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1
M
JOURNALS
NOLEGEIN Journal of
Management Information Systems
http://m bajournals.in/ index.php/J oMIS/index
ISSN: 2581-6810
Volume 5, Issue 2, 2022
DOI (Journal): 10.37591/NJMIS
Procurement Routes, Supply Chain Management and
Building Information Modelling: A Review of Trends
and Impacts on the Construction Industry
Amadi Alolote Ibim1 Abstract
It has been argued that the construction industry is distinct from other industries and must therefore
find solutions that align with its peculiarities. Over the last three decades, several reports, primarily
Latham (1994) and Egan (1998) have spotlighted systemic issues underlying the construction industry.
The construction industry is highly fragmented evidenced by a high level of subcontracting and a lack
of integration within supply chains. Poor information management has also been a common thread on
most construction projects. The adversarial culture of project stakeholders and low productivity has
been repeatedly discussed in the literature. Particularly, in the 199 0’s discussions on poor information
management, loosely coupled supply chains, and lack of collaboration took center stage. Addressing
these issues, given the transformational changes in other industries, has resulted in the drive by the
construction industry to proffer alternative methods of procurement and supply chain management
centered on Building Information Modelling. This report compares the advantages and disadvantages
of the different procurement methods available to construction projects, examines the impact of
Building Information Modelling on procurement methods, and also outlines the trends in digitalisation
within the built environment and its implications for procurement.
Keywords: Building information modelling, construction, digitalization, procurement, supply chain
INTRODUCTION
Procurement, within the context of the construction industry, can be defined as the method based on
which external resources needed for the completion of a project are obtained and organized (Davis, et
al 2008). It also refers to the organizational structure adopted by the client for the management of a
building project from design to construction (Masterman, 2002). Other definitions of procurement
methods extend it to the financing operation and facilities management of a project (Love et al., 1998,
Luu et al., 2003). From this perspective, various procurement systems or methods abound. These range
from the earliest traditional method, design, and build method as well as management methods -
Construction management/management contracting to other innovative methods (Masterman, 2002;
Davis, et al 2008). Other procurement routes
include the Design-Build-Operate (DBO) and
Design-Build-Finance-Operate (DBFO) (Mathonsi
and Thwala, 2012). Other mechanisms of
procurement such as partnering, Public Private
Partnership (PPP), and Private Finance Initiative
(PFI) are also in use. More contemporary
procurement methods such as collaborative working
procurement and alliancing are now becoming
commonplace, partly aroused by the team-focused
rethinking construction drive propagated by Latham
(1994) within the UK. Although Latham (1994) is
widely acknowledged to have initiated the
Review
NJMIS
*Author for Correspondence
Amadi, Alolote Ibim
E-mail: amadialolote@yahoo.com
senior lecturer, Department of Quantity Surveying, Rivers State
University, Port Harcourt, Nigeria.
Received Date: November 03, 2022
: Accepted Date: December 27, 2022
Published Date: February 05, 2023
Citation: Am adi, Alolote Ibim. Procurement Routes, Sup ply
Chain Management and Building Information Modelling: A
Review of Trends an d Impacts o n the Co nstruction Industry.
NOLEGEIN Journal of M anagement Information Systems.
2022; 5(2): 1–9p.
Procurement Routes, Supply Chain Management and Building
Amadi, Alolote Ibim
© MBA Journals 2022. All Rights Reserved
2
construction industry reform towards adopting supply chain management, counterarguments such as
Davis (1995) as well as Cox and Townsend (1997) are of the view that the report was mostly a
compilation of viewpoints, around which a consensus had to be taken. Yet, the Egan report (1998) re-
emphasized La tham’s (1994) position on the need for integrated processes and teams. Egan (1998, pp.
4) reiterated the need for integrated project processes centered around four key themes: ‘product
development, project implementation, partnering the supply chain and production of comp onents’.
Ferni and Thorpe (20 07) however questioned the universa lity of t he client’s worldvie w presente d.
Irrespective of the varying stances evident in the literature, drivers of change such as BIM and other
digitally-led innovations have strived for closer working relationships within the supply chain and led
to a wider proliferation of procurement methods (Luu et al., 2003).
