HOUSING DEVELOPMENT AND

THEIR PROCUREMENT
PRODUCTION PROCESS
 INTRODUCTION

• Construction procurement is an integral part of the housing development but it

is often over looked. With the proper procurement in place, a developer can
avoid major setbacks and delays, which cost time and money.
• Procurement system in construction is defined as a process to organize and
coordinate the related parties in the project, especially on defining their
contractual relationship. It includes the contract responsibility, the duties that
every party has, their rights, liabilities and roles towards the project. In order
for a project to be completed, it must be governed by a suitable procurement
system that can be used to control and manage the process and activities
involved.
• In broad-spectrum, construction procurement can be referred as the project
guidelines that determine the responsibility of the parties involved, including
their contractual obligations and the activities to assist the client in obtaining
competent construction services.
 Parties involved in the procurement process.
• Owner. The property owner is responsible for all aspects of the project and has the ultimate
authority over decisions that impact the design or construction process.

• Architect. Designs the building or structure that the contractor will build. Sometimes they
oversee the entire procurement process for beginning to end.

• Engineer. Engineer may work with the architect to ensure that plans meet the building
codes and other regulations for safety reasons. They can also perform surveys to determine if
the land is suitable for construction purposes.

• Contractor. They are hired by the owner to complete specific phases of a construction
project . They must have years of experience working on similar projects so they know how to
complete each phase efficiently while maintaining budget expectations of the owner.
 Benefits of Construction Project Procurement

With many companies vying for the same contracts, there are several benefits of using different procurement methods.

1. Cost savings. When you have an excellent procurement process, you can get better prices from your suppliers. This
means you can save money on your purchases and use it elsewhere in your business. In addition a good method
should foresee potential cost fluctuations and account for the same.

2. Improved Quality. The level of competition between firms tend to improve quality as they try to win contracts with
lower prices. The risk associated with poor quality is also reduced when multiple suppliers are involved.

3. Time efficiency. Putting an entire project team to work together, makes it easy to manage resources and achieve the
project’s success seamlessly. The contractor must stick to the construction schedule to complete the project quickly
and efficiently without wasting time or resources due to miscommunication between individuals.

4. Reduced delays. By ensuring that all ordered before they are needed, there should be fewer project delays caused by
missing components or materials. This means less downtime, which will improve productivity levels throughout the
site and help meet deadlines more effectively than if their were problems with deliveries.
 Characteristics when determining the best procurement strategy to employ

1) The degree of expertise low or high needed by the client body

2) The amount of control afforded to the client in selecting a design solution rather than simply testing if the project benefits are
achieved.
3) Extent to which the procurement strategy is reliant on a detailed set of client technical requirements. Each design element
needs a minimum performance level.
4) The ease of instructing a change and of agreeing implications of cost and time.
5) The extent to which the strategy enables contractors and designers to work collaboratively from an early stage
6) The extent to which responsibility for both design and construction is contractually combined
7) The degree to which construction phase risks are transferred to the contractor
8) Speed of project development.
9) Low resource levels and limited expertise needed.
10) Suitability for complex projects.
11) Suitability for a target cost approach
 Key Elements of a successful Procurement strategy

A successful procurement strategy should enable your procurement team to procure goods and services as
economically and efficiently as possible. These include

• Clear Objectives and goals. These should be aligned with organisation’s broader objectives. They should be
specific and measurable, attainable, relevant and time-bound and should be communicated throughout the
organization to ensure all stakeholder are aware of the goals.

• Strategic planning. The plan should align with the goals and objectives while taking into account the unique
basic needs and market trends. It should take into account supplier relationships and risk profile. By planning, you
can ensure that your procurement strategy is grounded in a data driven insights.

• Technology adaptation. Procurement software and e-procurement platforms can automate manual tasks,
streamline procurement workflows and offer real-time data and insights for informed decision-making. By using
such tools, organisations can increase their procurement efficiency, decrease costs and enhance collaboration with
suppliers.
 Cont’d
• Comprehensive supplier management. Supplier management is prioritized which
involves selecting the right suppliers, negotiating favourable contractors, monitoring
supplier performance and fostering collaboration. Strong supplier management practices
help organizations establish productive long lasting relationships with their suppliers and
gain a deeper understanding of their capabilities.

