Construction can be procured in different ways depending on the types and sizes of construction projects as well as weighing the importance between budget and quality desired.
This is one of the most basic types of procurement where the responsibility of a contractor is limited only to building. Most of the design works and management of contracts are carried out by consultants. The fact that the construction industry has been working with this method for a long time is its main advantage since it has established parameters that have been laid out for assessing the value for money of this type of procurement path. This type of procurement has the most control of design quality however, the poor influence that the contractor as an operational party has over the design cost involved and risk allocation are considered to be the main disadvantages of this approach.
Management contracting is one of the important types of procurement in the construction industry. In this approach, in addition to the client, the consultants and contractors and specialized contractors become a participant. The contractor acts as a manager for the project whereas specialized contractors undertake the real build aspect in their specialized field. Finance and operation are carried out by the client in such projects. This method is adopted when there are possibilities to identify projects in packages.
Design and Build (D&B)
In this type of procurement, the same contractor is meant to design and construct the project, meaning that closer collaboration is required in the process and all risks are allocated to the contractor. The design and build responsibility is usually covered by the contractor. The consultant’s scope is only limited to the management of the contract. The client is responsible for finance and operations.
Joint Venture or Partnering
The barriers between parties often could result in major problems in the construction contract. In order to overcome barriers, different parties must establish a working environment based on trust, mutual objectives, teamwork, and sharing risks and rewards. The success of such types of procurement largely depends on a memorandum of understanding between the parties involved. Identifying the responsibilities of each party is slightly difficult in the joint venture procurement system.