The aim of this newspaper is to research how Main Company procurement procedures influence value on the project through competitively tendering Sub Contract packages; whereby cost is influenced down by competition or sole sourcing Sub Agreement packages creating value through negotiation and development.
Empirical data was gathered through organized questionnaires released to Sub Deal companies and Main Contractor firms.
The questionnaire results reveal
1. 0 Introduction
1. 1 Qualifications - What the analysis is about
When taking into consideration the procurement of the Sub-Contract program, the procurer is confronted with numerous troubles. First he/she needs to collect all information required to decipher what must be procured and the way the information can be transposed to potential Sub-Contractors. Second of all a contractual agreement is established including responsibilities and ways of compensation. Thirdly, the procurer needs to decide how to award the procurement agreement between the Sub-Contractors, either through competitive tendering or solitary source negotiation. Inevitably the award method should bring about the selection of a highly competent and desirable Sub-Contractor resulting in a affordable product.
The award method may be appointed to Sub-Contractors in two ways. The sole Sub-Contractor can be contacted to go over and agree the works (one source tendering), or lots of Sub-Contractors can be asked to compete for this (competitive tendering).
With relation to competitive tendering it is important to distinguish the technique or form of competition from the requirements used for the selection of Sub-Contractors. Ciria (1994, p15) says that competition may be either:
Open, where there is no limit on the amount of Sub-Contractors asked to be competitive for work.
Selective or limited, where the variety of Sub-Contractors invited to compete is limited.
For the purpose of this study open up competitive tendering will not be taken into consideration to keep the number of variables to a constant. Where competition is referenced throughout the newspaper we could to presume selective or constrained competition.
1. 2 Research Focus
This paper address's the increase of project value produced by describing a partnering way predicated on Sub-Contractor and Main Contractor relationship's; compared to that of traditional competitive tendering. Competitive tendering can be described as determining the value of the subcontract; whereas in contrast, negotiation was created to create the value of the subcontract.
Since the Latham Report (1994) and Egan (1998) was shared there has been a greater recognition about the possible benefits to single source something or service. Theoretically if contractors and subcontractors indulge and work together would it not provide cost effective? Otherwise would value be added by competition? Competitive tendering is still widely recognized as a good procurement mechanism which is firmly advocated as it helps to encourage and promote competition motivating many potential suppliers.
This subject matter area has been tackled because of its close romantic relationship with the number Surveying occupation. Accurate procuring of goods and services is essential to a tasks success, having a direct impact on income. This study is relevant to everyday be employed by a site founded Quantity Surveyor working with nominated Sub-Contractors on a regular basis while working closely with the procurement team to procure future plans. Interest has encouraged the research and address of the thesis question;
"Single source or competitive tendering; which procurement path gives best value?"
1. 3 Overall Research Aim and Person Research Objectives
The overall goal of this research is to boost an understanding of the impacts that tendering Sub-Contract deals through negotiation or competition have on the tasks value. However, in order to understand tendering methods and its own results on value it is experienced essential to gain an information into the makes driving a car Sub-Contractor and Main Service provider associations and explore the obstacles to implementation of both celebrations obtaining maximum value. Further, this research will examine existing practices, exploring the experiences and views of professionals associated with Sub-Contract procurement. Subsequently two main research vehicles will be exploited to accomplish this study: an in depth overview of relevant books and the collection of and examination of empirical data. The chapter entitled Methodology provides the information on both research strategy and data collection ways to be used to obtain empirical data. Specifically, a variety of goals have been developed and unpacked from the central question, the goals of this research are to:
Identify and investigate the forces driving a car sole source and competitive tendering procurement routes.
Evaluate critically the construction business current views and thoughts, compiling the attitudes of the experts.
Explore and measure the advantages and disadvantages for each approach to procurement.
Formulate and propose tips on the procurement path that provides more value to a construction project.