PROCUREMENT METHODS: ADVANTAGES AND DISADVANTAGES
As the Latham Report (1994) espouses, the decision on what procurement route to adopt must be
guided by the nature of the project and the client ’s acceptance of risk. The Latham report (1994) further
outlined that project objectives such as early completion, price certainty, risk avoidance, etc. will
determine which procurement methods are suitable. The traditional method of procurement is also
referred to as the Design-Bid-Build method. The design and construction process are kept distinct i.e.
consultants are appointed for design as well as for cost control, while the contractor is primarily
responsible for executing the work (Davis et al., 2008). The design and build procurement method offers
a procedure where a single contracting organisation is solely responsible for the design and the
construction under a single Design-Build lump sum contract, following standards dictated by the client
(Koppinen and Lahdenperä, 2004). For management-oriented procurement methods, an organisation is
responsible for the management of the project, interfacing with the designer as well as other consultants
(Sawalhi and Agha, 2017). The management also oversees the physical operations that are executed by
the contractors (Mathonsi and Thwala, 2012).
The traditional procurement route accounts for the fragmentation of construction projects, whereby
on simple projects, main contractors and design consultants serve as separate tier -1 suppliers (Davis,
2008). With increasing project complexity, numerous suppliers may be engaged, which may then
generate an extended network of contractually disconnected supply chains. From a supply chain
perspective, therefore, the shortcomings of the traditional method primarily hinge on the non-integrated
nature of the supply chain, lack of early collaboration, and adversarial culture (Natasa and Car-Pu šić,
2008). Egan (1998) resounded the need to replace traditional procurement, with contracts that seek the
best overall value within the supply chain, which are not just based on minimum price. The traditional
method of procurement however remains in use to date, despite calls for client-led change from
competitive pricing in favour of more collaborative procurement methods rooted in long-term
relationships (Egan, 1998). This may be attributed to the advantages of the traditional procurement
method such as accountability/transparency of the competitive process which lowers the contract price,
and the price certainty upon contract award (Noau m, 1994). Typically, the traditional method was used
in the Research primary school case study led by Kennedy Nolan Architects, worth $5.7 million (Davis
et al., 2008).
Unlike the traditional method, the Design and Build procurement method provides the advantage of
a single point of responsibility with less client risk (Masterman, 2002). It is asserted that the design and
build procurement route enables better integration within the supply chain network, with less adversarial
relationship (Natasa and Car-Pusic, 2008). This is because it creates a platform for a fully integrated
team to work together from the project onset. This was typical in the case of the A4232 Eastern Bay
Link Cardiff, UK, whereby the team worked closely to overcome initial difficulties in preliminary
designs. The design-build method also provides a framework for early project completion, due to the
overlap between design and construction (Mathonsi and Thwala, 2012). It may however pose
disadvantages due to the difficulties in comparing alternative design offers, and loss of control over
NOLEGEIN Journal of Management Information Systems
Volume 5, Issue 2
© MBA Journals 2022. All Rights Reserved
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ISSN: 2581-6810
design (Masterman, 2002). Costs may also be higher, as fully competitive bidding is limited compared
to the traditional method (Sawalhi and Agha, 2017).
Procurement methods such as construction management, management contracting, and ‘design
and manage’ are all variants of the management procurement method (Davis et al. 2008). There are
a number of advantages to the management method of contracting, such as having a unified point
for addressing client issues, competitive letting of work packages, flexibility for design changes,
and the potential for overall cost/time savings (Sawalhi and Agha, 2017). Typically, the Sidney
Myer music bowl, in Melbourne which underwent significant restoration, adopted the constructio n
management procurement method and benefited from its flexibility in supporting requisite design
changes and adjustments (Mathonsi and Thwala, 2012). On the other hand, a key disadvantage of
management procurement methods includes higher client risk due to multiple coordination points
within the supply chain. Figure 1 is an extract showing common areas of concern/conflicts in the
management procurement supply chain, based on the outcome of an empirical study of a large
London-based case study.
Figure 1. Common Areas of Concern/Conflicts (Dodd and Langford,1990).
Therefore, although management procurement methods foster collaboration between the client and
the management contractor, Dodd and Langford (1990) outcome indicates that inadequate supply chain
integration between the tier-1 and tier-2 layers may constitute a disadvantage. The numerous
subcontracts, further pose difficulty in programming work, and price certainty can only be attained
when the final work package is subcontracted (Lahdenperä, 2008).
