Different procurement method for the construction projects
This report depicts the crucial importance of using the concept of procurement management for accomplishing a construction project based on “building Information Modeling (BIM)” within estimated budget and allotted time phase. The specific system chosen for this is the application of BIM in the construction projects. Different procurement methods are there and based on the construction requirement the most suitable method should have to be adopted by the project associates.
The process of procurement can be defined as a key factor that helps to run a company successfully and also helps to meet the business goals and live up the expectation of the stakeholders (Hornstein 2015). The benefits and problems of procurement methods are all elaborated in this report including a contrast and comparison. Apart from this, all suitable ethical considerations must not be compromised while implementing the procurement method in the BIM based construction project.
Procurement management is referred to as a systematic approach that is utilized for buying products and avail services required for the projects being sustainable. Appropriate business values will be added to the business prcatices if the project manager successfully manages the procurements (de Carvalho, Patah and de Souza Bido 2015). It has been found that professional business practices can save both the money and time of the projects. The aim of any successful procurement method is to deliver continuous improvement direction to the business by integrating some actions like planning, alignment, procurement and manage. The different procurement methods are elaborated in the below section:
Small purchase
It is found that, whenever the construction related project services are all aggregated values and less than $150,000 (for profit, public and non-profit) then only the construction projects should adopt and use the idea of this procurement method (Papke-Shields and Boyer-Wright 2017). The construction project manager will be able to obtain competitive quotation of price from the sellers as soon as the purchasing agent contact three raw material and other service suppliers who are known to them. Different from the sealed bidding in those cases where the bid price should be considered final, price negotiation and the more of suppliers contracted gets permission. The written contact details and all other information as well as prices should be demonstrated in the files of the purchase agents. It is the role of the construction project head to convey all the information to the rest of the project suppliers regarding the purchasing agents file (Nojavan, Zare and Mohammadi-Ivatloo 2015). For bringing individual purchase that is lesser than the ordered purchase of $150,000, different small purchase method are not measured as accurate.
Recommended procurement method
Competitive sealed bidding
Whenever the expected procurement is found to be more than $150,000 in aggregated values the services and products related to the construction projects then only this approach should be selected. Based on the price the procurement should be designed. In order to conduct a sealed biding the steps to be followed include bid specification preparation, procurement publicizing opening of the bid and contract awards (Pheng 2018). Based on the specific requirements of the contract the IFB should have to be approved by the contractor of the construction project. As it is difficult to send the IFB to all the associates therefore, it is acceptable to rotate the supplier’s lists. For the successful publicizing of the procurement a formal advertisement should be processed by the construction project manager. As per the competitive market analysis it can be said that, a low bidder must be awarded till the bidder is found as a non responsive one. Moreover, it can be said that this kind of contracts are always requires to be well documented.
Non-competitive negotiation
This particular procurement process will be referred to as a valid one whenever, any natural disaster committee prevents or the delays the publicizing process. Not only for this case but also for the services and products which have only one source his particular approach of non competitive negotiation is applicable (Heldman 2018). The contracts have more than $150,000 utilizing the non competitive negotiation should approve the contract.
All three of these procurement methods have some negative influence and the competitive negotiation will be appropriate whenever the procurement is predictable to be more than $150,000. This is the most suitable recommended procurement methods among the different. The complex technical nature of the procurement document can be completely resolved with the successful implementation of the competitive negotiation approach (Papke-Shields and Boyer-Wright 2017). For the factors such as research, development etc this procurement approach is suitable enough. The steps that are to be followed accordingly for the successful delivery of the competitive negotiation are as follows:
- The RFP prepared by the contact agency should represent the requirements and the objectives clearly to the rest of the project associates
- The procurement approach is formally advertised as well as the RFP’s are sent to the suppliers who are known to the contractors. The formal details of the advertisements are comprises of name, address, contact details, contract requirements and other bidding requirements. If any new amendments are allowed to the existing IFBs then the other should be informed about the details (Nojavan, Zare and Mohammadi-Ivatloo 2015).