1. 4 Value of this research
At the risk of oversimplification of the purpose and value of each of these objectives, target 1 focuses on methods, reasons and growing issues. Whereas it is goals 2, 3 and 4 is where this research will make key efforts to the field of Sub-Contract program procurement through sole sourcing or competitive tendering. Each of the objectives must not be viewed as split, unrelated issues. The outlined objectives are actually interlinked. The first target - on investigating procurement routes - covers the strategic individuals and methods associated with the procurement of Sub-Contract plans. For example, it is going to, in effect, energy to answer the question 'are there causes driving a car companies to procure Sub-Contract plans using ways and, if so, what are they and what do they entail?' An example of such driver could be regarded as communication, which if the situation, may act as a driver to encourage negotiation through one sourcing Sub-Contractors. Objective 2 - on critically analysing the development companies views - has an possibility to gain meaningful information in to the views of professional staff, and management form Sub-Contractor and Main Company backgrounds, on what would cause them to become procure Subcontract plans through either negotiation or competition, what would discourage them and how these link to value creation as well as their views on the market sectors beyond and current approaches. Objective 3 - on advantages and negatives - is of apparent relevance to aid in the evaluation of every procurement path and links along with objective 4. Finally objective 4 - formulating tips - will, because of this of both an assessment of books and the collection and discussion of empirical data, make tips. The objectives are not to be seen as independent of each other, but rather as all associated with issues adjoining procurement routes and how they can truly add value in the construction industry.
2. 0 Literature Review
2. 1 Introduction
This books review will verify the main issues adjoining the drive for solo sourcing and competitive tendering associated with Sub-Contractor selection. Emphasizing current hurdles and potential benefits for each and every procurement routes from both celebrations. The study through this review of books focuses on goals 1 and 2 as lay out in sub-section 1. 3 of the Introductory section (the 3rd objective will be completed through the automobile of empirical data collection and analysis, while the final aim - objective 4 - comes from because of this of studies from goals 1, 2 and 3):
Identify and investigate the forces generating single source and competitive tendering procurement routes.
Evaluate critically the building companies current views and views, compiling the attitudes of professionals.
Explore and evaluate the benefits and drawbacks for each approach to procurement.
Formulate and propose suggestions on the procurement way that delivers more value to a structure project.
By checking out the above regions of literature, a significant contribution will be produced to this research. By the end of this chapter it is hoped a critical understanding of key issues is exhibited, that the audience will be better enlightened in these areas and that there will emerge an obvious emphasis, and justification, for empirical research in the field of Sub-Contractor procurement methods and their effect on value during a construction project.
2. 2 Makes driving one source and competitive tendering procurement routes.
Historical Events & Administration Legislation
Subcontracting became a popular practice in the 1960's and over time set up itself as a fundamental element of the industries development process. Assignments were procured using traditional methods of delivery with main contracts being awarded through competitive tendering (Uher, 2009; Davenport, 2009, p. 200). During these years the overall economy was secure with little inflation and low interest rates, the service provider was viewed as the 'Professional Builder' due to employing almost all of its own immediate labour and only specialised areas of work such as mechanical and electrical power were subcontracted. Because the later 1960's the world's economies experienced regular economical downturns, increased inflation and higher interest charges. Using the Structure Industry being highly vunerable to monetary fluctuations, the negative economic actions altered the traditional tactics of the construction industry; one of the foremost changes being the change towards subcontracting.
Since the first 1990's the Development Industry has prolonged its conflict-ridden competitive tendering culture, together with adversarial working romantic relationships throughout its resource chain, (Brindley, 2004). The Building Industry continued to pressure its suppliers to lessen prices, along with delaying payments to them so that it could benefit from a level appealing. This tradition located risk on smaller businesses triggering them to cease to exist or execute projects at second-rate quality. Writers in the early 1990's were slightly certain about their view between main builder and subcontractor connections; with main companies driving a vehicle prices down even if detrimental to quality, not paying subcontractors promptly and occasionally forcing smaller companies to cease trading. THE UNITED KINGDOM government, worried by these facts utilized Sir Michael Latham in 1994 and Egan in 1998 to create two information. Latham advocated the need for a Code of Practice for subcontractor procurement and for statutory backing to 'fair payment terms' (Latham, 1994). Therefore in 1996 the Development Industry Board publicized and applied a Code of Practice for selecting Subcontractors and the Property Grants or loans and Regeneration Work. In addition, Egan (1998) remarked that partnering through the source chain is a crucial approach with that your UK development industry can drive advancement and support incremental improvement in performance.
