Partnering in Construction Part 1: An overview on construction procurement

Salam and dear all,

1. In my last posting I commented on the Ministry of Works' proposal towards achieving value for money via a technique known as "value engineering change proposal." I also mentioned that in 2000 a similar technique but labeled as "construction partnering" was developed and put in place in the PWD (JKR).
2. The purpose of this posting and the next is to describe (briefly) what "construction partnering" is about.
3. Firstly, it is best to acknowledge that "construction partnering" is not a system of procurement. Consequently, it is appropriate to situate "construction partnering" within the overall concept of construction procurement. This posting therefore will provide an overview on construction procurement.

   Construction procurement

4. According to Khairuddin (Construction procurement in Malaysia: processes and systems, constraints and strategies, 2002, International Islamic University Malaysia) the term procurement, in the context of construction, refers to the processes and systems involved in acquiring constructed facilities. Consequently, construction procurement has 2 distinct body of knowledge i.e. the processes of procurement, and the systems of procurement.
5. Processes of procurement refer to the 7 main elements that represent the steps that are to be carried out when procuring constructed facilities. The 7 main elements are (in no particular order or sequence): 1. Initiation or promotion of a project, 2. Funding, 3. Design (3 sub-categories: schematic design, detailed design and specialist design), 4. Statutory approval, 5. Tendering, 6. Construction (2 sub-categories: management and physical construction on the site), and 7. Risk allocation.
6. Systems of procurement refers to how best the 7 element of the processes of procurement are to be planned and managed and it relates to how risks in procurement are to be allocated amongst the parties involved.
7. The key procurement risks are: time, price, design, project finance, effectiveness of the project in operation, and quality.
8. The key parties involved are the client, funder (if different from the client), consultants or designers, and the constructors (or contractor and sub-contractors).
9. There are 3 dominant systems of procurement in Malaysia: 1. Traditional or design-bid-build system, 2. Design-build and Turnkey system, and 3. Management approaches procurement systems (2 sub-systems: management contracting and construction management).
10. In a survey by Khairuddin (2002) the traditional or design-bid-build system of procurement is the most dominant system in use in Malaysia.
11. In terms of time and cost, Hashim (1996, in Khairuddin, 2002) reported that the management contracting procurement system is most efficient (least time and cost overruns).
12. Construction partnering could be used in any of the above systems of procurement.
13. In my next posting, I will provide an overview of "construction partnering".

Wassalam.

P/s: To achieve brevity it is not possible to provide further description on the subject of construction procurement. For detailed understanding please refer to the many publications on construction procurement including Khairuddin, 2002, Construction procurement in Malaysia: processes and systems, constraints and strategies, International Islamic University Malaysia.