Procurement Route Research Articles

Asset-management framework(s) for infrastructure facilities in adverse (post-conflict/disaster-zone/high-alert) conditions

Public works departments have responsibility to manage and operate (transportation/water/power) infrastructure assets through careful planning and adoption of appropriate (facility) management techniques. Efficient asset-management becomes all the more important for countries subject to post-conflict/post-disaster adversity, not only to reactivate essential services, but also because programs that stimulate civil-engineering industry participation contribute much to recovery rates and can make-up 10% of a (recovering) nation's Gross Domestic Product. A good asset-management model needs to address key activities, communicate respective interconnectivities, and realize best practice. Limited study has been done into asset-management model frameworks that link directly with the change-management strategies required by recovering societies; this presents an obstacle to the prompt implementation of essential asset-management systems in sectors operating in adverse conditions. Asset-management techniques able to take account of the full range of factors in less stable environments require to link contributory variables including: dynamic user-needs analyses, life-cycle analysis, national design specifications, building codes, prefabrication opportunities, procurement routes, and project management tools towards re-build/retro-fitting. This early stage research project presents progress thus far in developing an integrative asset-management framework for infrastructure facilities in adverse/high-alert conditions using a multitude of North African case-study locations. Discussion centers upon developing framework(s) as a basis for workable procedures able to be amended with regard to (changing) design specifications/standards/legislation. Secondary research is presented that addresses the need to integrate economic whole-life evaluation techniques, asset-management tools and scopes in flux, and the extent to which such examination allows future development of flexible change-management for adverse situations towards incorporation into an integrative asset-management framework for infrastructure and civil engineering assets.

Analysing the advantages of early contractor involvement

Early contractor involvement (ECI), introduced by the Highways Agency in 2001 has commenced in Northern Ireland. The first five UK ECI schemes were investigated (Nichols Report, 2007) but there was an admission of limited piloting and research. Through an online survey and case study data this paper defines for the first time the success factors of the ECI procurement route against other UK Government approved procurement routes. It further shows cost savings of £59.3 m were achieved with an average saving per scheme of £5.4 m. ECI produces less time savings. The case studies confirm in larger schemes ECI supports risk management mitigating the costs accrued. However, there is often little benefit on smaller or low risk schemes. This research shows the negative issues relating to ECI costs and timescale stated by Owen (2009) are not shared by practitioners with initial opinions and statistics on the use of ECI being very positive.

AN INVESTIGATION ON THE IMPROVEMENT OF CONSTRUCTION EXPENDITURE FORECASTING

This study aims to determine the accuracy of the cash flow models and to investigate if these models could be more accurate if they accounted for the potentially influential variables specific to individual construction projects. An analytical case study research strategy has been implemented in collecting data for the construction projects. The data collected has been tested against recognised models. Statistical analyses have been carried out on the data for the specified variables, culminating in the potential proposal of an improved model with respect to these identified variables. The results revealed that the independent variables (type of construction, procurement route and type of work) affect the cash flow forecast. The findings suggested that a model could be more accurate with the input of more job-specific variables and that Hudson's DHSS model is best suited to a construction project procured traditionally. Adopting the ‘trial and error’ approach, Hudson's DHSS model has been recognised as an accurate model that could be adapted slightly, through changing the parameter values. The clients and the contractors are the main beneficiaries approached for this study.

Assessment of Factors Influencing Facility Management Procurement Route in Lagos State, Nigeria

Procurement of Facility Management (FM) services can be made through three main approaches; In-sourcing, Outsourcing or a combination of both In-sourcing and Outsourcing (Hybrid). The approach taken depends on the priority set by the organisation for the services to be procured amidst prevailing constraints and limitations. Many organisations follow a rule of chance approach in choosing a particular FM procurement option that seems right at the time and then wait to learn from the outcome later, this no doubt can come at a very high consequence to the organisation. This study therefore assesses the factors influencing the choice of procurement routes in facilities management. 75 structured research questionnaires were distributed, 55 were completed and returned representing a 73% response rate. The findings of this study shows that continuity and risk management are the most important factors influencing decision when considering in-house procurement route for FM services while reduced overhead and improved process responsiveness were ranked as top factors considered when outsourcing and choosing the hybrid routes respectively. It was recommended that organisations must strive to achieve efficiency in their service delivery for enhanced customer satisfaction.

