Content uploaded by Alolote Ibim Amadi
Author content
All content in this area was uploaded by Alolote Ibim Amadi on Oct 28, 2023
Content may be subject to copyright.
© STM Journals 2022. All Rights Reserved
19
ISSN: 2249-4766 (Online)
ISSN: 2347-9930 (Print)
Volume 12, Issue 3, 2022
DOI (Journal): 10.37591/JoPRM
STM JOURNALS
Journal of
Production Research & Management
http://engineeringjournals.stmjournals.in/index.php/JoPRM/index
Review
JoPRM
Pre-contract Advice on Construction Projects:
Procurement Assessment for Repair Works on
a Flood-Damaged Hospitality Facility
Amadi Alolote Ibim1,*
Abstract
Pre-contract advice on construction projects entails providing strategic expert evaluation at the
upstream phase of procurement. It is an essential part of contract management for routine work as
well as large projects. This study carries out a procurement assessment as part of the precontract cost
advisory services for proposed repair works on a hospitality facility, following damage from a flood
disaster event. Using a scenario-based approach, different methods of procurement were evaluated
for their pros and cons. Based on the outcome of the evaluation, the management contracting method
was chosen as the most suitable method for procuring the repair works. The key considerations in
reaching this conclusion were its potential overall advantages in most of the key client criteria,
including certainty of finish date, swiftness of response and minimality of employer involvement.
Criteria such as cost certainty and price competition were however lower on the scale of client
criteria. Further to this, a tender evaluation was carried out as a basis for assessing potential
contractors. The tender evaluation was two-pronged- a technical and financial proposal assessment,
which were based on set out criteria. The technical criteria was primarily pitched on the
experience/qualification of the contractor/team in general and specific to similar works, as well as the
quality of the proposed solutions. The overall assessment yielded a recommendation for the preferred
contractor on the merits of the highest combined overall score. The recommended tenderer however
did not have the lowest financial bid offer. Nonetheless, the tenderer emerged top, via a nexus of both
assessment criteria, demonstrating that technical and financial considerations are integral to the
selection of contractors for carrying out construction works.
Keywords: Construction, cost advice, precontract, procurement, repair works, tender evaluation
INTRODUCTION
The decision on what procurement route to adopt must be guided by the nature of the project and
the client’s acceptance of risk (Love et al., 1998; Luu et al., 2003). The Latham report (1994) outlined
that project objectives such as early completion, price certainty, risk avoidance, etc. will determine
which procurement methods are suitable (Davis,
1995; Cox and Townsend, 1997). 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
*Author for Correspondence
Amadi Alolote Ibim
E-mail: amadialolote@yahoo.com
1Senior Lecturer, Department of Quantity Surveying, Rivers
State University, PMB 5080, Port Harcourt, Nigeria
Received Date: January 12, 2023
Accepted Date: January 20, 2023
Published Date: February 07, 2023
Citation: Amadi Alolote Ibim. Pre-contract Advice on
Construction Projects: Procurement Assessment for Repair
Works on a Flood-Damaged Hospitality Facility. Journal of
Production Research & Management. 2022; 12(3): 19–25p.
Pre-contract Advice on Construction Projects Amadi Alolote Ibim
© STM Journals 2022. All Rights Reserved
20
the client (Koppinen and Lahdenpera, 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) [1–5].
PROCUREMENT METHODS EVALUATION
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-Pušić, 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 (Noaum, 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 design (Masterman, 2002). Costs may also be higher, as fully competitive bidding is
limited compared to the traditional method (Sawalhi and Agha, 2017) [6–12].
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 construction 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.
The emergence of collaborative working procurement methods such as frameworks and strategic
partnering reaffirms the move toward supply chain integration (Lahdenpera, 2012).
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 programme, Lincolnshire’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
Journal of Production Research & Management
Volume 12, Issue 3
ISSN: 2249-4766 (Online), ISSN: 2347-9930 (Print)
© STM Journals 2022. All Rights Reserved
21
result of learning from previous projects, and the integrated nature/maturity of the supply chain
(Petajaniemi and Lahdenpera, 2012). These benefits were evident in the 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 [13–20].
