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    Chris from London
  • When carrying out the project we had a huge problem with a client who blamed me and my staff for late work, even though the problems were on his side. Unfortunately, the cost estimate and contract I created was incomplete and not very professional. That's when I decided to look into Multiproject and through them I was able to provide a professional cost estimate and a contract from a new customer and I had complete control over the work. I highly recommend all Multiproject services, are masters at their work in Britain.

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    AJA Brothers Ltd.
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    You may with confidence select their services and be assured that the service will be done well and the way it should be.

    KS Sypien Ltd.

Types of procurement.

Roles and responsibilities in traditional (Lump Sum) contracts.

Types of procurement
In the British construction industry acquisition or ordering of properties or their elements is defined as "procurement". It refers to a wide array of strategies, rules, forms of procurement and responsibilities arising from material, services and construction equipment.

In Great Britain there are several forms or methods of property procurement. Each of those involves a different type of contract, contractual relationships, information flow, roles and responsibilities within a planning team. Available procurement forms are:
  • Traditional (lump sum) -traditional system, used at 43% of construction projects (according to RICS 2003 data). This method is the most popular among small and middle sized construction projects. Those rules have been formed in the beginning of 20th century (hence the name, ‘traditional’). The constructor works according to a detailed plan provided by the investor.
  • Design & Build (D&B) - this method is becoming more and more popular in middle sized and larger projects. It has been first introduced in the 1980s and is now applied at 42% of projects. It obliges the contractor to undertake a large part of project works (preparation of a detailed project), while the investor provides only an outline of a project. This method is rarely used in smaller investments, below 250 thousand pounds. • Construction Management - this method has been developed in the US, where it initially gained popularity in the 1930s. It is still commonly applied, especially in technologically complex projects, where fast completion is crucial. It first appeared in the UK in 1980s. The contractor acts as a consultant, and even though they manage the construction works undertaken by subcontractors, they are not directly responsible for subcontractors.
  • Management Contracting - - a hybrid form being a fusion between traditional method and construction management.
  • Private Finance Iniciative (PFI) - D&B form used at large projects, where the contractor provides an investment in return for licence to charge fare for using it in a designated period of time, e.g. Queen Elizabeth II Bridge in Dartford. It has a very complex settlement structure, applied only to multimillion public use projects.
  • Public-Private Partnership (PPP) - a form of long-term cooperation between government and private organisations, e.g. modernisation and maintenance of London underground.
  • Framework Contracting -methods used at large projects, where the contractors are chosen following selective criteria and not only the prices. It is usually connected with long-term cooperation contracts including many different projects. It was first introduced in the 1990s when the Terminal 5 of Heathrow airport was built.
  • Prime Contracting - an expanded traditional form including long-term partnership. The contractor is usually obliged to undertake construction works and further building maintenance. It is commonly used by governmental institutions, such as NHS and the army.

Lump Sum contract basics
Most of small projects (below £250,000 in value) are carried out under traditional form of procurement, Lump Sum.
Most importantly, such approach divides the design and construction functions. A detailed plan should be provided by the investor or their planning team and supplied to the contractor prior to cost estimate preparation. In practice it happens rarely. Often, some elements of the project are not finalised and the details are provided to the contractor at latter date. It is important that all doubts and errors in documentation are identified by the contractor at the time of preparing the tender.
In this procurement form, investor is fully responsible for all planning matters. The contractor should not make any decisions regarding the project, since it puts him at risk of having to redo the works if the client does not approve their decision. On the other hand, all additional works arising from changes of faults on behalf of client have to be paid for by the client.

There is a possibility to partially transfer of design duties to the constructor. It can be done by using adequate contract form. It often happens in case of technologically advanced elements, e.g. Air Conditioning installation etc. It is associated with additional responsibility, and costs, to the contactor.

Roles in traditional procurement
Individuals or organisations involved in supplying the project in traditional system can be divided into the following groups:

  • Client
  • Their employees and representatives

Design Team
  • Architect – team leader
  • Structural Engineer
  • Mechanical Engineer
  • Quantity Surveyor
  • Other designers

Construction team
  • Main contractor
  • Subcontractors
  • Suppliers

There is also a role of contract administrator, that is usually carried out by the architect t and it involves dispute resolution, certifying payments and changes to the project. This role should be performed separately from design functions and the decisions made by contract administrators should be objective.


Procurement routes and the information flow.
In traditional contract form relationship is separate to information flow.

All members of design team have direct contract with the client even though they are supervised by architect. This offers them a lot of independence and limited contractual responsibility. On the other hand, in the construction team all members are contracted to main contractor, who, in turn has access to the client. Such structure makes main contractor liable for performance of all subcontractors and suppliers.
Every exchange of information between construction and design teams should take place via main contractor-architect. This means, that legally, requests made by clent should not be implemented until they are confirmed in adequate form by the contract administrator (architect).

Theory versus practice
The above mentioned information refers of course to contractual theories. Reality can often be very different. One has to bear in mind that in case of disputes it is the fundamentals and contract terms will be taken into consideration – not common sense or good will of the parties. Following the contractual procedures it to contractors best interest, especially if JCT, which are usually drawn in favour to investor, not contractor. We have often aided contractors who have not been paid at the completion of the contract only because they have failed to follow the procedures. For instance, client requested the partition to be moved, which was not approved by the architect. As it turned out later on, this caused the previously ordered wardrobe not to fit. Client denied ever giving the instruction and architect, according to contact, deduced 12 thousand pounds of the final pay to cover the additional cost of moving the partition back.

