At of the project.it mainly focus on three

At the beginning of every
project the client thinks that the project should aim at having value for money
and within budget and completed on time by the contractor. But many researches
shows that the aim is not met. Thus the study examines that the impact of
procurement routes on residential project on cost and delivery in Northern
region in India. The data was collected in mainly the city of Delhi and
questionnaires was asked to various project managers and contractors in
construction industry. The study was mainly focused on major four routes of
procurement (traditional, design and build, construction management, and
management contracting). The study concluded that no procurement route is
better than other it mainly depends upon the project and its stakeholders what
procurement routes they want, what best suites the project to complete the
project in time within budget with maintaining the scope of project and desired
quality standards are met. Mainly the project manager with large amount of experience
still prefer the traditional procurement method as the study tells that the new
methods are being adopted now a days the project managers and other
stakeholders should have a good knowledge of all routes so that they can
suggest client to go for the best procurement route which suits the project and
meet clients requirements.

INTRODUCTION

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Project procurement is
the process for client to obtain construction projects. The procurement
involves a wide scope of work by gathering information about products
procedures firms and companies to design build manage and construct products
such as warehouse, office building residential apartments buildings, commercial
buildings etc. the process of obtaining building by client involves group of
people coming together and organizing systematically their roles and
responsibilities and building a interpersonal relation between them so that
they can achieve the milestone required for project

Now not only the
traditional method but the fast tracking method of projects are being used by
the projects managers and stakeholders of the project. All the different
procurement system differ from one another in their roles responsibilities,
activities and sequencing and process and project delivery. Project performance
means meeting the expectations of stakeholders needs of the project.it mainly
focus on three main important part i.e the triangle of (time, cost, quality and
scope) .these are the main factors on which the project success depends.

 

LITERATURE
REVIEW

Ø  The
Indian construction industry is very important for country’s growth and
employment. The Indian
construction industry has contributed an estimated amount of $308 billion in
the FY (2011-2012) about 19%.till now the traditional procurement route in the
construction industry is dominant. There are many professional in the
construction industry such as clients, contractors, suppliers, project
managers, quantity surveyors, subcontractors etc. the professional bodies in
construction industries regulate the construction professionals. Delays in the
project in the main cause in construction industry acc to study 7 out of 10
projects are delayed in construction sector. The major causes of delay can be
tie overrun, cost overrun, design change etc. the delays make the project cost
overrun and project is not completed on time and project parameters are also
not met to the standards of quality and scope. The poor performance can also be
accommodated with delay of project. The Indian construction has an important
position in Indian construction industry growth and economy of country. The
construction industry provide many jobs to people and socioeconomic growth of
country and contribute maximum to the GDP of country. The industry is the construction industry. The
Indian construction industry comprises of 120,000 class A contractors
registered with various government construction bodies. The sector is labour
intensive and includes around 30 million jobs. It contributes more than 5 per cent to the nation’s GDP and 78 per cent
to the gross capital formation.

Procurement
Route –The actions
required to carry out the Procurement Strategy

Choice
or Form of Contract–choosing
the most suitable form of contract to deliver the project.

Procurement
Strategy –to
identify best ways of achieving project objectives (relative to the issues).
Procurement strategy contains

Time-early completion achievable if
construction commences before design fully complete -cost certainty risks.

Cost–the importance of cost certainty
at various stages.

Quality–The quality requirements impacts
cost and timescale. Some procurement strategies enable Client control on
quality, whilst others reduce client’s ability to control & make changes.

Risk-Clients willingness to take on
risk.

FACTORS
INFLUENCING PROCUREMENT ROUTES

1.     
External factors

2.     
Client resources

3.     
Project
characteristics

4.     
Timing

5.     
Ability to make
changes

6.     
Cost issues

PROCUREMENT
ROUTES

A procurement system is a specific system of an
organization that assigns the clear roles and responsibilities, duties and
authorities to the organization and its people and defines various elements in
construction project.

The decision as what procurement route should be
made for the project as early as possible by the client business project. The
risk associated with each of these procurement route should be considered and
their effect on the project.

 

 

A)    TRADITIONAL
PROCUREMENT

In this method of procurement the design is
generally separated from the construction work, the consultants do the design
and control and the contractor is responsible for the construction. The
drawings are built by the client and it is given to contractor for the
construction work. The responsibility is distributed to all the workmanship and
materials, and includes all work by suppliers and subcontractors. The
contractor is appointed by tendering on having full information of complete
design review of the project.

This method of procurement sometimes uses the two
stage tendering or negotiates tendering and sometimes it is also called
“accelerated traditional method” the design and construction can run in
parallel to a limited extent of time. This allows early start on site but tells
about the uncertainty about the cost. The three type of contract under
traditional procurement routes are-:

1)      Lump sum contract- before the start of construction
the sum is determined and in the agreement amount is entered.

2)      Measurement contract-when the sum of money is
accurately known before hand and re measurement is done on some agreed basis by
client and contractor.

3)      Cost reimbursement- when the sum is arrives by the
actual cost of labour, materials and plant and to which we add the overheads
and profit.

