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Ref No: 1752

 

Question # 1 (a)

The first question of this open book exam focuses on the evaluation of different procurement systems for the construction project initiated by Oxford Properties namely Ernst & Young Tower located at the north of Toronto’s main train line station. Three types of procurement systems will be evaluated in this part which includes the traditional procurement, management procurement systems and package procurement systems.

Traditional Procurement Systems

The traditional procurement systems refer to a procurement system based on the design – bid – build philosophy. It means that whenever a constructor designs a building then bids to get the contract and builds it after the contract has been received is known as the traditional procurement for a construction project. In this process, the clients first appoint a consultant or architect to design the project then start preparing tenders and other documents necessary for the project bid (Love, 2002). As stated by Gould and Joyce (2009), the traditional procurement systems can be used by both the experienced and inexperienced constructors due to the philosophy employed. 37% of the total construction procurement projects are based on traditional procurement systems.

In the view of Love (2002), there are numerous strengths and weaknesses associated with the traditional procurement systems. One of the numerous advantages is that due to competitive selection, it leads to accountability. The contract bid includes a design lead and the client can have a direct influence which can ensure a high level of functionality and can improve overall design quality. Also, an advantage for both the parties is that this type of procurement leads to price certainty so both the parties are aware of the returns and costs from the project.  On the contrary, one of the weaknesses includes the higher time required to complete the documentation of the full tender documentation. Another weakness is that there is no possibility of the input by the contractor at the design stage as the appointment of the client is not confirmed yet (Gould and Joyce, 2009). In the case of Project under consideration, the traditional construction systems can be employed as it is applicable to both the experienced and inexperienced clients. However, while selecting this approach its weaknesses must be considered as discussed above.

Management Procurement Systems

The second type of procurement systems in this exam namely management procurement systems can be divided into two other main sub-categories. These types include management contracting and construction management. The management contracting refers to the type of procurement, where the contractor has contractual relationships with all the stakeholders and potential parties of the project and is also responsible for all the project work (Eriksson and Westerberg, 2011). The construction management refers to a procurement process where a contractor is hired to manage the design and construction processes of a particular project. It is known as packaged procurement system due to the fact that this type of contracting is employed to avail the services as a whole implying that the design and construction both will be overlooked by the contractor as a package (Gould and Joyce, 2009).

As identified by Eriksson and Westerberg (2011), the advantages of the management procurement systems include improved design and collaboration between the designers and constructors as a result of dealing with one client only. Secondly, there is a high chance for time savings as the construction and design activities are overlapped. The third advantage of management procurement systems is that it allows flexibility in the design and related activities. However, the main disadvantages include the uncertainty in the pricing until the project is completed or the package is delivered. The second disadvantage is that the management approach to procurement is not recommended when the client is less informed or not proactive. Thirdly, closely monitored time and information control are required in this case (Walker and Rowlinson, 2007). In the case of new property project of Oxford Properties, the management approach to procurement can be useful due to the fact that the company is already experienced and can closely monitor the time and information related to the execution of the project. Secondly, as Oxford Properties has sufficient experience in the industry so it can be proactive and can get an expected price during the course of the project as well. The accuracy of estimated price increases as per the experience of the client and their knowledge in the pertaining field.

Packaged Procurement Systems (Design and Manage Procurement)

The third type of procurement method identified for this exam is the packaged procurement system also known as design and manage procurement strategy. A design and management strategy is similar to the management contract; in this case, the company does not have in-house expertise so it hires a consultant in order to advice and process the design and manage the project accordingly. An important part of the advice is that the cost estimates are also prepared by the consultant as he/she has the expertise required in the industry (Masterman, 2003).

As stated by Walker and Rowlinson (2007), there are numerous advantages associated with the packaged procurement system which include the earlier and simultaneous start of different steps of the design and construction process. The second advantage is that it allows starting in a more flexible manner when compared to the traditional methods of procurement. Thirdly, there is a stronger control of the client over the design of the project and can propose the changes in a more detailed way…