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Common Procurement Strategies and their Characteristics 4. Scotland's Hub Programme 6. Traditional Lump Sum Strategy 7. Design and Build 8. Design Develop and Construct 9. Management Contracting Construction Management Revenue Financed Variant: Two Stage Tendering Variant: Target Cost Contracts Variant: Frameworks Selecting a Procurement Strategy and Form of Contract Example One Example Two Introduction to Risk Management and Apportionment Risk Apportionment Risk Management Amendments to Standard Form Contracts Selecting a Form of Contract Standard Form Construction Contracts Other Contracts Commonly Used Contracts Guides and Comparison Tools Choosing from the Different Forms of Contract Management of the Contract Dealing with Claims Design Responsibility Insurance Arrangements Dispute Resolution Other Useful Sources of Advice and Guidance.
In some cases, a clear selection process had been applied to the choice of contract which was appropriate for the nature of the work, the procurement method and the risks lying within the project. However, in other cases, it appeared that much less thought or planning had been given to the form of contract used where there was a reliance on historic practice regardless of whether the contract type was the best fit or approach for the project in question.
This will help to inform a contracting authority's decision on the procurement strategy and form of contract it wishes to adopt for the delivery of its desired project outcomes. While some procuring authorities continue to use these on a regular basis, those authorities not familiar with them may wish to consider other, more contemporary forms of contract.
However, these are not in common use and are not considered in detail in this chapter. Each description is accompanied by an assessment, in matrix form, of the relative impact from low 1 to high 10 of a set of twelve specific characteristics may have on the particular procurement strategy; for example, what level of client expertise is required in its application or is it suitable for simple or more complex projects. The twelve characteristics are described in Figure 2 , along with a description of what each characteristic assesses.
The amount of control afforded to the client in selecting a design solution, rather than simply testing if the specified project benefits are achieved. Needs the client to produce an output performance specification. Often called "Employers Requirements" or "Accommodation Requirements". The extent to which the procurement strategy is reliant on a detailed set of client technical requirements. For each design element this is normally expressed as achieving a minimum performance level.
The extent to which the strategy enables contractors and designers to work collaboratively from an early stage of the project. Measures the degree to which construction phase risks are typically able to be transferred to the contactor. Supports a high level of client involvement, specialist contractor design, optional supply chain intervention by the client, complex risk management.
The extent to which the strategy supports the use of a collaborative approach to procure to a cost target. The remaining options should then be assessed using a more rigorous weighted score analysis to help inform the choice of the optimum project specific strategy. This process is described in more detail from section 15 onwards.
For example, the hub programme further details below has been developed in Scotland on these principles. However, it is important to note that the approach does not replace formal contracts of engagement between parties or proper and appropriate management structures and procedures. It is a pragmatic way of working together to find ways of delivering the project to the required quality within budget and within programme.
Three forms of standard contract that have been developed to facilitate partnering approaches include:. PPC provides for a multilateral partnering agreement. Partnering is often used in framework arrangements where the long-term benefits of teams who work together regularly can be realised.
It is designed to provide the public sector with a mechanism to deliver and manage buildings more effectively. Each hubCo can undertake project development work, strategic support services professional consultancy services or facilities management services. Further details about the hub programme can be obtained from Scottish Futures Trust. This consists of a project brief and an associated budget which, if accepted by the hubCo, means that an Integrated Team, consisting of a Tier 1 contractor, designers and other consultants as appropriate, is then selected from the hubCo supply chain in consultation with the Participant.
A proposal for delivering the project, based on a scheme design, is then developed collaboratively over a period of approximately three months. Risks are jointly identified, surveys and investigations carried out and options considered.
A project development fee is only payable by the Participant if the proposal meets the project brief and budget criteria set out in the NPR and can also demonstrate value for money. All components of the project development fee are subject to percentage fee caps set at the time of the original, competitive PSDP procurement. The Tier 1 contractor's overheads, preliminaries and profit are subject, again, to percentage caps of the prime cost.
The "Stage 2" proposal is presented to the Participant and if this is accepted, a development contract is entered in to between the Participant and hubCo. The standard hub terms are based on those of a design and build contract. Recognising the period during which the Integrated Team has identified, mitigated and priced risks, the terms include for the risks on ground conditions, weather, utilities and contamination with exceptions for areas not able to be surveyed to be transferred to the hubCo and in turn to its Tier 1 contractor.
Suitable contractors are then invited to submit a tender priced against the client's requirements. Traditionally, this can comprise a Bill of Quantities. However, it is becoming increasingly common for contracts to be based on drawings and specifications, or activity schedules with contractors needing to satisfy themselves as to the quantities of material required. If the design has been fully thought out, developed and frozen, this type of contract should provide a reasonable degree of cost certainty at tender stage, subject only to client risk events, such as unforeseen ground conditions.
