A Study on Design and Build Procurement Methods’ Benefits to Clients in Sri Lankan Building Construction Industry

A Study on Design and Build Procurement Methods’ Benefits to Clients in Sri Lankan Building Construction Industry

L.M. Ruvinda and H.M. Bamunuachchige

Ruvinda, L.M.
Faculty of Computing, Engineering and the Built Environment, Birmingham City University, United Kingdom.

Bamunuachchige, H.M.
Faculty of Construction, International College of Business and Technology, Sri Lanka.

ABSTRACT

Construction industry is playing a major role in Sri Lankan economy. There are number of procurement methods in the construction industry but Design and Build (D&B) procurement method has become the most innovative method over all the other methods due to special characteristics of it. Single-point responsibility, less project time and certainty of project cost are name to few.

This paper reveals main advantages of D&B method such as fixed time and cost, single-point responsibility and less risk allocation to the client. However, there are some drawbacks such as lack of knowledge of clients about industry, less consultants and incapacity of contractors.

This research is carried out through a literature review and a questionnaire survey.  Through this paper successful factors of D&B and advantages in the perspective of clients has discussed which encourage the industry to use integrated procurement methods such as D&B.

Keywords: Construction Industry; Design and Build; Procurement Method; Traditional Procurement.

INTRODUCTION

There are number of publications and researches on the topic of procurement. Due to that there are quite a few definitions to the procurement (Love et.al. 1998; McDermott, 1999).  Procurement can be mainly divided in to two sections ‘Traditional method’ and ‘Non-Traditional method’ (Idiake et al., 2015; Ojo et al., 2006: Rameezdeen and De Silva, 2002: Masterman, 2002).

As this paper mainly focus on D&B integrated procurement system, it can be defined as an arrangement where single contracting company obtains full responsibility (Figure 1) to design, engineering and construct the project as per clients’ specific requirements(Joseph and Jayasena, 2008, Ng and Aminah, 2006; Masterman, 2002).

Figure 1: Single Point Responsible Structure of D&B Contract

Source: Ng and Aminah (2006)

Aim

Main focus of this research is to describe successful factors of D&B procurement method and encourage the industry to use integrated procurement methods such as D&B.

Objectives

  1. To identify the connection between D&B procurement method and performance of D&B projects with regards to time, cost and quality metrics.
  2. To do a comparison between D&B procurement method with traditional procurement methods.
  3. To evaluate advantages and drawbacks of D&B procurement method and to propose guidelines.

LITERATURE REVIEW

The Clients do not have much confidence to use integrated procurement methods such as D&B. Therefore, it is important to discuss advantages, drawbacks, strengths and limitations of it in order to give proper idea on the subject to the Clients.

Connection Between D&B Procurement with Regards to Time, Cost and Quality

Time

From all of procurement methods there are some advantages of select D&B method to modern day construction (Joseph and Jayasena, 2008). The main purpose of having an integrated procurement approach is to minimize the project duration (Rameezdeen and De Silva, 2002; Xia and Chan, 2010). In D&B procurement system it is overlapping design phase with the construction stage (Turina et al. 2008).

Cost

In the D&B method client knows firmly project cost in the beginning (Ng and Aminah, 2006; Xia and Chan, 2010). Certainty of ultimate project cost in D&B method is higher than other kind of procurement strategies (Turina et al. 2008).

Quality

From the beginning of the project it is a main concern of each and every client to have a quality structure at the end of the project (Idiake et al., 2015). Ng and Aminah (2006) stated that D&B method has a better-quality control over the project by selecting the proper contractor who meets the expected quality standards of the client.

Comparison Between D&B Procurement Method with Traditional Methods

D&B is an integrated approach to overcome the difficulties of traditional procurement methods (Ng and Aminah, 2006; Joseph and Jayasena, 2008; Turina et al., 2008). This section will discuss some differences among D&B procurement method with traditional methods.

Single point responsibility and Design Responsibility

In D&B procurement method contractor undertakes the whole design and construction process of the project (Beard et al. 2001; Joseph and Jayasena, 2008). In this approach single organization will be responsible for the design, procurement, construction and commissioning (Wardani, 2004; Ng and Aminah, 2006). This can be described as single point responsibility of D&B method (Ng and Aminah, 2006; Turina et al., 2008; Xia and Chan, 2010).

