A Word From Darrell

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Clients everywhere are always after the best value they can get from their construction project or program. The industry and many clients are moving away from the limitations of traditional master-servant project relationships and lowest price tendering towards a more collaborative approach.

Lowest price tendering is a procurement strategy that forces the main contractor into a race to the start line, exploiting missing information in the tender documentation to keep the price as low as they can to win the project. Once they have the contract, the truth starts to unfold; with multiple variations to the contract typically leading to an adversarial relationship between client and contractor, which makes the balance of the project works hugely testing and challenging for all parties. For many projects, the client may not have even met the main contractor before awarding the contract, but it is vitally important they are aligned and can work together as the only two parties to the contract agreement!

Partnering, Negotiated, Early Contractor Involvement, Alliance Based, or Relationship-Based Contracting/Procurement are some of the common terms used to describe the process whereby the Client, Contractor, and Design are all appointed before commencing the developed design, and in many cases before concept design.

The value of this approach is that you have the views of each of the three parties of a construction project from the very start.

  1. Client responsibility is the operability of the building/facility when complete
  2. Design responsibility is to ensure the building design complies with all of the acts, codes and standards required whilst meeting the architectural brief from the client
  3. Construction Contractor responsibility is to input into the project’s constructability to manage the risk during the design stage, not once on site.

There are many advantages to a partnered approach for project procurement, some of which are that it:

  • Mitigates any potential adversarial behaviour between owners, designers, consultants and contractors
  • Establishes good working relationships that lead to substantial benefits
  • Fosters team spirit and promotes closer relationships between the parties
  • Encourages innovation and creativity, leading to quality improve­ments, more efficient safety programmes and greater consideration of environmental issues
  • Provides greater control over possible cost overruns by proactively managing the risk during the design phase, not reactively during construction, increasing opportunities for financial success.
  • Better time management and shorter start times for projects, resulting in earlier project completion.

Price is an important part of any project, but more important is what the client is getting for that price. The client needs to know that they are getting the best value for their money and managing the construction risk upfront during design is the best way to avoid the hassle and uncertainty of variations to the budget and create certainty of outcome right from the beginning.

Ultimately a partnered approach to procurement and delivery of projects results in more successful outcomes. For the most recent years of The New Zealand Commercial Project Awards owned by NZ Registered Master Builders, most, if not all, of the projects entered or awarded, were procured by some form of partnered approach, clearly demonstrating that some of the most successful commercial, industrial, retail and public buildings in this country were procured and delivered collaboratively.

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