The emergence of collaborative working procurement methods such as frameworks and strategic
partnering reaffirms the move towards supply chain integration. They are however better suited for
larger clients with continuous or repetitive workloads. Forms of collaborative working procurement
have been adopted by the National Change Agent (NCA) - housing program me, Lin coln shire’s
Local Authorities, and the Midlands Highway Alliance (Constructing Excellence, 2009).
Collaborative procurement has advantages such as cost savings from not having to rebid and form
new teams for each project, improved performance/buildability as a result of learning from previous
projects, and the integrated nature/maturity of the supply chain. These benefits were evident in
London Borough of Hackney and Hackney Homes, which achieved 10% and 35% savings in
tendered rates for phases 1 and 2 of its Decent Homes project, through working with strategic
alliance partners and supply chain (Constructing Excellence, 2009). Collaborative procurement
may however have the disadvantage of losing market value due to the repetitiveness of the
tendering arrangement.
Impact of Building Information Modelling (BIM) on Procurement Methods
BIM is a computer-generated model of a project which facilitates information sharing in a digital
format among project stakeholders and professionals, thereby enhancing the collective
comprehension of design intent as well as promoting supply chain and life cycle integration (Azhar
et al., 2008). The advent of BIM has been advantageous for other procurement functions such as
tendering processes, resource planning, and scheduling (Azhar et al., 2008; Chevin, 2017). Several
Procurement Routes, Supply Chain Management and Building
Amadi, Alolote Ibim
© MBA Journals 2022. All Rights Reserved
4
case studies attest to the benefits of BIM. Case Studies of BIM in use were demonstrated in Precast
Concrete Design by four Structural Engineering Firms that experienced an improvement in
engineering design quality and labour productivity (Olofsson et al, 2008). Another case study of a
large healthcare project showed the benefits of complete pre-fabrication in plumbing works, less
than 0.2% rework, zero design conflicts, six months’ time saving s, and a $9M savings in overall
project cost (Olofsson et al, 2008).
A common misconception about BIM is that it is an ICT tool only. Yet the most copious impact of
BIM on procurement is its ability to foster collaboration. BIM is particularly important in complex
projects as it facilitates multidisciplinary collaboration (Both, 2012). BIM has thus triggered a shift in
paradigm from conventional procurement philosophy, which is characterized by fragmentation, to
integrated service delivery and co-ownership of virtual properties (Gibbs et al., 2012). Standard forms
contracts such as the JCT 2011, NEC 3, and PPC 2000 have various treatments of BIM in contract terms
that provide for an early contractor, subcontractor, and supplier involvement (Ilozor and Kelly, 2012).
The scope of services offered on BIM-enabled contracts now includes other roles such as the BIM
coordinator. Furthermore, the BIM protocol can be incorporated as an amendment in professional
service engagement.
A range of innovative procurement methods is now available, with the intent of fostering
collaborative procurement (Lahdenperä, 2012.). These include new procurement methods such as
Project Alliancing/Alliance Contracting (PA); Integrated Project Delivery (IPD) and Early BIM
Partnering. These procurement methods rely on BIM as a core component of the design,
construction, and asset management of projects (Hampson and Kraatz, 2013). Typically, the Project
Alliancing and Integrated Project Delivery meth ods are based on ‘multi -party’ contracting between
the project players, with all parties forming a joint organization to assume joint responsibility for
both the design and construction as well as risk-sharing (Petajaniemi and Lahdenpera, 2012). This
facilitates the formation of collaborative teams and the early contribution of expertise and
knowledge (Table 1).
Table 1. BIM Enabling Collaborative Features on PA and IPD.
(Bolpagni, 2013)
Whilst these aforementioned procurement methods lend themselves to BIM incorporation because of
their collaborative nature, the Early BIM partnering method, is specifically tailored to utilize BIM on
public projects (Figure 2).
based on a 'mult i-party' contract between th e players in volved in a
project
parties assume joint responsibility for the d esign
construction to be impl emented through a 'joint organisation', which
incorporates the client
players share both positive an d negative r isks- obse rve principle s of
openne ss and information a ccessibility to pro mote collaborat ion and 'no
fault, no bla me culture
different parties consider other's views and cooperate more efficiently
Project All iancing (P A)
Integrat es people, system s, business structures and practices into a
process that collaborat ively har nesses the tal ents and insights o f all
participants through all phases of design, fabrication and construction'
Teams usuall y include many experts and not only owner, designer and
contractor who enter into a single collaborat ive contract, a multi-part y
agreement to share risk and potential r ewards.