Cost-plus
percentage fees

Cost
–plus fixed fees

Cost –plus
fluctuating fees

KEY
POINTS WHILE CONSIDERING TRADITIONAL ROUTE FOR PROCUREMENT

Ø  The traditional procurement route requires the
complete set of drawings and documents before the tender is invited. This
process needs a lot of time.

Ø  The drawings are given by the client consultant
appointed by client and the contractor has no obligation in design.

Ø  The client has the full control on the design of the
project and the quality required.

Ø  The contractors depends heavily on the architect as
if the drawings are delayed by him it will affect the project and it can lead
to claims.

Ø  The client decides which contractor they want to use
for the project.

Ø  The payment to the contractor is the matter which is
led by the client consultant.

ADVANTAGES
OF TRADITIONAL METHOD

1.     
Due to
competitive selection it is accountable.

2.     
Tendering
contractor bid is on same basis.

3.      Client has the control over the design process
overall quality of design.

4.      Price
is certain s it is at the aware of contract.

5.      Changes
in contract are easily to manage.

6.      Method
is very familiar in market.

7.      Cost
certainty at the time of appointing contractor.

8.      Client
retains direct contractual relation with consultant and main contractor.

DISADVANTAGES OF TRADITIONAL METHOD

1.      Incomplete
design can lead to delay of projects and led to less cost and time certainty
and can lead to disputes in further process.

2.      Overall
duration of the project is increased.

3.      In
the design and planning stage of the project there is no involvement at design
stage.

4.      Design
must be fully developed before tendering process.

5.      Longer
timescale.

6.      Low
risk to contractor.

7.      Client
must have the resource and expertise to administer the contract of design team
and main contractor.

WHEN THE USE OF TRADITIONAL
PROCUREMENT METHOD IS BEST SUITED

1.      When
the construction process allows sufficient time.

2.      The
design when properly managed by the client.

3.      When
the contractor and consultant is appointed separately by the client.

4.      The
price is defined before the start of the construction.

5.      The
quality of product is required.

6.      The
risk is to be balanced between client and contractor.

 

B)   
DESIGN
AND BUILD PROCUREMENT

In this
procurement method the design and construction both are done by contractor
which is appointed by the client by tendering process. The full responsibility
of design is with contractor. The design liability is with the contractor
unless it states out in the contract. Sometimes the design and construct form
limits the design liability of the contractor to the normal duty for good care
and skills. The acceptance of liability is checked before the contractor is
appointed. if the contractor is not having his own designer their identity
should be established before tender is accepted. This procurement method brings
cost benefits. The client having full knowledge of market can provide client
with good competitive price. This method gives the contractor the freedom to
purchase on their own. Most importantly this method allows quick start of
project on site and close integration of design and build can led to good
programming. Time however is needed by the client to prepare a requirement.
Time is required for competing tenders. Once the contract is signed any change
by client is very costly.

There are number
of variation in design and build contract-:

1)      Direct =
in this no competition is there in tendering. Only one tender is obtained.

2)      Competitive
= this offers several other contractors to offer competition in design and in
prices.

3)      Develop and construct
= consultant design the scope design then the competitive tenders are obtained
from the selected list of contractors to develop construct the building. The
consultant design can vary according to the clients need.

4)      Novation
= this is when the contractor takes over the client work done previously for
design work, completes the design and construct the project.

KEY
POINTS WHILE CONSIDERING DESIGN AND BUILD ROUTE FOR PROCUREMENT

Ø  Single point of responsibility. The client has to
deal with only the main contractor.

Ø  The communication channels are very clear and very
less cases of blame game.

Ø  Construction can be started early and design can be
made in parallel. The contractor has the flexibility in the work.

Ø  Timely completion of work is in the hands of
contractor.no risk of claims.

Ø  Flow of necessary information is the most important
features of this type of procurement method.

Ø  Any change in design can led to costly affairs.

Ø  The requirements is prepared by the client with the
help of consultant the time is allowed for the preparation of requirements.

Ø  The contractors design obligations are obsolete and
it is really difficult to evaluate competitive tenders realistically.

ADVANTAGES OF
DESIGN AND CONSTRUCT PROCUREMENT

 

1)     
Client has one
point of contact which reduces the resources and time to contracting design.

2)     
The price
certainty is being defined before the construction starts and changes are not
very much incorporated.

3)     
The overlap of
design and construction simultaneously reduces the time and improves the
constructability of the project.

4)     
Transfers to
contractor for construction delivery and design development.

5)     
Cost certainty.

6)     
Shorter program.

7)     
Early contractor
involvement assists with buildability.

 

DISADVANTAGES OF
DESIGN AND CONSTRUCT PROCUREMENT

1)     
Difficulty in
preparing brief by the client.

2)     
Any change to
project scope can be costly.

3)     
Difficulty in
comparing bid as each bid will be different. Price will be different for each
design.

4)     
Design liability
is limited to standard contract.

5)     
Client has
reduced control over design cost quality and risk.

6)     
Client’s
requirement must be fully detailed before signing contract.

 

WHEN THE USE OF DESIGN AND BUILD PROCUREMENT
METHOD IS BEST SUITED

1)      The
functional building can be adopted rather than prestigious.

2)      The
brief for scope is likely to change.

3)      The
risk and responsibilities the single organization is ready to take.

4)      The
design and construction activities were run simultaneously.

5)      Building
is not complex.