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Selection of a procurement strategy

Every project should have a business case justifying it and the process of analysing and
choosing a procurement strategy should recognise the business case and be aligned with it.

The procurement strategy chosen for the project must satisfy a number of criteria and will
usually represent a balance between numerous, possibly conflicting, interests. In selecting a
procurement strategy, an adviser is attempting to match a particular solution to a client's
specific requirements. It is not the case that one procurement solution is 'better' than another ?
rather that each has a role to play in certain circumstances.

The procurement strategy selected will have a major impact on the timescale, sharing of risk
and the ultimate cost of a project. Therefore, in order for a consultant to recommend the
correct strategy, they must first understand and analyse the criteria that is important to the
particular client and project. Criteria for consideration includes:

Type of client

The type of client may determine what procurement strategies are available. Public-sector
clients, for example, are restricted as to how they can procure a project by The Public Contract
Regulations 2015 . This legislation applies when contracting authorities must meet certain
contractual requirements when procuring services, goods or works via an advertised award
process to ensure competitive bids are received and value for money is achieved.

For private-sector clients, who are not obliged to adhere to stringent procurement guidelines
(however, it is best practice to do so) when selecting an optimum procurement route will be
more concerned with time and quality. For example, for an end user client, the quality and
cost-in-use of the building is likely to be their priority whereas a developer client will be
influenced by market conditions and the time it will take to construct an asset and make it
available to the market will be their priority.

Risk

Construction is inherently consumed by risk. The outcomes of a construction project can never
be certain and the consequences can never be absolutely projected; however, when choosing
the optimum procurement strategy, the management, ownership and balance of risk is
fundamental to delivering success when defining the procurement strategy.

Risk in construction, be it time, cost or quality, is best allocated to the party most capable to
manage, control or insure that risk. The management of risk can be dealt with in a number of
ways:

- transfer of risk: achieved by the choice of contract and the specific wording of
contract clauses;
- acceptance of risk: if none of the contributors to a project can control the risk, it
should remain with the employer and
- avoidance of risk: define the risk beforehand and take mitigating measures, or
insure against the risk.

How the risk is apportioned will affect the procurement choice as well as the contract choice. It

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may also affect the tender price and programme. If it is recommended that the client
apportions all of the risk to the contractor, this will be likely to attract a premium of cost and
time and may lead to an inability to obtain tenders. It may also lead to a risk being taken on or
passed down to a subcontractor who may be unable to solve the problem or provide an
indemnity in the event of a problem.

As an example, consider a proposed refurbishment of an old hotel. The hotel may contain
asbestos, but it may not be possible to assess the extent of asbestos to be removed. If such
an unquantifiable risk is placed with the contractor, the employer may find that some
companies will not tender and those that do tender will include a large premium in their price. If
little or no asbestos is discovered, the employer will have paid a lot of money for no reason.

Time

The time available to procure, design and construct a project is usually determined by the date
at which the finished product is required and worked back from there. As certain procurement
strategies inherently take longer than others, and more complex buildings take longer to
construct, this influences the procurement strategy selected. It is not always the case that time
is a major concern to a client. Pharmaceutical clients, for example, are often far more
quality-focused than time-focused, as their facilities can be of little value unless they comply
with various UK and international standards.

Cost certainty

If the client's available finances for a project are finite, the most important criteria may be
absolute cost certainty before the project commences.

Design development

It takes time, skill and money to develop the design of a project for construction. There are
several measures for considering the completion of the design (RIBA stages). As the design
develops the degree of certainty about the project increases in terms of the time to construct
and the cost for doing so.

The extent to which the design has been developed before the construction work begins
should be considered in advance and set out in the procurement strategy. The general rule is
that the more design work has been carried out before the project is tendered, the greater the
degree of certainty of the tender price.

However, there are exceptions to this, for example, a single-stage design and build route
where the tender submits a lump sum price for the job (at say RIBA 3) and will also undertake
the detailed design phase prior to construction. This is likely to cost more as the contractor is
assuming the design risk and responsibilities, however, there is certainty in cost and speed to
site may also increase.

Design responsibility has two different parts:

- Firstly, who does the design and who is best to do that design in terms of their
ability, experience and price? This can be an engineer or architect and they may
work for the employer as consultants or for the contractor.
- Secondly, who is responsible for the design in terms of it being sound and provided
in time for construction?

The balance of these parts is to be considered in the procurement strategy.

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The apportionment of design responsibility between the designer and the contractor and
subcontractors should be considered. The type of building and the clients? appetite for risk will
have an influence on the apportionment of design responsibility. Where the building is of a
simple construction, and the client does not require close control over quality and design
functionality, 'design and build' may be an appropriate procurement method. Where the client
is an end-user, and requires close control over these aspects, they may wish to select a more
traditional procurement route.

Specialist input

The design may require input from specialists at an early stage. Specialists may include:

- project planners
- fa?ade engineers
- piling contractors and
- geotechnical specialists.

Advice from the contractor on buildability may be required, or enabling works may be needed.
Each of these will affect the choice of procurement.

Project complexity

A complex project will be likely to require design and construction input from a number of
specialists. It may also require specialist equipment, which may be costly or of limited
availability. It is, therefore, unlikely that the most suitable procurement route for a complex
project will be the same as for a simple project. The subdivision of the project should be
considered in the procurement strategy, in particular the scale.

Ability to change scope of works

The client may need to change the scope of work, due to a change in market conditions or
business requirements. External factors such as site conditions may also necessitate a design
change. If such changes are likely, the correct structure needs to be in place to allow this to
happen.

Contract administration

The responsibility for contract administration will be consequential on the procurement strategy
selected, and may fall on the design team, the project manager, a contract administrator or the
client.

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