INSTITUTE OF TECHNOLOGY

DEPARTMENT OF CONSTRUCTION

TECHNOLOGY AND MANAGEMENT

PROCUREMENT AND CONTRACT MANAGEMENT

For CoTM 5th year

1
(By Mahlet .Y)
 Course Outline
Chapter 1: Introduction
1.1 General Description
1.2 Contract and Procurement Management Process
1.3 Applicable laws, rules regulations and guideline
Chapter 2: Procurement and Contract Delivery
Systems
2.1 Definition, Type ,Merits and Demerits
Chapter 3: Procurement Management
3.1 Introduction
3.2 Characteristics of Tendering
3.3 Procurement cycle
3.4 Procurement method
3.5 Procurement management process
2 3.6 Statistical approach to tendering
 Course Outline
Chapter 4:Contract Management
4.1 Introduction
4.2 Contract Management and Its Process
4.3 Contractual Stakeholders and Their Roles
4.4 Contract Types
Chapter 5 : Construction Contract Change
Management
5.1 Introduction
5.2 Requirements of Change Management system
5.3 Time Change Management System
5.4 Cost Change Management System
Chapter 6 : Construction Claim and Dispute Management
system
6.1 Introduction
6.2 Claim Management system
3 6.3 Alternative Dispute Management system
 Course Outline
Coarse Objectives and Competences
At the end of this course the students :-
 Know and able to successfully manage Construction
Procurement & Contract Processes, Methods, Concepts,
Types and Governance Frameworks
 Be able to understand the benefits and requirements of

Procurement & Contract management applicable to the

Construction Industry (CI)
 To identify and evaluate project Delivery Systems,

Construction Procurement and Contract Management

Processes and Construction Procurement and Contract
4
Management Methods and / or Types
 1. INTRODUCTION
1.1 General Description

Procurement:
Procurement can be defined as the purchase of
goods and services at the best possible
prices, delivery dates and legal terms.
Procurement is a process used to select
the lowest competitive and qualified
bidder for procuring services or works or
goods from potential competitors based on
reasonable relevant criteria.
That is competitive procurement which in
turn implies a contractual
acquisition/procuring of goods or services or
5
works.
 Cont…
 Procurement and contract management is

crucial in construction because it ensures the

project is delivered on time, within budget, and to
the required quality standards

 by carefully selecting vendors, clearly defining

project scope, managing risks, and establishing

clear accountability through well-structured

contracts, ultimately minimizing disruptions and

6
 Cont…
Key reasons why procurement and contract
management is important in construction:-
 Cost Control:- By selecting the most competitive suppliers

and managing contract terms, procurement helps to

minimize project
costs and achieve value for money.
 Quality Assurance:- Contracts clearly define quality

standards for materials and workmanship, ensuring the

project meets the required quality level.
 Risk Mitigation:- Proper procurement processes identify

potential risks associated with vendors and contracts,

7
allowing for proactive mitigation strategies.
 Cont…
 Efficient Project Delivery:- Clear contract terms and well-
managed procurement processes streamline project
execution, reducing delays and improving project
timelines.
 Improved Stakeholder Communication:- Detailed contracts
establish clear roles and responsibilities for all parties involved,
fostering better communication and collaboration.
 Dispute Resolution Mechani[Link] Contracts should include
clear dispute resolution procedures, minimizing the
likelihood of legal conflicts if issues arise.
 Legal Compliance:- Proper procurement practices ensure adherence
to
8 relevant legal requirements and regulations.
 Cont…
Key aspects of effective procurement and contract
management in construction:-
 Detailed Procurement Plan:- Identifying project
needs, specifying requirements, and establishing a
timeline for procurement activities.
 Vendor Evaluation and Selection:- Thoroughly
assessing potential vendors based on their
capabilities, price, and track record.
 Contract Drafting:- Clearly defining project scope,

deliverables, payment terms, schedule, and

9 dispute resolution mechanisms in the contract.
Why Procurement & Contract management is to be
Cont…

discussed?
It ensures:
Fair competition among competitors

Fair distributions of obligations and rights among

stakeholders
 Fair competition helps
The Project Owners’ to acquire the five rights
(Counterpart, Cost, Time, Quality and Quantity) s/he is
entitled to
The Project Financiers’ and Regulators’ to value market
principles and effective utilization of finance such
that lowest qualified bids takes the project , and
The Project Providers’ to get impartial and neutral
10
Opportunity for business.
 Cont…
Fair distributions of obligations and rights

helps:
To allocate appropriate risks among contractual

parties.
To entitle remedial rights to contractual parties.