- Where the bids are to be submitted are all stated through the functional product specifications. The details of the legal notices are all delivered and edited through the help of the project procurement planning.
- Whether a newly prepared bid is acceptable or not from the project perspectives are measured and evaluated through the project procurement method.
- In order to make any specific bid price contingent well as conditional over the rest of the factors authorization is requires (Ahmed 2015). The benefits and the problems associated to this factors are illustrated in the below section.
While using the concept of the procurement management different challenges and benefits may rise and those are illustrated as follows:
Benefits:
In case of documented design procurement method, the project owners are responsible to procure the design which is completely suitable to gain statutory construction and development objectives. The design can be protected successfully with a lower level of risk margin from the builder’s end. In addition to this he rate of price can be easily compared through procurement method.
Benefits and problems for the clients
A project compliance risk regarding construction designs always provides higher value opportunities to the builders (Morozov and Liubyma 2016). The successful and buildable design allows the builders to start the constriction before the completion of the deign details.
Another advantage for procurement method is that, for the foregoing method a lowest rate of investment is require. It can give accountability due to competitive selection and at the same time competitive equity can also be generated due to the contractors bidding. Again the manageability and arrangement for necessary variation and changes will be defined as relatively easier.
Problems:
- The design document method requires huge capital investment as well as risk management program to resolve the operational challenges. The project cannot be commenced until the successful completion of the document. If risks errors are not re-set then that may cause project errors.
- It has been analyzed that currently the process of procurement management is facing increasing numbers of complexities. In order to produce full documentation for the contract is timely in manner. Improper and incomplete design planning can lead to massive project level disputes.
- If in the project design and development phase any additional changes are needed then incorporation of those changes may interrupt the project success.
For successful procurement management risk is a serious factor, which is one of the basic concerns for the construction project managers. The preliminary financial status of any project must be focused by the project manager (Dalcher 2016). For a successful industry prcatices these are to be well managed. If the project heads fail to establish a strong relationship along with the tier one suppliers then
During the progress of any construction project it has been found that, tendering process for most of the major contracts gives huge set of opportunities to the project owners. It is the role of the clients to grab advantages from these opportunities. It is found that, streamlined project procurement can lead a project towards enhanced business efficiency as well as lowering cost also. At the same time in order to establish competitive business advantages, the contractors utilize their experts throughout (Yakovlev et al. 2016). Moreover, it can be said that the successful procurement method can deliver competitive advantages, economic efficiency and transparency at the same time. For making successful decision for the construction project tender and design bid build are the methods to be considered. In order to choose suitable contractors for the projects floating tenders should be chosen after getting approvals. The issues of time and cost management get minimized as soon as proper project procurement method is applied.
On the other hand, different negative aspects are also associated to the construction procurement method such as intense competition can raised in the global market of construction. Nontariff barriers as well as enhancing trends towards the integral service are the other negative aspect for the procurement management method (Nojavan, Zare and Mohammadi-Ivatloo 2015). This approach has relatively low managerial capabilities. Many consequences are also associated to bad project procurement methods. Both short term as well as long terms problems can occur with an implementation of bad procurement method. It is the responsibility of the project manager to make sure that the mist suitable and appropriate method of procurement is being selected for accomplishing the project.
