We are seeing an increase in clients looking for different approaches to a traditional procurement in their projects, so we thought we would talk you through the main procurement options in the market at the moment and the advantages and disadvantages that you may experience.
Let’s start with TRADITIONAL PROCUREMENT
The client hires an architect to design the project and then complete a tender package to allow multiple contractors to price the proposed works. On selection, the client enters into a separate contract with the contractor to that of the architect.
Disadvantages
Longer overall project duration due to sequential design and construction phases.
Increased potential for disputes between designers and contractors if there are variations to the scope.
Higher administrative burden for the client in managing multiple contracts and coordinating between designers and contractors if they self project manage.
Advantages
Greater control for the client over the design process as everything is designed ahead of a contractor pricing it.
Higher quality outcomes as clients can choose any architect and any contractor based on their previous projects.
Competitive tendering process allowing the client to understand market value.
Then there is DESIGN AND BUILD (D&B)
In a design and build procurement, a single entity is responsible for both the design and construction of a project. The client typically signs a single contract with one firm which effectively streamlines the communication and decision making process.
Advantages
Single point of responsibility, reducing the potential for disputes between designers and contractors and streamlined project management in one place.
Faster project delivery due to concurrent design and construction phases.
Potential for cost savings as the contractor can optimise the design for constructibility and cost efficiency.
Disadvantages
Limited flexibility for the client in choosing separate designers and contractors.
Potential for conflicts of interest and cost increases if the selected company prioritises cost-cutting over quality or the expectation of quality is mismatched between client and contractor.
Clients may have less control over the design process compared to traditional procurement.
Finally, let’s look at COST PLUS PROCUREMENT
In this route, the architectural appointment remains separate in a traditional route, but the difference comes in the contracting as the client agrees to pay the contractor the actual costs of the building work and labour etc plus an additional fee (normally a percentage) to cover overheads and profit.
Disadvantages
Limited cost certainty for the client, as final project costs may exceed initial estimates.
Potential for conflicts of interest if the contractor has an incentive to increase costs in order to maximise their fee.
Requires a high level of trust between the client and contractor, as the client relies on the contractor's integrity in reporting costs accurately.
Advantages
High degree of transparency, as the client has full visibility into project costs and is only responsible for reimbursing actual expenses plus agreed fee.
Flexibility to accommodate changes and uncertainties during the project, as costs are not fixed.
Potential for cost savings if the contractor is able to complete the project under budget.
As you can see, the choice between Traditional Procurement, Design & Build and Cost Plus procurement depends on a number of factors such as project complexity and timelines, client preferences with regards to quality, budget constraints, and risk tolerances.
Each method has its own set of advantages and disadvantages, and the most suitable approach will vary depending on the specific circumstances of the project.
There are also other more bespoke offerings around, but they are mainly variations on the above three listed methods.