In general the following things determine the

construction process involved, the relationships
and roles of stakeholders along the process.
 The delivery system chosen

 The procurement method adopted

11
 The contract types decided
 Cont…
 Project Owners shall consider its own particular

institutional and technical SWOT (including

access to financing) before selecting which
procurement and contract forms to adopt for
its projects.
 These include:

 The design source

 Allocation of coordination responsibilities and

 The pricing methods.
12
 1.2 procurement and Contract
management Process
 Procurement and Contract Management
involves three major processes:
• Contract Planning,
• Procurement Management and,
• Contract Management

13
 1.2.1 Contract Planning
In construction, "contract planning" refers to the process of
strategically defining the terms, conditions, and legal
framework of a construction contract before it's formally
drafted and signed,
including identifying project scope, outlining responsibilities of
all parties involved, and anticipating potential risks to ensure a
smooth and successful project execution.

Procurement and Contract Management processes shall be based

upon the approved contract planning provisions; that are,
 The contract delivery system,
 The procurement method and
14  Contract types decided upon.
 Cont…
The approved contract provisions can only be
changed, the change process stated in the
contract planning document and if and only

if:
 The Environment and Context considered are

not correctly analyzed or changed,

 Their application can remarkably affect the

objective of the project, and

 Procurement management process justifies
15
change of the Contract Types.
 1.2.2 Procurement Management

Procurement Management is a process of selecting

individuals or organizations to carry out the
intended services and / or works. It is based on
provisions made on contract planning phase.

It involves
 The preparation of procurement documents

 Invitation and submission of tender proposals

 Opening and Evaluation of tenders

16
 Cont…

The following issues are necessary for a successful

Procurement Management phase:
 Knowing and ensuring the implementation of
procurement related National and International
laws, rules and regulations,
 Adherence to the provisions made during the
contract planning phase including their change
processes,
 Establishment of a flexible procurement team, and

 Adhering to the principles of Proof of competition,

17
Impartiality, Neutrality, Accessibility and Formality.
 1.2.3 Contract Management
Contract management in construction refers to ,
 the process of actively overseeing and administering the legal
agreements between parties involved in a construction project,
 ensuring all parties adhere to the outlined terms, conditions, and

responsibilities throughout the project lifecycle, thereby

minimizing disputes and maximizing project success;
it includes creating, reviewing, executing, and monitoring
contracts, managing change orders, and resolving contractual
issues that may arise.

Contract Management: is a process of reaching contractual

agreement for implementation, its administration and finally
concluding the contract.

It
18 based on provisions made on contract planning phase.
 Cont…
The following issues are necessary for a
successful Contract Management phase:
Knowing and ensuring contract related
National and International laws, rules and
regulations,
Adherence to the provisions made during the
contract planning phase including their change
processes,
Identifying, recognizing and involving all

19
potential or key stakeholders to form a contract
 1.3 Applicable Laws, Rules, Regulations and
Guidelines

 The following Rules, Regulations and Guidelines are

useful for Procurement and Contract Management.

Ethiopian Financial Laws and Ethiopian Procurement

Regulations by MoFED
Ethiopian Civil and Procedural Codes by MoJ

Public Works Related Organizations Establishment

Proclamations, their Policies, Strategies, Duties and

Responsibilities, such as MWUD, ERA, MWR, etc by
FGovt
Project Formulation Guideline, Volume II, MoFED, 2000
20
 Cont…
 ADB, WB, EC and Other Bilateral Donors Policies and

