Construction procurement is the process of acquiring goods, services, and labor needed for the construction of a building, infrastructure, or other type of project. Various methods of procurement can be used, each with its advantages and disadvantages. Take a look at our breakdown of the four main methods:
1. Traditional procurement
Also known as design-bid-build, traditional procurement is the most common method in construction. The client hires a design team to create the building plans, which are then put out to tender for construction companies to bid on. The lowest bidder is usually awarded the contract.
One of the main advantages of traditional procurement is that it provides a clear and well-defined contract that outlines the scope of the project, the budget, and the timeline. This allows for accurate cost estimation and risk assessment. However, traditional procurement can be slow and inflexible, as any changes to the design or budget require renegotiation of the contract.
2. Design and build procurement
Design and build procurement is a method where the client hires a single contractor to handle both the design and construction phases of the project. This can be advantageous as it allows for faster project completion and better cost control. The contractor is responsible for managing the design and construction phases, ensuring that the project is completed on time and within budget.
However, the design and build method can result in less control for the client over the design phase, as the contractor may prioritize cost-saving measures over design quality. Additionally, any changes made during the construction phase can be costly, as the contractor may need to renegotiate the contract.
3. Construction management procurement
This method involves the client hiring a construction manager to oversee the construction project, while contracting with the individual trades, such as electrical, plumbing, and structural work, separately.
This method can provide greater flexibility as the client has more control over the selection of individual trades. The construction manager is responsible for coordinating the various trades and ensuring that the project is completed on time and within budget.
However, this method can be more complex, and it does require more oversight from the client. Additionally, any issues or disputes that arise between the trades may need to be resolved by the client.
4. Public-Private Partnership (PPP)
PPP is a method of construction procurement where the private sector works with the public sector to finance, design, build, and operate a project. This method can afford advantages such as increased efficiency, faster project completion, and risk-sharing between the public and private sectors.
However, PPPs can also be complex and require careful planning and management to ensure that the project benefits both the public and private sectors. Additionally, the private sector may prioritize profit over public benefit, and the public sector may assume greater financial risk.
By understanding the differences between these procurement methods, clients can choose the one that best suits their needs and ensures a successful construction project.