63,99 €
Mehr erfahren.
- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
As an industrial process, construction is unique. The procurement processes used to achieve the successful completion of built assets requires a different approach to that adopted in most other industries, due to the design of buildings being bespoke and the sites being geographically varied. The procurement process is central to the success of any construction project and many of the problems which impact construction projects can be traced back to the procurement phase, so a good understanding of the methods of procurement, the development of a procurement strategy and the influence it has on project success is essential for all those working in the industry.
Much has changed in the global construction industry since publication of the second edition of Building Procurement, for example the increase in debt burden of many major economies, widespread adoption of Building Information Modelling (BIM) Technology in the industry and the United Kingdom's exit from the European Union. This new edition has been rewritten to take account of these significant developments, but at its core it continues to provide a critical examination and review of current procurement practices in the UK, continental Europe (including EU procurement procedures), China, Middle East and Sub-Saharan Africa and the USA. It retains its original strong emphasis on the need for clients to establish achievable objectives which reflect the project business case and focuses on development of suitable strategies and management structures to meet those objectives in the current construction climate.
Building Procurement will be essential reading for senior undergraduate and postgraduate students of construction management and practitioners working in all areas of construction management.
Sie lesen das E-Book in den Legimi-Apps auf:
Seitenzahl: 911
Veröffentlichungsjahr: 2021
Ähnliche
Contents
Cover
Title Page
Copyright
Preface to the Third Edition
1 Introduction
References
2 Procurement Strategy: A Literature Review
Introduction and Early History
Procurement Route Selection Models
Towards a Broader View
Defining Project Success
Team Relationships, Supply Chain Management and Communication and Their Effect on Project Performance
The Role of the Client in the Procurement Process
The Interrelationship Between the Components of the Overall Procurement Approach: Strategic Procurement Management
Legal and Contractual Issues, Including Public Sector Procurement Legislation, and Their Effect on Project Performance
International Procurement Comparisons and the Impact of Cultural Differences
Risk Allocation and Reward
Bid Evaluation Techniques
Environmental and Sustainability Issues and the Procurement of Construction Work
Sustainable Procurement for Construction Projects
Conclusion
References
3 Principles of Strategic Procurement
Introduction
Procurement: A Review of Theory and Practice
A Strategic Approach to Procurement
Components of the Procurement Process
Collaborative Procurement in the Public Sector
Conclusion
References
4 Public Sector Projects
Introduction: Why Should Public Sector Projects Be Different?
What Constitutes the Public Sector?
References
5 Project Initiation
Introduction
Strategic Fit
Payback
Assessment of Options
Achievability
Affordability
Defining the Project
Prioritisation of Objectives
Conclusion
References
6 Briefing and the Design Process
Introduction
Project Briefing: An Overview
Types of Construction Client
The Briefing Process
Developing the Strategic Brief
The Project Execution Plan
Project Briefing: The Case of Hospitals
Critical Factors for Success in the Briefing Process
References
7 Procurement Strategies and Procurement Routes
Introduction
Procurement Strategy
Developing a Procurement Strategy
Procurement Routes
Factors to Be Considered in Selecting a Procurement Route
Selection of a Procurement Route
Procurement Routes: A Review
New Models of Construction Procurement
References
8 Project Team Selection
Introduction
The Selection Process
Selecting a Consultant
Selecting a Contractor
Early Contractor Involvement
References
9 Managing the Procurement Process
Introduction
The Project Manager
First Tasks of the Project Manager
Project Resources
Temporary Organisational Structure
Contractual Arrangements
Systems and Controls
Time Management
Design Management
Design Risk
Cost Management
Quality Control
Change Control
Commissioning
Occupation and Take-over
Building Information Modelling
The Construction Act
Social Value in Construction Procurement
Health, Safety and Wellbeing
Conclusion
References
10 The Value of Design
Introduction
Considering Value in the Business Context
The Value of Good Design
Managing Value
References
11 Risk Management
Introduction
Risk and Uncertainty
Types of Risk
Risk Management Strategies
Identifying Risk
Analysing Risk
Choosing a Risk Management Strategy
Monitoring and Controlling Risk
References
Further Reading
12 Partnering Culture and the Management of Relationships
Introduction
The Latham Review and Subsequent Developments
The Rise of Collaborative Approaches to Procurement
Collaborative Approaches to Construction Work
Contractual Approaches to Collaboration
What Advantages Does Partnering Bring?
Managing a Successful Partnering Arrangement
Team Composition
Managing Relationships
The Project Supply Chain
A Case Study: Procurement of a Long-Term Multi-Project Alliance – Sheffield Hallam University
Conclusion
Acknowledgements
References
13 Privately Financed Public Sector Projects
Introduction
Historical Development
Modern Models for Privatisation
Public Private Partnerships
The Private Finance Initiative
Conclusion
References
14 Construction Procurement: Europe
Introduction and Background
The Development of the Professions
Europe
The European Union
European Procurement Practice
Procurement Rules: European Union Principles and Procedures
References
15 Construction Procurement: USA, the Middle East, Africa, and China
Introduction and Background
Construction Procurement in the USA
The Middle East
Construction Procurement in Sub-Saharan Africa
The People’s Republic of China and the Hong Kong Special Administrative Region
References
16 Procurement of Work to Heritage Buildings
Introduction
The Heritage Challenge
Procurement: The Heritage Context
The Value of Built Heritage
The Importance of Cultural Significance
Statutory Protection for Heritage Buildings
Managing Change in the Historic Environment
A Case Study in the Procurement of Work to Historic Buildings: The Derby Roundhouse
A Case Study in the Procurement of Work to Historic Buildings: The Belton House Stables Project
Acknowledgements
References
17 Summary
References
A Procurement Route Selection Checklists
Index
End User License Agreement
List of Tables
Chapter 1
Table 1.1 Summary of UK construction industry performance 2008–2018 based upon industry key performance indicators (KPIs).
