Comparison, contrast and description of the three modes of procurement of the construction projects
Choosing the best procurement method important for the success of the construction projects. It is a methodological calculation of risk by analyses of the strengths and weaknesses of each of the methods in the construction industry. The industry and stakeholders must carefully evaluate them as well.
There are many types of procurement available for the clients. Some of them are Design and Build, Job Order Contractor (JOC) and Best Value Source Selection etc. They have their strengths and weaknesses. The selection of the absolute methodologies of procurement in the construction industry is difficult as the clients who are aware and have knowledge do not know about the benefits and risks of each method in an appropriate manner (Jato-Espino et al., 2014).
So, in this regard, the industry and researchers have targeted on mitigating the risks through creative methods of procurement in the construction industry.The complications of the projects are impacted by many features such as finance, ground conditions, availability of labor etc. So, this report is targeted towards the three modes of procurement in the construction projects along with analyses of their impact on the parties participating in their project. The recommendations regarding the best-suited projects for the modes of procurement shall also be suggested.
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Particulars |
Job Order Contracting(JOC) |
Design-Bid-Build |
Best Value Source Selection |
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Explanation |
The public agencies are allowed to execute the job order contract with the contractors. It demands the availability of contractors on call for different projects during the contract term (Ameyaw, Mensah and Osei-Tutu, 2012). |
The contractor is accountable for the design and construction of the building. |
The contract is awarded to the offeror having the best combination of qualifications pertaining to price and performance. |
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Comparison |
This method is related to the issuance of a request of qualifications. The contractors respond to them by providing their qualifications and booking their tenders for prices of the labor and materials which are to be supplied per order of JOC. |
It is a traditional approach that aims at securing the best price of the construction project (Hardin and McCool, 2015). |
The values are examined through multiple and weighted criteria to be judged by a panel of evaluators. |
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The contractor’s qualifications are verified by the agency selecting the contractors that are most qualified regarding the submission of the proposals for each of the projects. |
The bids are invited from the contractors and the design packages are advertised (Cheong Yong and Emma Mustaffa, 2012). |
The panel analyses the non-price criteria and their importance that is based on the context of bid i.e. variety of project, scale and date of completion. |
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The price of labor, material, and equipment is assessed with the help of book price identified through the request of qualifications. The overhead cost related to the contractors is assessed with the help of an agreement that is executed by the contractor (Cheng, 2014). |
On the day of the opening of the bid, the contract is awarded to the lowest responsive bidder. |
After the contract is ascertained in the best value, the panel analyses the action plan of the contractors. In this process, the proposal is put into the contract with the quoted price of the contractor. The contractor authorizes the contract so that he can execute the project. |
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Contrast |
It is a method of the delivery of the tasks including those that are repetitive in nature. |
It is the single point responsibility pertaining to the design and construction. |
The contractor is accountable for the completion of the project through the elimination of the delays and establishment of healthy relationships with the sub-contractors. |
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The work authorizations are issued for different types of work. There is a customization of designs so that necessities of the stakeholders can be met. |
The contractors are permitted to initiate their activities on site before the design is completed (Doloi, 2012). |
In this method, the contractor acts in a dynamic role to make the project successful. He is bound by his duty to successfully deliver the project. |
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The employer does not involve himself with the JOC contractors. Its scope is exclusive to the contractor. |
There is an option for the employer to engage with the contractors in the designing process to get a more practical solution (Weisheng et al., 2013). |
The initiation of the control and management of the project is done from the planning stage through the panel of evaluators assessing the project. |
The advantage of the Job Order Contracting (JOC) mode of procurement for the construction project can be that they can promote the interaction between the owners and contractors related to the phase of designing and construction. They can accelerate the pace of reconstruction. The criteria of pricing to be adopted in the method are constant, objective and firm.
The disadvantages can amount to a lot of investment to be done in the project development process and estimating methods of the line items in order to make the JOC program a great success. Also, there is a requirement of proper training and support to be provided by the consultants that require a huge amount of investment in the starting phase.
Another disadvantage can be the owners from the community of the contractors can face resistance because often the JOC method is observed as a fading opportunity of the contracts (Díaz-Yáñez et al., 2013).
The various parties involved in the Job Order Contracting (JOC) are the clients, contractors, authorities related to the building of campus and campus fire marshals. The possibility of JOC is limited to the contractors. The contracts of the job order are well described and there is no involvement of repetitive work when quick execution is necessitated at the sites. JOC attempt to create a win-win relationship amongst the contractors, owners and users of the building.
Positive and negative aspects of the various procurement methods for construction projects
There are shared rewards and risks in JOC and the cooperation amongst the internal and external participants is required with an emphasis on its results (Ruparathna and Hewage, 2015).
