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Constructing a New Building? Worried About Getting Fleeced?Posted by Mohammed Shifreen on Saturday, September 11, 2010
Under: Construction Industry
Constructing a New Building? Worried About Getting Fleeced? "To build is to be robbed." Some of you may remember this quote featured in the Banwell Report in the 1960's. It was used in reference to the growing feelings of building clients', resentful towards the spiralling decline of the building industry's performance. Despite the inevitable furore at the time little was achieved in providing a solution. One might well question why clients had become so dissatisfied with an industry which could proudly boast high standards of technical and professional expertise. So why did the UK construction market continually under-achieve with significant cost over-runs and delayed completions? Contributory factors no doubt include the economy and attitudes to the workplace however a recurring theme in clients' complaints alleged an adversarial approach by contractors. On examination of the prevalent "traditional" contractual arrangements the reasoning behind this becomes clear. Having tendered in competition, incentives under the "traditional" system actively encourage contractors to claim extras for variations and delays which presented an opportunity. As a result contractors were no longer as committed to completing on time and to budget. The diverse interests of each party were pulling in differing directions to the detriment of the client. A review of the building process and procurement systems was inevitable. In order to better understand the commonly used procurement arrangements I briefly summarise the different options into 3 categories; traditional, design build and management. Traditional: The process is sequential requiring design is largely completed by client consultants before appointing a contractor. The contractor has no responsibility for design development, resulting variations and how this effects construction. Design Build: An integrated approach involving the contractor in design. Initially client consultants usually work-up a "scheme design" which is tendered. Responsibility for delivery of the scheme then rests solely with the successful contractor. Management: Integration is encouraged by appointment of a management contractor consultant within the client design team. The client shoulders the construction risk instead of the contractor who lets a series of works packages to subcontractors subject to the client's approval. There are numerous advantages and pitfalls inherent within each option which can be matched to projects with differing client priorities. When selected properly the system adopted can influence the project outcome positively in relation to the diametrically opposed functions of time, cost and quality. However all factors must be taken into account for any particular set of project circumstances. For example where early cost certainty is the client's main priority it is likely that the management route would be unsuitable. Management can however achieve earlier completion by overlapping design and construction whilst offering considerable flexibility for client variations. Design build can reduce the clients overall risk position but offers correspondingly less control over quality and design development. Clients must be able to determine their precise minimum requirements at the outset. Late changes can be costly and might significantly delay completion. Traditional arrangements can achieve early cost certainty, improved quality control and the flexibility to introduce variations along with a defined mechanism for their evaluation. Design is largely defined prior to committing to contract. It is essential for clients to recognise the importance of choosing the correct procurement route which can fundamentally affect the success of any project. Implementing systems which are inappropriate is a step backwards and can lead to the cost over-runs and delays referred to above. Be aware that the early decisions in any scheme are by far the most important as they are likely to have an affect throughout. So the next time your organisation is thinking of building it may be prudent to take advice before deciding on your preferred method of procurement. VFM Provides Chartered Quantity Surveying, Project Management and Property Consultancy Services to the Development and Property Sector. Russell Dyer is Director of London based VFM Procurement - Chartered Quantity Surveyors, Property and Development Consultants Article Source: http://EzineArticles.com/?expert=Russell_A_Dyer
Article Source: http://EzineArticles.com/?expert=Russell_A_Dyer
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