Chapter 5
Table 5.1 Examples of prioritised criteria by client type.
Chapter 7
Table 7.1 Owner–occupier client: typical values transferred from Figure 5.2.
Table 7.2 Developer client: typical values transferred from Figure 5.2.
Table 7.3 Investor client: typical values transferred from Figure 5.2.
Chapter 8
Table 8.1 Example of an assessment scale.
Table 8.2 Indicative ratios of quality and price.
Table 8.3 Recommended quality weightings.
Chapter 11
Table 11.1 A ‘traffic light’ approach to assessing risk.
Table 11.2 A more detailed approach to assessing risk.
Chapter 12
Table 12.1 Phase 1 projects.
Chapter 14
Table 14.1 Public sector directive timescales.
Chapter 16
Table 16.1 Breakdown of costs for the roundhouse project.
Table 16.2 The project team and principal contractors.
List of Illustrations
Chapter 3
Figure 3.1 Procurement strategies to address the danger of failure of the contractual relationship.
Figure 3.2 Changing collaborative trading relationships as project value and risk increase.
Figure 3.3 Procurement strategy as a function of market difficulty and type of spend.
Figure 3.4 Cultural issues.
Figure 3.5 Commercial issues.
Chapter 5
Figure 5.1 The interrelationship of client needs.
Figure 5.2 Priority distribution.
Chapter 7
Figure 7.1 Strengths and weaknesses of procurement systems.
Figure 7.2 Organisational structure for a traditional design–bid–build approach.
Figure 7.3 Organisational structure for a construction management approach.
Figure 7.4 Organisational structure for a management contracting approach.
Figure 7.5 Organisational structure for a design and build approach.
Chapter 8
Figure 8.1 Matrix analysis for selection of contractors.
Figure 8.2 Example of consultant selection sheets.
Chapter 9
Figure 9.1 Project management phases.
Figure 9.2 The bicameral approach to project management.
Chapter 10
Figure 10.1 Value management in the project lifecycle.
Figure 10.2 Cost benefit as design progresses.
Figure 10.3
Value management
(
VM
) and value engineering in the design process.
Chapter 11
Figure 11.1 Example checklist.
Figure 11.2 A graphical representation of risk assessment.
Figure 11.3 A ‘spider diagram’ showing the financial impact as risk changes.
Figure 11.4 A decision tree.
Figure 11.5 A decision tree with values inserted.
Chapter 12
Figure 12.1 Target cost/guaranteed maximum price contract.
OH&P
,
overheads and profit
.
Chapter 16
Figure 16.1 The Derby roundhouse.
Figure 16.2 The interior of the roundhouse prior to commencement of the contract.
Figure 16.3 Main entrance to the roundhouse offices.
Figure 16.4 Aerial view of the completed scheme.
Figure 16.5 The Midland Counties Railway engine shed and workshop with the new Stephenson building in the background.
Figure 16.6 ‘Honest repair’ – no attempt is made to make the repair look like anything other than a modern intervention.
Figure 16.7 The interior of the refurbished roundhouse.
Figure 16.8 The interior of the old carriage shop. Note the prefabricated ‘learning pods’ on the upper floor.
Figure 16.9 The new training restaurant, with the training kitchen in the background, in the old Midland Counties workshop building.
Figure 16.10 The new Stephenson building.
Figure 16.11 The new Kirtley building.
Figure 16.12 Echoes of the building’s history captured in the decoration of the training restaurant.
Figure 16.13 Belton House.
Figure 16.14 Belton’s stable block.
Figure 16.15 Existing winch preserved in the stables.
Figure 16.16 Seating area in the stables restaurant.
Figure 16.17 External view of the stable block.
Guide
Cover
Contents
Begin Reading
Pages
iii
iv
xvii
xviii
xix
xx
xxi
1
2
3
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
65
66
67
68
69
70
71
72
73
74
75
77
78
79
80
81
82
83
84
85
86
87
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
298
299
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
388
389
391
392
393
394
395
Building Procurement
Third Edition
Roy Morledge
Adrian J. Smith
Samuel Y. Appiah
This edition first published 2021© 2021 John Wiley & Sons Ltd
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse material from this title is available at http://www.wiley.com/go/permissions.
The right of Roy Morledge, Adrian J. Smith and Samuel Y. Appiah to be identified as the authors of this work has been asserted in accordance with law.
Registered OfficesJohn Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USAJohn Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UK
Editorial Office9600 Garsington Road, Oxford, OX4 2DQ, UK
For details of our global editorial offices, customer services, and more information about Wiley products visit us at www.wiley.com.
Wiley also publishes its books in a variety of electronic formats and by print-on-demand. Some content that appears in standard print versions of this book may not be available in other formats.
Limit of Liability/Disclaimer of WarrantyIn view of ongoing research, equipment modifications, changes in governmental regulations, and the constant flow of information relating to the use of experimental reagents, equipment, and devices, the reader is urged to review and evaluate the information provided in the package insert or instructions for each chemical, piece of equipment, reagent, or device for, among other things, any changes in the instructions or indication of usage and for added warnings and precautions. While the publisher and author have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness fora particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. The fact that an organization, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and author endorse the information or services the organization, website, or product may provide or recommendations it may make. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Library of Congress Cataloging-in-Publication Data
Names: Morledge, Roy, author. | Smith, Adrian J., author. | Appiah, Samuel Y., author.
Title: Building procurement / Roy Morledge, Adrian J. Smith, Samuel Y Appiah.
Description: Third edition. | Hoboken, NJ : Wiley-Blackwell, 2021. | Includes bibliographical references and index.
Identifiers: LCCN 2020037219 (print) | LCCN 2020037220 (ebook) | ISBN 9781119609490 (paperback) | ISBN 9781119609483 (adobe pdf) | ISBN 9781119609520 (epub)
Subjects: LCSH: Construction industry–Great Britain. | Construction industry–United States. | Construction industry–China. | Industrial procurement–Great Britain. | Industrial procurement–United States. | Industrial procurement–China.