• Robust risk management. A procurement strategy can benefit from a well-developed

risk management and mitigation plan that acknowledges and tackles potential risks. This
involves monitoring risks, preparing contingency plans and enforcing preventive
measures. This helps to maintain a continuous supply of goods and services
 Construction procurement strategies used in housing
projects.
Traditional method.
• With this type of method, the design teams are employed directly by the client to
fully develop the design prior to going out to tender. Suitable contractors are
then invited to submit a tender priced against the client’s requirements.
Traditionally, this can comprise a B.O.Q . However, it is becoming increasingly
common for contracts to be based on drawings and specifications. The
construction contract is with a main contract who has responsibility only for the
construction works.
• If the design has been fully thought out, developed and frozen, this type of
contract should provide a reasonable degree of cost certainty at tender stage,
subject only to client risk events, such as unforeseen ground conditions. The
client should also ensure the project budget includes an appropriate contingency
allowance to cover such risks but precise level will depend on the level of
complexity of the project.
Benefits
[Link] certainty and transfer of risk to the main contractor is achieved at contract award, provided no subsequent
changes are instructed to the design.
2.A high level of quality in design and construction is achievable as the scope of the work is prescribed on an input
specification basis by consultants reporting directly to the client.
[Link] client retains individual direct contractual relationships with the design team, cost consultant and main
contractor.
[Link] to the works can be simply instructed and then evaluated on the basis of known prices obtained I
competition without necessary excessive cost or time.
[Link] pricing can be achieved based o comprehensive bill of quantities which is attractive to the contracting
market.
Risks
[Link] overall development programme may be longer due to the need to produce a fully detailed design before the
project goes out to competitive tender and work starts.
[Link] client must have the resources and access to the expertise necessary to the administer the contracts of
consultants as well as the main contractor.
[Link] competitive timing of design and construction results in lack of continuity between the designer and the builder
hence little opportunity for buildability.
[Link] all project risk is transferred to the contractor and some is retained by the client. Claims for delay and disruption
can arise if the design is not fully detailed prior to agreeing the contract sum.
[Link], where there is a dispute over whether the cause is design or workmanship can prove difficult for the client
to identify the party responsible ad secure rectification.
 Design and Build
• A single supplier is appointed by the client to undertake both
the design and construction. The client’s own design team
develop a concept along with an output performance
specification. Together these form the Employer’s
Requirements depending on the form of contract.
• The contractor is likely to deliver the greatest performance
benefits to the client through innovation and standardisation.
Careful attention to the output specification is required to
achieve good quality, design and performance.
Benefits
[Link] tendering and preparation costs to the client.
[Link] point responsibility for design ad cost risks, including design errors and
omissions.
[Link] approvals are the responsibility of the contractor.
[Link] for more economical construction due to earlier consideration of
building methods.
[Link] result in a shorter overall design and contractual period.
Risks
[Link] client’s requirements must be properly specified prior to signing the contract
as client changes to the scope of the project, once left can be expensive.
[Link] client has little control over design once the contract is let, as the building is
specified on a performance basis with output specifications.
[Link] and build is unsuitable for complex, challenging projects which benefit
form a developed design prior to pricing.
 Design, Develop and Construct.
• It’s the same as D&B however in the case of design develop and construct, the client’s own
design team develop the design to a much greater level of detail than in a simple D&B strategy.
This will include both fully designed input specifications as well as output specifications for
those elements of design left to successful contractor to complete like cladding , steelwork,
building services.
Benefits
• Single point responsibility for design and cost risks, including design errors and omissions.
• Greater control of design and specification compared to a simple D&B
• Some, if not all statutory approvals are the responsibility of the contractor.
• Potential for more economical construction due to early consideration of building methods.
• Could result in a shorter overall design and construction period compared to traditional method.
Risks
• The client’s requirements must be properly specified prior to signing the contract as client changes to
the scope of the project once let, can be expensive.
• The client has little control over the outstanding design and quality standards once the contract is let,
other than to issue variations to the Employer’s Requirements.
• Design coordination issues can arise between the Employer Requirements and those elements still to be
designed by the contractor.
 Management Contracting.
• Thus is a fast track strategy which overlaps the design and construction stages
and enables contracts for early work packages e.g ground works ad steelworks,
to be placed before the overall design is complete.
• A management contractor is appointed by the client to manage the overall
construction contract in return for a management fee. The design team is not
from the management contractor’s team but from client’s own in house design
team or appointed separately by the client. If appointed before design is
complete, the management contractor can advise on buildability, programming
and procurement of various work packages.
• The contracts for the work packages are between the management contractor and
the individual trade contractors. Costs are controlled by the development of a
cost plan in which estimates of the costs of work packages are initially used for
budgeting purpose prior to being replaced by actual costs.
 Benefits
[Link] completion is possible due to a shorter overall development period achieved by overlapping design
and construction activities even with complex buildings.
[Link] the client maintains direct control over the design team, the management and trade contractors can
contribute to design development and improve the management and buildability.
[Link] suitable where there is complex design from specialist works package contractors to be
incorporated.
[Link] management contractor assumes some risk for the performance of the trade contractors.
[Link] can be accommodated more easily than in other forms of contract in both let and unlet packages
provided there is little or no impact on the overall project time table.
[Link] good alignment of objectives between client and management contractor.
Risks
[Link] final price and timescale are not fixed at the commencement of the works and do not become so
until the last work package has been let, and even then, are subject to the risks that lay with the client under
the contract chosen.
[Link] the management contractor fails to organise and coordinate the various works packages it could result
in claims from package contractors that the client could be responsible for.
[Link] client must have the resources and access to the necessary expertise to deal with separate design
consultants and the management contractor and the scrutiny of each of the work package tenders.
