procurement planning by providing cost and commercial advice during the development of the procurement strategy.
Depending on the scope of appointment, this may include feasibility studies, cost planning, preparation of Bills of Quantities, tender documentation, tender analysis, commercial comparison and advice on contractual and procurement considerations.
The quantity surveyor can also assist in establishing a structured cost information framework that supports the client's procurement and project decision-making process.
Procurement and Cost Management
Procurement and cost management are closely connected. The procurement method affects when costs are established, how contractors are engaged and how commercial risks are allocated.
A suitable cost management approach should therefore be considered alongside procurement strategy rather than treated as a separate exercise.
Procurement Strategy Should Reflect Project Requirements
The selection of a procurement method should be based on the specific objectives and circumstances of the project. Factors such as scope, design maturity, programme, risk allocation, cost information and client involvement should be considered together.
Early procurement planning can help establish clearer roles, responsibilities and commercial expectations before the project progresses into tendering and construction.
Construction procurement is a strategic decision that influences design responsibility, contractual relationships, risk allocation, programme and cost management. The appropriate approach depends on the specific requirements and circumstances of each project.