CRITERIA OF CHOICE FOR PROCUREMENT METHODS
Prof. Peter Hibberd Dr Ramdane Djebarni Centre For Research In The Built Environment University Of Glamorgan, Pontypridd, Mid Glamorgan CF37 1DL, UK 1.
Over the past fifteen years much work has been done on attempting to define procurement paths and Masterman (1992) provides a good background to some of this work. As the traditional procurement route came under closer scrutiny other procurement routes developed and consequently means for selection were considered. In 1985 NEDO set out general requirements for the selection of a procurement path and others including Skitmore and Marsden in 1988, Bennett and Grice in 1990 and ELSIE computer system in 1990 sought to assist in making the selection. More recently Morledge and Sharif (1996, a,b) have discussed procurement strategy, summarised procurement options and outlined a process to assist in the selection of the best procurement strategy. Gillespie (1994) questions the extent that rationality plays in procurement selection and suggest that other factors often influence choice. Some other researchers suggested the use of fuzzy logic to produce computerised systems to help practitioners (Peak et al., 1992; Russell, 1992). Turner (1990) provides an assessment of the risk inherent in procurement routes and it can be inferred that this is an important determinant in the route selected. It is known that procurement methods play a major role in defining and shaping contractual and work relationships between parties involved in the construction process. Therefore, a better understanding of those methods and criteria that practitioners use in their selection is a very important step in enhancing our understanding of the issue. This paper presents the results of a study into criteria of selection for procurement methods used in the construction industry in the UK, and investigates the issue of satisfaction with procurement methods. 2. 2.1 Background Procurement methods
A review of current practices in the UK shows different approaches to the procurement of building projects. A classification of these approaches is extremely complex because there are not clear and universally accepted definitions of what a particular procurement method is. This raises a major issue in that if there is no accepted definition of what comprises a particular procurement route, the possibility of establishing criteria to achieve specific objectives is problematic, if not remote. McCanlis (1967) pointed out the problems with the traditional descriptors of contractual arrangements but notwithstanding the acknowledged problems, ELSIE (1990) computer system and Masterman (1992) have defined the various procurement routes.
If the characteristics of a procurement route can be identified and the impact of these characteristics upon performance can be measured, then and only then, can the selection of a specific procurement path serve a purpose.
Procurement’ criteria for selection
The literature review on this issue reveals a wide spectre of reasons put forward for choosing a particular procurement method. Rowlinson & Newcombe (1984), in their research on the impact of procurement methods on performance, produced a table that provides a general overview of the respective characteristics of types of contractual arrangement (see table 1). This taken with Turner’s risk assessment and that set out in Latham (1994) provides a useful, albeit fairly crude tool. This paper describes research which has attempted to refine these issues and to provide a greater understanding of procurement decisions and needs.
Types of Arrangemen t Traditional Arrangemen t Design and Build Measureme nt Prime Cost
Price Certainty Fairly good Good Average to poor Poor
Level (inc. fees) Low
Design Parallel Working No
Buildabilit y No
Time Before Start Slow
Medium Medium High
Yes Yes Yes
Difficult Easy Easy
Yes No No...
References: Bennett. J., and Grice, T. (1990). ‘Procurement Systems for Building’ Quantity Surveying Techniques - New Directors, (Ed. Brandon, P.S.). Blackwell Scientific Publications, London. pp 243-262. ELSIE System, (1990). Imaginor System, RICS QS Division. Gillespie, B. (1994). ‘The Choice of Procurement Route is A Key Decision - So why not treat it as one?’ Building, 29 July. p.46. Hughes, W., and Djebarni, R. ‘A Preliminary Survey of Attitudes to UK Construction Procurement Practice’. Unpublished paper. University of Reading & University of Glamorgan. Latham, Michael, (1994). Constructing the Team, Final Report of the Government/Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry, HMSO, London. Masterman, J.W.E. (1992). An Introduction to Building Procurement Systems. E. & F.N. Spon, London. McCanlis, E.W. (1967) Tendering and Contractual Arrangements, Research and Information Group of the Quantity Surveyors’ Committee, RICS, London. Morledge R., and Sharif A. (1996,a). ‘The Procurement Guide’ A Code of Procedure for Builders and their Advisers. RICS, London. Morledge R., and Sharif A. (1996,b). ‘Strategies for Procurement: Implications for Cost Database, Cost Planning and Tender Price Indexing’ COBRA 95-Construction and Building Conference -, RICS, London. NEDO (1985)., ‘Thinking about building - a successful business consumer’s guide to using the construction industry’, Building Economic Development Committee, London. Peak, J.H., Lee, Y.W., and Napier, T.R. (1992). ‘Selection of Design/Build Proposal Using Fuzzy-Logic System’ Journal of Construction Engineering and Management, 118, pp 303-317. Rowlinson, S.M., and Newcombe, R. (1984). ‘Comparison of Procurement Forms for Industrial Buildings in the UK’ The 4th International Symposium on Organisation and Management of Construction, University of Ontario, Canada.
Russell, J.S. (1992). ‘Decision Models for Analysis and Evaluation of Construction Contractors’ Construction Management and Economics, 10, pp 185-202. Skitmore, R.M., and Marsden, D.E. (1988). ‘Which Procurement System? Towards a Universal Procurement Selection Technique’ Construction and Management Economics, 6, pp71-89. Turner, A. (1990). Building Procurement. Macmillan, London.
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