Strategic Procurement Pathways for Construction Projects

Introduction

Procurement, or the act of acquiring goods, labor, or other services from an outside source, is a significant aspect of the construction business. Planning, supplier identification, selecting the optimal procurement strategy, requesting bids, contract administration, and performance evaluation are all steps in this multi-step process. If a construction project is to be successful, its procurement strategy must be properly developed and implemented. executing a commission: This critical phase of the construction process ensures that all building systems are working as intended and in accordance with the client’s requirements. It’s essential for a procurement and construction professional to understand the following procurement principles: Commissioning often involves a number of tests and inspections in order to identify and address any issues with the building’s systems, including the HVAC, plumbing, electrical, and fire protection. Project management Successful construction projects need efficient project management. In order to do this, every aspect of the project must be planned, coordinated, and organized from the very beginning till the end (Khan et al., 2018).

How to get raw materials: Raw materials are the basic elements of every building project. Procurement experts must discover, acquire, and buy the supplies needed to complete the project. Materials must be provided in the required amounts and on schedule, and the supply chain must be regulated. Suppliers must also be haggled with. Making use of labor resources The work required to complete building projects is considerable. Procurement experts and project managers must work closely together to ensure that the necessary labor resources are available when needed. This might comprise planning work, scheduling tasks, and managing labor costs. The case study for this research will center on the Al Rayah medical organization, which intends to build a multi-specialty hospital in Muscat. We shall decide on the choices for the procurement arrangements (PAO) and the procurement assessment criteria (PAC) for this project. There will also be a discussion of the duties and functions of the members of the design team and construction team. We will then provide the finest procurement strategy to fully satisfy the client’s demands. new hire hiring and training (Ruparathna & Hewage, 2015).

Procurement Assessment Criteria (PAC)

The most effective procurement strategy for a construction project should be determined by a set of priorities or standards known as procurement assessment criteria, or PAC.

1. Time management is typically a major issue in construction projects. Delays in completion might result in higher costs and fines. Therefore, it is essential to choose a procurement strategy that ensures the project is completed within the designated time frame. The use of methodologies like Design and Build or Construction Management may be appropriate since they provide an integrated approach to design and construction. Delays may be reduced as a result. If Al Rayah wants to open the hospital as soon as possible, they must follow the project timetable. Therefore, the selected procurement strategy should enable the project to be finished as soon as is practical without compromising quality (Morledge et al., 2021).
2. Quality: While it’s essential for every construction project, hospitals and other healthcare facilities place a greater emphasis on it. The facility may be assured of compliance with the essential regulations and standards via a quality-focused procurement strategy. By using strategies like “Build and Design,” where the contractor is in control of both the construction and the design, the project’s quality may be preserved. Al Rayah wants the project to meet high standards and be compliant with international regulations. The selected procurement technique must have a track record of producing high-quality projects in order to be effective (Arrowsmith et al., 2021).

Price

Price is yet another important factor to take into account when selecting a purchasing strategy. Cost, facility quality, and project completion date all need to be balanced. A procurement strategy that prioritizes pricing may employ competitive bidding or a framework agreement to get the most value for the money. Al Rayah has said that the importance of price stability and a low interest rate for bank repayment. The selected procurement strategy should provide a unique and clear cost structure in order to decrease cost overruns (Meletiadis, 2018).

1. Risk: Building projects have a number of hazards, including design, construction, and financial concerns. Reducing these risks may be aided by a procurement strategy that focuses on risk management. With the use of methods like construction management or project management, risks may be recognized and handled throughout the project. Al Rayah is interested in minimizing risk; as a result, the procurement strategy chosen should have a solid risk management plan to minimize any dangers that may manifest throughout the project’s execution (Morledge et al., 2021).
2. Complexity

Construction projects are usually complex, particularly when they include healthcare institutions and need specialist equipment and technology. It is possible to ensure that the project will be completed as planned by giving complexity a greater priority throughout the procurement process. Utilizing strategies like Design and Build, where the contractor is granted the right to both construction and design, complexity may be handled (Arrowsmith et al., 2021).

Variation: Changes to the project’s scope may result in delays and added costs. A procurement strategy that focuses on variation control may help to lower these risks. For instance, design and construction strategies may help in managing unpredictability. Al Rayah has said they don’t need any changes after the project brief has been agreed upon. This recommends that the procurement strategy should provide a concise and clear project brief in order to minimize the requirement for adjustments during the project execution stage (Meletiadis, 2018).