Classification: LCC HD9715.G72 M667 2021 (print) | LCC HD9715.G72 (ebook) | DDC 658.15/242–dc23
LC record available at https://lccn.loc.gov/2020037219
LC ebook record available at https://lccn.loc.gov/2020037220
Cover Design: WileyCover Image: © Sven O Jess/EyeEm/Getty Images
Preface to the Third Edition
Although the construction of buildings has been commonplace for many thousands of years, the ways in which that construction activity has been procured and managed have all too often been both time consuming and inefficient, and the end result frequently unsatisfactory in terms of failure to meet basic time, cost and quality goals. There are many reasons for these failures, but perhaps the most fundamental arise not only because building is itself a very complex process, but because that complexity is compounded by the fact that most buildings are to some extent unique and bespoke, constructed in the open air by a team assembled especially for that project, and must be completed within demanding time, cost and quality and quality parameters.
In addition, the spectrum of customers of the construction industry is arguably the broadest of any industrial sector, ranging in size from very large organisations to single individual consumers, and in knowledge and expertise from organisations with substantial construction programmes and extensive construction knowledge and experience, to naïve consumers with no previous experience and little or no knowledge of the process.
It is in the context of a continuing search for greater satisfaction of this broad and disparate customer base that considerable amounts of effort and expertise have been expended over many years in an attempt to ensure efficiency and economy in the procurement of construction activity. That procurement process itself is complex, requiring the mobilization and management of an extensive range of professional, managerial, technical and financial expertise, and a successful outcome is frequently elusive. The procurement of construction work is significantly different from purchasing almost any other commodity in that most products are the result of a manufacturing process based in an environment that is permanent and controlled. The product can be designed, prototyped and tested prior to final production, quality can be readily assured, there is the opportunity for prototyping prior to production of the final product, and potential purchasers can view and even try the product before making their final decision to buy. The only sector in which the construction industry comes close to this mass production approach is arguably the construction of residential developments. Projects, and particularly construction projects, generally follow a process that has few of the above characteristics and which can provide none of the benefits.
Experience over the past few decades has shown an increasing demand from regular clients of the industry for significant improvements both in the predictability of construction projects in terms of time, cost, quality and fitness for purpose, and also for a substantial increase in value for money. Value for money in this case has often been characterised by the need for projects to be cheaper in terms of both capital costs and revenue expenditure, and for development and construction periods to be significantly reduced, whilst at the same time maintaining or improving the quality and functionality of the final product. These issues have been further complicated in recent years by the need for the industry as a whole to become ‘greener’ and more environmentally sustainable.
It must be said, however, that although significant improvements have been made, and the performance of the construction industry in satisfying its clients has demonstrably improved in recent years, the successful completion of construction projects, both large and small, within budget, to time and to the satisfaction of customers is still by no means as common as it ought to be in the UK. There is significant evidence that in many cases the way in which the procurement phase has been carried out has proved to be crucial to eventual project success, but also a significant component in project failure.
This book continues the approach set out in the second edition in that it seeks to explore approaches to improving the successful procurement of buildings, whilst incorporating recent developments in both research and contemporary practice.
It is worthy of note that purchasers of construction projects are usually referred to as clients rather than customers. This is appropriate since it suggests that they are purchasing services rather than products – construction is after all primarily a service industry. The distinction also hints at their possible legal position if the project does not meet that requirement of ‘fitness for purpose’ which is inherent in the purchase of other products. The term ‘client’ suggests the difference in approach that needs to be adopted for a satisfactory outcome to be achieved, and in this respect clients increasingly seek a fitness for purpose guarantee, particularly in the case of projects procured on a design and build basis. This issue will therefore continue to impact upon the procurement process.
The importance of understanding the need to establish realistic and measurable objectives, both for clients and contractors, linked to a carefully evaluated business case and supported by rigorous post-project analysis is particularly emphasized. The importance of those early project stages which are so often given insufficient emphasis or time prior to focus upon concept design is also highlighted. The initiation of the project and the need for the development of a justified business case are explored along with the need to identify measurable outcomes against which the completed project can be judged. The value to the client of the project output, a primary driver which is often forgotten as direct project issues such as time and cost dominate the construction phase, is emphasized. Upon completion these issues become historical fact and emphasis returns to the value or performance benefit derived from the completed project.
The UK is an example of an island nation which has steadfastly hung on to those traditional procurement practices with which it is most comfortable. Historically, data regarding the relative use of different types of procurement strategy has indicated a numerical dominance of these traditional approaches with little evident sensitivity to varying client needs, although the relatively few experienced clients often do adopt different approaches. Traditionalism has historically been sustained largely through the conservatism of professional institutions, universities and colleges in terms of the nature of professional education, but this tendency towards the traditional has significantly changed in recent years with a significant rise in the use of design and build approaches and, particularly in the public sector, a growth in approaches requiring increased collaboration and trust.
Project management tools and techniques suitable for adoption in the management of the procurement process are explored and evaluated in this book. Some considered to be innovative and beneficial have existed for many years, but their adoption has been limited largely to those projects where experienced clients understand the benefit and ask their consultants to provide the necessary services. The Construction Act which provides a mandatory framework for payment and dispute resolution within construction contracts in the industry is explored, with particular focus on how the requirements affect the various functions and roles within the contractual framework.
Public sector clients and commissioning authorities are increasingly becoming more imaginative and innovative in considering how they can best maximise the value generated by their projects, not only to themselves as clients, but also to the communities which they serve. This ‘social value’ has, in recent years, become an increasingly important element in the procurement of goods and services in the public sector, and we have therefore included some commentary on the concepts of social value, and the associated concepts of health, safety and ‘wellbeing’, within the public sector procurement process.
