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Image: Athanasius on flickr. Some rights reserved. Unit 1: Construction Project Participants D39PZ: Procurement and
Image: Athanasius on flickr. Some rights reserved.
Unit 1: Construction Project Participants
D39PZ: Procurement and Contracts
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Construction project parties

Construction projects are complex collaborations of many specialised organisations:

Some provide advice Others do the physical work

Procurement is concerned with structuring the relationships of these collaborating organisations

The role and responsibilities of each must be understood

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Construction project “stakeholders” Who is a stakeholder? (Discuss with the colleague next to you within
Construction project “stakeholders”
Who is a stakeholder?
(Discuss with the colleague next to you within a minute)
……………………………………………………………………
…………………………………………………………………
Who are the stakeholders of a construction project?
(Discuss with the colleague next to you within 2 minutes)
…………………
…………………
…………………
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Construction project “stakeholders” Employer/Client Physical Provide advice construction Contract Architect
Construction project “stakeholders”
Employer/Client
Physical
Provide advice
construction
Contract
Architect
Contractor
Sub-contractor
administrator
Project
Engineer
Manager
Project
Engineer
QS
BS
Manager
Building
Quantity
Surveyors
Surveyor
Clerk of Work
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Construction project “stakeholders”

Identify 2-3 responsibilities of each project stakeholder listed below:

1.

Employer (All)

2.

Contractor (All)

3.

Subcontractor (All)

4.

Contract Administrator (All)

5.

Clerk of work (All)

6.

Architect (AE students only)

7.

Project Manager (CPM students only)

8.

Building Surveyor (BS students only)

9.

Quantity Surveyor (QS students only)

Work in groups of three in each. 15 minutes

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The Employer

The legal entity that employs the Contractor to complete the Works

May be an individual, firm, company, plc.

Basic responsibilities:

To define what must be done

To appoint the Contractor

To make decisions and provide information when required

To pay the Contractor

May be quite distinct from the individual or group of people

acting as the “client.”

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The Architect

Employed by the employer to provide overall project guidance, design expertise and to (usually) administer the contract

Brief responsibilities:

extracting and understanding the client’s requirements

developing a design response

ensuring the design is constructed (contract administration administering the Contract between Employer and Contractor)

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The Contract Administrator

Traditionally, this role is performed by the Architect but any suitably competent organisation can do it

Ensures the overall project process is legally appropriate

Ensures the contract is applied (i.e. “administered”) to the project correctly

Acts as the Employer’s agent

makes decisions on their behalf

“certifies” key events in the project, usually to resulting in a payment from the Employer to the Contractor

can vary the contract by issuing instructions

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The Project Manager

If appointed by the Employer, the project manager may:

Co-ordinate the general flow of the project

Ensure programmes are realistic

Facilitate the flow of information between organisations

Co-ordinate site activities

Ensure the quality of workmanship and materials

Ensure good health and safety practice

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The Building Surveyor (the client’s BS)

Provide solutions to building failures

Preparing condition surveys of existing buildings

Preparing conceptual and technical design proposals

Managing the design and delivery of construction projects

Preparing management plans for real estate assets

Running construction contracts

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The Quantity Surveyor (the client’s QS)

Advises the Employer on procurement route and selection of contract

Provides budgeting advice

Prepares bills of quantities and compiles the tender documentation

Co-ordinates the tendering process and reports on tenders

Ascertains the value of the Works during their construction

Ascertains the value of any claims from the Contractor

Agrees the Final Account with the Contractor

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The Clerk of Works

Appointed by the Employer as an experienced set of “eyes and ears” on site

Responsible for monitoring workmanship to ensure compliance with the preambles and general good practice

Can reject work if not of sufficient standard

Signs the Contractor's Daywork sheets, if produced.

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The Contractor

Appointed by the Employer to construct the Works in accordance with the Contract Documents

The Contract Documents contain:

the Architect’s design and specification (including the preambles);

the bills of quantities priced by the Contractor

the contract itself

The Contractor usually appoints a series of subcontractors to complete the Works on its behalf.