IMF Regulations
 UNICETRAL and Other Internationally acknowledged

Construction Related Laws and Regulations

 Ethiopian Urban Planning & Building Laws - Draft

 Labor, Business, Intellectual Rights, Environment

Protection, etc Laws

 Standard Instruction to bidders, MWUD – 1995

 Standard RFP for Construction Consultancy Services

21
 Cont…
 General and Particular Conditions of Contract:

MWUD, ERA, FIDIC, WB, ADB, EC

 Construction related Codes of Practices such as

EBCS 1 – 12 by MWUD
 Construction related CPN, draft – MWUD

 Construction Related Standard specifications by

QSAE, MWUD, ERA

 Construction Related Regulations by Municipalities
22
and RBWUD
 2. PROCUREMENT AND CONTRACT DELIVERY
SYSTEM
2.1 Definition
 Procurement and Contract Delivery system is the way
Project Owners together with Project Regulators and
Financiers determine the assignment of responsibilities
to Project Stakeholders along the Construction Process.
 A formalized contractual approach which allows an owner to

secure planning and design services and build a project,

assuring effective management throughout life of the project.
 Procurement and Contract Delivery system is often
determined during the Basic Planning phase of
Construction Project.

23
 2.2 Types of delivery system
Project Delivery method is an organizational
concept which assigns specific responsibilities
and authorities to people and organizations and
which defines relationship of the various
elements in construction of a project.
Methods of project delivery system
Force Account,
Design Bid Build (DBB),
Design Build (DB) or Turnkey,
Finance / Build Operate transfer System
(BOT),
Construction/Facility Management
Consultancy
24 Alliances and Outsourcing.
 A). Force Account
When the Project Owners engage themselves to
undertake the project, it is called a force account
delivery system. This system is promoted ;
 When projects are small and places are remote such that
reaching them is difficult and in general they are not attractive
enough to call the attention of Bidders.
 If the project owner ,believe that their is comparative
advantage of cost, quality and time issues.
When there is a lack of capacity from privet sectors to
undertake very large and technologically new projects.
When the projects are spatially scattered and maintenance to

25
be done for schools, health centres etc. such cases can be
 Cont…
Advantages of Force Account delivery system include:
 Flexibility: Allows for quick adjustment to the project scope

and deign change without needing to renegotiate contract

with external contractors.
 Direct control: The owner has complete control over the

project execution including labor, material and scheduling.

 Potential cost saving: Can be cost effective for small, urgent

projects or when the owner has readily available resources

and expertise.
 Internal capacity building: can help develop the skill and

experience of owner force.

 Transparence: Fully visibility into the project costs as all
26
expenses are directly tracked.
 Cont…

Disadvantage of Force Account delivery system:-

 High management overhead: - requires significant project

management effort to oversee all aspect of the

construction project including labor, material and quality
control
 Potential cost overrun: - can lead uncontrolled costs if not

properly planed and monitored especially if unexpected

issues arise.
 Need for skilled workforce: - requires a well-trained and

experienced internal team to execute the project efficiently.

 Risk of Delays:- can be susceptible to delays if internal
27
resource are not sufficient to meet the project deadlines.
 B). Design-Bid-Build
(Two Separate Contracts for Design & Construction)

Owner

General
A/E Contractor

Responsible for Design Responsible for

28 Costs & Schedule
 Cont…
 This is the most practiced type of delivery system

in the Construction Industry of Ethiopia since

the 1987.
 After project owners did prepare the Basic
Planning that identifies construction project
programs, they call upon the participation of
Design and / or Supervision Consultants
either by tender or by negotiated contracts.
 This consultant will carry out the design together
29
with the necessary tender documents which will
 Cont…
Relation of parties in DBB

30
 Cont…
Typical Design-Bid-Build Process
(The Four Phases)

NEED

Planning Design Bid Constructio Occupancy

Typical
n
Design-Bid-
Build
Process

Design Contractor
Team

17
 Cont…
Advantages of Design-Bid-Build
1. Clear role and responsibilities: -

 Each project stakeholders (owner, designer, and contractor) has

a well defined role, to minimize confusion and potential for

conflicts.
 One of the key advantages of DBB contracts is the clear separation

of responsibilities between the design and construction phases.

