Results and Findings

Discuss About The Methods Procurement Construction Projects?

When a project is dreamt about by a developer or a client, the client puts in an effort towards achieving and actualizing it.in addition to funding and provision of land for the project, the client might not have the required skills to make real the dream. He/she has to seek the services of the skilled personnel to actualize the plan. The duty of designing his plan and its continuous construction are open to various methods hence need to select the most suitable method for the project leading the demand for a professional advice (Hashim, 2008, p. 775).

 Various methods of procurement are often employed at different and specific stages of procurement to maximize efficiency. Advantages and limitations of each method should highly be considered in the process of deciding which method of procurement best suit the construction project. Eventually, most reliable and cost-effective method to client and bidder should be adopted. In addition, objectives of the construction project, both short and long-term goals, should be considered during the entire process as it forms the entire basis of decision-making. Modern methods of procurement are always given first priority since they contain limited and open procedures of procurement (Aziz, 2014, p. 526).

There are various method for procurement in construction including;

• Single source tendering
• Request for proposals
• Open tendering
• Restricted tendering
• Request for quotations
• two-stage tendering

This method of procurement allows construction firms and firms to tender on construction materials in an open competition environment. It requires construction firms to:

• Have fair and consistent technical specification
• Contain objective assessment measures and also advertise locally
• Openness to all competent and potential bidders
• The capability of granting least cost contract negotiation provider(Bower, 2007, p. 862).

Open tendering is the most favored and preferred method of procurement by construction firms and may be applied for almost all procurements regardless of value. This method of procurement enhances effective competition and adds value for money, to the contrary, open tendering method is majorly procedure based facilitating procurement of simple goods and materials hence making it unfit for multifaceted procurements where high concentration is on output and outcome of the process being contracted but not strict conformity to standard and rules (Keith, 2007, p. 455).

• Open tendering encourages limited exposure to favouritism as everyone can apply for the tender
• It enables high level of competition in pricing as clients will take good and fair prices
• It facilitates new firms and company to enter into the market
• Increases employment opportunities as new firms enter the market
• Brings in development in experience inform of new technology
• Open tendering help contractors to grow
• Enables contractors to get new clients

However, it also has some limitations which include;

• Selected contractor may not suit the proposed project in terms of experience
• Firms with limited experience may enter the market
• Unknown firms and companies may enter the market
• It facilitates waste of estimating time(Teon, 2014, p. 223).
• Encourages high aggregate cost for tender in relation to transport, electricity
• Open tendering facilitates high evaluation time since all documents have to be checked
• It enables unrealistic competition with High concentration and focus on the least cost solution
• Excess focus on formalities may limit bidder or supplier participation in the tendering process
• Regulates suppliers participation in identifying the technical requirements and specifications

Opposite to the open tendering, restricted tendering exercises a regulatory limit and control on the number and amount of requests for tenders that can be sent by a supplier or service providers in a construction project. Just like open tendering method, this technique is a competitive method, though, the competition aspect is regulated and controlled by construction firms and suppliers that are invited by the procuring team (Austroads, 2014, p. 742).

Open Tendering

The procuring body or team should generate a set of procedures and measures to use when choosing the providers that appear on the invitation list since Random selections is not efficient enough. It is again employed as a way for the procuring team and agencies to save time and money as they conduct selection process.

Restricted tendering method is frequently adopted when;

1. The materials, works or services are strictly available from a limited number of bidders usually known to the procuring organization; and
2. The duration and cost or value of considering a large number of bids is not responding to the cost of procurement.

Hence both environmental conditions, a and b, must exist together to enable a restricted tendering method to be applied failure to which open tendering must be resorted to as there are no limitations placed on the application of open tendering method since it is associated with restricted tendering (Sidney, 2006, p. 832).

1. Invitation
2. ICTAD category
3. Prior qualification i.e. Financial
4. Negotiation

1. One stage selective tendering
2. Two-stage selective tendering

In this stage, developer or client advertises for contractor or bidder to apply for shortlisting after which a short list of the contractors considered qualified and suitable to do the work and approved list is kept and maintained by the client.

It is a combination of a single stage for competition, a double stage for competition and early start of work. The experience of the contractor and practical knowledge is necessary at the design stage (Austroads, 2014, p. 329).

• It enables familiarization of contractor by the developer
• Selective tendering facilitates good quality of tender provision
• It limits wastage of time during evaluation

• Selective tendering promotes favoritism of bidders
• It does not allow price competition among bidders
• Restricted tendering restricts entry of new firms and companies into the market
• It requires regular updating of documents and information relating bidders(Brian, 2011, p. 888).

• Information of the company

Information relating to the company is essential for clients when allocating tenders since most clients need to know the level of trust to give to a specific company. Reason being there exists both old and new companies in the market or construction bidding field. Usually, risks overburden the client when the company is new to the market. As result of this most clients prefer allocating tenders to old companies (Mosey, 2009, p. 434).

• Achievements and awards

During the process of performing duties by companies some departments always present awards for the best company of the year as a form of motivation. Clients frequently prefer offering tenders to such companies which receive these awards due to limited risks to the client.

• Availability of successfully completed projects

It is always very important for clients allocating contracts to contractors to know or be aware of successfully completed projects. This forms a basic ground of trust building to clients on the contractor.

• Work in progress

The ongoing work of contractor during the time of tender application is of much importance for the client to hand over their tender to the contractor as it forms a benchmark for the company to take on a tender (Masterman, 2015, p. 973).

• Financial information

Financial information of a company is of great use to the client whether to give the tender or not to the company. Some new companies to the market have got weak financial strengths compared to old ones.