PROCUREMENT ASSESSMENT SCENARIO AND ADVICE
To illustrate the nature of pre-contract advice that can be offered, a procurement scenario for
carrying out emergency repair works of a hospitality facility is used. The scenario entails offering
advice to a client in the aftermath of a flood disaster event that has damaged the facilities of a hotel
and leisure business. Repair works are thus required to restore the damaged assets. However, carrying
out the proposed works is strictly time bound in view of an upcoming annual event when sales are
usually at their peak. Fifty-six days before a regional sporting and games festival flooding occurs at
Riley Hotel and Leisure (RHL) resulting in damage to premises, facilities, fittings and equipment, loss
of stock, and major disruption of business activities. The festival is an annual event attracting several
hundreds of people and remains the busiest time of the year for RHL. It is estimated that the
management of RHL could lose a profit of about £25,800 per day if accommodation, leisure facilities,
services, etc. are not available to cater for demand. The management of RHL is appointing a
contractor to repair the flood damage and to restore the business activities. The estimated contract
value is £1.25 million.
As a consultant quantity surveyor, the procurement advice offered to the management of RHL
should be tailored to suit the peculiarities of the situation. The important criteria relevant to the
effective delivery of the RHL’s restoration project are presented in Table 1. However, considering the
urgency of the repair works, achieving price competition may be less feasible than the other important
criteria (Morledge, 1996). On a scale of 1–5, the following weightings may be subjectively allocated.
Based on the foregoing, a Construction Management procurement route via negotiation is
recommended, to provide a managed service for directly employed labour (Mbanjwa, 2003). As
Griffith and Headley (1997) weighting of procurement methods (Table 2) shows, this poses minimal
risk for the employer, whereby direct sub-contracts are placed with trade contractors chosen via the
traditional route. This can be achieved using a single-stage tendering procedure, with payments made
based on measurements/remeasurements (Muriro and Wood, 2010). The key considerations in
reaching this conclusion are the potential overall advantages in most of the key client criteria [21–24].
As Dodd and. Langford (1990) highlight, the construction manager will be required to
oversee/conduct the restoration of the damage to premises, facilities/fittings/equipment and maintain
the responsibility for the quality targets required by RHL. However, this procurement approach may
not necessarily meet all the set client criteria, typically that of cost certainty, since the extent of the
work to be done may be uncertain (RICS, 2011; De Marco, 2011).
Table 1. Client criteria.
Assessment criteria
Weighting
Rapid response/speed (Less than 56 days to execute contract),
4
Certainty of Finish date (estimated loss of profit of about £25,800 per day)
5
Price competition (ensures that RHL gets value for money)
3
Cost certainty (not exceeding the estimated £1.25 million contract value);
2
Quality (ensure that RHL gets value for money)
4
Minimal risk for employer
3
Pre-contract Advice on Construction Projects Amadi Alolote Ibim
© STM Journals 2022. All Rights Reserved
22
Table 2. Performance scores.
Performance scores for procurement methods
Criterion
Measured term
contract
Lump sum
contract
Directly employed
labour
Rapid response
3
2
4
Certainty of finish date
3
3
4
Price competition
2
3
2
Minimal risk for employer
3
4
4
Minimal employer resource
4
2
2
Source: Griffith and Headley, 1997.
TENDER EVALUATION SCENARIO AND ADVICE
The tender evaluation scenario is for the Management of RHL who have now invited tenders from
consultants for the provision of pre-contract advice in choosing a contractor for the procurement
scenario outlined. Management of RHL invites tenders from consultants for a consultancy assignment
to provide pre-contract cost and procurement advisory services for the above scenario. A two-
envelope method is used for tender submission; each tenderer submits a technical proposal and a fee
proposal. The tenders are evaluated by RHL’s tender committee using an assessment criterion.
Using the information above, the Quantity Surveyor can perform a tender evaluation by calculating
the technical and fee assessment scores of the tenders, as a basis to recommend and justify the best
tender to the client (Jarkas and Haupt, 2015).
Technical Assessment of the Tenders
The Technical assessment of the tenders is carried out using the score formula: Technical
assessment mark of the subject tender/ Highest technical assessment mark of all tenders x the pre-
determined weight for the technical proposal (60%). Table 3 shows the technical assessment score
computation for each of the tenderers.
Table 3. Technical assessment score tabulation.
Assessment
criteria
Weight of
criterion
(%)
Tenderers/Assessed marks (%)
Erney cost
consulting
Jeremy &
partners
Riley
LLP
Nhyira
international
North-East
surveyors
1.