 The project owner hires an architect or engineer to develop
detailed plans and specifications, which are then put out for
competitive bidding.
 This separation ensures that the design is complete and well-

defined before construction begins, reducing the likelihood of

32
changes or disputes during the construction phase .
 Cont…
2. Competitive Bidding Process:-
 DBB contracts typically involve a competitive bidding
process where multiple contractors submit proposals
based on the same set of plans and specifications.
 This competitive environment encourages contractors to

submit their best possible bids, often resulting in lower

construction costs for the project owner.
 Additionally, the bidding process allows the owner to
compare the qualifications and prices of different
contractors before making a selection, ensuring the best
33 value for money.
 Cont…
3. Risk Allocation:
 In DBB contracts, the majority of the project risks are

transferred from the owner to the contractor once the

construction contract is awarded.
 Since the contractor is responsible for executing the

project according to the specified plans and

specifications, they bear the risk of cost overruns,
delays, and construction defects.
 This risk allocation provides the owner with greater

financial protection and peace of mind, knowing that

34
they have a fixed price contract for the construction work.
 Cont…
4. Flexibility in Design Selection:-
 DBB contracts allow the owner to have more
control over the design process and the
selection of the design team.
The owner can work closely with the architect

or engineer to develop a design that meets

their specific requirements and
preferences, without being influenced by the
preferences or biases of the contractor.
35
The owner can refine the design based on
 Cont…

5. Clear project definition:

 The design phase is completed before
construction bidding, leading to a well defined
project scope with detailed specification,
allowing for more accurate cost estimations
from contractors.

6. Potential cost savings:

 The competitive bidding process can leads to

cost optimization by selecting lowest

36
 Cont…
In general the following points are the Merits of DBB
 Contractors bid competitively ,based on complete design

documents to maximize the built product for the price.

 The owner selects the Designer on the basis of
qualifications or ability.
 The Designer is active in construction administration, so

design intentions are followed.

 Design and construction roles are clearly defined, and

responsibilities and liabilities clear.

 Owner is an active participant in design process.
37
 Cont…
Disadvantages of Design-Bid-Build
1. Limited contractors involvement: -
 One of the main drawbacks of DBB contract is

limited involvement of contractor in design

phase.
 Since the contractor is not involved in developing

the plan and specification, they may identify

constructability issues or cost saving
opportunities only after the contract is awarded.
38
 Cont…
2. Potential for disputes
 Separate contract for design and construction can leads to

disputes between the parties regarding design errors or

unforeseen conditions, resulting in delays and cost
increasing.
3. Longer project duration:
 The sequential nature of the process, where the design is

completed before the construction starts, can leads to longer

overall project timelines.
4. Limited innovation and collaboration
 The distinct roles can sometimes hinder collaboration between

the
39 design team and the contractor potentially leading to less
 Cont…
In general the following points are the Demerits of DBB
 Fragmented contract for the project owner.

 Severe Adversarial relations between the contracting

parties, rather than foster a cooperative atmosphere.

 Non - Impartiality of the Design and Contract
Administration services
 Project owner responsibility for risks associated with the
design and contract administration
 Design-Bid-Build construction phases are sequential and

may require more time

 No built-in incentives for contractors to provide enhanced
40 performance (cost, time, quality, or combination thereof)
 Cont…

 Owner is at risk for final construction cost. Actual

construction costs are not known until design and

bidding are complete.
 The inability of design and contract administration

consultants to cope up with new construction

technologies and constructability issues of their designs.
 The indirect contractual obligation assigned for the

Design and Contract Administration consultants.

 Often prone to adversarial positions that lead to
disputes and claims
41
 Cont…
Key conditions favoring DBB delivery system
1. Clear and detailed design: - When the project plans and
specifications are thoroughly developed with minimal room for
design changes, allowing contractors to accurately estimate
costs based on a known set of requirements.
2. Price competition is crucial: - When the owner prioritizes
obtaining the lowest possible construction cost through a
competitive bidding process among multiple contractors.
3. Separate management preferred: When the owner is
comfortable managing the design team (architect/engineer)
and the construction contractor as separate entities, with clear
lines of responsibility.
4. Standard project type:- For projects that fall within a well-
established design category with predictable construction
methods, minimizing the need for extensive collaboration
between design and build teams.
5. Longer timeline acceptable: - As DBB usually takes longer
than
42 a design-build approach due to the sequential phases of
design, bidding, and construction.
 Cont…
When to avoid DBB: -

1. Complex design:- If the project requires significant

design flexibility or collaboration between design and
construction teams to optimize solutions, a design build
approach might be more efficient.