Determining the Performance of Procurement Methods against Selection Criteria using Outranking - Satisfying Methodology.

The need to develop a decision support system to determine the most appropriate procurement route for a building project led to the development of various theoretical models. One of the foremost techniques was the multiattribute utility approach (MAUA). In this technique, the arithmetic mean (averaging) method was used to fix the utility factors relating the procurement routes to each criterion. In this paper, the averaging method was subjected to further analysis using the outranking-satisfying technique to determine the correctness of the results derived from the averaging method used to fix the utility factors in the use of MAUA. The results showed that there is a significant difference between the rank-order of procurement methods against selection criteria by averaging and outranking-satisfying techniques. The use of outranking-satisfying analysis revealed that, the use of arithmetic mean to determine the utility factors can lead to inappropriate association of procurement routes with differing utility coefficients.

PFI/PPP, private sector perspectives of UK transport and healthcare

PurposePublic private partnerships (PPP) and the private finance initiative (PFI) are defined as a range of practical long‐standing relationships between the public and private sectors. This paper aims to investigate managers’ perceptions of PPP/PFI in two of the three largest sectors for private sector capital‐spend in PPP/PFI schemes, namely transport (highway infrastructure) and healthcare.Design/methodology/approachA web‐based Limesurvey™ questionnaire was used to collect data. A sample of 75 organisations was identified from the Partnerships UK (PUK) online Project Database (Partnerships UK, 2010). Total of 49 responses were received, of which 39 were complete.FindingsResults from each sector relating to PPP/PFI “best value”, advantages and disadvantages, and government preferred procurement routes, are investigated. The majority of organisations did not consider that PPP/PFI provided “best value” but thought it provided more value than the other two UK Government preferred procurement routes, “design and build” and “prime contracting”.Practical implicationsThis questions the UK Government's choice of preferred procurement routes. However, even during a recession and its aftermath, the majority of respondents consider that PPP/PFI remains appropriate to healthcare and transport developments.Originality/valueFirstly, this paper carries out a ranking of common advantages and disadvantages to PFI/PPP followed by an investigation of “best value” as perceived by contractors and consultants subsequent to the construction phase. Then the three preferred UK Government procurement routes are contrasted in terms of “best value” and finally the paper investigates how PPP/PFI schemes are viewed during recessionary times.

The impact of recession on construction procurement routes

The UK entered recession in Q2 (2008) and exited in Q4 (2009) as a consequence of world recession, creating major repercussions for the construction sector. In response, the government introduced a £81 billion efficiency drive. Procurement is a substantial percentage of government budgets, therefore efficient public procurement can offer substantial savings. The private sector indicates efficiencies are introduced through effective procurement and strong competition. It was hypothesised that recession would result in procurement routes being chosen that ensured closer control of costs. Results indicate expected use of traditional procurement will rise 5% and design and build 6% but that procurement personnel do not expect a major shift in procurement route choice due to recession or post-recession. The paper suggests that government policy should ensure that potential efficiencies through choice of route should not be ignored. Further use of robust and innovative procurement techniques should be adopted to ensure value for money.

我が国油脂産業におけるパーム油調達の垂直的調整分析

In Malaysian palm oil industry, domestic firms are getting competitiveness rather than foreign companies. And then, I have a question for Japanese oils and fats industry, which does not have strong power in plantation sector, which channel do they select to procure the palm oil from Malaysia. In this thesis, I aim to examine vertical coordination system of palm oil procurement and to consider the efficient procurement channel for Japanese companies. To achieve these objectives, this thesis adopts analytical view point which focuses on the decision making process of channel selection of firms and following analytical framework. (I) Examining the motives and barriers of firms to entry some vertical level. (II) Analyzing the actual coordination activities of firms and the reason of adopting its activity. This analytical framework will be effective to study the origin of distribution structure from case study. The results are following. (1) There are motives to entry palm oil industry such as supplying cheap row materials and reducing distribution channel. Then, there are barriers such as difficulties to construct the selling route of by-products (I). (2) Because of barriers, many firms select procurement route via trading companies which enables to obtain economies of scale without entry expenditures (II). (3) Running worldwide palm business or taking over the existed companies, which enable to get distribution route of by-products, are the important factors to access palm oil industry (II).