In recognition of the increasing interest shown in recent years in many parts of the world in both the preservation and adaptive reuse of historic buildings, we have again included a chapter devoted to the challenges inherent in procuring construction work to historic buildings. It should however be noted that work of this type requires a skilled and specialist understanding of the issues involved, and the employment of specialist skilled expertise in its execution. The information we have presented here is therefore given simply as a guide, and more specialist expertise will usually need to be sought. We have also enhanced the relevant chapter by the inclusion of a second extended case study of a recent very successful project of this type, and the two studies graphically indicate in different ways some of the particular challenges and problems which such projects may pose.
We have already noted that construction clients differ widely in terms of their experience, purpose and size. Numerically, inexperienced clients dominate and on average their projects are relatively small and short-lived. On the other hand, the minority of regular and experienced clients are by far the biggest spenders and they tend to benefit from their experience and buying power. Nevertheless, whether the client is an inexperienced small-to-medium-sized enterprise, a major corporate organisation or a public body, exposure to risk is inherent in the procurement of construction. Perhaps the inexperienced small and medium-sized enterprise (SME) is likely to be proportionally most exposed, but managing that risk is a key part of the process. The issues surrounding client and project risk are explored.
Recent years have seen a significant increase in understanding the importance of selection of the most appropriate procurement approach as a means of managing project risk, and a key component of this is now seen to be the effective use of Building Information Modelling (BIM) techniques. The recent upsurge in interest in BIM should provide a further boost to ensure that future buildings are both more economical and more efficient in use throughout their useful life, and some of the possible impacts on the procurement process of the more widespread use of BIM are therefore considered. Even given the recent economic difficulties faced by the construction industry, collaborative approaches to procurement continue to gain support from experienced and regular construction clients where they can see that continuous measurable value-based improvement has been achieved by adopting such practices in preference to price-led traditional practices. Contemporary approaches such as Cost Led and Two Stage Open Book procurement, which are designed to promote early supplier engagement, transparency of cost and collaborative working, allow clients to lead change and promote efficiency with positive results. Both procurement strategies where collaboration is enabled and the culture underlying the management of collaborative business relationships such as partnering are therefore explored in some detail.
Governments have for many years adopted a range of approaches to procurement based upon long-term agreements of various kinds with project funding provided by private sector investors. Public private partnerships and private finance are therefore explored, and the processes outlined together with the benefits and the inherent difficulties of complex schemes where traditionally disparate participants have to collaborate if successful bids and outcomes are to be achieved.
Internationally, procurement practices in Europe, as well as the Middle East, USA, Africa, and China are reviewed to enable some comparison to be made, not just about the practices themselves, but also about the context and attitudes of clients. In Europe, although traditional differences are still evident in the way in which construction is procured in different countries (and there may well be potential benefits for clients in some of the adopted practices, particularly the post-completion protection required in some countries), the European Union progressively imposes an increasing level of regulation in the constant search to provide a Europe-wide open market with standardised procurement procedures. With construction output of over 1300 billion dollars, the USA’s construction industry is both huge and complex. This book therefore provides only an overview of the general procurement processes in use in America. The Middle East, particularly countries such as the UAE, Bahrain and Qatar continue to develop as vibrant construction markets, and we have therefore included a brief overview of construction procurement practice in this region.
Procurement approaches developed in Europe were exported to the developing world mainly as a by-product of colonial development. These approaches continue to be the foremost procurement options in many countries within the Sub-Saharan African region. The growing involvement of external parties in financing major infrastructure projects in Africa has seen more foreign construction companies operating in the region. This is resulting in more competitive procurement practices and impacting negatively on the development of local small and medium enterprises in the region. The procurement practices in Sub-Saharan Africa, including the influence of Chinese investment in the region, have been explored.
China remains important as a worldwide construction market, and represents a fascinating instance of an economy developing at a tremendous pace, where procurement influences from many parts of the world, largely focused on geographical areas with extensive traditions of western influence such as Hong Kong and Shanghai, collide with traditional Chinese values and a centrally controlled state construction industry.
Our intention in revising and updating this book continues to be to provide students, researchers, practitioners and those involved in the provision of construction services with a wide-ranging appreciation of the issues involved in the procurement of building projects. We have endeavoured to include in this edition a review of significant advances which have emerged in both research and practice since publication of the first edition. The book covers an exceedingly broad canvas, and we are well aware that some areas are treated somewhat superficially. This is partly deliberate in the search for readability (this is after all not a research thesis) and partly imposed by pressures of space, but we trust that the references given will enable those seeking a deeper understanding of specific issues to be able to explore the subject in greater depth.
May we jointly express our grateful thanks to all of those colleagues and friends with whom we have debated issues and discussed techniques and points of principle over the years. Many of the outcomes from these discussions have found their way into this book in one form or another.
Special thanks to Sandie Lee, formerly Director of Product Development at the University College of Estate Management for her contribution to the section on procurement methodologies in the Middle East, and to the staff of National Trust Belton House and Sheffield Hallam University for their assistance in the compilation of the new case studies included in Chapters 12 and 16. Also grateful thanks to the staff and students of the School of Architecture, Design and the Built Environment, Nottingham Trent University and the University College of Estate Management, Reading, and to the directors and staff of Stradia Ltd of Sheffield. Finally, heartfelt thanks to Bernice, Christine and Maame Adjoa for their patience and tolerance during the process of revising this book.
Roy Morledge
Professor Emeritus,
Nottingham Trent University
Adrian J. Smith
Senior Consultant Stradia,
former Visiting Professor Nottingham Trent University,
Tutor University College of Estate Management,
Reading
Samuel Y. Appiah
Civil/Structural Engineering and Procurement Consultant,
Tutor Nottingham Trent University
1Introduction
The worldwide construction industry embraces the sectors of building, civil engineering and the process plant industry. It includes projects of dramatically different types, sizes and complexity and requires extensive professional and trade skills. Groak (1994) suggested that the construction sector was more an agglomeration of projects than a discrete industry or a fixed constellation of firms. Winch (2002) suggested that construction is essentially a service industry. He argued that what is sold to the client is not a product but a capacity to produce.
