Report on Procurement Process for Holiday Development

Report on Procurement Process for Holiday Development1.0 first appearanceThis report has been prep bed to discuss the procurement options available to All Star Property Development for the proposed holiday development in Tring.2.0 Project Details2.1 broadlyThe project comprises the provision of a holiday development comprising inexpensive holiday lets, club house and shop. Work to include modular unit accommodation, with all opinionated fittings, furniture and equipment included within the strike including kitchen units and appliances.All loose furnishings and furniture will be down to the client following completion and handover over the project.2.2 budgetThe construction budget is currently approximately 2million.2.3 ProgrammeThe project programme anticipates completion May 2011 with a construction period of approximately 11 months.The whole kit and boodle are therefore expected to commence June 2010.An excelerated programme would be considered for an earliest opening for Eas ter 2011. originationThe programme is at a RIBA stage C.The achievement of the traffic pattern development is subject to discussion and the procurement route decided upon but, is currently envisaged that it will be beyond RIBA work stage D in order to achieve the programme stated above.Procurement MethodsDue to the budget, it is felt that the procurement routes suitable for this project are handed-downDesign and Build3.1 TraditionalThe invention and construction are generally deemed to be separate activities. Full documentation is necessary for tendering purposes, including that from specialist subcontractile organs where appropriate and adequate time is needed for the dressing of this.The method of reimbursement is commonly expected to be a lump sum pedestal. The procurement method can however be used in a wide range of situations including a measurement or personify plus contract.In theory, therefore should reasonable cost certainty on construction be in a lump sum contrac t, however, cost increases can result due to a client changes, inadequate design and poor asseverator performance.Advantagesi) Tenders are on a like for like basisii) Scheme fully pre-designed and specifiediii) Early commitment to priceiv) Provides contractually agreed prices for valuation of variations, cost admit and analysisv) Standards are easier to controlvi) Direct employer relationship with designers.Disadvantagesi) Longer procurement timeii) Split responsibility between construction and designiii) limited risk transfer.3.2 Design and BuildA method where the contractor is responsible for undertaking both the detailed design and construction of the work in grant for a lump sum price. there are variations on this option depending on the degree to which initial design is included in the clients requirements.The extent of control over the design is restricted once the contract is let since the contractor assumes responsibility once appointed. Some of the risk associated with this can be mitigated by a lesser extent by the novation of the original design team. The design and construction can generally proceed in parallel resulting in the boilersuit programme time being shortened.Client changes in design specification can be made during construction although are more difficult to accurately agree on costs.Advantagesi) Transfer of risk to contractor (but non usually all risks)ii) Design is in competition (unless ii-stage see later)iii) Maximum overlap of design and constructioniv) Construction expertise available for designv) Early commitment to maximum pricevi) Less construction information required from client.Disadvantagesi) Tendering expensive to contractorsii) Design not fully developed at tender stage, uncertain of final exact details until construction do itdiii) Best designer is not unavoidably best builder and vice-versa (unless client team is novated)iv) Design liability can be limitedv) Standards can be difficult to controlvi) Variations ca n make water greater consequence on costvii) Normally only the minimum is provided to satisfy the Employers requirementsviii) Premium for assumption of risk payable.3.3 Variants on Procurement ProcessThere are refinements or variations on the procurement options described previouslySingle stage discriminating tendering 2 stage selective tenderingNegotiated tendering3.3.1 Single stage selective tenderThis form of tendering occurs when the client wishes to obtain the most competitive price for the project. This method will only be successful where the design is substantially complete for the type of contract being proposed, ie. design and build or traditional as any incomplete elements of the design will lead to post contract variations and additional costs.In using this method, the client seeks tenders usually from three to six pre-selected competent contractors issuing detailed tender information, whether it be performance specifications for a design and built route or full detail ed bill of quantities for a traditional route. Tenders are returned and assessed under competition, with a contractor being selected on the basis of who best meets the evaluation criteria.Advantagesi) Most competitive price achievedii) The client retains greater control of design andiii) Increased cost certainty at signing of contract.Disadvantagesi) The contractor is not able to share its construction expertise at the design stageii) Increased programme requirements to produce the full design in levy of tender andiii) Possible cost increases and variations are likely where the design is incomplete or erros have been made in design.3.3.2 Two stage selective tenderingTwo stage tendering is best suited where the client requires a competitive price but in particular requires early contractor involvement. The client will vent tenders with limited preliminary information (usually preliminaries, provisional sums, early work packages) and a schedule of rates for the areas where the desig n is incomplete. Tenders are returned and assessed under competition, with the contractor being selected on the basis of who best meets the evaluation criteria. As the works progress, the schedule of rates is sued to complete the pricing of the design.Advantagesi) Allows early startii) Allows the contractor to have input into design and construction techniquesiii) Greater programme certainty as risks and identified early andiv) Can build trust between client and contractor.Disadvantagesi) Possible increase in construction costs due to lack of competition on tenderingii) A risk to programme if negotiations fail to meet targetsiii) Less cost certainty if early site start is preferred.4.0 Evaluation of Procurement MethodsThe chosen procurement method is determined by the Clients approach toCostProgrammeDesign and build character4.1 CostCost is a decisive factor with the client seeking cost certainty at an early stage.However, a fixed price not the only factor as value for money, scope for variations and accountability are feature in selection.4.2 ProgrammeAs stated in section 2.0, the completion is required for May 2011 with a start on site date of June 2010.Assuming RIBA work stage typical lead-in periods for tender document preparation, tender, contractor selection and mobilisation for the various procurement options are given below1. Traditional 6 months2. Design and Builda) individual stage 5 monthsb) two stage 3 months4.2 Design and Build qualityWhilst the quality of the design and the building works is view as important, achieving value for money will repose fundamental.An evaluation matrix based on interpretation of All Star Developments expectations is attached at appendix 1CostTimeQuality5.0 testimonialBased on the evaluation matrix the following ranking is achieved1. Design and Build2. TraditionalAs cost certainty is paramount a single stage process is recommended.