Performance of Design-Build Projects in terms of Cost, Quality and Time: Views of Clients, Architects and Contractors in Singapore

One of the major problems in the construction industry is that of fragmentation. This hasled to an increased adoption of design-build (DB) as a procurement route in recent years.This move attempts to solve problems associated with the use of the traditional designbid-build method.The performance of DB projects is investigated under three aspects, namely quality, timeand cost. Results of the opinion survey concluded that contractors, architects and clientsagreed that DB projects perform well in these three areas. This confirms the inherent advantagesthat DB has to offer. It is concluded that DB is indeed a worthwhile procurementroute but the various participants must understand its structure and accept the changesinvolved.

Buyer‐supplier collaboration: the aim of FM procurement?

PurposeThe purpose of this study is to explore the causal link between procurement route and ongoing buyer‐supplier relationship.Design/methodology/approachThe research draws on literature in the areas of: facilities management (FM) outsourcing; purchasing and supply chain strategy; and collaborative business relationship management. The research methodology is qualitative, and comprised semi‐structured interviews with buyers and suppliers of FM services.FindingsFindings suggest that in general clients are seeking more collaborative relationships and this may determine a more relational procurement process. Some organisations appear more practiced than others in defining the level of collaboration and business benefits sought. Results support the view that a relational procurement process provides greater clarity of service requirements and facilitates cultural alignment between the buyer and supplier. However, additional time, effort, and cost are incurred, and concerns arise regarding the maturity of the supplier‐market and the sincerity of client intentions to collaborate.Practical implicationsA major practical implication is that facilities managers should recognise the importance of determining relationship objectives and the benefits sought within the context of FM procurement activity and select a purchasing route which supports the achievement of those objectives.Originality/valueOriginality exists in the qualitative approach used to inquire into the causality between relationships and procurement routes. The study offers potential value to both buyers and suppliers of FM services through describing the attributes of a successful collaborative relationship and how they link to a given procurement process, and identifying the potential risks and rewards involved.

Adoption of Improved Animal Husbandry Practices by the Members and Non-Members of Dairy Cooperative Societies in Bikaner

The present investigation was concerned with Uttari Rajasthan Sahkari Dugdh Utpadak Sangh Limited (URMUL) Bikaner of Rajasthan to find out the adoption of improved animal husbandry practices by the farmer in the district. URMUL dairy Bikaner rank sixth in terms of milk collecting union and consist of 32 milk procurement routes, out of which eight routes and one dairy cooperative society were selected on the basis of highest milk collection routes. The information was gleaned from 160 respondents i.e. 80 members and 80 non-members by applying random technique. It was found that (42.50 %) of dairy cooperative member were fall under medium adoption category where as fall under low level of adoption improved animal husbandry practices majority of (56.25%) few of non-member was fall under low level. The members were adopting improved animal husbandry practices up to 57.51 percent whereas non-members were adopting the same up to 42.20 percent. There was significant difference in the extent of adoption of improved animal husbandry practices by member and non-member respondents. Further, the higher adoption was observed in case of management practices by both members and non-members. While lowest adoption was observed in case of health care practice of animals in Bikaner of Rajasthan.

Vertical governance of construction projects: an information cost perspective

A research framework is developed to analyse the vertical governance, or transaction relationships between the client and its first-tier suppliers of construction projects in terms of project procurement route and payment terms. Starting from the particularity of the construction industry, reduced treatments that Williamson used in governance structure analysis are revised, and an assumption of ‘second-order transformation’ is proposed: as the information gap reaches a given level, and the proportion of specialized knowledge to deal with uncertainty exceeds a certain degree, the approach of selecting the governance structure of construction projects might deviate from the path anticipated by canonical theories. Both uncertainty and information cost are included in the analysis framework, and a principal–agent model is developed to analyse the procurement route and payment terms of construction projects. It is concluded that the information gap and the relative cost coefficient of information are decisive factors that determine the vertical governance structure of construction projects. They determine not only the time when ‘second-order transformation’ occurs, but also the distribution of ‘weak incentive regions’.

