Types of Construction Procurement

Types of Construction Procurement

Choosing a procurement method is critical to any construction project's success. Choosing the right procurement method is also critical to the success of any construction project. Construction companies consider topography, logistics, weather, accessible technology, financing, labour availability, and services when choosing a procurement method. Before diving into the many forms of procurement, it's important to understand the construction industry. A construction project has five main functions: design, build, manage, finance, and operate. A construction contract also involves the client, consultant, and contractor.

Purchasing the Old Ways

This is a basic form of procurement where a contractor's responsibility is limited to a building. All design and contract management is done by a consultant or engineer. The fact that the construction industry has been using this approach for a long time means it has developed metrics for evaluating its value for money. The main disadvantages of this strategy are the contractor's lack of control over design costs and risk allocation.

Management Contracting

Management contracting is a vital type of construction procurement. This strategy involves consultants, contractors, and specialist contractors as well as the customer. The general contractor manages the project while specialist contractors do the actual construction. Customers are in charge of both finance and operations. This strategy is used when packages of projects can be identified.

Design and Build (D&B)

The same contractor is responsible for both design and construction, necessitating greater collaboration and transferring all risks to the contractor. The contractor usually designs and builds. The consultant's duties are limited to contract management. The customer is in charge of finances and operations.

Collaboration vs. Joint Venture

Parties' differences can cause serious issues in a building deal. Parties must work together to overcome obstacles and share risks and rewards. A written agreement between the parties is essential to the success of such purchases. Determining each party's obligations in a joint venture procurement system is more difficult.