GROUP 2
PRADO, RHOS CLARIES
VINLUAN, JERICHO
OROPESA, MARK DANIEL
CRISTOBAL, KYLE JOSHUA
CORTEZ, GENE RINCHON
PROCUREMENT
❖ OVERSEEING THE PURCHASING OF APPROPRIATE GOODS AND
SERVICES FOR AN INDUSTRIAL OPERATION WITH THE BEST POSSIBLE
COST OF OWNERSHIP.
❖ MEET THE NEEDS OF THE CLIENT IN TERMS OF QUALITY, QUANTITY,
AND TIME.
❖ DESCRIBES THE MERGING OF ACTIVITIES UNDERTAKEN BY THE CLIENT
TO OBTAIN A PRODUCT.
❖ CORE OBJECTIVE OF A PROCUREMENT SYSTEM IS IDENTIFYING THE
RESPONSIBILITIES AND TASKS OF EVERY PARTICIPANTS IN A SIGNED
PROJECT.
87%
OF CONSTRUCTION PROFESSIONALS
BELIEVE THAT GOOD PROCUREMENT IS
SYNONYMOUS WITH A SUCCESSFUL
PROJECT (THE CHARTERED INSTITUTE
OF BUILDING).
TRADITIONAL (DESIGN-BID-BUILD)
❖ WELL-ESTABLISHED, RECOGNIZED, AND MOST COMMON METHOD OF
PROCUREMENT.
❖ RESPONSIBILITY OF A CONTRACTOR IS LIMITED ONLY TO BUILD.
❖ ALL DESIGN WORKS AND MANAGEMENT OF CONTRACT ARE
CARRIED OUT BY CONSULTANT OR ENGINEER.
❖ FINANCE AND OPERATION ON PROJECT SHALL BE CONTROLLED BY
CLIENT.
❖ THIS METHOD OF PROCUREMENT IS RECOMMENDED FOR COMPLEX
AND COMPARATIVELY HUGE PROJECT.
TRADITIONAL (DESIGN-BID-BUILD)
❖ USES THREE MAIN MECHANISMS FOR DETERMINING CONTRACT
PRICE:
LUMP SUM CONTRACTS - DETERMINED BEFORE CONSTRUCTION
STARTS.
MEASUREMENT CONTRACTS - THERE IS RE-MEASUREMENT OF
WORKS ON A PREVIOUSLY AGREED BASIS AFTER COMPLETION.
COST REIMBURSEMENT CONTRACTS - DETERMINED BY THE
ACTUAL COST OF LABOR AND MATERIALS, WITH AN AMOUNT
ADDED TO COVER OVERHEADS AND PROFIT.
TRADITIONAL (DESIGN-BID-BUILD)
❖ ADVANTAGE: ENSURED DATE OF COMPLETION, WHICH WILL
MINIMIZE THE TENDERING COSTS AND PROVIDE FAIRNESS.
❖ DISADVANTAGE: LENGTHY DESIGN AND CONSTRUCTION PERIODS.
DESIGN AND BUILD
❖ THIS APPROACH IS GROWING IN POPULARITY IN THE RECENT YEARS.
❖ INCLUDES AN ENTIRE COMPLETED PACKAGE WITH FIXTURES,
FITTINGS, AND EQUIPMENT FOR THE PRODUCTION OF A FULLY
FUNCTIONAL BUILDING.
❖ ALSO INCLUDE FINDING THE SITE, ARRANGING FUNDS, AND APPLYING
FOR ALL NECESSARY STATUTORY CONSENTS.
❖ DESIGN AND BUILD RESPONSIBILITY COVERED BY CONTRACTOR.
❖ CONSULTANT’S SCOPE IS ONLY LIMITED TO MANAGEMENT OF
CONTRACT.
DESIGN AND BUILD
❖ CLIENT IS RESPONSIBLE FOR FINANCE AND OPERATION.
❖ ADVANTAGES: SHORTER PROJECT TIMEFRAME AND REASONABLE
CONSTRUCTION COST FOR THE CLIENT.
❖ DISADVANTAGES: EFFECT OF THE PROPOSED CONSTRUCTION ON
THE AESTHETIC APPEAL OF THE BUILDING, DIFFICULTY TO ASSESS
PROPOSALS FOR THE CLIENT, AND DIFFICULTY MEETING THE
CLIENTS' EXPECTATIONS FOR THE CONTRUCTORS.
MANAGEMENT CONTRACTING
❖ THIS METHOD OF PROCUREMENT SYSTEM IS COMPLETELY DIFFERENT
FROM TRADITIONAL METHOD AND DESIGN & BUILDS METHOD. IN
ADDITION TO CLIENT, CONSULTANT, CONTRACTOR, AND SPECIALIZED
CONTRACTORS BECOME A PARTICIPANT.
❖ CLIENT'S CONSULTANTS ARE RESPONSIBLE FOR THE OVERALL
DESIGN.
❖ CLIENT APPOINTS THE CONSULTANTS AND PREPARES THE PROJECT
DRAWINGS, SPECIFICATIONS, AND COST PLAN, AND RETAINING
OVERALL DESIGN CONTROL WITH THE HELP OF HIS PROFESSIONAL
TEAM.