However construction is described, it is an important contributor to the national economy (CIOB 2020); without adequate construction capacity, aspirations for economic growth cannot be achieved. Economic activity, self-evidently, is the primary driver for construction activity and the two are inextricably linked.
There is, however, an inherent dysfunction between demand and supply because of the extended time period between the initiation of the project procurement process and its eventual delivery. This period of time can encompass significant changes in economic activity, and this may provoke changes to the initial rationale for the construction process.
There is constant demand for the construction sector to source the physical assets necessary to live and work in modern society. The building industry produces a diverse range of outputs ranging from products verging on mass production, in the construction of houses, through bespoke service facilities, such as schools and hospitals, and elements of production, in the form of industrial premises to house the manufacturing operations of organisations both large and small, to minor repair and maintenance work. Civil engineering, on the other hand, provides for many of our transportation needs in the form of roads, tunnels and bridges, railways, docks and airports, for our energy needs in the form of pipelines and power lines, and for the essentials of civilised life in the form of water and sewage treatment facilities, distribution and disposal systems. Indeed, the capital assets of a country consist predominantly of built environment assets. For instance, more than three quarters of the UK’s stock of economic assets result from construction. In 2017, dwellings and other buildings and structures accounted for £3620 billion of the UK’s £4670 billion of capital assets (CIOB 2020).
There is therefore no doubt that construction forms a major aspect of the economy. For example, in the UK it currently contributes approximately 6% to the GDP and provides direct employment for 7% of the working population (House of Commons Library 2019).
History shows that, over time, construction demand is variable and is often affected by government policy changes as well as national and local economics. In ‘Construction Matters’ (Business and Enterprise Committee 2008), the UK House of Commons suggested that as many as 95% of clients were either one-off or inexperienced clients. A significant minority of more experienced regular clients spend very significant sums on construction but there is little evidence of the cascading of knowledge and experience from these regular buyers to the inexperienced majority. Equally there appears to be little understanding by inexperienced clients of the need for that knowledge. The result is a heavy dependence upon construction professionals who have, in the past at least, tended to limit their exposure to risk by leaning towards traditional practice.
Few construction companies employ skilled craftsmen, preferring to outsource rather than to retain and train. Most skilled tradesmen are self-employed or employed in small specialist companies because the returns are greater than employment by contractors. This scenario results in huge fragmentation and specialisation, with 99.7% of firms in the industry being small and medium-sized enterprises (SMEs), most of which employ fewer than seven people and take work on a project-by-project basis (Business and Enterprise Committee 2008). Small firms rarely feel able to afford to train new people and, consequently, there have historically been comparatively few young tradesmen in the industry. At the same time, the role of traditional contractors has moved from one in which they manage their own people to one in which they coordinate the activities of other, typically smaller companies and organisations.
This fragmentation of the industry means that it tends to be a diverse supply market from which clients may source their specific needs. There are subcontractors or specialists who occupy specialised niches in order to survive by avoiding direct competition with established market-leaders. There are also firms that are spanning these ‘niches’ in the provision of complete ‘solutions’ to large organisations and who act as ‘integrators’. The end result is a very large number of specialists with which any client may do business in the delivery of his or her construction requirements.
A further consequence of fragmentation is that the industry has in the past taken little or no responsibility for seeking improvement in terms of either design or process. The inexperience of most clients of the industry means that they have tended to rely heavily upon advice from construction professionals who, unless any improvement is tried and tested, are reluctant to use their client’s project as a test bed.
Even 25 years after Sir Michael Latham (1994) highlighted the difference between construction and other industries, investment in construction research and development is still significantly lower than in other industries. Consequently, if there is innovation it tends to be driven by legislation, by the client or by other industries’ changes in technology which can be imported to construction through specialist suppliers. Perhaps the exception is the attempts made by companies to develop new ways to deliver housing. In some cases, modern methods of construction are proposed using off-site production. These proposals, usually adopting a pre-prepared panel system, do meet the requirements of legislation but also require a client, such as a local authority or housing association, to need a relatively large number of completed homes before the up-front investment is viable (EMDA 2011; Trowers and Hamlins 2019).
The construction industry is unique in the way that it responds to the need to deliver predominantly one-off products. In this sense, the industry is quite different from the manufacturing or retail sectors which have continuous demand and are thus able to construct and refine stable supply chains. These industries can focus on improving the product or streamlining their supply chain management processes. The product of construction is bespoke in nature and the supply process is more an inconsistent network than a coordinated and carefully managed supply chain. This can often cause conceptual difficulties for clients coming to the industry with a value proposition associated with the delivery of a project. Clients, who usually purchase defined and specified goods in the course of their normal business and who concentrate on price and delivery, usually need considerable assistance to purchase undefined, unspecified projects where price and delivery are both vague at the outset.
The process has been described and analysed as having six primary steps (Egan 2002), commencing with a business case rooted in the client’s established need for the project. From this business case or value proposition, the client will be able to identify a multiplier from the investment. User value is usually significant as a multiplier of spend.
Whilst the benefits from the construction process can be immense in investment or business terms, the perceived performance of the construction industry appears historically poor. Many, perhaps most, projects are delivered late, over budget and with variable quality standards. Often these are unwelcome outcomes which frequently surprise the client organisation and cause significant problems.
Table 1.1 summarises the UK construction industry’s performance over 10 years to 2018. This is based upon construction industry key performance indicators (KPIs) and indicates some improvements compared with previous surveys, such as those carried out by client groupings (CCF 1999/2000).
