Criteria For Selection of Design and Build Procurement Method
Criteria For Selection of Design and Build Procurement Method
Criteria For Selection of Design and Build Procurement Method
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INTRODUCTION
Many researchers including for example Love et al. (2012) and Francom et al. (2014) indicated
that, the term ‘construction procurement method’ has been given different definitions in the
literature. For instance, Chan (2007) defined it as the system that represents the organizational
structure adopted by clients for the implementation of project processes and eventual operation of
the project. On the other hand, Molenaar et al. (2009) defined procurement method as a
comprehensive process by which designers, constructors and various consultants provide services
for design and construction to deliver a complete project to the client. As this definition suggests,
a wide range of processes are involved in a procurement strategy. These processes are often
interrelated and sequential in nature and their effectiveness and efficiency have considerable
impact on the success or failure of projects.
Not only are modern construction and engineering projects characterized by high complexity and
uncertainties (Gidado, 1996; Wardani et al., 2006), they are also increasingly subjected to
stringent project performance requirements by clients. Such demands typically call for projects to
be delivered under limited resources, at low cost, in short duration and to a high level of quality
and safety standard (Love et al., 1998). These requirements have often been difficult to meet in
most projects with the results being, significant project delays, cost overruns, loss of reputation,
extensive disputes and litigation between parties. The traditional approach to procuring projects,
commonly known as Design-Bid-Build (DBB), has often been blamed for such unfortunate
consequences (Love et al, 1998; Rwelamila and Edries, 2007), largely due to its inability to meet
changing clients’ needs and increased complexity of the interactions in technical, economic and
multi-organizational participation at play in modern project execution (Mohsini et al, 1995). The
need to deal with this problem has resulted in a wide variety of procurement methods (Love et al.,
2012), with the most common types including Design and Build, Management Contracting,
Construction Management, Project Finance Initiative and Partnering. These types of procurement
methods differ from each other in terms of allocation of responsibilities, activities sequencing,
process and procedure, and organizational approach in project delivery (Abdul Rashid et al.,
2006; Alhazmi and McCaffer, 2000). The complex nature of procurement selection and their
subsequent management, therefore pose great difficulties to clients and any failure to rise up to
this challenge has often resulted in poor project performance. Such consequences have long been
recognized by a number of researchers (Mohsini and Davidson, 1991; Molenaar et al., 2009).
Various attempts have thus been made by researchers over the years towards addressing these
procurement issues.
The studies done so far can be put into three categories. The first category involves studies that
compare existing procurement methods in a bid to find out their efficiencies as used in practice
(see for e.g. Mohsini, et al., 1995; wardani, et al., 2006). The second category involves research
carried out to identify the criteria or factors that determine the right procurement method to use
(for e.g. Alhazimi and McCaffer, 2000, Luu et al., 2003 and Hashim et al., 2008). The third
category of the studies, focus on using these criteria to develop models by which clients can
employ to select the most suitable procurement method. For instance, Chan (2007) developed a
procurement selection model called fuzzy procurement selection model. It is a mathematical rank
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model that is adaptable to local circumstances. Alhazmi and McCaffer (2000) proposed a model
called Project Procurement System Selection Model (PPSSM) for assisting government agencies
in Saudi Arabia to select the most appropriate procurement method. The model consists of four
screening levels to be followed in selection process: feasibility ranking, evaluation by
comparison, weighted evaluation and analytic hierarchy processes. Based on a Delphi study, a
multi-attribute decision analysis was used to develop a procurement selection model by Chan et
al. (2001). Luu et al. (2003) developed a procurement selection model based on case-based
reasoning (CBR) approach. The suitability of CBR approaches was subsequently examined in a
study by Luu et al. (2005), who indicated that the approach has the potential to ensure high
quality decisions on procurement selection. The approach was also found to deal effectively with
variability in the characteristics of the clients, project and extreme environment.
However, there seems to be very less research reported in the literature which has looked at the
influence of procurement selection criteria on project performance, although such criteria are
known to contribute to project success. Such information will be of invaluable benefit to the
clients, that is, helping them to understand the aspects of procurement methods or the criteria they
need to concentrate on to improve project performance. As a contribution in this direction, this
paper reports a conceptual framework developed as a part of a wider on-going study aimed at
developing a model on the relationship between the criteria of selection of DB procurement
method and project performance criteria (time, cost and quality). The framework developed,
based on the extensive review of literature, not only seeks to establish the basis of the relationship
between these criteria, but also aims to serve as the basis for developing a quantitative model (at
later stage of the study) for establishing the exact nature and level of the influence PMs exerts on
PP.