• ICTAD grading and relevant documentary evidence

Advantages of Open Tendering

Usually, in the construction field, ICTAD grading is of high importance than any other qualification to be awarded a contract or tender. It clearly states a good construction company accompanied by evidence proving the same and in completing projects.

A request for proposal is a tendering document that expresses proposal usually exercised via bidding criteria, by an agency or firm interested in procurement of a construction commodity or service to a potential client or developer. Request for proposal is often delivered early in the procurement cycle frequently at the preliminary study or at procurement stage (Singh, 2008, p. 783).

It is appropriate in a situation where the advertised tender requires technical know-how, the specialized capability of the bidder or where the material or service being requested is limited or do not totally exists. This may demand research and development creating the commodity or service being requested. A reliable request for proposal reflects the strategies, short and long-term construction goals, elaborating inclusive details upon which bidders will be able to present a matching perspective.

• Requires the client or developer to clearly distinguish what it intends to purchase.
• Informs the bidders or suppliers that the selected criteria are entirely based on competition.
• Informs bidders that an organization is in need to procure and calls on them to implement best of their efforts.
• Enables for a vast and elaborate distribution and response.
• Ensures that suppliers respond and reacts factually to the advertised and the singled requirements.
• Generally required to follow an outlined evaluation and selection criteria to ensure an organization expresses impartiality.

A request proposal entails more than a request for a price as other requested information may include corporate information, financial details, technical strength, material information and estimated period of completion. Often RFPs contains item specifications, service or construction project for which proposal is requested. Detailed specification increases the accuracy of the proposal sent to approve suppliers. The bidders return the proposal on the set duration as late proposals are not considered (Mark, 2013, p. 985).

• It highly reduces occurrence of favoritism unlike open tendering
• It helps in achieving lower cost of the project through negotiations
• False assumptions and unrealistic expectations are avoided through RFP vendor feedback.
• RFP enables determination of if part of the project can be regarded appropriate for the internal team.
• It helps in the identification, postponing and cancellation of prune marginal projects.

• Consumes a lot of time as it requires an extensive description of services which take a longer duration to prepare.
• The high occurrence of limited guarantee that any bidder will be awarded a contract through an RFP as the developers may decide that no proposals were acceptable and met minimum requirements.
• Limited chances of winning a contract through a competitive RFP as bidders lose more RFPs than they win

The selection of suitable procurement method is of high importance to all construction stakeholders and increases chances of achieving the desired objectives of the project and the overall client’s fulfilment. In contrast, modern procurement methods are characterized by a high level of skilful input personnel making it slightly expensive to actualize (Ogunlana, 2012, p. 744).

Thus, when selecting the most suitable choice of procurement method, it’s of the importance of the construction project by the client to consider: 

• The desired duration to complete the construction project
• The long-run estimated cost of the construction project
• The intensity of the desired skilful input and technology
• Legal requirements of the desired construction project
• Performance or quality in relation to both design and construction of the structure.

Conclusion

The project included a comprehensive description and analyses with respect to the negative and positive aspects of the different methods of procurement in construction.  There are very many different methods of procurement and the selection involves some aspects such as Defining the project, Identifying and allocating the construction project need Establishing and implementing a well-analyzed construction project program for execution, among others. Three methods have been analyzed and it is worth concluding that open tendering is the most advisable since it allows for competition in an efficient manner (Aziz, 2014, p. 666).

References

Austroads, E. C., 2014. Building and Construction Procurement Guide: Principles and Options. 2nd ed. Carlisle: Austroads Limited.

Austroads, E. C., 2014. Building and Construction Procurement Guide: Principles and Options. 3rd ed. Chicago: Austroads Limited,

Aziz, A. A., 2014. Procurement Methods in Reducing Disputes for Construction Projects. 2nd ed. Carlisle: Universiti Teknologi Malaysia.

Bower, D., 2007. Management of Procurement. 4th ed. London: Thomas Telford,

Brian, G. S., 2011. Introduction to Building Procurement. 2nd ed. Chicago: Routledge,

Brian, G. S., 2011. Introduction to Building Procurement. 2nd ed. London: Routledge.

Hashim, M., 2008. The Effects of Procurement Methods on Performance of Construction Projects in Malaysia. 4th ed. Malaysia: Universiti Teknologi Malaysia.

Keith, G. Y., 2007. Alternative Project Delivery, Procurement, and Contracting Methods for Highways. 5th ed. Chicago: American Society of Civil Engineers.

Mark, L. E. R., 2013. Construction and Procurement Law. 1st ed. Westminster: W. Green/Sweet & Maxwell,

Masterman, J. W. E., 2015. An Introduction to Building Procurement Systems. 2nd ed. Chicago: Taylor & Francis,.

Mosey, D., 2009. Early Contractor Involvement in Building Procurement: Contracts, Partnering and Project Management. 3rd ed. Carlisle: John Wiley & Sons.

Ogunlana, S., 2012. Profitable Partnering in Construction Procurement. 2nd ed. Chicago: Routledge.

Sidney, N. C. H. R. P., 2006. Best-value Procurement Methods for Highway Construction Projects. 2nd ed. London: Transportation Research Board,

Singh, A., 2008. Creative Systems in Structural and Construction Engineering. 2nd ed. London: CRC Press.

Teon, M. L., 2014. Project Procurement Method: The Conflicts in Construction Projects Procured Under Design and Build Method. 2nd ed. London: UMP,

Woodward, J. F., 2009. Construction Project Management: Getting it Right the First Time. 3rd ed. London: Thomas Telford,