Subcontractors (usually) have no link to the Employer

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Subcontractors • In practice, the subcontractors do the majority of the work. • The contractor
Subcontractors
• In practice, the subcontractors do the majority of the work.
• The contractor is vicariously liable for all subcontractors’
performance
• Subcontractors are typically specialised (although there
are also labour-only subcontractors)
 Specialised by trade
 Specialised by technical expertise
• Usually entirely of the contractor’s choosing
“Nominated” subcontractors no longer exist.
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The contracted parties

We will focus on the main contract between Employer and Contractor

Only the Employer and the Contractor are parties to this

Contract

Other contracts also exist:

Fee-based consultancy contracts between the client and:

its Agent (the Architect / Contract Administrator)

its other consultants (e.g. Quantity Surveyor)

Lump sum contracts between the Contractor and its subcontractors

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Employer is not the same as client D39PZ: Procurement and Contracts 16
Employer is not the same as client D39PZ: Procurement and Contracts 16
Employer is not the same as client
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What does it mean to procure? D39PZ: Procurement and Contracts 17
What does it
mean to
procure?
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Image: Toby Maloy on flickr. Some rights reserved. What does it mean to procure? Procurement
Image: Toby Maloy on flickr. Some rights reserved.
What does it
mean to
procure?
Procurement is the
management of
process complexity
Image: www.curtiswoodarchitects.com on flickr. Some rights reserved.
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Procurement issues

To procure a building it is necessary to:

understand what the client wants

organise the relationships of many specialised organisations

allocate each risk to the organisation best placed to handle it

agree and document the responsibilities of the

collaborating organisations

agree how problems will be solved

organise the exchange of information and money

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Construction and the client’s business

Commercial clients construct buildings or facilities to develop their business

The relationship between the construction project and the client’s business need must be understood

It is critical that the construction project is aligned with the client’s business

Many clients don’t want to build

They do so because there is no alternative

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Construction and the client’s business

The client’s primary strategy directs its business

Long term goals focus on organisational development and commercial competitiveness

The client’s secondary strategies direct its projects

Short term goals focus on meeting immediate business

needs

Secondary strategies that involve construction projects are implemented with the assistance of construction industry professionals

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Construction and the client’s business D39PZ: Procurement and Contracts 22
Construction and the client’s business
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Can you briefly define ‘Procurement’?

4 minutes…

discuss

with the colleague next to you

Procurement is not briefing

Procurement is:

“the framework through which construction is brought about, acquired or obtained”

or

“the strategy to satisfy the client’s development and/or operational needs with respect to the

provision of constructed facilities for a discrete life cycle

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Clients and industry change • Clients have stimulated change in the principles of the construction
Clients and industry change
• Clients have stimulated change in the principles of the
construction industry due to historically poor performance
• A series of industry initiatives have directed change
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Clients and industry change

1994: The Latham Report (“Constructing the Team”)

Advocated more collaboration and less adversarial working

1998: The Egan Report (“Rethinking Construction”)

Advocated partnering and other forms of collaboration

Started a series of “demonstration projects”

2002: “Accelerating Change”

Recommended practices and procedures

Led to “Achieving Excellence in Construction”

Adopted by the Office of Government Commerce

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Understanding clients D39PZ: Procurement and Contracts 26
Understanding clients
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Understanding clients Experience in construction Experienced Inexperienced • Utilities • Large commercial
Understanding clients
Experience in construction
Experienced
Inexperienced
• Utilities
• Large commercial
organisations
• Small and medium
enterprises
• Private individuals
• Retail, leisure &
hospitality organisations
• Property developers
• Local authorities
• Central government
agencies
• Small public sectors
bodies/ “single issue”
interest group
(http://www.direct.gov.uk/en/Dl1/Directorie
s/A-
ZOfCentralGovernment/index.htm?index
Char=A )
• Social landlord/Small
housing associations
• National Health
Services
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Sector
Public
Private

Understanding clients

Property and development companies

Seek to make a financial profit from the process of development

Some developers specialise in location or development

type

Specialisation improves their understanding of risk

Other developers do not specialise

They spread their risk by not being too dependent on any one market

Developers change their priorities to ensure financial

viability

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Understanding clients

Investors and funders

Seek financial return, but with a longer term view than developers

They will prioritise a secure revenue stream in the long term

Prefer to purchase existing or recently completed buildings

When constructing, will prioritise quality and functionality over cost

They are willing to spend more initially to ensure the building will continue to perform in the long term

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Understanding clients

Owner-occupiers

Require a building that suits their individual needs

Their needs vary widely, from simple warehouses to highly complex manufacturing facilities

Their priorities cannot be predicted

Tend to build infrequently (perhaps “once in a lifetime”)

Their lack of construction experience can expose them to inappropriate risk

They rely on construction organisations for advice

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Understanding clients

Government bodies

Procurement processes can be complex

Office of Government Commerce (OGC) requirements

Policy increasingly requires Government bodies to act alone

Some can be inexperienced

Cost is increasingly important to these clients

Many public sector projects must be self-financing

Most Government projects must satisfy multiple

stakeholders

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Understanding clients It can’t cost more than £500k I need it now! I don’t know
Understanding clients
It can’t cost
more than
£500k
I need it
now!
I don’t know
what I want -
yet .
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Remember to read the full Unit notes and Appendices, and

complete your independent study

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