Contents Introduction – Page 2 Executive summary – Page 2 Advisory: Industrial units – Page 2 - 4 Landscaping and infrastructure – Page 4 – 5 Flagship office development – Page 5 – 7 Conclusion – Page 7 - 8 References – Page 9 - 10 N0873561 1 Introduction Leopard Developments are in need of professional advice on the best procurement methods to take, alongside relevant contracts that will go hand in hand with the advised procurement routes stated in this report. This involves their industrial estate, which they wish to consist of: new infrastructure and landscaping, four, one-storey industrial units, refurbished to produce modular bathrooms and internal partitions and a new extension onto one of the industrial units to form their new headquarters that is marked as a flagship development. Executive summary The industrial units are of standard quality and already have a pre-existing shell to work with. It is advised that Design and Build Procurement is used here alongside a fixed lump sum contract. Landscaping and infrastructure are advised to be carried out with Management Procurement with a cost reimbursable contract. The flagship office development is of very high quality, therefore, traditional procurement with two-stage tendering is advised alongside a Standard Building Contract with Quantities. All aspects of the project have been advised with an assumed high budget and fast completion time considered. Advisory Industrial units Leopard Developments wishes to have their four industrial units refurbished. Each unit is comprised of 2000 M2 Gross Internal Area each, equating to 8000 M2 of space that needs to be refurbished. I believe the best procurement method for these construction works, moving forward, will be to incorporate the Design and Build procurement method. Leopard Developments have not stated a budget within their requirements of the project; therefore, I must assume that cost is not a big enough factor for the N0873561 2 development company to consider as a vital component of their requirements. However, they have stated that time is a vital factor in the project, and they would like the completion as fast as possible. The Design and Build method of procurement focuses more on cost and time by allocating responsibility for the construction and design to only the contractor, resulting in a quicker start time and completion. As this refurbishment revolves around the production capabilities of modular bathrooms this procurement method can be used to its full potential here as the four units already have a pre-existing exterior and only the interior needs to be refurbished, meaning that this part of the project has very little complexity to it and can be completed to a standard that is acceptable (fit for purpose) to Leopard Developments and can be completed in less time as compared to a project with a higher amount of complexity (requiring numerous specialists in several fields). This method overshadows the other procurement methods as a better option due to it not focusing on the quality which is an invalid aspect of this section of the project. Due to common law, a ‘fitness for purpose’ liability is guaranteed for the project. “In a construction context, this means that a contractor is effectively guaranteeing that the components and the finished building will be fit for their intended purpose”. (Fenwick Elliot, fenwickelliot.com, understanding your design duty [online], Available at: https://www.fenwickelliott.com/researchinsight/annual-review/2014/understanding-designduty#:~:text=%E2%80%9CFitness%20for%20purpose%E2%80%9D,By%20contrast%2C%20a&text=In%20a%20construction%20context%2C%20 this,fit%20for%20their%20intended%20purpose. Date accessed: 7 th January 2021) As for the contract, by using this procurement method, cost certainty is guaranteed as a fixed lump sum contract is agreed upon between the contractor and employer before construction takes place. From this agreement, the contractor accepts a large sum of capital before the works start in exchange N0873561 3 for their services to complete the project instead of being paid small instalments over time. This ensures that the employer knows roughly how much the works will cost to complete. The costs are not exact as there can still be changes to the project that are unforeseen. For example, changes to the design of the units may be made after construction has taken place (although this is unlikely under a contract such as this), the redesign may cost more than the previous so more capital will be needed for completion. Infrastructure and landscaping Leopard developments also needs to conduct infrastructure instalment and landscaping across their site to complete the project. I believe that the quality of these works requires higher quality than that of the four single storey units. The works involved here also have a need for specialist sub-contractors for its completion; therefore, the infrastructure and landscaping works should be carried out using Management Procurement. The Management Procurement method focuses more on quality and time but less on cost. Leopard Developments have stated that they require a fast completion for the units, which can be constructed after infrastructure and landscaping is carried out. As Previously