Following the contractual procedures and detailed organisation of contract documentation protects the contractor against wrongfully imposed penalties and problems with payment. An adequate contract strategy allows maximising profits and minimising the risk of construction works.

Cooke B., Williams P., 2004. Construction Planning, Programming & Control. Oxford. Blackwell Publishing Ltd.
Use our tips today by calling 07885 249 489
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Mini Guides
JCT - Joint Contract Tribunal
JCT is an organisation uniting different groups of professionals within the British construction industry. Members of the JCT include professional associations of architects, surveyors, inspectors, estimators, building contractors and many others. Read More...
Forms of Property Aquisition
In the British construction industry acquisition or commissioning of properties or their elements is defined as "procurement". Available procurement routes include Traditional (lump sum), Design and Build, Construction Management, Management Contracting and others. Please refer to our guide for more information. Read More...
Tender offer from client's and architect's point of view.
Perceptions of the stages of a construction project often vary between the client/architect and the contractor. Investor and architect are involved in the project for months before the actual construction work commences; for a contractor however stages of the project include only the tender offer and construction. Read More...
Gantt Chart
Gantt or Bar chart is the simplest planning method. If appropriately constructed however, it can convey much information crucial for the completion of the project. Read More...
Schedule types
Schedules can be divided into several categories depending on their type and the accuracy of information. This includes Master Programme, Detailed Programme, Purchase schedule and others. Read More...
Risk management
Through use of available supporting software it is possible to include risk management procedures into the schedule. Convenient analysis of possible scenarios for different options of construction work. Read More...
Insurance from the point of view of the contractor
From the contractor’s point of view, construction insurance can be divided into three groups:

- "Employers Liability Insurance" (EL)
- "Public Liability Insurance" (PL)
- "Contract Works Insurance" (CW)

Types of insurance in the JCT's contracts
The JCT contracts categorize insurance types legally required by the contract. One of the ways of categorisation is according to the level of cover: "Specified Perils" (SP) and "All Risk Insurance" (AR).
Contractor's rights and duties
Contractor’s liability is limited to project between taking it over from the investor and practical completion. Those dates do not have to coincide with the actual construction period. Read More...
Investor's duties
The investor should hold a valid insurance covering the liability for death or bodily injury caused by his or his employees’ actions or negligence. In case of institutional investors PL and EL type of insurance should be appropriate. Read More...
Architect's role
The architect is not a party to a contract. They are employed by the investor as their representative. According to the JCT contracts however, the architect is obliged to make sure that the parties are aware of the insurance requirements and that the necessary policies have been acquired. Read More...
Contract Documents
A contract may include various documents describing the project and stating the cooperation conditions as long as they are approved by both parties. Read More...
Contract Administrator
person responsible for contract management and certifying any additional works, changes, contract extensions, accounts etc. Contract Administrator is usually the architect who supervised the preparation of the contract documentation. Read More...
Architect's Instruction
Instructions given by the Contract Administrator, which are necessary to carry out any changes to the contract. They have to be stated in writing; in case of verbal instructions the architect has to submit a written document within 2 days. Read More...
Provisional Sum
Refers to the estimated sum included in contract to cover the costs of work, materials or equipment where the actual cost is not known at the time of signing the contract. It is most often used when the work specification has not been completed. Read More...
Interim Certificate
Is a certificate issued by an architect authorising the client to a partial payment for the works completed to date, when the payoff is scheduled before termination of work. It is prepared according to cost estimate presented by the contractor. Read More...
PC Sum (Prime Cost)
Is a term used when creating estimates and defining the price of material and resources, when the actual const cannot be established. Read More...
Base Date
Rarely found in smaller projects, due to their short life span. It is the time when the contractor's offer has been prepared to reflect the current market conditions, usually 10 days before the proposal is put forward. Read More...
Extension of Time
Procedure/certificate which allows a change of the completion date agreed by the contract. The certificate can be issued by the Contract Administrator when due to the circumstances beyond contractor's control work can not be completed on time. Read More...
LADs (Liquidated Ascertained Damages)
Often described as a penalty for late completion of work. In fact it is not a penalty, but a compensation for the costs incurred due to late completion. This sum is stated in the contract and should reflect the actual costs for the client. Read More...
In general, all variations from the range or specifications of the work. Read More...
ADR - 'Alternative Dispute Resolution'
'Alternative Dispute Resolution' - this term refers to all forms of resolving a contractual dispute, which are not judicial proceedings to change the contractual sum. Every such change has to be confirmed by an architect's written instruction. Read More...
It is a voluntary procedure, both parties have to agree to such a solution and are not obliged to accept the terms of the agreement. This procedure involves employing an accredited mediator, who organises a meeting of both parties in the same time and premises, but in two different rooms. Read More...
Is a form of resolving contractual disputes existing from 1996 and created especially to the needs of the construction industry. It is included in the JCT contracts as a standard. Both sides have to agree to it when signing a contract. Read More...
An alternative to the court proceedings, established for many decades. Initially this solution was simple and inexpensive, however in the last few decades procedures and costs neared to those incurred by full judicial action. Read More...
Is a term to describe formalised judicial proceedings. It is available to both parties of a contract. The only occasion, when parties lose their right to litigation as a consequence of former use of 'arbitration'. Read More...
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