In the lead up to the launch of our UK construction guide, each week we will be releasing one chapter of the guide. The full version will be available in April. Read the first chapter below "Understanding UK procurement"
The traditional route involves the client separately appointing a design team under direct contractual appointments, and maintaining this direct contractual relationship throughout the project. The client appoints the contractor separately under a building contract.
Design responsibility rests with the design team, and the contractor has a responsibility to build to their design. Although the contractor has no overall design responsibility, he may design discrete specialist items.
Design and build
With design and build, the responsibility for carrying out most, if not all, of the design, and the risk in the design, is passed to the contractor. The contractor may carry out design in house, or may appoint his own design team. Alternatively, the design team appointments originally entered into by the client may be novated to the contractor, allowing for continuity of design.
Hybrid and variant versions of such single point responsibility include:
- BOT (build, operate, transfer)
- DBO (design, build, operate)
- EPC (engineer, procure, construct)
In major civil engineering projects, contractors may form unincorporated JVs to undertake large works packages (assuming joint and several liabilities to their client, and allocating responsibilities between themselves through a JV agreement).
Management procurement involves a fast track approach which allows work to progress very quickly, but provides little cost certainty. The main types are:
This approach overlaps the design and construction stages, allowing early parts of construction to be started before the design has been completed. The management contractor is appointed by the client early in the programme, and his role is to manage the overall contract in return for a fee. The contracts for individual work packages are entered into by the management contractor and the individual subcontractors. Final costs cannot be ascertained until the final work package has been awarded
This is also a fast track strategy, similar to management contracting. Here, the contracts for the subcontractors are placed directly between the client and the subcontractor, and the client needs to have a high level of involvement during both the design development and the construction phases of the work. As with management contracting, the final costs will only be known, once the final works elements have been awarded
Partnering is a broad term referring to a more collaborative management approach to contracting. An overarching partnering agreement may be used, together with one or more contracts relying on one of the more conventional methods of procurement referred to above. There are also standard form contracts which adopt a partnering approach (see Standard Forms of Contract).
Like partnering, alliancing is based on a collaborative approach. It relies on the creation of an integrated and collaborative team from across the supply chain. Client outcomes and requirements are agreed, and risks and returns are normally shared between the participants. Alliancing requires commitment from all participants to ensure that the requisite cultural and behavioural approach is maintained.
A framework agreement seeks to establish, as between a client and its contractors or suppliers, the terms that will govern any contracts that are subsequently entered into during the period for which the framework agreement is in place. It sets out the general terms under which more specific orders or contracts will be placed or "called off" and - provided that the initial framework arrangement has been tendered in compliance with EU public procurement rules - it has the advantage for public bodies and utilities of avoiding the need to repeat such compliance for each subsequent call-off.
Early Contractor Involvement (ECI)
ECI is used in two-stage tendering, and is promoted as a way of achieving an integrated approach to design, with the contractor being retained during the early stages of the project, when design Is being carried out, so that its specialist knowledge may benefit the design process. The contractor contributes to the development of the design at stage 1 alongside the design team members - generally on a cost reimbursable basis - and will then submit a lump sum bid for the contract works at stage 2, based on a well-defined scope.
When implemented properly, ECI has the advantage of achieving a realistic and comprehensive price for the works, which both reduces the risk of subsequent claims and variations, and gives the contractor an appropriate margin