Main Methods of Procurement

Construction projects involve a variety of inputs, including finance, design, management, installation, supply of materials, installations and maintenance / operation of the plant, if the necessary expertise during a construction project is huge. Buy the expertise provided by the owner. The owner may be considered as the organisation begins building and designate the construction team. This owner has identified a need for a project, but generally, their business is not construction, but another process, such as production, sales / leasing of real estate, retail, services or other production processes.

Procurement system of a project may have a significant impact on its cost, gestation period and function as well as for how the design team and construction staff to interact and communicate. External Relations Strategy defines the customer's purchase, which may be one of the following:

  1. Traditional Route
  2. Management Contracting
  3. Build-own-operate-transfer (BOOT)
  4. Design and build route (turnkey)
  5. Construction Management
  6. Tendering

Traditional Route

Route where the design is complete before construction. Traditionally, design and other consultancy services offer stand-alone projects or in the house (architect, engineer) directly with the developer of the building, even if a separate contract for construction of the project is placed and the contractor.

The construction project has been designed and detailed to the point where the different parts of the design may be removed and worked up a list of the number. At this stage the builder invited to tender for construction work, if successful, is expected to start work on the site has little knowledge or understanding of the construction of the building. The contractor has been selected for the race always has a fixed price.

The advantages of this system lies in the fact that the design is chosen by its designers named, allowing strict control of the specification and product realisation. Benefits to the supply side (main or sub-contractors and suppliers) are limited and bidding costs relatively low.

The disadvantages lie in the separation of design, procurement and construction phases by adding time to the process. It also limits the possibilities for direct and fast communication between designers, contractors and specialist suppliers. The project is, therefore, lose the advantage of experience, in particular reinforce the skills and value for money. The system is well known and proven.

Management Contracting

Route where a contractor is appointed by the client, responsible for all civil works, and provide guidance for building the design team. But under this system, all design work is completed before the first commercial contractors start work.

Build-own-operate-transfer (BOOT)

Way in which a contracting organisation offers a package to deliver and execute a building for a number of years, and at the end of the period of ownership of the property to the client.

There are other ways much more than recruitment, most of which are variations on these basic themes. All of them have arisen because of deficiencies in the tradition lump sum contract. The main barrier to the actual construction was the division between the organisation and the contractor and the difficult problem of access to expertise without affecting responsibility and liability.

Design and build route (turnkey)

Route where the contractor is responsible for design and construction of the project. Design and construct a form of procurement that requires a memorandum containing the customer's needs, this brief is a contractual document. The contract amount of the contract by the contractor is based on concepts developed by the design team of the contractor and submitted as part of the tender. Any modifications required by the customer will be as an amendment to the revised drawings and a revised amount of the contract. For this reason, the design and construction is often considered suitable only for projects that are simple and have proven design solutions.

The principle behind the project to build a system is that the agency contracts with the client organisation throughout the design and construction. The concept of single point of responsibility for the existence and the possibility of overlap in the design and construction as a result of this integrated approach.

Construction Management

Route in which the client employs a design team and a separate construction manager who co-ordinates the design and translates the brief into construction activities. The construction manager is able to input construction expertise from the beginning and improve the build ability of the design.


If your relationship is extended or non-recurring, needs of the first. Contractors may be selected by open competition, and competition for an unlimited number of pre-qualified contractors or through the negotiation of one or more stages. Competitive bidding has made a greater focus on competition or cooperation. Traditionally, the competition more focused, open and selective tendering procedures based on price competition as the main or sole criterion. It is often thought that the lowest bid said the best value for money for the contracts and conditions of engagement. The tradition of compulsory payments and long-term relationships have been replaced by competition and a formality. Modern trends have seen customers adopt a perspective of cooperation and good for the negotiations, in which the price is not the policy is an important part. Customers using the "weighted scorecard" to achieve a balance between quality and price that fits their project.

• Competitive tendering is an open book approach, which is advertised and all companies which are interested to work are invited to tender.

• Selective tender differs from the competition aw company that the job needs only to ask for a job bid0for approved contractor. List of contractors can be brought together because they worked for the company in recent times, and if a good value for money, or may be a permanent list of requested parties concerned.

• Partnership framework can not be beaten, in this case of selective tendering is carried out. Tenders will be evaluated and the list of preferred contractors determine the order of merit. When the work requires the contractor to be low (the entrepreneur who has achieved the highest weighted score) will be offered for first approval. If the contractor does not or do not have the expertise to carry out the work, the company remains on the list was offered the job. CCF are usually reviewed every two years to ensure the best value is the money and competitive pricing achieved.

• Two stage tendering is a popular approach that seeks to exploit the benefits of negotiation and competition. It also accelerates the process by allowing the overlap of design and procurement. The appointment of a contractor is done in two phases: Phase 1, is competitive and based on the cost of the preliminaries, overheads and profits Phase 2, the appointment is made after a successful negotiation open book final price. Cooperation in this stage can also help provide significant improvements in value through the early involvement of contractors. A full evaluation of the bidder's offer and identify the best suppliers to provide the level of service specified in the optimum value for money.