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Objectives Main text
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Commercial management of construction Main text
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Construction technology & environmental services Main text
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Contract practice Main text
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Design economics & cost planning Main text
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Commercial management of construction Main text
In your groups Prepare answers to questions – 20 minutes Main text
Give feedback to everyone – 10 minutes
Commercial management of construction Main text
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Construction technology & environmental services 1
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Procurement & tendering Main text
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Route Traditional
Advantages Control over design process
Disadvantages No one person is responsible for the design and construction
Quality control through the direct
Design will be developed as fully as
reporting of the design team to the client
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No risk premium built in by the Main text
Time and cost are likely to escalate
contractor Design & Build
Single point responsibility
Lack of control over quality
Buildability through the early
Contractor will include a
involvement of the contractor
risk premium
Cost certainty
Where novation exists this could cause legal difficulties
Procurement & tendering Main text
Route
Advantages
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Management Contracting
Buildability achieved through the
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contractor‟s early involvement
for design and construction
Early appointment can be achieved
Management contractor is only responsible for workmanship
Construction Management
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Construction Manager is a
Construction manager has
qualified advisor to the employer
no direct control with the trade contractors
Construction Manager can exercise cost and quality control
It is difficult to control cost increases
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Framework Agreements
The contractor only needs to
May not always be the best value
negotiate once for a series of contracts
for money
Prospect of repeat business for all
Public procurement
concerned Two Stage Tender
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regulations may impact
Buildability achieved through the
Once contractor is selected
contractor‟s early involvement
competition is lost and may impact on the pricing
Can start on site earlier
Difficult to walk away once second stage has taken place
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PFI/PPP
Advantages
Disadvantages
Risks borne by the private sector
Loss of control by the public sector
Specialist private sector manages
Can be hard to show value for
construction and the operation of the
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asset Partnering
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Less adversarial approach to the project
Difficult once the partnership breaks down
Buildability achieved through the contractor‟s early involvement and all parties in partnership
Can be non competitive
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Quantification & costing of construction works Main text
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Quantification & costing of construction works Main text
You must demonstrate knowledge and understanding of the principles of quantification and costing of construction works as a basis for the financial management of contracts. The quantification of construction works (including both measurement and definition)
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The measurement of buildings and structures to agreed standards
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Commercial management of construction Main text
In your groups Prepare answers to questions – 20 minutes Main text
Give feedback to everyone – 10 minutes
Procurement & tendering 1. What procurement routes are you familiar with?
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2. What do you say to a potential client who says “Partnering is just about having a cup of tea around a table – there are no real benefits” ? Main text
3. How do you make partnering happen and how do you facilitate this?
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Main text to Construction Management (Construction manager is employed arrange trade contracts and monitor them)
Framework Agreements (A template contract is agreed for a series of projects) Two Stage Tender (The Contractor is selected for the first stage on the basis of limited scope i.e. preliminaries, overheads and profit. The second stage will involve negotiation on an open book tendering basis) Main text PFI/PPP (Private sector designs, builds, operates and finances the asset for the public sector who pays an annual charge) Partnering (Open and less adversarial approach to construction projects)
Procurement & tendering Main text
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What do you say to a potential client who says “Partnering is just about having a cup of tea around a table – there are no real benefits”
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The candidate would be expected to provide an opinion here. Issues that may be considered could be to ensure the client understood the whole concept of partnering and its many benefits. Explain that partnering is not about „having Main text a cup of tea around a table‟. Partnering is too often confused with longstanding relationships, negotiated contracts, serial working and other “pseudo partnering” arrangements, all of which lack structure and the objective of true partnering. The essential characteristic of partnering is the commitment of all parties at all levels to make the project a success. There are three fundamental characteristics to partnering:
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Formalised mutual objectives: improved performance and reduced cost The active search for continuous measurable improvement An agreed common approach to problem solving
Partnering arrangements which include all members of the team (including client, contractor and consultants) provide the necessary solution, but to be successful, it is essential Main text and thoroughly that the partnering process is both properly planned, and more importantly that all partners within any project team are fully committed and trained in this respect.
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Q. How do you make partnering happen and how do you facilitate this‟ A. To instigate a full blown partnering contract the procedures and objectives are often worked out in a one/two day workshop, where all parties come together at the earliest possible stage, to plan the project. This is the start of the team building exercise and involves the actual Main text personnel to be involved as well as the senior staff. The workshops are often run by professional facilitators and terminate with the drawing up of a project charter. You may want to try and relate this to a specific project you worked on. Once instigated a properly set up and effective partnering contract has many benefits in the terms of time, cost and quality.