Table 1.1 Summary of UK construction industry performance 2008–2018 based upon industry key performance indicators (KPIs).
KPI
Measure
2008 (%)
2009 (%)
2010 (%)
2011 (%)
2012 (%)
2013/2014 (%)
2015 (%)
2016 (%)
2017 (%)
2018 (%)
Client satisfaction – product
8/10 or better
83
86
87
87
83
82
81
85
90
87
Client satisfaction – service
8/10 or better
77
84
82
80
75
75
73
77
81
77
Predictability of construction cost
% on target or better
48
46
47
59
58
57
56
64
65
66
Predictability of project cost
% on target or better
49
48
52
63
61
69
69
68
65
66
Predictability of construction time
% on target or better
58
59
57
60
42
57
48
55
67
59
Predictability of project time
% on target or better
45
45
43
45
34
45
40
41
66
63
Source: The KPI Team (2018).
At first sight, this performance does not look very good. Some improvement has been identified in relation to client satisfaction with the product but client satisfaction with the service received from contractors has dropped back to the 2008 level, with 77% rating their satisfaction as 8 out of 10 or higher. There has been a significant improvement in both project cost and time predictability but there is more room for improvement in predictability. Each project is, however, unique and it is very difficult to estimate the cost of a future design or when it can be delivered.
The lack of a consistent, industry-wide database of project costs and project times is a huge disadvantage and there are so many variables. Whilst the Building Cost Information Service run through the Royal Institution of Chartered Surveyors is an extremely useful source of information, it is limited to the extent to which data is voluntarily supplied.
It is the client who takes the initiative to start a construction project and, therefore, construction is often a customer-driven, one-off production process. Frequently the client will set targets based upon a set of expectations drawn from his or her own experience, which may well be unsuitable for a construction project. Inevitably, construction professionals and constructors will strive to meet the client’s demands, often taking a much too optimistic approach, in the absence of a completed design, to what can be achieved for the price or in the time allocated.
The initiation of the construction process is usually aligned to the strategic or business need by the client for a constructed asset, e.g. a school, a factory, or an office complex. After developing an appropriate brief for the project and establishing and prioritising parameters and priorities, a project organisation will be created to provide the necessary expertise to finalise the design and specification. Usually a tendering process will follow to select a contractor. In most cases, this contractor will take care of the employment of specialists and subcontractors and the procurement of materials. When contracts are signed and enough of information is available, the physical execution of the construction project can start. This includes obtaining materials, manufacturing, engineering and assembly of elements, and finally construction on site. After the successful completion of the project, there will be a hand over and use will be made by the end user of the completed asset.
Construction is largely a site operation, confined to the specific location where the final assembly takes place, and it is important to note that construction takes place at the site of consumption unlike in the manufacturing industry, where products are produced in bulk for subsequent consumption at a distance.
Construction project organisations, in contrast to manufacturing organisations, tend therefore to be temporary. The participants involved with this temporary organisation experience frequent changes of membership but are totally interdependent on each other, operating through a variety of contractual arrangements and specific procedures.
In summary, it can clearly be seen that the construction industry is vital to the economy but that both demand and supply are fragmented, inconsistent and complex. Collaboration and innovation are the exception, not the rule, and most purchasers of construction are inexperienced. Nonetheless its products are valuable, useful and serve their purpose, and the key to their successful production is effective procurement. This book aims to explore the factors that are influential on success in procurement.
References
Business and Enterprise Committee (2008). Construction Matters. Ninth Report of Session 2007–08. The Stationery Office. London.
CCF (1999/2000).
Surveys of Clients’ Satisfaction
. Construction Clients’ Forum.
CIOB (2020). The real face of construction 2020: Socio-economic analysis of the true value of the built environment.
https://policy.ciob.org/wp-content/uploads/2020/02/The-Real-Face-of-Construction-2020.pdf
(accessed 9 July 2020).
Egan, J. (2002). Accelerating Change. Strategic Forum for Construction, Construction Industry Council.
EMDA (2011).
Comparisons of Off-Site Housing Manufacture Techniques
. East Midlands Development Agency.
Groak, S. (1994). Is construction an industry? Notes towards a greater analytical emphasis on external linkages.
Construction Management and Economics
12 (3): 289–293.
House of Commons Library (2019). Construction industry: statistics and policy. Briefing Paper 01432, UK Parliament House of Commons Library.
Latham, M. (1994). Constructing the Team. HMSO.
The KPI Team (2018). UK Industry Performance Report: Based on the UK Construction Key Performance Indicators.
https://www.glenigan.com/wp-content/uploads/2018/11/UK_Industry_Performance_Report_2018_4456.pdf
(accessed 12 June 2020).
Trowers and Hamlins (2019).
Funding Barriers to Offsite Housing: Separating Fact from Fiction
. London: Trowers & Hamlins LLP.
Winch, G. (2002).
Managing Construction Projects
. Blackwell Publishing.
2Procurement Strategy: A Literature Review
Introduction and Early History
The efficient procurement of construction work (defined here as the framework through which construction is brought about, acquired or obtained [Sharif and Morledge 1996]) through choice of the most appropriate procurement strategy has long been recognised as a major determinant of project success (Bennett and Grice 1990). Indeed, Newcombe (1994) argued that the selection of the procurement path is much more than simply establishing a contractual relationship. Rather, building on the work of the Tavistock Institute (1965) and Cherns and Bryant (1984), he argued that the procurement strategy not only creates a unique set of social relationships but also ‘forms a power structure within a coalition of competing or co-operating interest groups’. In terms of quantifiable project deliverables, Gordon (1994), in an American study, reported that it was possible to reduce project capital cost by an average of 5% through selection of the most appropriate procurement methodology.