assumed, Leopard Developments do not seem particularly concerned with cost due to no stated budget, therefore this procurement method fits well as the works will be completed quickly to a larger degree of quality compared to the Design and Build Procurement method as the client sub-contracts numerous contractors themselves using management contracting. Management Procurement involves the client sub-contracting numerous contractors at the same time. These contractors will sub-contract their work as well meaning the workforce becomes large for a quick completion time. In regard to contracts, I believe Leopard Developments should use a cost reimbursement contract. The downside to the very fast speed of this contract is N0873561 4 that Leopard Developments will not have information about how much the landscaping and infrastructure will cost until they are completed as whatever capital that is not used within the works is reimbursed to Leopard Developments. Therefore, Leopard Developments will have to pay the contractors a large sum of capital from the beginning of the works and will only be reimbursed the capital that is not used on services and resources at completion of the works. However, it can be assumed that Leopard Developments are prepared to have more capital tied up in the process of the project due to a budget not being stated and are more focused on the time that the project is complete by. Flagship office development Leopard Developments also want to construct a new extension onto their foursingle storey units which will serve as a new office block and headquarters for the company that is to be a flagship construction quality. Because of these factors, I suggest that Leopard Developments choose the route of Traditional Procurement. I believe that this type of procurement works well with this part of the project as the flagship office is a specialist type of build with high complexity in that it should be of the highest quality possible due to it being a specific requirement from Leopard Developments The Traditional Procurement method focuses on cost and quality over time. This procurement method separates the design from the construction and has the design already completed and agreed before the tendering process. As this part of the project requires a high degree of quality it will also require specialist contractors to carry out numerous sections of specialised work, therefore, increasing the amount of time the project will be completed in. This procurement method alone doesn’t guarantee a faster completion time; therefore, I suggest Leopard Developments use a two-stage tendering process to speed up the procurement process. Although not a requirement for this part of the project, it will allow Leopard developments to use their office space as fast as possible to carry out their business ventures. N0873561 5 A two-stage tendering process is where the tendering stage is split into two separate parts, here, Leopard Developments should seek out multiple contractors and establish a level of pricing, this is the first stage. The second stage will involve the negotiation of this level of pricing between Leopard Developments and their chosen contractors. Within stage one, six or more contractors will be involved in a competitive tendering process and will be sent documentation that can include a schedule of rate (where items for the project are priced) and schedule of pricing (where rates are adjusted by the contractor). At this stage, the design will not yet be complete, this completion comes while the contractor is completing their submission for stage one. Upon the completion of the design, stage two can be conducted. Here, the chosen contractor will be within negotiation with Leopard Developments about the sum of pricing for the project revolving around the information from the contractor’s stage one submission. By using this two-stage tendering process, Leopard Developments are able to cut down the completion time by choosing a contractor from a pool of applicants on an incomplete design concept of the project. Leopard Developments will tender several contractors with the assumption that they will enter a lump-sum contract or cost reimbursable contract when they are able to see the full scope of the design for the flagship development. By allowing the contractor to advise and be involved with Leopard Developments and their design team allows the working environment to be less hostile and more collaborative leading to a smoother construction phase. (Lexology, www.lexology.com, Two stage tenders what is a two-stage tender [online], Available at: https://www.lexology.com/library/detail.aspx?g=2e5ada34-30a9-4e9e-987a6c8c270cb5a3. Date accessed: 8 th January 2021) With regards to which contract route Leopard Developments can take, there are a few ways they can take. With a cost reimbursable contract, they can create the contract prior to the completion of the design since an agreed amount of N0873561 6 capital is put forward by Leopard Developments without knowing the exact quantities of resources (for example) needed for the project. Any capital not used will be reimbursed to Leopard Developments. This allows works to be carried out as fast as possible Another option could be that the Development company