Competition: Competition is an essential part of procurement since it ensures that the greatest value for money is gained. A procurement strategy that emphasizes competition may employ competitive tendering or a framework agreement to get the most value for your money. Al Rayah hasn’t been very specific about the competition’s conditions. However, the selected procurement technique should include a competitive bidding procedure to guarantee that the greatest value for money is acquired (Theron & Dowden, 2017).

Management: Effective project management is essential to a construction project’s success. A procurement plan that prioritizes management might be useful to ensure that the project is completed on time, within budget, and in compliance with the essential standards. Techniques like construction management or project management may be used to manage projects effectively. The procurement plan has to have a strong management structure to provide effective project management from beginning to end (Theron & Dowden, 2017).

Accountability

Accountability is essential to any construction project in order to ensure that everyone involved is responsible for their actions. A procurement strategy that prioritizes accountability may be used to hold all stakeholders responsible for their actions. Strategies like design-build, in which the contractor is in control of both the design and the construction, may increase accountability (Meletiadis, 2018).

Procurement Arrangement Options (PAO)

Procurement arrangement options (PAO) are alternatives for purchasing goods or services for a construction project. The procurement strategy will be chosen based on the priorities listed in the Procurement Assessment Criteria (PAC). Al Rayah Medical Organization’s key priorities are time, quality, cost, and risk. The three primary procurement strategies that may be taken into consideration on the basis of these criteria are managed contracting, conventional procurement, and design and construct.

Management Contracting

A management contractor is recruited by the client as part of this procurement approach to oversee the construction project. The management contractor oversees the project’s design and construction stages and works closely with the client’s design team to ensure that the project is completed on time, as planned, and within the allocated budget and level of quality. With this procurement technique, the customer has greater freedom and control since they may choose the design team and the subcontractors, and they have better access to information about the project’s progress and costs. However, in order for the project to be effectively completed, a significant level of client participation and management experience are required (Bowman et al., 2017).

1. Conventional Procurement: In a conventional procurement method, the client chooses a design team to develop the project’s design and names a contractor to carry it out subsequently. Contractors are required to finish projects in accordance with the client’s design team’s design and requirements. The contractor is chosen via an open and competitive procurement procedure. Due to the fact that the design is finished before the contractor is selected, this method provides the customer greater assurance about the project’s cost and timing. If changes are made during the building phase, the design could become less adaptive and might cost more (Von Hlatky & Rice, 2018b).
2. Design and construction: As part of the design and build procurement approach, the client chooses a single contractor to manage both the construction and project design. This strategy lessens the possibility of disputes occurring between the design team and the contractor by establishing a single point of contact for the customer. Additionally, it may lead to cost savings since the contractor is better able to identify potential issues and address them before to the start of work, preventing the need for exorbitant changes. Lacking the necessary design experience, the contractor can be less adaptable and provide a lower-quality design (Tran et al., 2016).

The optimal procurement strategy for Al Rayah Medical Organization would be design and construct. This is because the customer prioritizes efficiency and quality while still being concerned about lowering risk. A single point of contact provided by design and build reduces the likelihood of misunderstandings and ensures that the project will be completed on time and to the required quality standards. It also makes it possible for the design and construction teams to communicate better, which reduces the likelihood of errors or delays.

Responsibilities and Roles

The composition of the design and construction team may vary depending on the procurement strategy used. However, in general, the following obligations and responsibilities belong to each party:

1. Client: The client is the entity that owns or is funding the construction project. Flammer (2018) claims that the client is in charge of choosing the project’s goals, budget, procurement strategy, design and construction team, and making sure that the project is completed on schedule, within the allocated budget, and to the required quality.
2. Architect/Designer: The architect or designer is required to develop and provide the project requirements, drawings, and plans. They work together with the client to understand their requirements and convert them into a design that meets those goals, complies with all relevant building rules and regulations, and can be produced within the budget allotted (Flammer, 2018).
3. Engineer: The engineer contributes technical knowledge to the design and building processes. To ensure sure they are safe, efficient, and achieve the project’s objectives, they design and evaluate the building’s structural, mechanical, electrical, and other systems (Office, 2013b).

