YANGON TECHNOLOGICAL UNIVERSITY
DEPARTMENT OF CIVIL ENGINEERING
CE 52052
CONTRACTS, SPECIFICATIONS AND ESTIMATIONS II
PROCUREMENT CASE STUDY (Assignment -1)
Submitted by : Htet Ei Ei Khin
Roll No
: VC – 1
Submitted date : 28.7.2023
Introduction
The term ‘Procurement’ in construction context means obtaining the whole spectrum of goods,
materials, plant and services in order to design, build and commission a building that delivers the best
possible value for money for the client over its life cycle. The approach to construction procurement
and the choice of the appropriate construction strategy will vary depending on clients (public or private
sector) and projects (new construction or refurbishment of existing structure). The most common
procurement routes are traditional, design and build, construction management and collaborative
contracting.
Traditional procurement method, also known as general contracting involves the separation of
construction from design. A main contractor is employed to build what has been documented by the
design team. The general’s contractor role is to co-ordinate and manage the construction work. They
have no design liability, although the dividing line between workmanship and design is largely to do
with who takes decisions, rather than nature of decisions. Sub-contracting of significant parts of the
work leads to extended supply chains. Payment for work in progress demands high level of financial
acumen on the part of the main contractor and throughout the supply chain. General contracting is a
response to the problem of dealing with the issues of coordinating and managing the work on site.
Design and build is procurement method in which a contractor is appointed to take on design
as well as construction responsibility. The DB contractor’s primary role is to co-ordinate and manage
the construction work as well as to take responsibility for all or part of the design work. DB contractors
tend to have the same level of design liability as the lead designer in a general contracting project. Subcontracting of significant parts of the work and payment for work are the same as stated in general
contracting. The payment mechanism could be monthly for work in progress, stage payments or a
single payment on completion. DB contracting is about integrating design responsibility with
construction responsibility.
Construction management involves a particular profile of risk and management responsibilities
that are quite different from above procurement methods. It is a procurement route in which employer
utilizes the expertise of a construction manager who acts in the role of consultant. The construction
manager is responsible for coordination and managing design as well as construction. Trade contracts
are used between employer and sub-contractors as there is no general contractor. Each trade contractor
is paid directly by the employer, involving higher degree of financial management on the part of the
client. Construction management is a solution to the need for property developers to retain control over
the risks of construction and to bring construction site expertise into design team from an early stage.
It also offers opportunities to overlap design and construction in order to speed up the overall process.
Collaborative contracting is the route to which the parties work together to deliver the project
in a co-operative and collaborative manner, in a spirit of mutual trust and respect. It involves longterm relationship, spanning more than one project. The primary responsibilities are obligations to
negotiate and cooperate at every stage. Obligations relating to time, cost, quality and default can
usually be found in collaborative contracts.
Those stated above are the distinctive characteristic features of each procurement route used
in projects.
Study of the case
This case study aims to suggest two suitable procurement methods including payment types
for major maintenance project at Yangon Technological University. The maintenance works include
overall academic buildings and it is said that the project period will take at least 3 months to 6 months.
The proposed project is refurbishment of academic buildings in campus. The maintenance works
consist of renovation of the whole building (lecture rooms, toilets and laboratories) including
demolishing old canteen, redecorating main library and renovation of student dorms. The client is the
public sector and need to spend their budget within specified time period. The next semester will
resume in 1st day of June and finish at the end of September so it is likely that fast-tracking process
may be necessary for this major maintenance project.
In accordance with the nature of proposed project and client’s priorities, the approach to
suitable methods will be made based on the criteria of procurement methods. It is also necessary for
factors of risk concerning time, cost and quality to be considered since they are key drivers of
procurement in every project.
The most significant criteria for selecting appropriate procurement method include (1)
Involvement of the client with the construction process (2) Separation of design from management (3)
Reserving the client’s right to alter the specification (4) Clarity of client’s contractual remedies (5)
Complexity of the project (6) Speed from inception to completion (7) Certainty of price.
This major maintenance project is considered to be simple and straightforward one. It is short
term project and funding for maintenance works is already furnished. Construction Management is
related with project in which technical complexities are dominant and Collaborative Contracting is
associated with long-term project. Therefore, those are the least suitable methods for this project. It is
assumed that time and cost risk are client’s high priorities. The remaining methods, General
Contracting and Design and Build may be the possible and applicable procurement routes.
General contracting demands client organizes not only funding and tendering process but also
overall control of design, construction, facilities management and operation although most of
management functions to contract administrator. Design and build does not involve contract
administrator in the same role and places extra demand on the client for their involvement in project.
If the cost of this maintenance project is based on bill of quantities, general contracting may be
the response to such need as items of works in building contracts have to be described in bill of
quantities. The maintenance works of academic buildings are considered to be in need of architectural
aspects but if the client wants design to be modest, design and build might be the choice. Design and
build contractors are typically contractors first and designers second yet this is not always the case.