2. Tight deadlines: -When a fast project completion is

critical, a DBB contract might not be the best option due to
the potential for delays during the bidding process.

3. Innovative design features: - For projects with unique or

cutting-edge design elements, a design-build approach can
facilitate
43 better integration between design and
 C). Design Build/Turnkey
 Design Build or Turnkey by principle reduces numbers of

procurement processes engaged in the fragmented process

and employ only one procurement process and a single
contractor to provide the entire Construction Implementation
Process (Design and Construction Implementations).
 Enhance the Force Account delivery System

 Reducing fragmentation, adversarial relations and

Project Owners’ risk

 Employ(use) only one procurement process

 Single contractor to provide the entire Construction

Process (Design and Construction Implementations)

44
 Cont…
Design-Build (Turnkey)

Owner

Design-Build
Firm

Designers and Consultants Subcontractors and Suppliers

45
 Cont…
Design-Build

OWNER

DESIGN-BUILD
FIRM

design
subcontractors construction
design subcontractors
sub consultants
46 suppliers
 Typical Design/Build Process
(The Four Phases)

NEED

Typical Planning
Design/ Design
Build Construction
Process Design/Build
Team Occupanc
y

47
 Cont…
A design-build contract may also include responsibilities that
extend beyond the design and construction phases of a
project, shifting more performance risk to the private sector.
These have include
Design-Build-Warranty
Design-Build-Maintain
Design-Build-Operate

48
 Cont…
Advantage of DB
 Reducing fragmentation and adversarial relations between

designers and constructors;

 Minimizing Project owners’ risk transferable due to designers’

faults;
 Accountability and entire responsibility for both design and

construction is onto a single contractor;

 Employers’ responsibility to co-ordinate is avoided;

 Single point responsibility minimizes the opportunity to claims

 The client budget or financial requirement is defined early

enough
49
 Earlier schedule and cost certainty
 Cont…
Accelerated project delivery by:
Fast-tracking design and construction
Close coordination between designer and
contractor
Early contractor involvement to enhance
constructability of plans
Innovation and quality improvements through:
Alternative designs and construction
methods suited to the contractor’s
capabilities
Flexibility in the selection of design,
materials, and construction methods
50
 Cont…
 In general design-build system has the following
advantages;-
 Collaboration: -Designers and builders work together from the start,

which can lead to cost-saving opportunities.

 Risk mitigation: -A single entity is responsible for the project's

completion, including costs, timeline, and final outputs.

 Quality control: -A streamlined construction process can lead to

higher-quality results.
 Flexibility: The team can adapt to changes and challenges more easily.

 Budget management: The collaborative approach can help streamline

operations and control costs.

 Faster results: The design-build system is responsive during

construction, and big decisions can be revisited without added cost and
51 time delays
 Cont…
Disadvantage of DB
The disadvantage of this delivery
system is
loss of control,
cost of tender and
cost of risks.
Accelerated construction can potentially
overextend the workforce.
Traditional funding may not support
fast-tracking construction or may
require accelerated cash flow.
52
 Cont…
 Key situations where design-build is advantageous:
 Complex projects with tight timelines:- When a project
has intricate design requirements and a fast completion
deadline, design-build allows for efficient coordination and
quicker decision-making.
 Need for flexibility and design optimization: -If the
project scope might need adjustments during design, the
design-build approach enables easier modifications and cost-
saving solutions.
 Innovative design solutions: -When seeking creative
design elements or new technologies, a single design-build
team can better integrate these features into the construction
process.
 Uncertain site conditions: -If the site conditions are not
fully understood at the project start, design-build allows for
design adjustments based on discoveries during construction.
 Strong collaboration desired: -When the owner wants
53 close collaboration with the design and construction teams to
 D). Build Operate Transfer
 Build - Operate – Transfer (BOT) is a form of procurement and

contract delivery system that promotes Public Private

Partnership (PPP) in which a private company is contracted
to finance, design, construct, and operate for a certain
period (usually 10 years) and transfer.
 The project owner is not responsible for any liability other

than force majeure and agreed upon claim adjustments.