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There is a reduced learning curve as optimum performance and productivity can be achieved much earlier in the process, through a combination of familiarity with working practices and participants‟ expertise. A continuity of personnel and familiar systems of management diminishes the problems of mistakes. There is improved identification of risk, and as a result risk allocation and management is enhanced. Long-term relationships can be built, and Main text as a result there is greater confidence and reliability. There is improved quality and programming. This is due to the fact that an overall strategy is developed giving balance to the client‟s priorities. Consequently, there is a balance between the client‟s requirements with regard to time, cost and quality.
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The contractual relationship is one of harmony, rather than the adversarial relationship, which is sometimes associated with some of the traditional procurement arrangements. Advantage can be taken of continuity and preferred supplier arrangements, so, partnering potentially exists throughout the supply chain. Through common mutual objectives, improved performance and reduced cost can be achieved. There is continuous measurable improvement Main text
Project financial control & reporting Main text
1. What is the purpose of change control on a construction project? 2. What information would you include within the cost report for a project procured under a single stage traditional procurement route? Main text
3. I see from your summary of experience that you advised the client of the change control procedure implemented on your project. Can you tell me the key issues you considered in advising the client on the procedure you adopted?
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What is the purpose of change control on a construction project
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This provides a method of assessing and managing change giving details of consequent cost, programme and scope effect. Effective change control procedures enables the monitoring and reporting of cost changes where they affect the out-turn cost and enables the project team to monitor and appraise programme Main text implications and impact. The client is made aware of the consequences of a potential change and the effect this will have on the overall project thus allowing an informed decision to be made with a full understanding of the impact of it‟s implementation
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What information would you include within the cost report for a project procured under a single stage traditional procurement route
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This will be based upon the candidate‟s experience, the type of project and the requirements of the client, but typically the cost report will include the following information: Main text
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Current budget and forecast Contingency position Level of cost „certainty‟, i.e. agreement of provisional sums Total commitment and expenditure to date
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Final account progress Contract position Cash flow position Progress in the period and current financial position Outstanding information Major risks or causes for concern
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Q. I see from your submission that you advised the client of the change control procedure implemented on your project. Can you tell me the key issues you considered in advising the client on the procedure you adopted? A.
Your answer will needless to say be based on your experience and should cover the following: • •
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Main text What are the clients objectives in terms of monitoring change Who are the key decision makers in the design and approval of the change What are the implications in terms of the key client requirements of time, cost and quality
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What was the procurement process on your project and will this have any effect on your change control process At what point in the design process of your project was it appropriate to start measuring change and why? Confirm with the client and/or the project manager what costs need to be included within the change e.g. professional fees, v.a.t. etc Who takes responsibility for raising the change proposal Main text How will the change control procedure link with contract instructions and contractor‟s procedures(RFI‟s) during the construction period
Quantification & costing of construction works Main text 1. What are the standard methods of measurements that you are aware of?
2. What are Nominated Sub-contractors? 3. The client is thinking of using a design & build procurement Main text strategy but is concerned as to what form of pricing documentation he will receive from the contractor
Quantification & costing of construction works Main text
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What are the standard methods of measurements that you are aware of SMM7, CESSM, POMI, NRA and the New Rules of Measurement. The RICS New Rules of Measurement Order of cost estimating and elemental cost planning provide a structured basis for measuring building work and present a consistent approach for dealing with other Main text key cost components associated with a building project when preparing order of cost estimates and elemental cost plans. The rules represent the essentials of good practice and have the same status as RICS guidance notes. It is divided into 4 parts with supporting appendices as follows
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Part 1 – places cost estimating and elemental cost planning in context with the RIBA plan of work and the OGC Gateway process and explains the symbols, abbreviations and definitions used in the rules. Part 2 – describes the purpose and content of an order of cost estimate, defines it‟s key constituents, explains how to prepare an order of cost estimate, and sets out the rules of measurement for the preparation of an order of cost estimate using the floor area text method, functional unit method andMain elemental method Part 3 – describes the purpose of elemental cost plans, explains their key constituents and explains how to prepare an elemental cost plan Part 4 – comprises the tabulated rules of measurement for the preparation of formal elemental cost plans
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What are Nominated Sub-contractors
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Nominated Sub-contractors are nominated by the client to carry out specialist work on behalf of the client. The main contractor is entitled to object to the appointment of a nominated sub-contractor provided he has a legitimate reason for doing so. The main contractor will be entitled to claim profit and attendance on the nominated sub-contractor. The profit element will be adjusted on a text pro-rata basis whereas the attendanceMain is only adjusted depending on the scope of works once quotations have been received from nominated sub-contractors. The main contractor will have to include for the nominated sub-contractors programme within his own programme