However, by their nature, Lump Sum Contracts may be less appropriate where the timescales for delivery of the project may mean that a fully developed design cannot be prepared in advance of tendering; in which case subsequent design development changes will usually lead to cost and, possibly, time escalation. Typically, this procurement strategy also uses forms of contract where the client generally retains the risk of, for example, unexpected ground conditions, adverse weather and utilities.
Typically, the client's own design team either in-house or outsourced develop a concept or scheme design to RIBA Stage 2 along with an output performance specification. Together these form the "Employer's Requirements" or "Works Information" depending on the form of contract chosen.
The client then invites competitive tenders in accordance with the guidance set out and relevant procurement legislation referred to in Chapter 7 of this handbook, covering "Procurement Route 2".
Where an output specification is insufficiently well developed, there is a risk that the quality, design and performance of the completed facility may be compromised by a contractor pursuing the lowest cost material specification or design solution. Careful attention to the output specification is required to achieve the required outcome. Often the client retains the services of the original design consultants to scrutinise the contractor's developing design and to confirm it is compliant with the Employers Requirements.
By including the maintenance and operation requirements within a design and construction contract, the supplier has an increased opportunity for adopting innovative solutions that provide greater value for money when considering whole life costs. However, in the case of Design Develop and Construct, the client's own design team either in-house or outsourced develop the design to a much greater level of detail than in a simple Design and Build strategy.
Typically, this will be to RIBA Stage 3 and will include both fully designed input specifications as well as output specifications for those elements of design being left to the successful contractor to complete. Together these form the "Employers Requirements" or "Works Information" depending on the form of contract chosen. Commonly, Planning Consent is secured by the client in advance of the tender, leaving the contractor to comply with any Planning Conditions and to secure Building Warrants and other statutory approvals.
The client then invites competitive tenders in accordance with the guidance set out in Chapter 7 of this handbook, covering "Procurement Route 2". The contractor is then required to complete the outstanding design - often integrating many specialist contractor elements such as cladding, steelwork, building services - all of which must comply with the relevant output specifications contained in the Employers Requirements.
Careful attention to the output specification elements is required. By including the maintenance and operation requirements within a design and construction contract, the supplier has increased opportunity for adopting innovative solutions that provide greater value for money when considering whole life costs. The design team, however, is not part of the management contractor's team and are either the client's own in house design team or appointed separately by the client as appropriate.
That said, if appointed before the design is complete, the management contractor, can advise on buildability, programming, sequencing and the procurement of the various works packages. Costs are controlled by the development of a cost plan in which estimates of the costs of works packages are initially used for budgeting purposes prior to being replaced with actual costs obtained in open book competitive tenders.
The projected final cost still subject to risk events will only be known once the final works package has been awarded and hence management of the cost plan focussing on risks and contingencies is extremely important. A construction manager is appointed by the client to manage the overall contract in return for a management fee and, as with management contracting, the project can benefit from the early involvement of the contractor.
The main, and very significant, difference from management contracting is that the contracts for the works packages are placed directly between the client and the trade contractors.
outside the United Kingdom, see the Design and Build Contract Guide. Page © The Joint Contracts Tribunal Limited DB Page 9.
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Compared with the traditional Design-Bid-Build project delivery method, the D-B offers potential time and cost savings. The D-B projects combine the design and construction phases of a project into a single contract. This reduces costs without reducing quality, since construction can begin while the plans are still being developed.
The Design Build contract templates listed below must be used by the University when the University contracts with a single party that designs and builds the project. The following documents are approved by the Office of the President and Office of the General Counsel for use by the Facility.
The Design-Build Program is an innovative delivery method by Caltrans whereby a contract for both design and construction of a project is awarded to a single entity. You will find various documents developed by the Department to implement Design-Build on this webpage. These documents are subject to modification. Delivery dot. Statewide Campaigns Response. I improvement project from I-5 to Harbor Boulevard including extend pavement life, improve safety, enhance traffic operation, and incorporate Intelligent Transportation Systems ITS.
It is a method to deliver a project in which the design and construction services are contracted by a single entity known as the design—builder or design—build contractor. It can be subdivided into architect-led design—build ALDB , sometimes known as designer-led design—build and contractor-led design—build. In contrast to " design—bid—build " or "design—tender" , design—build relies on a single point of responsibility contract and is used to minimize risks for the project owner and to reduce the delivery schedule by overlapping the design phase and construction phase of a project. Design-build also has a single point responsibility. The design-build contractor is responsible for all work on the project, so the client can seek legal remedies for any fault from one party.
PDF | A nationwide survey of state Departments of Transportation (DOTs) found that 15 states are using design-build (DB) to procure highway.
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