[Link] contracting is unsuitable for an inexperienced and/or hands-off client as there is a risk of
increased costs and delays arising from ineffective administration.
 Construction Management.
• A construction manager is appointed by the client to manage the overall contract for a
management fee and as with management contracting, the project can benefit from the early
involvement of the contractor. The significant difference is that the contracts for the works
packages are placed directly between the client and the trade contractors.
• Construction management was largely devised for use in the commercial development
market and where there are examples of public sector projects being successfully procured
via this route, this approach is generally unlikely to represent an appropriate option for
public sector procurers other than in exceptional circumstances and where the client has the
necessary resources and experience.
Benefits
1. Construction management should reduce the overall project timescale by allowing procurement and
construction to proceed before the design is completed.
2. The client controls the design and changes can be accommodated in let and unlet packages provided there is
little or no impact on the overall project timetable.
3. It can be applied to a complex building and has opportunity to allow good buildability input.
4. Achieves good alignment of objectives between client and the construction manager.
5. Particularly suitable where there is complex design from specialist works package contractors to be
incorporated.
6. The client contracts directly with trade contractors, which could result in lower prices and allows poor
performance to be dealt with directly.
 Risks
1. The final design, price and timescale are not fixed at the commencement of the works and
do not become so until the last work package has been let and even then, are subject to the
risks that lay with the client under the contract chosen.
2. The client bears most of the total risk including delays, disruption, design and its
coordination with construction.
3. The construction manager commonly does not assume any risk other than negligence, is not
contractually responsible for achieving programme and cannot instruct third parties.
4. The design team must envisage both the totality and detail of the design at the outset,
accommodating uncertainty, procuring long lead items and avoiding change.
5. Clients need to be experienced, informed, decisive and have the necessary expert resources
to administer the contracts of the separate design team members, the construction manager
and many trade contractors.
6. Construction management contractors must be sufficiently incentivised to avoid fee
escalation, they should be experienced in construction management and have very good
leadership skills.
7. The client must place an even greater premium on risk management in construction
management than under other procurement strategies and needs to ensure that roles and
responsibilities are well defined.
 Challenges faced when the wrong procurement strategy is adopted in
executing construction work.
• Many construction professionals do not really understand the various functions of
different procurement systems. Due to this, they tend to use procurement that they
are familiar with or one that gives most benefit to them without giving much
attention whether that procurement will suit their project’s characteristics.
1. Delayed execution of the project
2. Increase in the cost of works.
3. Conflicts amongst project members
4. Contractual and payment disputes which lead to civil court cases.
International approach to the current procurement strategies.
• Traditional procurement has become unstable when the nature of modern
construction has changed and more building technology is being applied.
Traditional procurement which applied a fragmentation based model is no longer
suitable for modern projects that want to combine or overlap some of the
activities, where two or more construction works can be conducted concurrently.
 Most important issues to address in relation to the procurement strategy.
1. Sustainability. This involves value for money on the entire life of the premise in order to create long haul benefits while
reducing the damage on the society. The use of traditional procurement and design and build method is an obstruction to
innovative change which is needed for sustainability hence not being used in advanced countries.
2. Lean construction. Lean is radical to enhance production and it is the best practice. Traditional design practices are outdated
and have performed ineffectively in dealing with meeting customer’s prerequisites. A collaboration and integration associated
with all parties is the best option hence CM procurement.
3. Innovation and Technology Development. The term innovation directly shows that it is about practicing latest sciences and
solutions for construction and it has turned out to be fundamental for development of construction organisations due to high
pressure from customers to enhance quality, minimise cost and accelerate construction hence the need for design and build
and administration contracting.
4. Constructability. Little advancement has been made to resolve the constructability issue and this is because of the
confrontational behaviour between customer, contractors and consultant. Design and Build and venture administration are
most suitable for customers setting a high need on the constructability of their project.
5. Value Management. VM is a standardized way to deal in delivering a project with the needed functions at optimum whole
life cost without affecting negatively to quality, execution and reliability. Thus, it will be the group team which is
systematically used to distinguish and wipe out the expenses of the goods hence the use of Management Contracting.
6. Building Information Modelling. While looking world construction industries, one of the most serious issues is the trouble in
implementing widespread team working ad cooperation mainly because of social barriers something that BIM brags about. BIM tools
were created to extensively enhance profitability in the construction industries and make it possible to oversee and manage the
information produced through the life cycle of the building more efficiently. Because of this, it can be contended that management
contract, design, build and partnering approaches are best equipped to manage this situation.
7. E-Procurement. The need for information framework e.g e-procurement to encourage the coordination of the supply chain is getting
more attention and consideration from the construction industries. The idea can be utilized with most procurement techniques with
the exception of the partnering arrangement.
 Procurement Process
• This is a systematic approach to identifying , evaluating and acquiring goods and
services from external sources to fulfil the needs of an organization.
• Also when putting up a housing project, finding suitable building materials and
supplies at the correct prices can be difficult. Building materials are often difficult to
access. To procure them, you must go through many complex channels. Any lapse in
the procurement process could lead to extra expenses that may cause you to prioritize
your cash flow when you should be spending it else where.
Critical Factors to take into account in the procurement process
i. Quality of Goods and Services
ii. Delivery times
iii. Supplier reputation
iv. Cost-effectiveness
v. Compatibility with inventory management system
vi. Reliability
 Steps involved in the Procurement process when
executing housing projects
• Identification of housing need. This is entirely internal and initiated by the developer. This is where stakeholders
within the organization be it government or private entity define the need that should be filled. Identify the
requirement, frame it and define in terms of what it should do for you the developer.