In the modern world, client satisfaction is increasingly seen by all concerned with the development and construction process to be largely dependent upon the selection of the most appropriate procurement methodology and failure to select an appropriate procurement approach was recognised well over two decades ago as a primary cause of project failure (Masterman 2002). Hibberd and Djebarni (1996) reported that whilst 64% of the clients they surveyed were happy with the procurement methodologies they were using at the time, 89% stated that they had previously been dissatisfied. Smith and Wilkins (1996) reported that, in a study of 11 publicly funded major hospital projects constructed in the UK, USA, and Hong Kong, projects procured using a traditional approach consistently failed to achieve the client’s objectives in terms of time or cost or both, whereas projects procured using a design and build route consistently fared much better. They did, however, point out that this was not necessarily because the design and build route is generically better than the traditional path; simply that, at the time the reviewed projects were procured, the choice of a design and build path was the result of a careful analysis of project characteristics and client expectations, whereas the traditional path was generally chosen ‘because it’s always been done that way’. This last point then appears to indicate a lack of skill or knowledge on the part of those making the procurement decision.
These issues were in fact already well recognised by early researchers in the field. Authors such as Franks (1984) and Nahapiet and Nahapiet (1985) offered critiques of the major procurement methods in common use with some advice on how to go about making the most appropriate choice, based largely upon the client’s perceptions of what would constitute project success in terms of time, capital cost and quality. Nonetheless Bowen et al. (1997) reported that their research led them to believe that relatively few construction industry professionals fully understood the differences between the various procurement systems and that most would be unable to make sensible recommendations as to which system would be most appropriate for a specific project. Similarly, Broome (2002) noted that the process of developing a procurement strategy was like ‘a black box’ to many in the industry. More recent industry guides and reports such as the Institution of Civil Engineers’ (ICE2009) client best practice guide, the British Standard for Construction procurement policies, strategies and procedures (BS 8534:2011 2011) and the RIBA (2013)’s work plan have helped to demystify the concept of procurement strategy in project delivery.
Procurement Route Selection Models
Early attempts to examine the strategic procurement selection process led a number of academics and practitioners to develop structured methodologies, tools and models of various types to aid this selection process. Among the models published in the UK, one of the earliest was Thinking About Building (Economic Development Committee for the Building Industry 1985) and its approach was further developed, and made progressively more complex, by a wide range of researchers using a variety of mathematical and statistical techniques. Many early researchers proposed some form of multi-attribute decision analysis, among them Skitmore and Marsden (1988), Bennett and Grice (1990), Cook et al. (1993) (who proposed the use of multilevel decision trees), Chan et al. (1994) (who adapted Skitmore and Marsden’s model to suit the Australian construction industry), Zavadskas and Kallauskas (1996), Dell’Isola et al. (1998), and Love et al. (1998b). Ambrose and Tucker (2000) continued the theme with the development of yet another multi-attribute model, but this time based on a three-dimensional matrix, and Chang and Ive (2002) carried out a critical examination of the multi-attribute approach.
Cheung et al. (2001) and Al-Tabtabi (2002) presented further variations on the theme with models using an analytical hierarchy process built upon the work of earlier researchers, including Saaty (1980) and Skibnewski and Chao (1992). The successful practical use of Al-Tabtabi’s model was demonstrated with a live case study showing how it was used in the procurement of the Kuwait University Expansion Program, a substantial project comprising more than 40 design and construction packages and costing approximately 132 million Kuwaiti dinars (approximately US$467.5 million in August 2012). Seydel and Olson (1990) and Ng et al. (2002) took a somewhat different approach, presenting models based on the use of fuzzy set theory, and Alhazmi and McCaffer (2000) developed the Project Procurement System Selection model (PPSSM) based upon a four-step screening process.
In spite of all of this, not inconsiderable, academic effort, Chan (2005) wrote that ‘none . . . [of the existing models] . . . has been adopted widely in practice’ and proposed yet another model based upon a combination of the multi-attribute and fuzzy set models previously published by Cheung et al. (2001) and Ng et al. (2002), respectively.
ELSIE, developed under a project funded by the Royal Institution of Chartered Surveyors (RICS) and based at Salford University (Brandon et al. 1988; Brandon 1990), and PASCON (Mohsini and Botros 1990) are two examples of attempts to automate the procurement selection process through the development of computer-based expert systems. Again, neither appears to have been widely adopted in practice.
A rather more radical approach was the Best Value Procurement/Performance Information Procurement System (BVP/PIPS) developed over a 20-year period by Dr Dean Kashiwagi and the Performance Based Study Research Group based at Arizona State University in the USA (PBSRG 2012). The BVP/PIPS system is described as an integrated and detailed structured methodology which includes not only selection of the initial procurement route, but also contractor selection, bidding and price analysis (Kashiwagi et al. 1996; Kashiwagi and Mayo 2001). The approach was claimed to have been widely used in the USA and PBSRG (2012) discussed a number of case studies. It was also claimed that the approach had been used for several projects in Botswana. Although successful projects have been run using the PIPS system within its home environment, it is openly admitted that, despite attempts to transfer the technology to other universities in the USA, the UK, Malaysia, Botswana, New Zealand, and Australia, ‘the PBSRG research model had not been proven to be successfully transferable to other research group [sic] or to other countries’ (Kashiwagi and Kashiwagi 2011). Nonetheless Kashiwagi and Kashiwagi (2011) claimed that the system had been successfully introduced into the Netherlands.
More recently, Appiah (2016) continued the theme by developing an electronic system for selecting building procurement routes. The procurement design support (PDS) software takes users through a series of questions about the client and project requirements and then recommends the most suitable procurement approach based on a detailed qualitative and quantitative assessment of the project specific information. Appiah (2016) argues that his PDS system acts as an intelligent assistant that helps client advisors to ask the right questions and encourage decisions aligned with organisational requirements and project objectives. It also encourages users to set down their justifications for decisions made in order to facilitate the auditing process.