Communication

Hence D&B procurement method having a single point responsibility the communication and co-operation also more efficient (Ng and Aminah, 2006; Turinaet al., 2008). Direct lines of communication between client and contractor allow the contractor to respond and to adapt more quickly to the client’s needs. Client and contractor work together from the beginning of the project design stage and it gives opportunity to interact more often and directly than traditional method of procurement (Ng and Aminah, 2006).

Usage

As shown in the Table 1, when considering the usage of procurement methods in Sri Lanka, D&B method only had been second to measure and pay method of traditional approach (Joseph and Jayasena, 2008).  Therefore, it can be identified as that D&B method also now getting popular (Kamala, 2000). Konchar and Sanvido (1998) mentioned that Design and Build procurement method has extraordinary growth in recent years.

Table 1: Trend of the use of Construction Procurement Systems in Sri Lanka Source: Joseph and Jayasena (2008)  

Advantages and drawbacks

Advantages

According to previous studies, advantages of D&B procurement method can be summaried as follows.

Single point responsibility provides the client to deal with one organization. It reduces resources allocation and time significantly (Molenaar, 1996; Ng and Aminah, 2006; Turina et al., 2008). Because of overlapping of the design and construction process, overall project period can be reduced and will help effective project management (Lahdenpera et al. 1999; Rameezdeen and De Silva, 2002; Ng and Aminah, 2006; Turina et al., 2008). By accurately specifying clients’ requirements the final project cost can be determined in the initial stage (Ng and Aminah, 2006; Turina et al., 2008; Joseph and Jayasena, 2008). Early approach of contractors’ professionals to the project will provide more integrated and cost saving solutions (Ng and Aminah, 2006; Turina et al. 2008). D&B approach transfer more risk to the contractor by giving design responsibility as well as construction responsibility to contractor (Ng and Aminah, 2006).

Drawbacks

Not only advantages but also draw backs of D&B procurement method can be identified by reviving the previous works of researches.

Lots of clients don’t have experience and technical knowledge in the construction. Therefore, the clients will face in difficulties when preparing proper and descriptive client brief (Joseph and Jayasena, 2008; Turina et al. 2008). Furthermore Turina et al. (2008) mentioned that the client has to commit to a concept design in early stage without any final design. As there is no bill of quantities provided by the client it is difficult to evaluate the bids and it will restrict the freedom of client to do future changes on design (Ng and Aminah, 2006; Turina et al. 2008). Moreover, Turina et al. (2008) has stated that relatively fewer firms provide the D&B facility. Therefore, the competition will be less among bidders and it will increase the final bid price. Generally, it is not recommended to use aesthetically important buildings because the client has less control over the design (Rameezdeen and De Silva, 2002; Ng and Aminah, 2006; Turina et al. 2008).

METHODOLOGY

Research Approach

Relevant data for the research collected was through the experience of people, their ideas and opinions. It is decided to use quantitative approach and analyze data using graphical illustrations to generate meaningful symbolic content. Quantitative approach had been used to collect data on this topic by using below mentioned data collection techniques.


Data Collection Techniques

Figure 2: Steps of Data Collection

Survey data collection method can offer many advantages (Wardani, 2004). According to Simon (1969), by a questionnaire survey it can be asked number of questions at the same time and it increases the flexibility of the analysis.

Therefore, to collect data on the findings of the literature review it was planned to do a questionnaire survey (Figure 2). Hence this study had been decided to carry out in quantitative research approach where questionnaires survey was designed to collect qualitative data along with quantitative data which can be support to the findings of this study.

To collect relevant data the questionnaires were distributed among hundred professionals in the industry. Out of that sixty-one had been retrieved. Almost 61% respond rate. Those data have been analyzed and discussed below.

DISCUSSION

The questionnaire findings had been plotted in graphs to have better graphical view on the outcome. Moreover, using those data calculated the weight of each answer as percentage to get a quantum of it. The findings of those had been discussed below.

Criteria for The Selection of Procurement Methods

Time

  • Project completion at estimated time & Minimization of construction time

As per the above graph project completion at estimated time and minimization of construction time is important for both procurement methods. But according to the graph D&B method have 55% weight on those while traditional method only scored 30%. Idiake et al., (2015) also had discussed that D&B have more possibility to project completion at estimated time.