1. The contractor is in responsibility of completing the construction work in accordance with the designs and guidelines provided by the architect or designer. i. To ensure that the project is completed on schedule, within the authorized budget, and to the required standards, they monitor daily operations at the construction site and work with suppliers and subcontractors (Office, 2013b).
2. Project Manager: The project manager is in charge of overseeing the whole process to ensure that it is completed on schedule, within the allotted budget, and to the necessary level of quality. They interact with the client, design team, and contractor to ensure that the project goals are accomplished and that any issues or risks are quickly managed (Office, 2013b).
3. The quantity surveyor is in charge of budget planning and management for the building project. They develop the cost predictions, monitor actual spending in relation to the allocated funds, and advise the client of any prospective cost-saving opportunities (Flammer, 2018).

Examples of common contract forms that provide a framework for describing the duties and obligations of each party engaged in the construction project are the JCT (Joint Contracts Tribunal) and NEC (New Engineering Contract). The contracts also include provisions for handling adjustments, resolving conflicts, and guaranteeing that the project is completed on schedule, within budget, and to the specified standard of quality.

An illustration of a design and construction team hierarchy is shown below.

Figure 1.Hierarchy of the design and construction

Procurement Strategy

For the new multi-specialty hospital project in Muscat, the design and construct procurement technique is the best choice based on the goals and considerations of Al Rayah Medical Organization. According to this concept, the design and construction of the project will both be the responsibility of the Design and Build contractor. The Design and Build procurement method offers Al Rayah a variety of benefits, including less risk and uncertainty, speedier completion, and cost certainty. The contractor takes charge of the design and construction, ensuring that any issues are resolved without the client’s involvement. The client’s 100-month deadline is met by this strategy’s early completion, which also decreases the interest rate for bank repayment (Flammer, 2018). The project will also be of high grade and comply to international standards since the contractor is in responsible of ensuring compliance with all pertinent construction rules and quality requirements. The Design and Build process minimizes the possibility of cost overruns by ensuring that the project’s total cost is set from the beginning. Another important issue is price certainty. Al Rayah Medical Organization may choose the best procurement approach to meet their requirements using the Design and Build procurement method.

Recent Procurement Initiatives

With the intention of improving efficiency and reducing costs, a number of efforts have been developed in recent years to procure construction projects. Building information modeling (BIM), a computerized depiction of a structure’s structural and functional components, is one such undertaking. BIM facilitates collaboration between architects, engineers, and contractors, enhancing communication, reducing errors, and reducing waste. Due to its increased usage in public projects, this technology is now mandated by many governments. IPD, a team-based approach that connects owners, designers, and contractors in addition to all other parties involved in the building process, is another new effort. This approach promotes cooperation and communication with the goal of completing projects on time and within budget. IPD contracts are typically used for challenging projects with a lot of risk or uncertainty (Frevvoblog, 2021).

PPPs are being used more often in the procurement of public infrastructure projects. A private sector partner provides finance, planning, building, and/or operation and maintenance services for a public project. The private sector partner is often compensated via a long-term contract with payments contingent upon the accomplishment of the project. Since the private sector partner assumes some of the project’s risk, PPPs may help reduce public sector risk. These efforts aim to enhance project results by streamlining and streamlining the procurement process. It is important to remember that a number of factors, including the project’s complexity, the stakeholders involved, and their degree of participation, determine whether or not these efforts are effective (Shuler, 2021).

Procurement in the Construction Industry MOOC

The MOOC “Procurement in the Construction Industry” provides a thorough examination of procurement strategies and their application in the industry. Among the several procurement tactics taught in the course are traditional procurement, design and build, and construction management. It also discusses the benefits and drawbacks of each approach and provides advice for selecting the best course of action for a project. The course covers the assessment of bids and the tendering process in-depth as part of the procurement process. The main contract forms used in construction projects are covered, together with an introduction of the legal and regulatory framework that governs procurement in the industry (CIOB Academy, 2023). The importance of collaboration and communication among the several project stakeholders, including clients, designers, contractors, and suppliers, is heavily emphasized throughout the course. It also covers the use of technology in procurement, notably the usage of BIM and other digital tools. The MOOC’s introduction to procurement in the industry may help everyone involved in building projects, from clients to suppliers and contractors.

Conclusion

The Procurement Assessment Criteria (PAC) must be taken into account when deciding on the optimum procurement approach for a construction project. Al Rayah Medical Organization in Muscat recommends the Design and Build procurement technique for the new hospital project in light of the PAC evaluation. The design team and construction team have different tasks and responsibilities within the confines of the typical contracts and forms used in the construction sector. Through recent initiatives like DBFO and PPP, alternative procurement options may also be provided for building projects. It is essential to carefully review the PAC and choose the best procurement strategy to guarantee the project’s success.

References

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