Key procurement issues 1

Key procurement issues associated with the multi-phase retail complex

Students Name

University/College
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In construction management, a project is considered successful if the building is

complemented within budget, as scheduled and maintains high-quality standards. It should also

fully satisfy the needs of the client, in this case, Tower Developments. However, these variables

have become increasingly difficult to achieve. This arises from the procurement method applied

in construction. The multi-phase retail complex can be faced with a variety of issues. Choosing

an appropriate method can prove beneficial to the success of the project. This report will detail

the issues that arise, and will analyse the procurement options available for Tower developments

(Naoum & Egbu, 2015). Finally, it will offer a recommendation for the best procurement

approach that can be used for development of Eccles Retail park that will occur in three phases.

Supply chain

This is defined as the efforts in constructing and delivering the product from the supplier

to the consumer. It entails the transfer of expertise between different parties and the minimisation

of costs involved during the process. Supply chain risk is issue will arise in the procurement

processes of coffee shops and retail units. This arises when the company relies on a single

supplier. This is often the case when the supplier provides the essential resources on the

procurement list such as cement, timber and plumbing materials. In this regard, the project may

fail if the supplier faces an issue such as the company failing due to financial issues. The current

procurement approaches do not detail the organizational framework to deal with fragmentation

and cultural problems in the building process. A suggested strategy to address this problem is by

grouping using technology clusters. The building can be divided into three clusters such as sub-

structures, vertical service finishes and horizontal service finishes. This allows the input of the

correct information from consultants and specialists at the right level and time. It also details that
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the building services is a discrete variable in need of a specific programme. This would improve

interaction between the different stakeholders (Knight, et al., 2012).

Technology and innovation

Innovation entails the use of new solutions in the construction of retail units and coffee

shops. This has become the norm for many construction companies due to pressure from clients

to reduce costs, improve quality and reduce the time taken to finish a project. This issue will

affect the project, and could be a setback to the achievement of the project objectives. Lack of

innovations and technology should lead to higher costs when compared to current methods.

Furthermore, it will also lead to an increase in time for completing the project, and this is a

setback to performance (Naoum & Egbu, 2015). In this regard, the construction might not

exploit or use the resources available. In this context, the construction can be faced with various

barriers to innovation. This will arise if the organisation cannot expand its expertise. This will

mean that the strategies in use would be inefficient, and the project would not meet the demands

of the client.

Lean construction

The lean techniques are considered as a method to improve production in the construction

of coffee shops and retail stores. An issue is a lack of integration between the design and delivery

of the project. This is an issue that arises from the organization of the teams involved in the

project. The lack of cooperation between all the stakeholders in the project would be a setback.

In the current context, the third phase will utilize a different operator for external works. An

issue would arise where the external operator does not cooperate. It would be impossible to meet

the needs of the clients or manage the flow. Furthermore, lack of constant improvements will
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mean that the project will not achieve high standards (Mead & Gruneberg, 2013). Considering it

is a multi-phased project, it will be impossible to reduce waste and enhance customer value.

Furthermore, cultural and organizational barriers will arise, and this will limit the interaction

between the stakeholders involved.

Value management

This issue often arises. It means that the project could be unable to deliver the required

functions. This occurs when the project has limited finances, but the outcomes are unreliable, of

poor quality, and the performance is low (Morledge & Smith, 2013). Due to the limited finances

that have been estimated, the project may be unable to deliver the required functions. The lack of

an integrated management oriented approach would mean that some elements that lead to

unnecessary costs would rise. These features are not beneficial to the construction project and do

not provide neither use, quality, appearance, life or even meeting the client needs.

Constructability or buildability

Naturally, when a design is buildable, then it would lead to cost and time savings. This is

an important issue in the construction project. It arises from the confrontational attitudes between

consultants, clients, and contractors that often arise under the traditional procurement approach.

Improving buildability would lead to performance improvements. The continued use of the

traditional lump sum is a setback to technological innovation (Naoum & Egbu, 2015).

Furthermore, it affects the constructability and design of the multi-phase building. In this

context, it depends on whether the design is feasible, and can be achieved. Specifically,

buildability issues that can arise include cost overruns, delays and even errors in the construction.

Procurement options
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The procurement strategy is essential in realizing the goals of a construction project. The

procurement options often take entail minimising costs over the entire project life cycle. An

efficient procurement approach achieves a balance of control, funding, and risk of the project.

Three procurement options can be used in the construction.

Traditional

This approach entails the contractor undertaking the project that is based on the designs

provided by the client and their design team. The is one of the most popular forms of

procurement strategy in many projects. The client employs and manages the consultants who are

involved in various aspects of the project such as cost control, contract administration, and

design. The client is also tasked with directly appointing the main contractor who will deal with

the activities of the project (Russill, 2010). The contractor is also responsible for the materials

and workmanship. It does not matter whether the contractor decides to subcontract some aspects

of the work to others.

