Procurement Strategy 540 - Traditional Procurement Competitive Tender Process

A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)

AC1.2: Explain the roles and interests of those who should be involved in a tender process

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Interested parties can view all the bids at this time, although they don't have access to the bidders' financial data and other proprietary information. Then contract is awarded to the company with the lowest bid. The Contracting office will then make sure the lowest bidder has submitted their bids on time and in accordance with the instructions and requirements of the IFB. In addition to making sure they have fulfilled all requirements that were outlined in the IFB they also evaluate the bidder's level of responsibility based on the company's means to fulfill all the contract requirements. Due to the fact this process is very rigorous this process is monitor to ensure sure strict rules are applied and followed.

Tendering managers have been asked to look into ways we can make tenders to the local authority more cost effective while preserving quality, by being more competitive the organisation intends to increase the number of contracts secured.

In this method, the design and the construction roles are combined into a single responsibility and the team is referred to as the Design Build Contractor. The architect is under contract to the contractor and not the owner. The advantages of this method are that the owner is dealing with one contract for the design and construction and does not get involved in the details of the design and construction. The design can be accomplished according to the budget and easily be changed if necessary. Since the maximum price is set in an early stage, this method is faster than the design-bid-build and the construction manager method. However, there are drawbacks to this approach. Since the architect and contractor report to the design/build firm, a conflict is created between the owner and the design/build firm. Also, as the design and construction roles are part of the same team, this can lead to a disadvantage. As the owner is no longer dependent on the architect, the architect’s judgement is no longer provided to the owner and this leads to quality control problems. (what I think if this is the best method or

In this assignment I will be writing a formal report that will explain a typical procurement process, I will outline a variety of methods of supplier reimbursement and contract relationships; I will also outline the pros and cons of each contract type. As well as this, I will explain a typical supplier selection process through the use of Carters 10 C’s and a typical selection process model.

It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)

Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making

Choosing construction management as a procurement strategy means the client is responsible for leading the

Client and the contractor have same priorities. Basically, contractor will make the decision in turnkey approach and client will just accept in silent. In this project, the contractor and the client have the same focus and priorities therefore the relationship between the contractor and client is good and there is no overruns or communication problems between both sides.

• Ray: “Your telephone message about an error in your tender was a waste of time. You can’t change the rules. The best you can do is to withdraw”

terms of time can be managed in this scenario, as there is no specific delivery

Perceived benefits are referred to as the anticipated advantages of an e-procurement system that can be provided to an organization. Among the existing studies are those on the benefits of e-procurement, for example [69], [70], [71]. Aggregate findings of these researches shown that there are many benefits of e-procurement in construction in relation to costs and time savings; improved quality of construction products and services, client and user satisfaction, efficiency and effectiveness in the management of construction projects. Organizations are likely to adopt an e-procurement system if they believe it will yield positive or beneficial results.

This type of procurement strategy is a ‘fast track’ strategy. Client pays a sum of money to hire a management contractor to manage the whole construction project. Therefore, some early work can be carried out before the design is complete. The contract for the construction projects are between the management contractor and sub contractor. The final cost for the project can not be identified until the final work has been awarded.