Early contractor involvement in building procurement : contracts, partnering and project management

328 Pages·1.404 MB·English

by  David Mosey

Early Contractor
Involvement in
Building Procurement
Contracts, Partnering and Project
Management
David Mosey

A John Wiley & Sons, Ltd., Publication

Early Contractor Involvement in
Building Procurement

Early Contractor
Involvement in
Building Procurement
Contracts, Partnering and Project
Management
David Mosey

A John Wiley & Sons, Ltd., Publication
This edition fi rst published 2009
© 2009 by David Mosey
Blackwell Publishing was acquired by John Wiley & Sons in February 2007.
Blackwell’s publishing programme has been merged with Wiley’s global Scientifi c,
Technical and Medical business to form Wiley-Blackwell.
Registered offi ce
John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ,
United Kingdom
Editorial offi ces
9600 Garsington Road, Oxford OX4 2DQ, United Kingdom
2121 State Avenue, Ames, Iowa 50014-8300, USA
For details of our global editorial offi ces, for customer services and for information about
how to apply for permission to reuse the copyright material in this book please see our website at
www.wiley.com/wiley-blackwell.
The right of the author to be identifi ed as the author of this work has been asserted in
accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988,
without the prior permission of the publisher.
Wiley also publishes its books in a variety of electronic formats. Some content that appears
in print may not be available in electronic books.
Designations used by companies to distinguish their products are often claimed as trademarks.
All brand names and product names used in this book are trade names, service marks, trademarks or
registered trademarks of their respective owners. The publisher is not associated with any product or
vendor mentioned in this book. This publication is designed to provide accurate and authoritative
information in regard to the subject matter covered. It is sold on the understanding that the publisher
is not engaged in rendering professional services. If professional advice or other expert assistance is
required, the services of a competent professional should be sought.
Library of Congress Cataloging-in-Publication Data
Mosey, David, 1954–
Early contractor involvement in building procurement : contracts, partnering,
and project management / David Mosey.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4051-9645-1 (hardback : alk. paper) 1. Building–Planning.
2. Building–Superintendence. 3. Subcontractors–Selection and appointment.
4. Industrial procurement. 5. Construction contracts. I. Title.
TH438.M62 2009
692–dc22
2009006625
A catalogue record for this book is available from the British Library.
Set in 10 on 12 pt Palatino by SNP Best-set Typesetter Ltd., Hong Kong
Printed in the UK
1 2009
Contents
Introduction – Who Remembers Mott the Hoople? 1
Chapter 1 Early Contractor Involvement – An Overview 6
1.1 Early contractor involvement – why bother? 6
1.2 Early contractor involvement and project pricing 8
1.3 Early contractor involvement and risk transfer 10
1.4 Early contractor involvement and payment 11
1.5 The role of building contracts 12
1.6 The limits of construction phase building contracts 15
1.7 Contractor contributions to design, pricing and risk
management 15
1.8 The client, communications and project programmes 16
1.9 But do you need an early building contract? 18
1.10 Preconstruction commitments under framework
agreements 18
1.11 The infl uence of project managers and project
partnering 19
1.12 So what is stopping us? 20
1.13 Government and industry support 21
Chapter 2 Conditional Contracts and Early Project
Processes 22
2.1 The conditional preconstruction phase agreement 22
2.2 Recognised categories of contract 25
2.3 Effect of the number of parties 27
2.4 The planning function of contracts 29
2.5 Choices and contractual conditionality 31
2.6 Limited effi ciency caused by unknown items 32
2.7 Risk and fear of opportunism 33
2.8 Conditional relationships without full consideration 34
2.9 Need for long-term relations 35
2.10 Alignment of different interests 36
v
Early Contractor Involvement in Building Procurement
2.11 Preconstruction phase agreements as project
management tools 38
2.12 Contracts and new procurement systems 39
Chapter 3 Problems and Disputes Under Construction
Phase Building Contracts 41
3.1 Introduction 41
3.2 The role of standard form building contracts 41
3.3 Standard forms and the assumption of complete
information 42
3.4 Origins of standard forms and lack of trust 43
3.5 Criticisms of effectiveness of standard forms 45
3.6 Causes of claims 46
3.7 Links between claims and preconstruction phase
activities 48
3.8 Links between claims and building contracts 51
3.9 New procurement procedures or gambling
on incomplete information 54
Chapter 4 Early Contractor Involvement in Design,
Pricing and Risk Management 57
4.1 Introduction 57
4.2 Preconstruction design processes 59
4.3 Preconstruction pricing processes 68
4.4 Preconstruction risk management processes 78
4.5 Preconstruction subcontractor appointments 86
4.6 Perceived benefi ts of early contractor appointments 91
4.7 Early contractor appointments and sustainability 92
Chapter 5 Client Leadership, Communication Systems
and Binding Programmes 95
5.1 Introduction 95
5.2 The role of the client 95
5.3 The role of communication systems 102
5.4 The role of binding programmes 111