Promotes a tight collaboration between all the parties involved from
early design thro ugh project hand over
The client and/or a consultant need to be part of the integrat ed team t o
help the management of the proc ess
Integrat ed Proje ct
Deliver y ( IPD)
BIM Enabling collaborative f eatures
NOLEGEIN Journal of Management Information Systems
Volume 5, Issue 2
© MBA Journals 2022. All Rights Reserved
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ISSN: 2581-6810
Figure 2. Early BIM Partnering, (Bolpagni, 2013).
BIM has been benchmarked as a primary platform for procurement in many developed countries. In
the UK, level-2 BIM has been made mandatory on all public projects, whereby all parties to the
construction can access and make contributions to a single BIM model. Cost Led Procurement, Two -
Stage Open Book, and Integrated Project Insurance are the three BIM-based procurement methods
developed in the UK (Bolpagni, 2013). Trial projects such as the Cookham wood and the North Prison
case studies attest to the cost, time, and collaborative benefits of the two-Stage Open Book procurement
method of BIM incorporation in the UK. In support of these new procurement approaches, several
industry frameworks have been established in the UK, such as the PAS 1192:2 and PAS 1192:3
frameworks, to address the BIM information requirements of different stakeholders throughout the
building life cycle (Philp, 2012).
Digitalization Trends in the Built Environment: Impact on Procurement Methods
Evolving information and communication technologies have caused a shift from conventional
methods of working and triggered change and modernization in the built environment. Digital
technologies such as 3D printing, Internet of Things (IoT), Augmented and Virtual Reality, etc. have
permeated every aspect of construction. According to Froese (2010), the trend in digitalization specific
to construction procurement activities can be delineated into three phases (Figure 3).
Figure 3. Phases of Digitalization.
This trend indicates a shift in paradigm in digital technology uptake from supportive CAD-based
applications to integration and collaboration enabling data management systems. Typically, Whyte and
Lobo (2010) study of a public-private partnership (PPP) project in a European motorway, revealed that
several types of digital technologies (3D printing, Internet of Things, and Geographic Information
Systems) were deployed in the design and engineering of the work by the different stakeholders to
facilitate communication, coordination, and knowledge sharing. Particularly, the adoption of BIM
enabled the easy exchange of project data, enabled collaboration in real-time, and facilitated the virtual
construction of the facility before its actual physical construction. This minimized uncertainty and
helped in simulating and working out potential problems. Furthermore, sub -contractors from the
different trades were able to collaborate and share critical information, which was imputed into the
the deployment of Computer Aided Design (CAD) system to carryout and support processes in 2D
architectural design, cost estimating and structural analysis, whereby outputs and mode of
information sharing were still mostly paper-based.
the use of non-paper-based technologies -e-mail and web-based and other computer-assisted
communication technologies/tools as well as document management system.
the move towards integration and collaboration-based technologies, such as BIM, web-enabled
project management software and cloud computing.
Procurement Routes, Supply Chain Management and Building
Amadi, Alolote Ibim
© MBA Journals 2022. All Rights Reserved
6
model before construction began. Opportunities for pre-fabrication and offsite pre-assembly were noted
and utilized.
Different digital technologies applied to different aspects of procurement can be identified. In the
appointment of consultants and professional team Web-based applications are utilized. In the
preparation of procurement documents, CAD and BIM-based applications are used for design,
engineering as well as for quantity take-off. Advanced CAD-based technology includes Autodesk Revit,
Bentley Architecture, and Graphisoft ArchiCAD. Other digital technologies utilized include Vico
Constructor Tekla Structures and Autodesk Naviswork. Digitalization also supports visualization and
virtual reality in procurement via Interactive, 3D computer applications. In establishing a procurement
strategy and management of supply chains, Web-based Enterprise Resource Planning (ERP) is used to
integrate functional and departmental information flow within organizations into single computer
systems (Alpers et al., 2014). Web-based Project Portals are used in tender solicitation as a basis to
gather information about different organizations, their services, and products. Online transactions and
information exchange such as the transmission of drawings are also facilitated (Sheng et al 2020). Cloud
computing technology and specifically tailored internet-based applications (Software-as-Service) such
as ‘Decision Max’ serves as a basis for e-Tendering. Video conferencing and multimedia technology
are also utilized to clarify bid information during tender evaluation and also during contract award
(Amarapathy et al., 2013). During contract administration, LADAR (laser distance and ranging)
technology or a 3D scanner is used with photogra mmetry to rapidly track changes in the quantities of
work carried out on sites. Radio Frequency Identification (RFID) technology is deployed in the tracking
of project materials down the supply chain. Live images of project sites can be captured directly into
the project team computers via the use of Web-based cameras, thus facilitating remote project
monitoring. Other digital technologies applied to procurement include Bar Code technology, electronic
data interchange (EDI), and e-market places. The emerging trend in digital technologies now includes
blockchain and smart contracts (Abdel-Basset et al., 2018; Ali et al 2018)
Profound and continuing changes have correspondingly occurred in digitally enabled procurement
models (Whyte, 2019). The pace of innovation in digital technology means that project deliverables are
changing from just physical products to include digital information as the physical and digital interact.