COMPARING RISK TRANSFERS UNDER DIFFERENT PROCUREMENT ARRANGEMENTS / RIZIKOS PERKĖLIMO, TAIKANT SKIRTINGAS PIRKIMŲ TVARKAS, PALYGINIMAS

Public Private Partnerships (PPPs) may be considered to represent a range of procurement routes characterized by the integration of many project elements into a single contract with an output-based pricing mechanism. At the other end of the same continuum of procurement routes are less integrated arrangements with more input-based pricing (‘traditional’ procurement). Risk transfer from the client to the contractor should vary with procurement route attribute values: with greater integration and more output-based pricing an increase in risk transfer would be expected. The more risk transferred to the contractor, the greater the incentive for the contractor to deliver the project efficiently. The paper proposes indicators of risk transfer and delivery efficiency which are then used in modeling the relationships between risk transfer, efficiency and procurement route attributes. The proposed model enables the mi croeconomic assumptions which underlie PPPs to be tested with data from historical construction projects in order to cast light on the effectiveness of the PPP approach. Santrauka Privataus ir viešojo sektorių partnerystė (angl. PPPs) gali būti svarstoma kaip pirkimo būdas, kuris nusakomas įvairių elementų įtraukimu į vieną sutartį, paremtą gamybos apimčių kainodaros mechanizmu. Kitame šios nenutraukiamos pirkimų srautų virtinės gale yra ne tokie kompleksiniai susitarimai, paremti sąnaudų kainodaros principais (,,tradiciniai“ pirkimai). Rizikos perkėlimas nuo kliento prie rangovo turi skirtis priklausomai nuo pirkimų srautų savybių vertės: taikant platesnį kompleksiškumą ir gamybos apimčių kainodarą, tikėtina padidinti ir rizikos perkėlimo galimybę. Kuo didesnė rizika perkeliama rangovui, tuo efektyviau jis stengiasi įgyvendinti projektą. Straipsnyje siūlomi rizikos pėrkelimo ir įgyvendinimo efektyvumo rodikliai, kurie vėliau yra pritaikyti modeliuojant rizikos perkėlimo, efektyvumo ir pirkimo srautų savybių tarpusavio priklausomybes. Siūlomas modelis leidžia patikrinti mikroekonomikos prielaidas, sudarančias privataus ir viešojo sektorių partnerystės pagrindą, naudojant istorinius statybos objektų duomenis, ir atskleisti privataus ir viešojo sektorių partnerystės požiūrio efektyvumą.

Bidding model for sustainable projects using the traditional procurement method

The evolving concept of sustainable development introduced a new dimension to development processes and procurement routes. Consumption of natural raw materials that have fixed quantity without commensurate replacement should be a matter of concern to humanity. The need to maintain the ever growing human populace instigates the challenge that society’s developmental effort meets the demand of economic prudence, social equity and environmental conservation. This is quite daunting one, yet must be met if this planet earth and its inhabitants are not to be put in harm’s way. Sustainability in development seeks to achieve the reduction of input-output ratio yet presenting qualitative and satisfactory products to end users. The traditional procurement method (TPM) is still widely used in construction because of some advantages it offers over other methods. Contractor selection in the traditional procurement method can no longer be overlooked- being a vital process that influences project success in terms of cost, quality, function, and environmental care. Many scholars have asserted that time allowed for bidding in the TPM is little in Nigeria as such responsible for the persistent cost over-run in building construction projects. Increasing the time increases the overall project procurement period. Since market fluctuation due to other market forces is unfriendly, the goal of sustainable projects is defeated in this context. This paper seeks to enquire if the TPM remains a good base for project procurement and then modified to retain its numerous advantages over its disadvantages. Estimates from 50 samples of projects were tested using analysis of variance (ANOVA) to find if the (estimates) are reliable at times of tender. This was established and a new bidding model using the TPM proposed. The model reduced time taken to bid yet gave bidders more time to prepare their offer. Other critiques of the TPM have also been addressed in the model. This helps to achieve the goal of sustainable development and enhances TPM for built environment.