Towards a Broader View
In contrast to those who believed that a purely systems-driven, mathematically derived approach would deliver project success, other commentators recognised selection of the most appropriate strategy for large or complex projects, particularly those involving multiple stakeholders, to be a difficult and complicated process dependent upon the interaction of many variables and incorporating a high degree of subjective, and in many cases intuitive, judgement (Luu et al. 2003). We should also note that the problems of complexity tend to be magnified greatly where the overall complexity of the project depends not only upon the technical complexity of the work but also upon the complexity of the context in which the project is to be developed and constructed.
Issues of complexity and the difficulties of improving project success came to a head in the UK in the early 1990s, when client concerns over the generally unsatisfactory performance of the construction industry in terms of its ability to deliver on time, within budget and to the expected quality and performance standards placed the role of the client in construction procurement firmly in the spotlight.
In light of the above, it is no surprise that procurement issues featured strongly in Sir Michael Latham’s government-sponsored report on the UK construction industry (Latham 1994). Latham’s recommendation that the construction industry should move towards more collaborative methods of procurement built largely upon existing experience elsewhere. In Japan, for example, it is claimed (Reading Construction Forum 1998) that partnering was part of the normal way of working. In the USA, partnering had been practiced from the mid 1980s; the term appears to have been first used to describe the Fluor Daniel/Du Pont alliance for construction work at the Cape Fear plant in 1986 (Kubal 1994), although it was not until the early 1990s that ‘time and money . . . being . . . wasted in defensive posturing, case building, developing claims and litigating’ in the late 1980s (ATI 2007) led the Construction Industry Institute to develop a formal partnering approach. The approach was soon picked up and used with some success by the US Army Corps of Engineers (Cowan et al. 1992). McGeorge and Palmer (1997) reported that trials took place in Australia, also in the early 1990s. Similar concepts were also introduced in international oil exploration projects, where alliancing as a concept was pioneered by Shell and British Petroleum in the North Sea, again in the early 1990s, as a method of sharing risk and reward in high-risk, high-cost activities (NEDO 1991; Skeggs 2003; Sakal 2005).
The need for change in the UK was also fuelled by a growing insistence by major clients that, rather than being considered simply as passive customers of construction services, they should actively participate at the very heart of the construction procurement process as a full partner. Liu (1994) understood this issue well, suggesting that successful procurement approaches would be more likely to result from a deeper mutual understanding of the organisational and performance goals of the parties involved. She clearly pointed to the importance of understanding the cultural and organisational aspirations of all stakeholders in the procurement process, in particular those based upon a collaborative relationship. A number of academics and researchers examined various facets of the client’s role (see for example the work of Wilkins and Smith (1995)) and concluded that, particularly in the case of complex buildings, there was evidence that closer involvement of the client in the procurement process appeared to be a significant factor in project success. The enhanced client interest in the procurement process, coupled with demands for clearer guidance on procurement issues, led directly to the publication of The Procurement Guide (RICS 1996), which was republished in 2013 (RICS 2013).
A second government-sponsored review of the UK construction industry by Sir John Egan (Egan 1998) set targets for improvement in construction performance designed to improve customer satisfaction; the implementation of Egan’s recommendations was subsequently accepted as UK government policy for centrally funded public sector projects. The targets were also made implicit in the public sector ‘best value’ legislation introduced in 1997, which required all public bodies to show that they were achieving maximum value for money (defined in terms of whole-life cost not just initial capital cost) in all of their projects including construction work. The message was further reinforced by the National Audit Office (NAO) ‘Modernising Procurement’ report (NAO 1999), which amongst other things emphasised the need, particularly in the case of strategic projects, for close client involvement in allocating and managing risk and setting out effective mechanisms to incentivise superior project performance.
In the spirit of the new paradigm, Newcombe (2000) adopted a somewhat different approach to modelling procurement, and presented the development and field testing of a construction procurement simulator designed to aid the development of skills in analysing client needs and translating them into an appropriate procurement path. More recently, concerns over the environmental performance and social sustainability of the built environment have led some to question how these specific issues ought to be addressed in the construction procurement process.
Interest in the integrative aspects of construction procurement has, predictably, led to a more detailed and extensive study of the different elements of the procurement problem as part of the wider discipline of construction management. In recent years, therefore, we have seen considerable attention being paid to understanding how the individual elements of the procurement process work – individually, in combination with each other and in interaction with the rest of the construction management process. This process has been carried out largely by attempting to relate practical empirical experience of successful and unsuccessful projects to established theoretical concepts in general management, industrial psychology, and motivation. A number of major threads in procurement research have emerged from this work including, in no particular order:
More complex procurement strategy selection models (see for example the computerised decision making tool presented by Luu et al. (
2003
,
2005
,
2006
), which combined the use of case-based reasoning, fuzzy logic and elements of the earlier expert systems approach).
Team relationships, supply chain management and communication and their effect on project performance.
Defining in greater detail the role of the client in the procurement process.
The interrelationship between the various components of the overall procurement approach (e.g. the overriding strategy, the contractor and consultant selection processes, the contractual framework and tender evaluation models) in enhancing project success (the general presumption seems to be that, for a process to be deemed successful, then the whole must be greater than the sum of the parts).
Legal and contractual issues, including public sector procurement legislation, and their impact upon project performance.
Comparative analysis of international procurement practice and the impact of cultural differences.
Risk allocation and reward.
Bid evaluation techniques.
The impact of environmental and sustainability issues upon the procurement process.
Sustainable procurement for construction projects.
Defining Project Success
It has already been shown that many attempts have been made to develop selection models designed to match a range of project performance indicators to the project characteristics with the aim of achieving improved overall ‘project success’. The problem, however, lies in the definition of ‘project success’ and there have been many attempts to define how success might be measured (see for example the work of Cooke-Davies (2002)). Eriksson and Westerberg (2011) pointed out that although many still held firmly to what they termed the ‘iron triangle’ of primary success criteria (time, cost, and quality), in reality it was no