This has evolved supply chains and redefined relationships with operators, clients, and end -users.
Digital workflows rather than paper-based documentation, are becoming increasingly central to public
project procurement methods (Table 2).
Table 2. Digitally Enabled Project Delivery Trends in Mega Infrastructure Projects.
Project Delivery Mo dels
Digitall y Enabled D elivery
Heathrow Terminal 5
Long-term o wner-operator BAA acted as
the delivery client for the project and used
the T5 Agre ement to share risks and
reward s.
Single model environment, held by BAA with
access for first-tier su ppliers, used to coordinate
and manage interdependenc ies across
subprojects. The design software was provided
by Autodesk through a reseller.
London 2012
Olymp ics
The megap roject delivery client, the
Olymp ic Del ivery Author ity (ODA),
worked with a del ivery partner, CLM.
Contracts for the ma jor venues used a
collaborative contract, New Engin eering
Contract (NEC) 3, option C (a t arget
contract with activity schedul e).
Contracts wer e out before the digital strategy
was developed, and so d ifferent subprojects
used different technolo gies, and th en files we re
convert ed for archivin g and for hand -over by
CLM and passed to ODA for o nward
transmission to games in 2012 and lon g-term
owners and operators.
Crossrail
Crossrail acts both as t he megaproject
deliver y client and del ivery p artner. The
three major tunneling contracts u sed a
collaborative contract (NEC 3, option (C ).
Different parts o f the line will h ave
A central information strategy was put in place,
with GIS, BIM, and asset manageme nt data
being aggregated an d stored at project le vel.
There is a strong partnersh ip with Bentley
Systems: All contractor were trained in use of
NOLEGEIN Journal of Management Information Systems
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© MBA Journals 2022. All Rights Reserved
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ISSN: 2581-6810
different long-t erm owners and operators,
with hand-overs to Transport for London
and Rail fo r London.
data, and th e quality of in format ion th ey
develop ed was mo nitored.
High Speed 2
HS2 is the megapr oject delivery cl ient, with
CH2 M, Atkin s, and SENER as delivery
partner in Phase 1, with contract s in Phase
1 using a coll aborative contract (NEC3,
option C).
The amb ition is to receive informat ion in
standard formats rather th an to specify data , and
to use standard proc esses. There is a BIM
roadmap associated with the project.
(Whyte, 2019)
The widespread deployment of digital information and technology has thus transformed the
conventional procurement methods frontier (Lobo and Whyte, 2017). Conventional procurement routes
still exist but are now becoming heavily shaped by digital integrative strategies. Digitalisation has
redefined the relationships between the project team, created new norms for approvals and workflo w
monitoring, and has resulted in new forms of professional accountability. (Jaradat et al., 2013;
McKinsey, 2014).
CONCLUSION
Procurement methods have undergone transformational modifications, triggered primarily by
paradigm shifts in supply chain management, the development of Building Information Modelling, and
other forms of digital technologies. Despite counter-arguments surrounding the contextual applicability
of supply chain management principles in the procurement of construction projects, BIM and
digitalization provide a pathway to change in technical operations which links directly to promoting
partnering and collaborative practices recommended by Latham and Egan. The overarching theme of
BIM and technology triggered change center on process change from fragmentation to integration
within procurement methods. In this age of digitalization, therefore, the adoption of BIM -enabled
procurement methods has become a panacea for survival in the construction industry. Particularly the
need for wider adoption of BIM becomes critical, in view of the accelerated changes caused by the
Covid-19 crisis. This report, therefore, makes a case for promoting collaborative relationships,
particularly hinged on the adoption of BIM and digital technologies.
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