As digital technologies continuously develop, prime space becomes a rarer commodity and construction projects increase in complexity, investors and developers of real estate are seeking greater control over how their projects are procured.
Each construction project is unique, with its own inherent challenges, multi-facetted expectations and desires. The ultimate decision for a project’s procurement and tendering strategy is one of the most important and influential decisions facing clients and their professional teams. Setting the foundation for the strategic operation and management of any project, the chosen route to procurement will influence time, cost, quality, risk, alongside other factors including flexibility of design; design responsibility and client control.
So, why are we sleep-walking into a two-stage design and build approach?
Procurers of real estate need to put their strategies under the microscope, and question if the models they have chosen are responding to and delivering against key project objectives.
Two-stage design and build is just one of many procurement strategies, yet it has become a default option without appropriate due diligence, and this should be challenged. Through adoption of two-stage design and build, the main contractor absorbs project risk, assuming responsibility for design obligations and liabilities, whilst not always being best placed to do so. They also become the decision maker, driving changing market forces, which can potential lead to increased cost of tender submissions, often straining scheme viability. In any market there needs to be an appropriate transfer of risk, but the two-stage design and build model can create inefficiencies and project delays.
Whilst there are examples of two-stage Design and Build procurement meeting and exceeding the clients project objectives, the industry needs to take a step back. We must consider and implement alternative procurement strategies, which will provide clients with a higher degree of control and certainty compared to the go-to two-stage procurement strategy we have all become accustomed to and familiar with.
A different approach & back to basics
Successful procurement and tendering strategies are developed and tailored based on thorough and critical assessments of client objectives and project characteristics, whilst being intrinsically linked to the cost, time, quality, apportionment of risk, and whom is to be responsible for design. This recommendation is in accordance with the RICS UK Professional Guidance Note (2013), developing a construction procurement strategy and selecting an appropriate route and the tendering strategy guide.
To identify and achieve the most successful route to procurement, there needs to be early collaboration with everyone involved in the project, including the client, supply chain and the contractor. The industry also needs to be flexible in its approach, taking elements of procurement models which are proven to work well and harnessing the power of efficiency-enabling digital technologies, to create hybrid, bespoke routes. This approach allows for realistic, openly-managed, fairly-funded procurement strategies, providing greater certainty of delivery, without an unnecessary premium.
Moving from two-stage design and build, as an industry, we need to stop and think about how we can challenge traditional views of procurement models, inject creativity, creating open, transparent approaches which truly benefit our clients, and celebrate true collaboration across the industry.