 The Operation period between completion and transfer gives

the contractor an opportunity to verify the quality of the

output of the services and works
 BOT project involves a potentially complex contractual
structure.
54
 Cont…
 Most BOT projects failed because of their built up

and engagement in very large projects which is

an extremely risky business for contractors.
 It is advisable to start with small projects and

tries to develop experience and expertise to

make such delivery system successful.

55
 Cont…
 Advantages of BOT:-

 Reduced government funding: -The private sector finances the

project, lessening the initial financial burden on the government.

 Faster project completion: -Private companies often have

greater capacity to execute projects quickly compared to

government agencies.
 Expertise and innovation:- Private companies can bring

specialized knowledge and advanced technologies to the project.

 Risk transfer: -The private sector assumes most of the

construction and operational risks associated with the project.

 Improved quality: -Private companies may prioritize quality

control to ensure project standards are met.

 Potential for economic development: -Large infrastructure
56
projects can stimulate economic growth in a region.
 Cont…

This delivery system is advantageous because

of
It minimizes owners’ scarcity of financial

resources.
It devoid of considerable risks from the

project owners.
The facility is well operated and transferred

with free of charge or minimum

57
 Cont…
Disadvantages of BOT: -
 Limited government control:- Once the project is
operational, the government may have less control over day-to-
day operations and decision making.
 Complex contract negotiations:-BOT agreements can be
intricate and require extensive legal expertise to manage
potential risks.
 Potential for cost overruns: -If not properly managed,
unforeseen issues during construction could lead to increased
costs for the government.
 Dependency on private sector performance:-The project's
success relies heavily on the private company's ability to deliver
quality services as per the contract.
 Potential for user fee increases:-To recoup their investment,
the private operator may need to set higher user fees for the
project.
58
Regulatory challenges:-Obtaining necessary permits and
 Cont…

In short ,the disadvantages of BOT are:

Cost more in the long run
Longer tendering process
Costly tendering
Future political change may disrupt prior
agreement
No capable local contractors
Contractors not interested in all works
59
 E). Construction/Facility Management Consultancy
 Response to problems associated with DB and BOT

 Where the Project Owner was not well represented for

its benefit and the problem of fragmentation between

Planning and Implementation.
 As a result, Construction management consultancy

firm is used to coordinate all activities from concept

inception through acceptance of the facility.
 Facility management consultancy adds operation of

facility during operation to Construction Management

Consultancy.
60
 OWNER

ARCHITECT
LIMITED
CONSTRUCTION
ADMINISTRATION

DESIGN
DATA DETAILED
CONSTRUCTION
COORDINATION

FEASIBILITY
+COST
DATA
Architect’s
design GENERAL
consultants CMa CONTRACTOR

subcontractors

Construction Management: materials suppliers

61
“Agency” Form
 Cont…
The main difference of this delivery system is that,
while all the others involve only during the
implementation phase after major decisions was made
during the Basic planning phase of the construction
process,
it is involved in the whole construction processes.
Construction Management Consultants then represents
Project Owners to carry out the following services:
 Feasibility studies of Construction related services,
 Plan and Monitor the Triple Constraints of Project
Performances,
 Lead and Organize regulatory systems of the Construction
Industry
 Valuation, Quantity Surveying , Procurement and
62
Contract Management Services
 Construction Management

Construction management is a broad term covering a

variety of project delivery scenarios in which a
construction manager becomes an integral part of the
team, at early stages in the project, to oversee such
elements as schedule, cost, and construction
methodologies and procurement strategies.

The general Construction Management variations are

Construction Management-at-Fee (CM at-Fee) and
Construction Management-at-Risk (CM-at-Risk),
63
 CM at-Fee
CM-at-fee is a delivery method similar to the DBB
In CM-at-fee method,
The construction manager is responsible for
project and site management,
 but is not involved in actual construction
work.
The construction manager monitors cost, time,
quality and safety,
 but does not take responsibility for them.
The construction manager is paid a fixed or time
based for services provided
The construction management organization takes an
advisory role or role of an agent to the client.
The CM has limited risk because construction
64 contracts are between the owner and individual
 Cont…
Construction Management-at-
Fee
(CM at-Fee)
Owner