Cost

  • Project completion at estimated cost

When selecting procurement method, project completion at estimated cost is an important factor. As per analyzed data 90% of responds supported that, D&B method has possibility to complete projects at estimated cost and this has been discussed buy Turina et al. (2008).

 Quality

  • Quality Assurance

It is important to select a suitable procurement method which can provide the best quality assurance. From the responses 80% are in rage over highly important for D&B method whereas traditional method only having 65%. These have been proved in the findings of Idiake et al. (2015) Ng and Aminah, (2006) and Wardani (2004).

Other

High degree of control of the project, consultancy service offered, communication and co-ordination, complexity of design, nature of client, technical complexity of construction, associated risks, availability of information at project inception, nature of project and stake-holders management also can be considered as criteria for the selection of procurement methods. For all these factors response distributions had a similar nature. While traditional method has responses from not important to strongly important range, most of the D&B responses are in strongly important range. That means those factors are more sensitive in D&B method than traditional procurement method.

From all above it is justified that D&B is more suitable for clients when considering reducing time, cost and risk. Easy communication, single point responsibility and better control over the project gives more benefits to clients.

Factors Affecting the Performance of Procurement Method

As indicated in the graphs it is clearly shown that traditional method has more effect of financial risk with total of 82% of responds on high to very high range. According to above graph D&B method have more certain project budget and it reduces the financial risk. Ng and Aminah (2006); Xia and Chan (2010) also have mentioned the same.

According to the responses of questionnaire survey, generally more than 50% of responds are in high to very high range for below factors as well. Therefore, it can be identified that contractor’s experience, project type, size of contractor’s organization, consultant’s experience, flexibility of the procurement process to client changes, payment methods, capital cost of project, project size, client’s contribution to design,  adequacy of contractor resources, project manager’s coordination and organizing skills, technology feasibility, degree of innovative technology, government policies, aesthetic appearance of the building also as affective factors for performance of procurement method. Therefore, it can be identified that these factors also have affect to some extend to the performance of procurement method. Waziri (2012) also have similar kind of result in the study on factors affecting project performance.

CONCLUSION AND RECOMMENDATIONS

Key Findings

This paper has highlighted the connection of D&B procurement method and its performance in connection with the time, cost and quality parameters. It has been found that D&B method has more positive features such as single point responsibility, less time consumption, easy management and less risks to the client.

Moreover, some factors were identified from the questionnaire survey as factors affecting to the performance of the procurement method. Financial risk, time management, alterations to design, complexity of project design, contractor’s experience and project type are to name a few.

In addition to that, the D&B method has more advantages from client’s perspective when comparing with the traditional procurement method.

Conclusions

Main aim of this research was to identify successful factors of D&B procurement method. According to literature and questionnaires survey it can be concluded that D&B procurement method can provide best performance in time, more benefits in cost and better quality over traditional procurement method. Moreover, comparison between D&B procurement method with traditional procurement methods had been done through past literature as well questioner survey. It is evaluated that advantages of D&B procurement method and there are more advantageous to the clients rather than traditional methods. Thus, the evaluated advantages enhance the importance of application of D&B method in the construction industry

Recommendations

According to the findings of the study, following recommendations were made.

  1. Need to encourage the clients to select the D&B procurement method and the contractors must be encouraged to expand their capacity to develop their organizations to facilitate D&B projects.
  2. Professionals such as project managers, architects, engineers and quantity surveyors need to be educated on integrated procurement methods such as D&B.
  3. Moreover, consultancy firms also need to be expanding their services to achieve the requirements for D&B procurement without limiting traditional methods.

Limitations

As per the literature it was identified that, infrastructure development has captured more share of the construction industry. Even if this study was limited to building construction industry in Sri Lanka.

Even though there are collaborative method, management oriented and D&B methods in integrated procurement, this paper focused only on D&B procurement method.

Moreover, this study was discussed only the clients’ benefits regarding cost, time and quality matrices. But there are more stakeholders in the construction industry which must be considered for further researches.

Furthermore, as only a very few numbers of professionals have expertise in the integrated project delivery methods such as D&B, it is very difficult to interview and gather the ideas and experience of those experts. Their busy schedule limits the resource parson’s availability.

Further research

From the results of the research, it has been identified some other areas that require further research. Current research can be expanded in the following sections.

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