An appraisal of the level of application of life cycle costing within the construction industry in the UK

PurposeLife cycle costing (LCC) is a means of comparing design options on the basis of their whole life cost with the objective of providing value for money for the life of the asset. The process involves estimating all the cost elements of the particular subject and translating them into a cost at a particular point in time, the present, enabling comparison. Despite being in theory, a useful tool LCC appears to experience varied levels of usage. Varied opinions have been expressed about the level to which LCC is used but there is no doubt that private finance initiatives and public‐private partnerships procurement routes have seen an increase in the use of the technique. The paper aims to appraise levels of application within the construction industry, in particular the paper will evaluate the existence of motivators and barriers which affect the decision to undertake LCC analysis in order to identify what actions can be taken to increase usage levels.Design/methodology/approachFollowing a literature review, empirical research was undertaken to collect data from construction professionals regarding their views, opinions and experiences of LCC. In total, 100 questionnaires were sent to construction and professionals in the North West of England.FindingsThe paper suggests that whilst just over 50 per cent of the sample implemented LCC the data also identified the lack of understanding of the technique and the absence of a standardised methodology as key limiting factors to wider implementation.Research limitations/implicationsLimitations in both the data collection strategy and sample size raise the issue that the results obtained cannot necessarily be deemed to be representative of the construction industry as a whole but merely of the sample and further research is recommended.Originality/valueThe paper concludes that continued professional development for construction professionals and clients alike together with the development of standardised procedures may enhance usage levels.

Barriers Affecting the Adoption of Point-of-Care Technologies Used in Chest Pain Diagnosis Within the UK National Health Service

Adoption and implementation of point-of-care testing (POCT) in the UK National Health Service (NHS) for use in the emergency department during chest pain diagnosis are affected by manufacturer pricing and device procurement routes. The study presents the findings of a Web-based survey of UK POCT manufacturers to appraise their pricing policies and device purchase options to show how these could impact on market uptake. The UK-Northern Ireland survey collected information on the device procurement options, prices, and associated costs and from 5 leading manufacturers of cardiac marker point-of-care (POC) devices. These included the Abbott, i-Stat, Biosite Triage, Dade Behring Stratus CS, Response Biomedical RAMP, and Roche Cobas h232. The POCT device manufacturers surveyed offered 3 purchasing routes to market, direct purchase, lease-rental agreement, and free product placement. The latter procurement option was dependent on achieving a mean annual threshold test panel purchase volume of 1000 tests per year. UK NHS procurement policy favors the free product placement option for POC devices. Cardiac marker test panels for POC devices may be supplied in 2 formats, single-test or multiple-test panels. Manufacturers may adopt 1 of 2 strategies for price setting of POC device test panels in the UK market. In the case of 2 manufacturers, Biosite and Dade Behring, the test panel prices are fixed irrespective of the annual purchase volume at £16.85 per panel for the Biosite Triage and £11.02 per panel for the Dade Behring Stratus CS. The test panel price can also be set by a discounted scale based on exceeding the threshold annual purchase volume. Three manufacturers adopted this pricing policy for test panels. These were Abbott, Response Biomedical, and Roche, for the i-Stat, RAMP, and h232 POC devices, respectively. Test panel pricing discounts for the 3 POC devices were as follows: £13.12 per test (1000-2000 tests/year), reduced to £7.12 per test (≥5000 tests/year) for Abbott i-Stat; £9.81 per test (1000 tests/year), reduced to £8.18 per test (≥1000 tests/year) for Response Biomedical RAMP; and £9.18 per test (1000 tests/year), reduced to £5.67/panel (≥1000 tests/year) for the Roche Cobas h232. Other POC device manufacturers could offer a similar discounted pricing policy for test panels, to increase their market presence and to overcome the perceived test cost procurement barrier when introducing POCT more extensively within the NHS. The recently proposed changes to the NHS Pathology tariff are discussed in the context of its likely future impact on UK POC device uptake.