Risk management
The stakeholders associated to the project are required to be more focused to their job roles and it is their responsibility to accomplish their assigned jobs within the estimated time and budget (Sorunke, Omojola and Adeleke 2016). If the project manager and project team members fail to do this then the designed objectives and framework will not be meet accordingly. For different project activities separate stakeholders should be assigned depending on their skills and knowledge. The association of the stakeholders to the project activities is elaborated in the below section:
|
Name of the stakeholders |
Interest |
Medium |
Purpose |
Roles and responsibility |
|
Project manager |
To accomplish the project by meeting the project objectives |
Email, face to face meeting and presentation |
To submit the final procurement plan |
To control and monitor the project progress |
|
Finance manager |
To make feasibility analysis of the project |
Email, face to face meeting and presentation |
Company’s standard documentation presentation |
To develop the budget of the project based on project specifications |
|
Architect |
To design and develop the blueprint of the project |
face to face meeting and presentation |
Blueprint of the construction site |
To design the outline in such a way so that it can attract the consumers |
|
Contractor |
To coordinate the project with the objectives and other specifications |
face to face |
Successful bidding |
To gain competitive advantage and commercial success |
Conclusion
From the overall discussion it can be concluded that three different procurement methods selected for this project are competitive sealed bidding, small purchasing and non competitive negotiaton. A modern process of procurement is recommended for the selected system. It is expected, that if the position of the stakeholders are properly presented for the selected project then, the project will be a successful one. It can be said that the issues associated to three of these procurement methods are resolved with the competitive negotiation procurement approach. This report also elaborates the profit and losses related to project procurement method. Expect the mentioned three procurement method the construction project manager and the contractors should utilize the process of competitive negotiation procurement approach to avoid further business clashes and financial losses. Not only this but also the ethical obligations that are to be considered by the project manager of the construction project are also illustrated in this project.
References
Ahmed, J.U., 2015. Determinants and constraints to effective procurement management in government projects: a practitioner’s perspective (Doctoral dissertation, BRAC University).
Dalcher, D., 2016. Thinking in Contracts: the role of intelligent procurement in projects. PM World Journal.
de Carvalho, M.M., Patah, L.A. and de Souza Bido, D., 2015. Project management and its effects on project success: Cross-country and cross-industry comparisons. International Journal of Project Management, 33(7), pp.1509-1522.
Fuller, M.A., Valacich, J.S., George, J.F. and Schneider, C., 2017. Information Systems Project Management: A Process and Team Approach, Edition 1.1. Prospect Press.
Heldman, K., 2018. PMP: project management professional exam study guide. John Wiley & Sons.
Hornstein, H.A., 2015. The integration of project management and organizational change management is now a necessity. International Journal of Project Management, 33(2), pp.291-298.
Morozov, V.V. and Liubyma, I.O., 2016. The integration models of procurement management of hybrid projects in development of project-oriented enterprises. Bulletin of NTU” KhPI”. Series: Strategic Management, Portfolio, Program and Project Management, 6(2 (1174)), pp.22-25.
Nicholas, J. M., & Steyn, H. (2017). Project management for engineering, business and technology. Routledge.
Nojavan, S., Zare, K. and Mohammadi-Ivatloo, B., 2015. Stochastic energy procurement management for electricity retailers considering the demand response programs under pool market price uncertainty. Majlesi J. Energy Manag, 4(3), pp.49-58.
Papke-Shields, K.E. and Boyer-Wright, K.M., 2017. Strategic planning characteristics applied to project management. International Journal of Project Management, 35(2), pp.169-179.
Patel, T., Rathod, H., Sharma, N.D. and ME, I.Y., 2016. Analysis of parameters affecting material procurement in construction industry.
Pheng, L.S., 2018. Project Procurement Management. In Project Management for the Built Environment (pp. 177-193). Springer, Singapore.
Sorunke, O.A., Omojola, O.S. and Adeleke, E.O., 2016. The Imperative of Risk Management Plan in Curbing Corruption in Public Procurement System in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6(2), pp.134-139.
Yakovlev, A., Vyglovsky, O., Demidova, O. and Bashlyk, A., 2016. Incentives for repeated contracts in public sector: empirical study of gasoline procurement in Russia. International Journal of Procurement Management, 9(3), pp.272-289.
Yan, M.R., Chien, K.M. and Yang, T.N., 2016. Green component procurement collaboration for improving supply chain management in the high technology industries: A case study from the systems perspective. Sustainability, 8(2), p.105.
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