Procurement systems advantages, disadvantages and risks for the construction client

Updated: Aug 31



Various procurement systems available in the industry are individually acknowledged to have strengths and weaknesses which is the job of the client and project manager to carefully calculate and choose the most appropriate system.


A UK based survey research carried out by the Charted Institute of Buildings (Hawkes, 2010) indicate that 93% of responders have been involved with a project that overran in terms of cost and 94% have been involved with a project that overrun on time with around 50-60% believing the procurement system had a direct influence.




Procurement is a succession of calculated risks and allocation of responsibilities carefully matched to the project specifics and objectives. Different types of procurement (Traditional, Design and Build, Construction Management, etc) as shown in Figure 3.1-3.3 (download report above to see figures), the CIOB study shows the popularity of traditional systems for small projects, design and build for medium and partnering for large complex projects.


Traditional


Advantages

Traditional procurement as illustrated in Figure above has the advantage of ensuring a firm contractual date of completion (Cooke & Williams, 2010) provided that the design has been fully developed and uncertainties are eliminated before the tender stage. This results in minimising the tendering costs (Greenhalgh & Squires, 2011) and provides competitive fairness since contractors are bidding on the same basis (Morledge & Smith, 2013).


The client is benefitted from the knowledge of the lump sum cost before being committed and this results in obtaining the best contract price for the full scope of works (Cooke & Williams, 2010) which will result, in the final project cost being lower than using the majority of other procurement methods (Greenhalgh & Squires, 2011) and provide reasonable price certainty at contract award (Morledge & Smith, 2013).