Forms of procurement procedures

Forms of procurement procedures

1. Design Bid Build

   • Characteristics
     • Clear distinction between employer and contractor
       • Employer designs and controls
       • Contractor builds
   • Advantages
     • No discussion, standard contract clauses
   • Disadvantages
     • The contractor doesn't contribute in any other phase
     • Irregularities between design and construction
   • Position in the building process
   • Liabilities
     • Employer for the design
     • Contractor for the construction
       • Remains liable in case of damages to the project for a period of time after construction

2. Design-Build

   • Characteristics
     • Employers involvement concerns mainly the definition and quality assurance system of the project
   • Advantages
     • Employer
       • Deals with only one party
       • Cost ant time estimates are more reliable
       • Consultancy costs can be reduced
       • Execution of works is improved
     • Contractor
       • Put themselves in a strategic market position
       • Project harmony is improved, design-construction
   • Disadvantages
     • Employer
       • Limited competition, not many companies can do this
     • Contractor
       • All responsibilities
   • Position in the building process
   • Liabilities
     • Unknowns belong to the employer
     • Uncertainties belong to the contractor

3. Design-Build (with repayable performance)???

   • Characteristics
     • Most risks are assigned to a single party
     • Fixed price based on an initial concept
       • Associated with some preformance targets
       • Price is based on expected uncertainties, but not unforseable ones
     • The employer prescribes how performance will be measured
     • The model relies on performance measurements made during the building process and completion
       • Extra work is paid by a predefined formula taking possible variations into account
   • Advantages
     • Employer
       • He does not pay for risks that do not occur
       • There is competition in a value-price basis
       • He has influence on the product
     • Contractor
       • Higher level competition
       • Less risks
     • Room for innovation
   • Liabilites
     • Every party deals with their own work, no overlapping

4. Build Operate Transfer

   • Characteristics
     • Similar to EPC model + maintenance and exploitation stages
     • Consortium of parties
       • Contractor
       • Investor
       • Operator
       • Financer and/or project developer
     • Feasible when there is a need for a project but no funds to start it
   • Advantages
     • The government can provide for a social need without carrying the financial burden for it
     • Public facility obtained without investing any funds in it
   • Disadvantages
     • Depends on external factors such as economy, politics, social context and environment
   • Liabilities
     • All risks are responsibilities of the consortium
   • Position in the building process

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