could take would be to draft up a Standard Building Contract with Quantities. This contract outlines a bill of quantities with completed drawings that specify the exact quality and quantity of work expected. This would be a good option for Leopard Developments to take as it ensures that the flagship development will have an agreed upon quality required from the contractor. This contract also allows the contractor to appoint specialist sub-contractors to carry out specialised work which will filter into the quality aspect of this type of work. (JCT, jctltd.co.uk, standard building contract with quantities [online], Available at: https://www.jctltd.co.uk/product/standard-building-contract-with-quantities Date accessed: 9th January 2021) Conclusion In conclusion, Leopard Developments should choose different procurement methods for each section of the project. For the Industrial units, Leopard Developments would like them completed as fast as possible, therefore it is advised that Design and Build procurement is used to ensure a fast completion time due to project planning happening earlier and problems being detected sooner, alongside the fact that quality doesn’t need to be considered and is ensured to a fair standard by the common law of ‘fitness for purpose’. The lump sum contract is advised alongside this as it is a straightforward contract that can be drafted quickly for the contractor to agree upon. The contract ensures cost certainty for Leopard Developments but may lead them to some negotiation issues with the contractor as they are at risk due to having limited room to negotiate their prices due to costs already being written into the contract. If Leopard Developments can handle the negotiations with the contractor with N0873561 7 care, then this contract will allow the units to have a lower completion time. As landscaping and infrastructure will impact the completion time of the units, these works will need to be completed quickly as well. Therefore, it is advised that the Management Procurement route is taken. This is because these works are of a much larger scale than the units and therefore require more thought into the design. Considering the larger scale and required quick completion time, Management Procurement fits well as it is tailored to projects of bigger scale that need to be completed quickly. Alongside this, a cost reimbursable contract should be used with the contractor to quicken the completion time. As cost is assumed not to be a big factor from the brief it is assumed that Leopard Developments do not mind a sizable sum of capital being tied up in the construction stage in exchange for a faster completion. As for the flagship office, it is advised that Traditional Procurement is used. This is due to the high complexity and quality of this build being a large factor. Two-stage tendering is advised to speed up the process of this build so that it can be utilised as soon as possible, which is a great advantage to Leopard Developments. A Standard Building Contract with Quantities should be agreed upon with the contractor here, over a cost reimbursable contract, due to a specific level of quality being agreed upon before the contractor is allowed to enter the design process, this will allow the flagship office to be built to a very high standard, which is a specific requirement from the brief. N0873561 8 References Fenwick Elliot, fenwickelliot.com, understanding your design duty [online], Available at: https://www.fenwickelliott.com/researchinsight/annual-review/2014/understanding-designduty#:~:text=%E2%80%9CFitness%20for%20purpose%E2%80%9D,By%20contrast%2C%20a&text=In%20a%20construction%20context% 2C%20this,fit%20for%20their%20intended%20purpose. (Date accessed: 7th January 2021) Lexology, www.lexology.com, Two stage tenders what is a two-stage tender [online], Available at: https://www.lexology.com/library/detail.aspx?g=2e5ada34-30a9-4e9e987a-6c8c270cb5a3 (Date accessed: 8 th January 2021) JCT, jctltd.co.uk, standard building contract with quantities [online], Available at: https://www.jctltd.co.uk/product/standard-buildingcontract-with-quantities (Date accessed: 9 th January 2021) The Balance Small Business, thebalancesb.com, A guide to lump sum construction contracts [online] available at: https://www.thebalancesmb.com/lump-sum-construction-contract-844915 (Date accessed 9th January 2021) APMG international, ppp-certifcation.com, Infrastructure methods that are not regarded as PPPs [online], Available at: https://pppcertification.com/ppp-certification-guide/21-infrastructure-procurementoptions-are-not-regarded-ppps (Date accessed 9th January 2021) C-Link, c-link.com, Management procurement method [online], Available at: https://c-link.com/blog/management-contracting-procurement/ (Date accessed 9th January 2021) JCT, jctltd.co.uk, Repair and maintenance contract [online], Available at: (https://www.jctltd.co.uk/product/repair-and-maintenancecontract#:~:text=The%20Repair%20and%20Maintenance%20Contract,a N0873561 9 nd%20maintenance%20of%20a%20building. (Date accessed: 9 th January 2021) Ideaswa, ideas.swagroup.com, What is landscape infrastructure [online], available at: http://www.ideas.swagroup.com/what-is-landscapeinfrastructure/ (Date accessed 10th January 2021) N0873561 10