Chapter 6 Contractual and Non-contractual
Preconstruction Options 125
6.1 Introduction 125
6.2 Building contract options 125
6.3 Letters of intent 130
6.4 Non-binding arrangements 132
6.5 Benefi ts of contractual clarity 137
vi
Contents
Chapter 7 Preconstruction Commitments Under
Framework Agreements 139
7.1 Commercial attraction of frameworks 139
7.2 The relationship between frameworks and
partnering 141
7.3 Frameworks and preconstruction phase processes 142
7.4 Published forms of framework agreement 143
7.5 Frameworks and the Private Finance Initiative 145
7.6 The impact of frameworks on changing behaviour 146
Chapter 8 Project Management and Project Partnering 151
8.1 Introduction 151
8.2 Preconstruction phase agreements and project
management 151
8.3 Preconstruction phase agreements and partnering 160
Chapter 9 Obstacles to Early Contractor Appointments 176
9.1 Introduction 176
9.2 Project-specifi c obstacles 176
9.3 Procedural obstacles 181
9.4 Personal obstacles 186
9.5 Education and training 193
9.6 The role of the partnering adviser 195
Chapter 10 Government and Industry Views and
Experience 197
10.1 Introduction 197
10.2 Importance of government and construction
industry support 197
10.3 Support for contractor and subcontractor design
contributions 198
10.4 Support for two-stage pricing 199
10.5 Support for selecting contractors by value 200
10.6 Support for joint risk management 202
10.7 Support for greater client involvement 203
10.8 Government and industry views on partnering 204
10.9 Government views on preconstruction phase
agreements 205
10.10 Industry experience of preconstruction phase
agreements 208
10.11 Preconstruction phase agreements in an economic
downturn 209
vii
Early Contractor Involvement in Building Procurement
Chapter 11 Conclusions – the Golden Age Of Rock ‘n’ Roll? 214
11.1 Functions of building contracts and their potential
to govern project processes 215
11.2 The assumption in standard form building contracts
of complete project information and consequent
problems and disputes 216
11.3 Preconstruction phase processes that can be
improved by early contractor appointments 217
11.4 The role of the client, communication and
programming of preconstruction phase processes 218
11.5 Contractual and non-contractual options to govern
preconstruction phase processes 219
11.6 Increased preconstruction commitments under
framework agreements 220
11.7 The relationship of preconstruction phase
agreements to project management and partnering 220
11.8 Circumstances and attitudes that are obstacles
to early contractor appointments or to
preconstruction phase agreements 221
11.9 Government and industry support for early
contractor appointments under preconstruction
phase agreements 222
Appendix A Project Case Studies 225
Use of Preconstruction Phase Agreements on
Single Projects 225
Use of Preconstruction Phase Agreements on
Multi-project Frameworks 251
Appendix B Preconstruction Phase Processes Under
Standard Form Building Contracts 262
1 Introduction 262
2 Design development 263
3 Two-stage pricing 269
4 Risk management 271
5 Communications 275
6 Programmes 283
7 Team integration 288
Appendix C Preconstruction Phase Processes Under
Standard Form Framework Agreements 291
Introduction 291
JCT Framework Agreements 291
NEC3 Framework Contract 294
Appendix D Form of Risk Register 298
viii