Background and expertise of
consultancy firm
15
6
12
11
4
12
2.
Experience and competence in
delivering similar consultancy
assignments
25
17
23
23
20
21
3.
Reputation of the consultancy
firm
10
8
6
8
7
5
4.
Quality of proposed technical
solution to address tasks
expressed in the assignment
brief
30
20
22
24
10
22
5.
Organization of consultant’s
team with qualifications,
expertise and experience of
each consultant
20
15
15
15
15
16
Total marks
100
66
78
81
56
76
Technical assessment scores
66/81×60 =
48.89%
78/81×60=
57.78%
81/81×60=
60%
56/81×60=
41.48%
76/81×60=
56.29%
Journal of Production Research & Management
Volume 12, Issue 3
ISSN: 2249-4766 (Online), ISSN: 2347-9930 (Print)
© STM Journals 2022. All Rights Reserved
23
Fee Assessment of the Tenders
Assumption: It is assumed that the lowest bid of 478, 000 has a 100% fee assessment score. All
other tendered fee scores are inversely proportional to the lowest fee benchmark, i.e. the higher the
tendered fee, the lower the score. The individual fee scores are then normalized using the
predetermined 40% weight for the fee proposal.
Fee Assessment Formula = lowest tender fee/tender fee of subject tender × 40%
Table 4 shows the computation of the fee assessment scores for the tenderers.
Table 4. Fee assessment scores.
Tenderer
Fee proposal (£)
Fee assessment scores
Erney cost consulting
650,000
478,000/650,000×40% = 29.42%
Jeremy & partners
730,000
478,000/730,000×40% = 26.19%
Riley LLP
554,000
478,000/554,000×40% = 34.51%
Nhyira international
478,000
478,000/478,000×40% = 40%
North-East surveyors
490,000
478,000/490,000×40% = 39.02%
Based on the technical and fee assessment, an overall assessment for the best tender is recommended
to the client as shown in Table 5, with due justification.
Table 5. Overall assessment.
Erney cost
consulting
Jeremy &
Partners
Riley
LLP
Nhyira
International
North-East
Surveyors
Technical assessment score
48.89%
57.78%
60%
41.48%
56.29%
Fee assessment score
29.42%
26.19%
34.51%
40%
39.02%
Total score
78.31%
83.97%
94.51%
81.48%
95.31%
Rank
5th
3rd
2nd
4th
1st
North-East Surveyors is recommended as the preferred tenderer due to its:
highest overall score (95.31%)
Second-lowest fee proposal/2nd highest fee score of 39.02% (fee is important in this project)
third-highest technical-assessment score (56.29%)
highest overall score in terms of technical criterion (1) and (4)
CONCLUSION
The study has evaluated the different procurement methods that are regularly used in executing
construction projects. The advantages and disadvantages associated with the use of each procurement
route has been highlighted, with a view to showcase their suitability. The study has shown that the
suitability of the procurement methods is bespoke to individual projects and the client’s expectations.
In this study, the selection of a procurement method was for a scenario-based case of urgent repair
works for a hospitality project, with the management method of procurement deemed adequate. As
such, for management-oriented procurement methods, an organisation is responsible for the
management of the project, interfacing with the designer as well as other consultants. The
management will thus oversee the physical repair operations that are executed by the contractors.
Upon selection of the management method of procurement, the scenario-based tender evaluation
carried out, demonstrated that technical and financial considerations are integral to the selection of
contractors for carrying out construction works.
Pre-contract Advice on Construction Projects Amadi Alolote Ibim
© STM Journals 2022. All Rights Reserved
24
REFERENCES
1. Constructing Excellence (2009). Collaborative Procurement. Available at
www.constructingexcellence.org.uk. [Accessed 02 March 2022].
2. Cox, A and Townsend, M. (1997). Latham as half-way house: a relational competence approach
to better practice in construction procurement. Engineering, Construction and Architectural
Management, Vol.4 No. 2, pp.143–158
3. Davis, M. (1995). Achievements, Action Plans and How Clients Can Help. The Latham
Implementation Plan Conference, 25 - 26 October, Cabot Hall, London
4. Davis, P., Love, P. and Baccarini, D. (2008). Report: Building Procurement Methods. Research
Project No: 2006-034-C-02. Brisbane, Australia: Icon.Net Pty. Ltd.