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Time related
Quality related
Cost related
Natural disasters
Client
requirements
Client
characteristics
External
Construction
procurement environment
Internal selection
environment
Project Economic
Political & legal
characteristics
Choosing an appropriate PM entails identifying the right selection criteria, which are informed by
these factors, and then assessing their level of compatibility with the features or characteristics of
the project to be delivered (Love et al., 1998; Rwelamila and Edries, 2007). According to Love et
al. (2008), the selection process can be narrowed down into two main components: (i) analysing
and establishing priorities for project objectives and client attitudes to risk; and (ii) considering
possible options, evaluating them and finally selecting the most appropriate option. The accuracy
and clarity of the client’s requirements and needs are crucial ingredients here. Hence, selecting a
PM involves a key set of decisions which must be planned for and which require the participation
of high-level decision makers. The nature of the selection process therefore calls for employment
of sound systematic procedures by clients. This approach involves relying on a number of existing
PM selection techniques/models (Alkhalil, 2002; Chan, 2007; Chan, et al., 2001) to arrive at the
best PM that meets the needs of the particular project (Ali, et al., 2011).
Since there are a wide range of factors that could count as a criteria for selecting a PM, it was
deemed appropriate for this study to identify the most common criteria reported in the literature
from past research studies, through an extensive literature review. Critical review of the literature
suggests total 13 criteria which are commonly cited (refer Table 1) and are suitable for selecting
Design and Build procurement method. Many of the past studies, including those listed in Table
1, have highlighted the importance of relying on these criteria to rightly select the most
appropriate PM, if increased satisfaction with PP is to be ensured. These criteria thus represent the
most current criteria that are of relevance to Design and Build procurement selection and for
which the researchers are involved in further development of the selection process.
DB Procurement Method
DB method of procurement has been used in the industry throughout the world extensively for
many years (Minchin et al., 2013; Turina et al., 2008; Seng and Yusof, 2006). It is considered as
one of the most favored project delivery methods in the engineering construction industry
(Minchin et al., 2013; Ibbs et al., 2003). It has gained its popularity from its time and cost saving
reputation, reduced conflicts and enhanced communication between project participants (Minchin
et al., 2013). DB is classified as one of the integrated forms of procurement methods, whereby the
client provides his/her requirements and needs for the specified project and signs contract with
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only one organization, namely the contractor. This organization is responsible for the design,
supervision and construction services of the project as Fig. 2 below depicts (Seng and Yusof,
2006).
The circumstances in which this method is generally considered appropriate include the following
is:
The client not familiar with the construction process.
The project is technically complex.
There is a low likelihood of variations to the project.
The client desires a single point of responsibility.
The employer desires a quick start to work on site.
The client desires to prioritize either – time, quality, price or value for money etc.
The client desires an opportunity for effective direct communication/interaction with contractors.
The client desires an integration of the design and construction process.
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Table 1 : Criteria For Selecting DB Procurement Method
DB procurement criteria
commenceme
Less conflicts
Quick project
responsibility
Collaborative
communicati
Flexibility in
project team
construction
construction
Single point
experienced
project time
competence
project plan
relationship
Complexity
project cost
on between
Transfer of
risks to the
delivery of
design and
contractor
contractor
of design
Effective
Desiring
Desiring
Desiring
amongst
Level of
efficient
working
between
changes
reduced
reduced
process
project
project
parties
parties
Quick
and
of
nt
Authors
Hashim et al., 2008
Al Khalil, 2002
Natkin, 1994
Gould, 2005
Lee, 2007
6
Kamal and Hindle, 2000
Albert, 2000
Parkins, 2009
Shapiro, 2013
Ness, 2012
Guld, 2005
Albert, 2000
Gehrig, 2009
Terril, 1998
Total 7 6 8 5 13 9 9 8 12 9 5 3 1
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PROJECT PERFORMANCE CRITERIA
Traditionally, a project is considered to have achieved a high level of performance if it is
delivered at the right time, right price and good quality level. It should also provide the client
with a high level of satisfaction. Bryde and Brown (2004) concluded that the traditional
distinction between good and at poor project performance focused on the meeting of cost, time
and product quality-related criteria. These criteria have been described as the iron triangle of
project performance. Fig. 3 shows the iron triangle as adopted by Atkinson (1999).
Time
Project
performance
Cost Quality
The project success is usually measured differently from the perspectives of different parties.
Jing et al. (2010) compared success criteria as measured by contractors and clients and found out
that clients put more emphasis on satisfying the needs of other stakeholders, while contractors
emphasize on minimizing project cost and duration. They also found that all project stakeholders
put products satisfying owner’s needs as the first criteria.
In last decades, several researchers within the multidimensional construct of project performance
have proposed different criteria or indicators based on empirical research. While some focused
on using these measures as strategic weapons, others emphasized the proper delineation of the
measures and groupings into classes that will make tracking and management reasonable. Most
of the studies (for example, Bassioni et al., 2004; Jin et al., 2007; Cheung et al., 2004) agree that
project performance can be measured and evaluated using a large number of performance
indicators or criteria but time, cost and quality appear to be the three commonly preferred
performance evaluation dimensions.
A CONCEPTUAL FRAMEWORK
The premise underlying this study is based on the principle espoused in literature that the best
procurement method chosen for a project, based on the right procurement selection criteria,
would result in successful project performance (Molenaar et al., 1998; Thomas et al., 2002). In
other words, the level of project success to be expected depends on how suitable the procurement
method used for that project was (Molenaar et al., 1998). It thus follows from this hypothesis
that a relationship exists between the extent to which the selection criteria of a given
procurement method are compatible or suitable (for the characteristics and requirements of a
project) and the performance outcomes of that project. Establishing such relationship in detail
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would thus offer vital insights into procurement method selection, such as, knowledge of which
selection criterion contributes significantly to improved project performance and for that matter
deserves more attention during the selection process. As an initial step towards exploring this
relationship, a conceptual framework (Fig. 4) was first established to demonstrate the
relationship between the research variables involved.