• Purchase requisitions And approvals. Since it depends on the organization’s specific procurement systems, team
members should be presented with a clear picture of goals and priorities that drive the housing project that would suit
them

• Request for Information. The first step in choosing a supplier or contractor to do the work is to issue a request for
information. This can be advertised or an internal scouting for gathering data on various suppliers and providers.

• Request for Proposal. This includes a comprehensive project information that enables you to receive quotes and
recommendations for the best supplier. It contains all stringent procurement guidelines for content and supplier
responses. This is to identify the best contractors that meets all the requirements needed.
 Cont’d
• Request for Quotation. This is a critical step in the process when you know what you want but need information on how the
suppliers will satisfy your requirements. This is mostly done through pricing of the B.O.Q that the contractors submit to the
developer.

• Choose a supplier and negotiate contract term. The procurement team compiles the information provided and examines it with
its stakeholders. This can be lengthy and the one that meets the favourable quotation is chosen then finally discuss the conditions
of the contract.

• Implement and integrate supplier collaboration. Be mindful that if the project is very complicated , the suppliers and
contractors chosen may prove to be very difficult to work within.

• Review supplier performance. Suppliers should be held responsible for meeting certain key performance indicators for
example conducting quality checks of the works done and materials being supplied to the contractor.

• Keep records of all contractor invoices. All certificates, advances, quality check records, meetings should be kept and recorded.
Emails should be printed if necessary as no misunderstanding will have to happen.
 Challenges that can arise during the procurement process that
can impact inventory management.
• Inaccurate forecasting. One of the most significant challenges in procurement is inaccurate forecasting of demand for goods
and services. This can lead to over stocking or understocking of inventory. This can make the suppliers’ inability to meet the
client’s demands and needs.

• Supplier performance issues. This can include issues like late deliveries, substandard quality, and inadequate quantity. These
issues may result in lost revenue or decreased customer satisfaction.

• Delivery delays. These delays can be caused by issues such as transportation problems, natural disasters and labour strikes.
This can lead to stock shortages, missed deadlines and decreased customer satisfaction.

• Quality control issues. Failure to maintain quality standards can result in defective products, returns and reduced developer’s
satisfaction.

• Cost overruns. This can be impacted by factors like fluctuations in currency exchange rates, changes in supplier’s pricing and
unexpected expenses. This can lead to budget constraints and financial difficulties.