Construction procurement strategies of national health service in the UK: A critical review

In the UK healthcare sector, funding and provision of public care facilities has been primarily the responsibility of government through the National Health Service (NHS). After decades of under-investment and consequent effects on the quality of care, new procurement routes are currently being used to improve the standards of facilities to meet the requirements of modern care services. This paper critically reviews these new procurement routes in terms of concepts and suitable areas of application, and examines how the principal procurement methods have evolved into the forms used for UK healthcare facilities. The paper outlines recommendations for further research in assessing the suitability or otherwise of these new procurement methods, both for construction projects generally and specifically for healthcare facilities.

An investigation on the cost implications of methodology of sub‐contract work pricing

PurposeThe purpose of this paper is to identify how much particular variables influence the cost differences between order values and final accounts for certain trade subcontractors.Design/methodology/approachThe methodology consists of a literature survey and a case study. A sample of 33 projects, undertaken by a contracting organisation, are analysed as a basis for testing their significance.FindingsFor highly asset specific transactions the research suggests that the level of variables which can affect their performance is greatest, suggesting integration within the contracting firm to mitigate the threat of opportunistic behaviour. Procurement route utilised on a project was strongly linked to outturn cost performance, as is inclusion in the tender bid, suggesting earlier subcontractor involvement through design and build and partnering arrangements is significantly better at managing subcontractor cost performance than traditional routes.Originality/valueThe market volatility of the construction industry has meant the procurement of subcontractors has long been established as an important part of the project coalition. Transaction cost economic theory has recently become popular within the construction research industry. Much of this research has examined the vertical boundaries to which a construction firm is subjected when considering integration of trades or continued use of subcontractors. Empirical data on the cost performance of subcontractors within a project environment are not widely available. For this reason, this research aids practitioners and researchers by identifying why particular variables influence the cost differences between order values and final accounts for certain trade subcontractors.

Construction project procurement routes: an in‐depth critique

PurposeThe purpose of this paper is to examine different categories of building project procurement routes based on organisational, contractual, financial and technical issues.Design/methodology/approachThe paper is based on review of literature and conditions of contracts. The UK construction industry serves as a general frame of reference. The Royal Institution of Chartered Surveyors survey ofContracts in Usefrom 1985 to 2004 is used to probe the share and value of contracts along different procurement routes and across different conditions of contracts in the UK. The logic is that the value and the share of contracts will indicate the behaviour of different procurement routes in the UK construction market while the in‐depth analysis of conditions of contracts will show the gaps and relationships between the general definition/categorisation and contractual context (conditions of contracts) of each of the procurement routes.FindingsThe preliminary result of the analysis shows that traditional routes remain the main type of procurement route for the construction project industry sector, within which different management and incentivisation systems are applied for greater efficiency. The conditions of contracts in the UK support this assertion by aligning different procurement routes to different conditions of contracts and additionally specifying different forms of agreements, special provisions and incentivisation in order to increase performance, reduce risks and improve compensation methods.Research limitations/implicationsThe study can serve as a learning opportunity for construction project stakeholders internationally, and clients in particular, to differentiate between procurement routes, management‐oriented systems, relational contracting and incentivisation.Originality/valueThe research provides an original assessment of construction procurement which can be used as intervening tool in different levels of private and public procurement strategies.

Defining the intelligent public sector construction client

Recent efforts and aspirations to transform the delivery of major capital programmes and projects in UK public sector construction by focusing on achievement of value for money, whole-life asset management and sustainable procurement have led to the adoption of integrated procurement routes characterised by multiplicity of stakeholders with a diversity of differing and often competing requirements. A study of the challenges faced by the public sector to deliver present and future major capital programmes and projects gravitates to the role of the intelligent client, and concomitant skills and capabilities. The results of the multiple case studies research show that the challenges of this role are especially evident at the interface between the internal organisation and the external suppliers and advisors from the private sector. The research concludes that the intelligent client role requires an individual champion with a unique set of skills working in an environment of a supporting team and capable organisation.