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As an industrial process, construction is unique in that the method of procurement of any built asset (building, infrastructure or process plant) defines many of the subsequent management processes that take place during the building phase - a very different situation to the purchase of goods and services in most other industries. The procurement process is therefore 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 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 first edition of Building Procurement, for example the global liquidity & banking crisis and the debt burden of many major economies. 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 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. Review of the first edition "...a thorough and comprehensive investigation of building procurement..." Construction Management and Economics

Building Procurement

Preface to the second edition xii

1 Introduction 1

2 Procurement strategy: a literature review 6

Introduction and early history 6

Procurement strategy selection models 7

Towards a broader view 8

Defining project success 10

Team relationships, supply chain management and communication and their effect on project performance 11

Teamwork and team performance 11

Partnering: introduction and early development 12

Partnering: a critical review 13

Partnering variants 15

Partnering dissected 16

Procurement and multicultural teams 17

Supply chain management 17

The role of the client in the procurement process 18

The interrelationship between the components of the overall

procurement approach: strategic procurement management 19

Legal and contractual issues, including public sector procurement legislation, and their effect on project performance 20

International procurement comparisons and the impact of cultural differences 22

Risk allocation and reward 24

Bid evaluation techniques 25

Environmental and sustainability issues and the procurement of construction work 27

Conclusion 28

References 29

3 Principles of strategic procurement 42


Introduction 42

Procurement: a review of theory and practice 44

A strategic approach to procurement 45

Components of the procurement process 46

Conclusion 53

References 54

4 Public sector projects 55

Introduction: why should public sector projects be different? 55

What constitutes the public sector? 56

Central government 57

Local government 63

Best value 64

Procurement rules: European Union principles and procedures 64

Non-discrimination and transparency: the role of the EU 64 EU Directives 65

Tendering 69

Framework agreements 72

Electronic auctions 74

Sustainability and environmental issues 75

Timescales 76

Award procedures 76

The Remedies Directive 78

Enforcement of EU Directives 79

References 79

5 Project initiation 81

Introduction 81

Strategic fit 82

Payback 82

Assessment of options 86

Achievability 87

Affordability 87

Project initiation 87

Prioritisation of objectives 88

Conclusion 91

References 91

6 Briefing and the design process 92

Introduction 92

Project briefing: an overview 92

Types of construction client 94

Questions to determine the type of client 96

Project complexity 97

The briefing process: a historical perspective 98

Developing the strategic brief 100

The project execution plan (PEP) 101

What issues does the PEP need to address? 101

When should it be prepared? 103

Who prepares the PEP? 104

How is the PEP prepared? 104

Project briefing: the case of hospitals 105

Critical factors for success in the briefing process 106

References 108

7 Procurement strategies and procurement routes 110

Introduction 110

Procurement strategy 115

Procurement routes 117

Factors to be considered in selecting a procurement route 119

Factors outside the control of the project team 119

Client resources 120

Project characteristics 120

Ability to make changes 120

Risk management 120

Cost issues 121

Project timing 121

Construction times 122


Performance 122

Selection of a procurement route 123

Procurement routes: a review 126

Traditional (design-bid-build) 126

Design and build 129

Measurement (remeasurement or measure and value) 134

Construction management 135

Management contracting 137

Design and manage 139

References 139

8 Project team selection 141

Introduction 141

The selection process 143

Prequalification 143

Tender invitation and submission 146

Tender evaluation 146

Interview 147

Award of the contract 148

Selecting a consultant 148

Selecting a contractor 151

References 152

9 Managing the procurement process 153

Introduction 153

The project manager 154

First tasks of the project manager 155

Developing the project execution plan 156

Identifying the project team 156

Implementing the procurement strategy 157

Project resources 157

Financial resources 157

Human resources 157

Physical resources 158

Temporary organisational structure 159

Contractual arrangements 159

Systems and controls 159

Time management 160

Design management 162

Design risk 163

Cost management 164

Quality control 167

Change control 168

Commissioning 169

Occupation and take-over 170

Conclusion 170

References 170

10 The value of design 171

Introduction 171

Considering value in the business context 172

The value of good design 173

Managing value 175

Value management 176

Value engineering 179

References 181

11 Risk management 182

Introduction 182

Risk and uncertainty 183

Types of risk 183

Risk management strategies 184

Identifying risk 185

Assumption analysis 185

Checklists 185

Brainstorming 187

Delphi technique 187

Cause and effect of risk 187


Examples of risks 188

Analysing risk 189

Qualitative assessment 189

Quantitative assessment 190

Choosing a risk management strategy 194

Risk management strategies 195

Risk allocation 196

The empty chair theory 197

Monitoring and controlling risk 197

References 198

Further reading 198

12 Partnering culture and the management of relationships 199

Introduction 199

The Latham review and subsequent developments 199

The rise of collaborative approaches to procurement 200

Collaborative approaches to construction work 201

Contractual approaches to collaboration 202

The JCT forms of contract including the Standard Form of Building Contract 202

The New Engineering Contract Engineering and

Construction Contract (NEC ECC) Edition 3 202

The ACA Project Partnering Contract (PPC 2000) 203

Perform21 Public Sector Partnering Contract (PSPC) 203

Target cost contracts 204

What advantages does partnering bring? 205

Managing a successful partnering arrangement 205

The role of the workshop facilitator 206

Facilitation guidelines 207

Team composition 208

Managing relationships 208

Why is relationship management important? 209

Establishing the 'cultural fit' 210

Mutual objectives 212

Team development 213

The nature of trust 216

Maintenance of the relationship 218

The project supply chain 219

The holistic approach 221

The bicameral approach 221

The unilateral approach 221

The collaborative approach 222

Conclusion 222

References 223

13 Privately financed public sector projects 225

Introduction 225

Historical development 225

Modern models for privatisation 229

Outright privatisation 229

Participative privately financed techniques 230

Corporatisation and the use of semi-private (mixed) companies 230

Management contracts 232

The leasing or build-lease-transfer (BLT) model 232

Prefinancing 233

Mixed models 234

Concession-based methods 234

Public private partnerships (PPPs) 238

The Private Finance Initiative 239

Genesis 239

Problems 240

Current developments 253

Conclusion 254

References 254

14 Construction procurement: Europe, the Middle East and China 257

Introduction 257

Europe 258

The French system 258

The northern European approach 265

The Mediterranean approach 267

The Middle East 271

The People's Republic of China and the Hong Kong Special Autonomous Region 273

The Chinese construction industry 273

The construction professions 275

Opportunities for Western companies 275

Reference 276

15 Procurement of work to heritage buildings 277

Introduction 277

The heritage challenge 278

Procurement: The heritage context 280

The value of built heritage 284

The importance of cultural significance 286

Statutory protection for heritage buildings 287

Listed buildings 288

Conservation areas 289

Scheduled monuments 289

World Heritage Sites 289

Managing change in the historic environment 290

Planning for conservation 290

The role of the conservation advisor 292

Procurement processes and procedures 293

The investigation contract 294

A case study in the procurement of work to historic buildings: The Derby roundhouse 295

The existing buildings: historical background 297

The genesis of the project 302

The final scheme 302

Site surveys and pre-tender investigations 308

The tender process 308

The partnering process 309

Post-contract processes 310

Practical issues on site 310

References 312

16 Summary 316

Appendix: Procurement route selection checklists 320

Index 324