MANAGEMENT CONTRACTING
❖ CONTRACTOR ACTS AS A MANAGER FOR PROJECT WHEREAS
SPECIALIZED CONTRACTORS UNDERTAKE REAL BUILD ASPECT ON
THEIR SPECIALIZED FIELD.
❖ FINANCE AND OPERATION CARRIED OUT BY CLIENT.
❖ THE LENGTH OF THE PROJECT MAY BE REDUCED AS DETAILED
DESIGN CAN PROCEED IN PARALLEL WITH CONSTRUCTION WORK.
❖ FINAL COSTS ARE UNKNOWN UNTIL THE LAST TRADE CONTRACT
IS SET.
MANAGEMENT CONTRACTING
❖ ADVANTAGES: MANAGEMENT CONTRACTS OF OPINIONS AND INPUTS
REGARDING THE MATERIAL AND DESIGN WILL ENSURE DESIGN
FLEXIBILITY; IF ONE MANAGEMENT CONTRACTOR FAILS, OTHERS CAN
DELIVER THEIR BEST OUTPUT, AND THE PROJECT WILL MOVE
FORWARD.
❖ DISADVANTAGES: CONTRACTORS CAN INTENTIONALLY ESCALATE
PROJECT COST BY GIVING COSTLY INPUTS SUCH AS HIGH-END
MATERIAL AND SPECS; CLIENTS HAVE TO DEPEND ON MANAGEMENT
CONTRACTORS SUCCESS AND WILL NOT HAVE CONTROL OF THE
PROJECT PROGRESS.
JOINT VENTURE / PARTNERING
❖ THE SUCCESS OF THIS SETUP SOLELY DEPENDS ON MEMORANDUM
OF UNDERSTANDING.
❖ IDENTIFYING RESPONSIBILITIES OF EACH PARTY IS BIT DIFFICULT
IN JOINT VENTURE PROCUREMENT SYSTEM.
MANY OF THE PROBLEMS THAT EXISTED IN CONSTRUCTION ARE
ATTRIBUTED TO BARRIERS THAT FOUND BETWEEN PARTIES OF
CONTRACT. TO OVERCOME BARRIERS, DIFFERENT PARTIES MUST
ESTABLISH A WORKING ENVIRONMENT BASED ON MUTUAL
OBJECTIVES, TEAMWORK, TRUST AND SHARING RISKS AND REWARDS.
PRIVATE FINANCING INITIATIVE (PFI)
❖ THIS METHOD IS GENERALLY USED BY GOVERNMENT OF
DEVELOPING COUNTRIES.
❖ CONTRACTOR IS SOLELY RESPONSIBLE FOR ALL FUNCTIONS OF
CONSTRUCTION.
❖ AFTER SUCCESSFUL COMPLETION, PROJECT SHALL BE
TRANSFERRED TO OWNER WHICH IS VERY HELPFUL FOR A CLIENT
WHO DOES NOT HAVE A SOUND FINANCIAL BACKGROUND.
SUMMARY
PROCUREMENT FUNCTIONS OF CONSTRUCTION
MODELS
DESIGN BUILD MANAGEMENT FINANCE OPERATION
TRADITIONAL CONSULTANT CONTRACTOR CONSULTANT CLIENT CLIENT
METHOD
DESIGN AND BUILD CONTRACTOR CONTRACTOR CONSULTANT CLIENT CLIENT
METHOD
MANAGEMENT CONSULTANT SPECIALIZED CONTRACTOR CLIENT CLIENT
CONTRACTING CONTRACTORS
JOINT VENTURE / ALL THE FUNCTIONS SHALL BE SHARED WITH PARTIES IN MUTUALLY UNDERSTANDING
PARTNERING ENVIRONMENT.
PRIVATE FINANCING ALL THE FUNCTIONS SHALL BE CARRIED OUT BY CONTRACTOR AND OWNERSHIP OF
INITIATIVE PROJECT SHALL BE TRANSFERRED TO CLIENT.
SUMMARY
❖ THE FOLLOWING FACTORS SHOULD BE CONSIDERED IN SUITABLE SELECTION
OF PROCUREMENT METHOD FOR A PROJECT: COMPLEXITY NATURE OF
PROJECT, TIME MANAGEMENT, AND QUALITY ASSURANCE
❖ TRADITIONAL METHOD PROVIDES MORE QUALITY ASSURANCE IN A COMPLEX
PROJECT THOUGH IT CONSUMES MORE TIME THAN OTHER METHODS.
❖ DESIGN AND BUILD METHOD SUITS FOR RELATIVELY SMALL PROJECT IN
COMPLEXITY.
❖ MANAGEMENT CONTRACTING CAN BE POSSIBLE IF PROJECT IS IDENTIFIED IN
PACKAGE BASIS.
❖ JOINT VENTURE IS NOT A VERY EASY PROCUREMENT METHOD TO ADOPT
SINCE IT REQUIRES A LOT OF TRUST AND MUTUAL UNDERSTANDING.
❖ PRIVATE FINANCING INITIATIVE IS VERY HELPFUL FOR A CLIENT WHO DOES
NOT HAVE A SOUND FINANCIAL BACKGROUND.
THANK YOU,
ENGINEERS!