5. De Marco, A. (2011). Project management for facility constructions: A guide for engineers and
architects. Germany: Springer Science & Business Media.
6. Dodd, J and. Langford, D.A. (1990). Construction management on one large project in London: A
case study. Construction Management and Economics, Vol. 8 No. 4, pp. 385-398, DOI:
10.1080/01446199000000031
7. Egan, S. J. and Williams, D. (1998). Rethinking Construction: The report of the Construction
Task Force, Proceedings of the Institution of Civil Engineers – Municipal Engineer, Vol.127
No.4, pp.199–203.
8. Griffith, A. and Headley, J.D. (1997). Developing an effective approach to the procurement and
management of small building works within large client organizations, Construction Management
and Economics, 13(4), pp.279–289.
9. Jarkas, A. M and Haupt, T. C. (2015). Major construction risk factors considered by general
contractors in Qatar, Journal of Engineering, Design and Technology 13(1): 165–194.
10. Koppinen, T and Lahdenpera, P. (2004). He Current and Future Performance of Road Project
Delivery Methods. VTT Building and Transport, Publication 549.115s.
11. Lahdenpera, P. (2012). Making sense of the multi-party contractual arrangements of project
partnering, project alliancing and integrated project delivery. Construction Management and
Economics, Vol. 30, pp. 57–79.
12. Latham, Sir M. (1994). Constructing the Team, Norwich: HMSO.
13. Love, P.E.D., Skitmore, R. and Earl, G. (1998). Selecting an appropriate procurement method for
the construction process: An empirical study. Construction Management and Economics, Vol. 16
No. 2, pp. 221–233. https://doi.org/ 10.1080/014461998372501.
14. Luu, D.T., Thomas, S. and Chen, S.E. (2003). Parameters governing the selection of procurement
system: An empirical survey. Engineering, Construction and Architectural Management, Vol. 10
No. 3, pp. 209–218. https://doi.org/10.1108/ 09699980310478458.
15. Masterman, J.W.E. (2002). An Introduction to Building Procurement Systems. 2nd Ed. London: E
& FN Spon
16. Mathonsi, M.D. and Thwala, W.D. (2012). Factors influencing the selection of procurement
systems in the South African construction industry. African Journal of Business Management,
Vol. 6 No.10, pp. 3583–3594. https://doi.org/ 10.5897/AJBM10.978.
17. Mbanjwa, S. (2003). The use and effectiveness of construction management as a building system
in the South African construction industry. M.S. thesis. Pretoria: Univ. Pretoria.
18. Morledge R. and Sharif A. (1996). The Procurement Guide: A Guide to the Development of an
Appropriate Building Procurement Strategy. RICS.
19. Muriro, A. and Wood, G. (2010). A comparative analysis of procurement methods used on
competitively tendered office projects in the UK. Proceedings of COBRA, Held 2-3 September,
2010, pp. 1-16. Dauphine Université, Paris.
20. Natasa, T. and Car-Pusic, D. (2008). "Design and build" in comparison with the traditional
procurement method and the possibility of its application in the creation constructability.
Proceedings of the 8th International Conference on Organization, Technology and Management in
Construction. Zagreb, Croatia
Journal of Production Research & Management
Volume 12, Issue 3
ISSN: 2249-4766 (Online), ISSN: 2347-9930 (Print)
© STM Journals 2022. All Rights Reserved
25
21. Noaum, S.G. (1994). Critical analysis of time and cost of management and traditional contracts.
Journal of Construction Engineering and Management, Vol 120 No.4, pp 687–705.
https://doi.org/10.1061/(ASCE)0733-9364 (1994)120:4(687).
22. Petajaniemi, P. and Lahdenpera, P. (2012). Alliance contracting –one for all and all for one
(Finland). In: European Infrastructure Procurement Symposium, Conflict between Institutional
Frameworks and Managerial Project Practice. Copenhagen, Denmark, 8 May, pp. 12–15.
23. RICS. (2011). Contracts in Use, A survey of building contracts in use. The Royal Institution of
Chartered Surveyors (RICS), London
24. Sawalhi, N.I and Agha, O. (2017). Multi-attribute utility theory for selecting an appropriate
procurement method in the construction projects. Journal of Construction in Developing
Countries, Vol. 22 No.1, pp. 75–96. https://doi.org/10.21315/jcdc2017.22.1.5