DB Procurement Criteria
Quick delivery of construction
processes
Quick of project commencement
Effective communication Time
between project parties
Flexibility of design changes
Influence
Single point of responsibility Project
Less conflict between project Cost
performance
team
Complexity of design
Transfer risks to contractor
Quality
Reducing project cost
Minimizing project time
Component and experienced
contractor
Working relationship between
project team
Planning and design project time
As indicated in Fig. 4, the independent variables of the study are represented by DB procurement
selection criteria, whilst project performance outcomes (time, cost and quality) form the
dependent variables. Review of the literature suggests that all selection criteria emanate from two
main groups of factors, external and internal environmental factors as highlighted in Section 2
(Refer Fig.1).
It was noted previously that an important step in the selection of an appropriate PM involves
defining and prioritizing client’s requirements and project objectives. This is followed by setting
out selection criteria that will be used to determine the right PM. These criteria are defined as
“the set of project specific requirements that weigh high in level of suitability when measured
against procurement methods” (Thanh et al., 2003).
Following the identification of the most commented upon criteria for selection of DB
procurement method in the literature, the next important review that followed relates to a
discussion (based on critical review of the literature) on what these selection criteria entails. The
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aim of this discussion is to specifically establish the theoretical relationship that exists between
DB selection criteria and PP, and to also identify the variables that could be used to
operationalise or conceptualize these criteria. The criteria for selecting DB methods have been
discussed as follows:
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communicate effectively during the design and construction stages of the project (Edmond et al.,
2008; Mohsini and Davidson 1991; Seng and Yusof, 2006). Using DB procurement method to
deliver projects enables a design and construction process to overlap, which normally facilitates
communication between the client and contractor, through, for example, the direct and close
interrelationship that must be exhibited by the parties (Gould, 2005; Pinto and Slevin, 1998).
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costs to minimum in the event of unforeseen circumstances (Abdul Rashid et al., 2006; Seng and
Yusof, 2006).
Therefore, we hypothesize that:
H5: Single point of responsibility has a positive effect on the performance of the project.
Complexity Of Design
Project design is often characterized by complex processes, creating uncertainties and therefore
difficulties in achieving good project performance (Naoum and Mustapha, 1994). A key feature
of complexity is high interdependency between project activities, which require among others, a
central coordinating unit for dealing with the issues involved (Mohsini et al., 1995). This
criterion thus represents the ability of the procurement method to facilitate complex design
projects (Molenar and songer, 1998; Park et al., 2009; Thomas et al., 2002). It is often
considered while selecting DB. For instance, according to Konchar and Sanvido (1998) and Seng
and Yusof (2006) projects with greater complexity may call for the use of DB method as the DB
method is relatively appropriate for dealing with large and complex projects in terms of design
due to its ability to facilitate early collaboration between design and construction disciplines.
This collaboration minimizes design errors, which are a major source of change to the
construction contract (Perkins, 2009) and hence a source of poor project performance.
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opportunities for clients to transfer most of the project risks to the contractor than any other
construction procurement. Therefore, the ability to transfer risks to the contractor remains one of
the significant reasons for clients to choose DB method. As the DB method offers single point of
responsibility, project risks (within both design and construction) are easily transferable to the
contractor.
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managing the design and construction processes effectively. This criterion thus represents the
level of skills and experience of contractors required to manage and control projects efficiently
(Adnan et al., 2012; Pinto and Slevin, 1998; Seng and Yusof, 2006).
The thirteen criteria reviewed so far will represent the main variables (independent) in the model
to be developed in future by the ongoing wider study. In this further work, each criterion will
first be assigned weightage based on its suitability in the selection of a particular PM, and then
aggregated (using regression or other relevant tool, as appropriate) to indicate which of these
criteria makes a significant contribution to the optimum selection of a PM, and hence project
performance.
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CONCLUSION
This paper is part of an on-going research aimed at investigating the relationship between the
procurement selection criteria and the key project performance outcomes (Time, Cost and
Quality). It highlights the development of a conceptual framework to identify how the criteria for
the selection of DB method influences project performance, which seeks to offer a deeper
understanding of this subject matter. Such a framework has potential benefits to clients, as it
could guide them to identify the selection criteria that have relationship with project
performance, and hence employ the criteria in their DB method selection process, if project
success is to be achieved. The aspect of the study reported here explores the influence that
Design and Build procurement selection criteria has on project performance outcomes. The
framework was developed based on an intensive literature review, which was used to identify
various procurement selection criteria and the suitability of Design and Build method as far as
each criterion is concerned. From the literature, thirteen (13) procurement selection criteria were
identified as the most commonly cited criteria. The ways in which each of these criteria are
adapted for Design and Build have been explored and the ratings facilitated by a scale to predict
the actual level of influence a particular PM exerts on the performance of a project were
described.
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