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PPMP20011 - Contract and Procurement Management Assignment - Central Queensland University, Australia

Task - What is the best procurement route (method) your PPMP20011 consultant company will advise CQ to follow keeping in mind the constraints and priorities as well as the experience of CQU as project owner. Why do you think this is the best route (giving the project factors).Justify your selection. What is the advantages of this route over other routes (traditional/non-traditional). What are the risks associated with this selected rout for both the owner and the contractor. How does this route will satisfy the main points (Cost, time, and Quality).

Answer - Procurement Routes

Traditional Procurement Route

  • Design part and construction part by different parties.
  • Design part is completed first
  • Construction part starts with inviting the contractors tenders after design part
  • Contractors shortlisting based on lowest cost
  • Duration of project long.
  • Cost is known with certainity.
  • Design risk lies with client.

Contract and Procurement Management Assignment.png

Risks in Traditional Procurement Route

  • Design risk lies with client as he is responsible for design part
  • Time risk as timeframe required to complete the project is long.
  • Medium cost risk as changes in design after construction require extra expenses.

Contract and Procurement Management Assignment1.png

Design and Build Procurement Route

  • Construction and design part is undertaken same contractor.
  • Cost to complete the project is known with certainity
  • Project proposals are invited from different contractors
  • Constructor control the design
  • Proposals shortlisting based on price and quality of design
  • Project duration is short

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Risks in Design and Build Procurement Route

  • Risk of increasing cost lies with the contractor
  • Design risk lies with contractor
  • Risk of completing the project within stipulated time lies with the contractor

Contract and Procurement Management Assignment2.png

Management Contracting Procurement Route

  • Design part is undertaken by consultant appointed by client
  • Client appoints Management Contractor by tendering and interviewing.
  • Cost of project is not known with certainity
  • Duration of the project is short
  • Level of service quality is high.
  • Ease of introducing changes

Contract and Procurement Management Assignment3.png

Risks in Management Contracting Procurement Route

  • Cost risk lies on the part of owner and not known with certainity in the beginning
  • Design risk lies on the part owner as he is responsible for design.
  • Time risk lies with the owner as he choose different packages.

Contract and Procurement Management Assignment4.png

Construction Management Procurement Route

  • Design and construction is done by different parties
  • Design part is done by owner's consultant
  • Client hires construction manager on fixed fee
  • Construction manager invites different trade contractors
  • Construction starts before design completion

Contract and Procurement Management Assignment5.png

Risks in Construction Management Procurement Route

  • Cost risk lies with the owner as it is not known with certainity in beginning
  • Design risk lies with the owner
  • Risk of completing project within given time frame lies with owner.

Contract and Procurement Management Assignment6.png

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Best Route For CQU

CQU situation best fits into Design and Build Route

  • Timeframe required to complete the project known with certainity
  • Cost required to complete the project is known with certainity
  • Owner selects proposal that offers high quality design
  • Ease of inculcating changes after construction
  • Design risk lies with constructor only.
  • Best suited for less experienced clients

Best Contract for Payment

  • Lump sum contract type is best
  • It ensures expenses within budget
  • Whole payment done in one go
  • Requires pre determination of expenses during project
  • Other contracts do not ensure budgeted expenses
  • Lowers cost risk

Conclusion

  • Traditional routes best suited for novice owners
  • Except design and build route all involves design risk
  • Traditional routes take longer duration to complete project than other routes
  • Except traditional route, all routes involves construction and design process simultaneously
  • Lump sum contracts are best suited for fixed budget projects
  • Different routes are adopted according to need of situation

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