Agency
CM

A/E
GC

Designers and Consultants

Subcontractors and Suppliers

65
 Cont…
Advantages of CM at-Fee :-

Managing and administering all

phases of a project.
Treats Planning, Construction and
Design, as an Integral Task.
Cost and Schedule Control
Constructability input at design
66 stage
 Cont…

Disadvantages of CM at-Fee

No contractual relationships with trade

contractors
No contractual responsibility for outcomes

of a project
Client retains the risks

Additional cost for the Construction

Manager
67
 CM at-Risk
 In CM-at-risk, the construction manager, apart from

providing constructability inputs at the design

stage, is also responsible for construction means
and methods and delivery of the completed
work, including quality and performance of
the asset.
 All procurement in the project is done by the

construction manager.
 Owner make contracts with the designer and the
68
construction manager-at-risk.
 Cont…

69
 Cont…
Advantages of CM at-Risk
Good for clients with insufficient staff
Owner flexibility
Responsible for cost and time overruns
Holds and manages trade contractors
Constructability design review
Legal position as a General Contractor
Works closely as a teaming effort and
encouraging trust and partnering
70 Phased construction (fast tracking) possible
 Cont…
Disadvantages of CM at-Risk
Lack of capable construction managers
Demanding work organization
Lack of cost certainty for each work packages
Lack of contractors who can provide both
construction management and construction
services
Fragmentation, as compared to DB& BOT
No exactly defined work packages (bill

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quantities)
 F). Partnering, Alliances

Which focuses most on management of relationships and

value adding to ensure quicker, cheaper and quality
services and products with less disputes are recent
developments.

This is a method where an owner/developer and a

contractor agree to work together by freely sharing
resources, risks and knowledge during the course of
the project.

These systems require to overcome cultural and

behavioral barriers among interest groups and
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 Cont…
This type of project procurement can be
distinguished from others by
Collective performance of obligations
by the owner/developer and contractor,
Decision-making by agreement,
Commitment to resolve disputes
without resort to litigation
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 Cont…
Advantages of Partnering, Alliances:-
 Cost efficiency:- Sharing delivery infrastructure and
personnel with a partner can significantly reduce
costs associated with building and maintaining a
dedicated delivery fleet.
 Scalability: -Quickly expand delivery reach by
leveraging the partner's existing network, allowing for
rapid scaling during peak demand periods.
 Focus on core competencies:- By outsourcing
delivery, a company can concentrate resources on its
core business activities like product development
and marketing.
 Access to expertise:- Partnering with a specialized
delivery company can provide access to advanced
74 logistics technology and delivery expertise.

 Cont…
 Wider reach:- Expand delivery coverage to new
geographic areas through the partner's established
network.
 Competitive advantage: - Offering faster or more
convenient delivery options through a partnership can
set a company apart from competitor
 In general Partnering, Alliances has the following
advantages
Increased opportunities for cost saving by continual

improvement,
Lack of an adversarial atmosphere,

Cultivation of good public relations and increased

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prospects of repeat business,
 Cont…

However, partnering is not an easy

solution. It requires commitment,
discipline and trust and can
demand significant adjustments in the
relative, traditional positions of an
owner/developer and a contractor.

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 2.3 Choice of Project Delivery Methods
Choice of project delivery methods can be pictured
in a different context, which displays the project
delivery methods viewed by means of two criteria.
This is based on whether the project delivery
methods are based on:
Approach (segmented or integrated), and
Source of finance (direct or indirect funding)

If the goal is to seek traditional or segmented

delivery methods, then the client would consider
the following delivery methods.
77
 Cont…
If the goal is to seek integrated delivery methods, then the client
would consider the following delivery methods.
 Design-Build (DB)

Construction Management (CM at-Risk)

Design-Build-Operate-Transfer (BOT)

And if the intention is to seek direct project funding, the owner may
consider the following options:
Design-Bid-Build (DBB)

D-B (Design-Build)
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Construction Management (CM) at fee and at risk.
 Cont…
If the goal is to seek external financing
(indirect funding), then the client would
consider the build-operate-transfer
(BOT ).

 Note: It is worth mentioning that the

above division is based on the normal
procedure or the usual practice. It may
79 vary as agreed up on.
Thank You!!!!