When the client wishes to make changes to the specification as the work proceeds, general
contracting is preferrable as detailed clauses defining what would be permitted as a variation are
described. However, common law restricts the real scope of variations clauses to those that could have
been within the contemplation of the parties at the time the contract was formed. Design and build
contracts usually lack the detailed contractual machinery and bill of quantities for variations thus
variations are best avoided if this procurement method is chosen.
General contracting involves an organizational structure that is too complex for simple projects.
The idea of fully designing or specifying all of the work to be done before a contractor bids for it
assumes that the design is beyond the skill of contractor. In simple projects, it would be better to rely
on the skill and judgement of a contractor by utilizing design and build with single point responsibility.
For projects that are straightforward, design and build is generally used since a contractor will
be undertaking design, early assumptions are fairly safe. General contracting is a slow method due to
its need to design and specify the whole of the works before inviting tenders.
There is a huge range of price variability in general contracting because the final price depends
on bill of quantities (with quantities) or (without quantities), adequacy of initial budget, the quality of
design, etc. By contrast, design and build is a contract for lump sum for all of work required. Although
the contractor may add contingencies, final price is agreed at the beginning.
The proposed project is major maintenance project which is simple and straightforward. The
client is public sector and the project may not be design quality oriented to achieve within the approved
budget. Variations are also unlikely to be made. From various aspect of procurement options, the most
applicable method to this project would be design and build. The second suggestion is general
contracting. As for payment type, the interim payment may be applied in both design and build and
general contracting,
Advantages and Disadvantages of Design and Build
The most important advantage of DB is that the contractor is responsible for everything. This
single point responsibility is very attractive to clients, particularly those who may not be interested in
trying to distinguish the difference between design fault and a workmanship fault.
As the contractor does not have to rely on other firms such as architect for the execution of
design or for the supply of information, the speed of the project is likely to be quicker.
Cost certainty for the employer is one of advantages of DB. It is a fixed price contract so the
risk associated with pricing is entirely the contractor’s, except to the extent that fluctuations clauses
may apply.
One of the strengths of DB is that the contractor’s proposals will include design solutions to
problems posed in the employer’s requirements. Here contractors are competing not only on price but
also on any criteria the client thinks important. This may present opportunities for making the level of
accommodation, for example, the selection criteria, where a client can put forward a budget and ask
the bidders to demonstrate how much construction they can supply for the money.
One of the biggest disadvantages of DB is that employer’s requirements must be very clear and
unambiguous. Also, they should not be subject to change during the project.
If the need for changes occurs during the construction stage, one response of the employer is
to consider allowing the DB contract to be completed on its original basis, making variations the
subject of additional contracts after the conclusion of the project. The limited scope for variations and
changes is thus a weakness of the DB process.
Another disadvantage of DB is where there is a conflict between aesthetic quality and ease of
fabrication, the requirements for fabrication will dominate. A further criticism has been that a DB
contractor will put in the minimum design effort required to win the contract, or will suggest design
changes during the project with a view to saving costs and, in the process, maximizing profitability.
These two criticisms suggest strongly that quality, particularly architectural quality, will suffer under
this procurement process.
There are opportunities to overlap the design and construction processes and early start on site
can be made since the contractor is undertaking both design and build work. However, the benefits of
fast-tracking process in DB could give the same penalties. The overall construction process can be
speeded up by not delaying construction until the whole design is completed but too much overlapping
will rise to the problems from the need to revise early design decisions. If the project has already
started on site by the time that these revisions are made, work may have to be undone before further
progress can be made.
Advantages and Disadvantages of General Contracting
One of the advantages of general contracting is that client has greater control of design as the
preparation of design involves an intensive and comprehensive dialogue between client and design
consultant, in the context of project’s environment and employer’s circumstances and needs.
Since all contractors are given the same specific brief in the tender pack, traditional
procurement leads to a greater level of competitive equity during the tendering process. This also
allows for a clearer cost comparison between tendering parties and since the prices are based on a
specific design there will be greater accuracy as well as price certainty. This leads to a greater
understanding of proposals. If the design is fully scoped before tendering then greater cost certainty is
achieved.
Another benefit for the traditional route is the degree of flexibility it affords clients, with any
changes or variations relatively easy to arrange and manage, even post tender. These factors all
contribute to a finished project built on design collaboration between client and design team where the
client has been involved in a lot of the detailed decisions throughout.
The disadvantage of this traditional method is that disputes can arise on where the fault lies for
defects due to split responsibility of design and construction.
Its another downside is that construction life cycle is elongated as the client has to engage
multiple parties (design consultants, quantity surveyors and contractors), and ideally the design needs
to be complete before engaging a contractor.
If design is only partially completed, general contracting begins to break down because it is
based on the assumption that the contractor calculate prices, and builds, what has been documented.