In this strategy, the entire set of documentation of the activities to be completed must be

ready before the invitation to tender (ITT) has been sent out. The consultants are involved in the

design. Moreover, some aspects of the design are the responsibility of the contractor. The client

has direct control over the design and is responsible for the quality standards. In a context that

the contractor has been provided with the entire design information in the ITT, the employer will

have to cater to the entire costs (Knight, et al., 2012). This is subject to new demands after the

start of the project. The delivery of instructions and information between the team, employer,

and contractor, are essential to avoid any delays in the project.

Design and Build

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This approach involves a contractor that designs or finishes the design of the project and

builds it based on the clients specification and brief. This provides an opportunity for the

contractor to apply their experience and reduce the costs of the project. The value of the project

is not affected. This is often known as a turnkey in a context where the contractor operates the

facility or purchases the site. This is not popular in comparison to the traditional approach. This

method is realised in a variety of ways. The scope of the design that is allocated to the

employers team influences the level of design responsibility that lies on the constructor. The

design and build contractor will move from concept design, detailed specifications and outline

plans (Russill, 2010). In this context, the contractor can choose to tender, and this relies on

construction responsibilities and if the design has been complete. Essentially, this will have an

impact on the contractors design requirements as outlined in the main contract. The contract

limits the contractor's role in the design. This means that the contractor is not considered as the

single point of liability for construction and design.

Management approach

This is a method where the contractor is replaced with a manager. The manager offers

administration and coordination skills, and the actual project is carried out by specialists and sub-

contractors. This approach sought to deal with particular risk transfer issues. It shows the rise in

fragmentation in the construction industry. In this case, the contractors are not involved in

employing their personnel. It also leads to speeding up of construction processes and project

procurement. The management approach exists in three forms. These are prime contracting,

management contracting and construction management. A standard feature of this model is that

the manager is determined due to reputation or experience in managing the construction process
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(Mead & Gruneberg, 2013). It does not simply depend on the construction experience.

Furthermore, the manager is not involved in any construction or design work.

A major limitation in effectively using the management-based procurement is that

advisers and clients often change the provisions of the standard form contracts. This is done to

represent a risk balance and is comparable to traditional contracting.

Conclusion

Project management is a complicated process. There is a myriad of procurement issues

that will face the multi-phase retail project that Tower Developments wants to develop. This

includes innovation, supply chain, buildability among others. This can be a setback to the

completion of the project. Several procurement options are used in a project. These include

traditional, design and build and management approach. They all have some benefits and

setbacks. They can prove beneficial to the success of the project. The traditional approach is the

most attractive option. Many projects have used the options detailed above, but the success is

sometimes not guaranteed. While some projects will be successful and the traditional approach,

others would fail. However, these methods provide effective procurement options.

Recommendation

The recommended procurement systems that would be effective for Tower Developments

is the management approach. This arises since Tower Developments will have authority over the

process that begins with the employment of the personnel such as the manager. This is an

effective approach for the multi-phase project. The client also controls the agreements with the

trade contractor. This allows for improved price and financial controls. However, the client

retains the agreement risk of non-performance of the trade suppliers. Furthermore, the process
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would mean that the client has a means for getting into direct contracts with trade suppliers and

for the regular payments to several specific contractors. This is the best choice and is cost

efficient for the client (Naoum & Egbu, 2015). Furthermore, integration occurs between the

construction process and design process. It leads to improvements in quality. Furthermore, it is

possible to integrate alternative and innovative innovations into the construction. The client also

has full control of the outcomes of the planning team. This leads to improvements in quality, and

would ensure that the project meets the needs of the client.

The management approach is also time-efficient. Due to the integration of the

construction and design process, the period before the begging of the project can be significantly

reduced. Even though precaution has to be taken due to the flexibility, the on-site demand can be

prolonged if the client does not make decisions quickly. This would be a setback to the project.

However, the time used would be minimal if the client makes decisions swiftly (Morledge &

Smith, 2013). This will ensure that the total costs will be within the estimated limits. In this

regard, the management-based approach is the best choice to ensure that the project is completed

on time and is of high quality.

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Bibliography

Knight, L., Harland, C., Telgen, J. & Thai, K. V., 2012. Public Procurement: International

Cases and Commentary. 1st ed. New York: Routledge.

Mead, J. & Gruneberg, S. L., 2013. Programme procurement in construction: Learning from

London 2012. 1st ed. Chichester, UK: Wiley-Blackwell.

Morledge, R. & Smith, A., 2013. Building Procurement. 2nd ed. Somerset: Wiley.

Naoum, S. & Egbu, C., 2015. Critical Review of Procurement Method Research in Construction

Journals. Procedia Economics and Finance, Volume 21, pp. 6-13.

Russill, R., 2010. A short guide to procurement risk. 1st ed. Farnham: Gower.