The advantage of the Design-Bid-Build method for procurement of the construction is that the owners allow the contractors to manage the cost of the project. This method of procurement provides a useful route for the developers in the project. According to this method, the contractors are responsible for designing and construction of the project at the agreed price.
The owners and developers agree to a specified design mutually but after the authorization of the contract by the contractor, he shall be accountable for the contract. There is also a possibility of reduced time in the construction methods. If the contractor is responsible for the designing phase as well, then a lot of time is saved as both the components of designing and construction are executed in a concurrent manner (Hughes, Champion and Murdoch, 2015) .
The disadvantages can be that if the contractors have been granted the liberty for designing the base of building at a pre-determined price then in case if there is no increase in the costs, they would be working at the lowest probable specifications. Furthermore, the builders are not architects. Therefore, there are chances that the designs are not in accordance with the specific set of skills.
The parties involved in the Design-Bid-Build methodology are engineers, contractors, architects, and owners. The parties involved in the construction project are of the opinion that this method has a crucial impact on the dissemination of risks amongst the parties. This method attempts to mitigate the risk of the owners by accelerating the risk of the other members of the team (Porwal and Hewage, 2013).
The concept of distribution has also been applied to the allotment of the accountabilities as well. There are chances that the owner might lose the control over the details of the design whereas the entity that has adopted the approach of Design-Bid-Build may acquire some authority on the decision making of the project. The key success factors in this method are the owner’s commitment towards the project and the communication initiated amongst the owners (Masterman and Masterman, 2013).
The method of Best Value Selection can be applied when it is necessary to evaluate and contrast the features along with the costs involved in the selection of the most advantageous offer. When the government demands high technical capabilities and low costs, then this method is best suited as the most hopeful procurement mode of construction (Ng, Luu and Chen, 2012).
Advantages and disadvantages of the Job Order Contracting (JOC) mode of procurement for the construction project
It is the most wanted methodology when the specifications by the government are difficult to describe or are of troublesome nature. Therefore, it permits a greater amount of flexibility for comparison of the technical and cost factors for the determination of the values of the strengths, weaknesses and risks contained in the offers. It is also benefitted by the experience and independent judgment of the judging panel (Akintoye, Goulding and Zawdie,2012).
The major disadvantage can be that the criteria for evaluation do not appropriately reflect the requirements of the administration. The choice of the inappropriate criteria can lead to monetary benefit for the offeror that might prove to be disadvantageous for the government. Moreover, a large number of criteria overrule the consideration for the parties having significant interest.
The coordination and cooperation are required amongst the various members of the team to ensure consistency in the Best Value Source Selection. The main stakeholders in this regard are contractors and government. As per this method, the award is being considered by the government which is other than the lowest priced offeror or other than the offeror of the highest bid price. It forms the basis of the method which represents the greatest value to the administrating authority (Chasey, Maddex and Bansal, 2012).
Some of the recommendations are for the potential developers or owners pertaining to the projects, which are best suited for the different procurement modes of construction as, mentioned above.
The projects which are best suited for the Job Order Contract are preventive maintenance contracts of Intelligent Transportation Systems.The other projects can include maintenance of property of the army. The integrated delivery of the projects for the renovation and repair of the newly started constructions and job order contracting to form the examples of delivery methods of construction. It enhances the productivity, quality and satisfaction of the stakeholders.
The projects that are best suited for the Best Value Source Selection can include infrastructure projects owned by the government and highway construction projects. The best value procurement methods are applicable in alignment with the traditional design-bid-build mechanism for the infrastructure projects owned by the government. Recently, it is acquiring a lot of interest from the state and federal agencies (Fellows and Liu, 2015).
Disclaimer: There is no conflict of interest in the views expressed by the author.
Conclusion:
This report can be concluded by stating the fact that the determination of the optimum mode of procurement has proved to be a challenge for the various stakeholders. They contemplate on a variety of methods of procurement that are at their disposal. For assisting the clients of the public sector regarding the process of decision-making, a group of stakeholders can be involved for development of an approach for determination of a resolution for their necessities.
The relationship between parties involved (benefits and problems)
In this regard, some of the techniques have their own advantages but sometimes they are inflexible so they fail to assess the complications associated with the process of selection. Many stakeholders are involved in the process of decision making. The decisions would be dependent upon the interaction of the variables that are assimilated with a high degree of subjectivity and judgment.
The projects related to architectural services and engineering, construction software and engineering cater to the mode of Design-Bid-Build . The civil engineering and construction projects are also assimilated in this mode of procurement. The systems related to the energy mechanisms pertaining to the whole building are other types of projects that are appropriate for the Design-Bid-Build Method.
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