In recent years main contractor supply chain relationships have improved from the traditional adversarial to the joint venture, with tendering experiencing a retreat from traditional methods of procurement towards one source processes. Regarding to Davenport (2009) the contribution of subcontractors to the total development process can take into account approximately 90 % of the full total value of any construction project. One of the results of the is that main contractors are concentrating their attempts on controlling site process's rather than utilizing direct labour to undertake engineering work. Main contractors have accepted the positive influences that closer working interactions with subcontractors can have on deal value and quality. Most work performed on engineering partnering has been between consumer and main company romantic relationships with little reference to adopting partnering with subcontractors.
2. 2. 2 The Contracting Framework
A central problem in procurement is that both Sub-Contractors and Main Contractors share uncertainty about many important design changes that occur after the contract has been given. These changes are usually a outcome of design failures, surprising conditions and changes in regulations, which have an impact on job costs. This observation shows that relationships between both celebrations can become adversarial hindering source chain romantic relationships. Therefore task design completeness will have an impact on the procurement honor method determined. (Tadelis, 2006; Bajari, 2006) argue that simple jobs, requiring an uncomplicated design should be procured using fixed-price deals as they have high 'design completeness'. Therefore preventing the necessity for contract versions, and are best honored through competitive tendering. On the other hand (Tadelis, 2006; Bajari, 2006) state that complex projects requiring large design give rise to surprises throughout the tasks due to low levels of 'design completeness'. Implying that there will be a high chance for variations so that it should be awarded through negotiation. The understanding for these thoughts is through bonuses to reduce costs that follow on site variations consequently having an effect on a jobs overall value. In predetermined price agreements, the Sub-Contractor offers the procurer a lump total price to handle the works as specified, with any changes being negotiated throughout the deal.
The bonuses for a Sub-Contractor to reduce tender costs offered by fixed price lump amount tendered agreements will lead to increased costs for the Main Contractor through variations when changes need to be negotiated. This specific surplus to the Sub-Contractor causes efficiency loss through the Sub-Contractor desperate to use these changes to his edge. On the topic of competitive tendering Tadelis (2006, p. 4) expresses:
"While competitive bidding does have the good thing about neutral awarding of jobs, it fails to answer optimally to ex post adaption. "
Therefore it would appear that competitive tendering stifles coordination between Sub-Contractors and Main Contractors before technical specs and drawings have been finalised. After all a Sub-Contractor does not have any incentive to own procurer advice on value engineering or progressive ideas, if anything the Sub-Contractor would benefit from retaining any information from the Main Contractor as they would offer a competitive advantage above the rival rivals. Once granted the deal the expected design mistakes will be learned and the Sub-Contractor will maintain a posture to claim increased variation costs. YET, IN negotiated one source tendering both Main Service provider and Subcontractor typically spend some time discussing the task before construction commences. During these conversations the Sub-Contractor will have better bonuses to suggest potential cost conserving techniques through design and specification changes. Associated this more design pitfalls will be found before a project begins, potentially adding value.
The competitive pressure through negotiating deals with an individual Sub-Contractor is poor with the procurer not achieving all the cost benefits.
2. 3 The building business current views and opinions
Competitive tendering is generally recognised as an attractive procurement method and is often recognized for numerous reasons. Generally it can be regarded as a way of promoting and revitalizing competition between Sub Companies. By its nature available competitive tendering invites potential Sub Contractors from many locations reducing the chance for price inflation (Tadelis, 2006; Bajari, 2006). Good market price finding is beneficial for this kind of tendering with open up competitive mechanisms being clear, making it much easier to prevent corruption. (Cira, 1994) shows that competitive tendering has three significant advantages over negotiation which as as follows:
Competition stimulates a systematic approach which is more likely to produce the right Sub-Contractors than negotiation with an individual Sub-Contractor
Competition is a translucent process and so helps satisfy the increasing demand for accountability in both general population and private industries.
Competition can provide clients better value for money, particularly if compared based on both their capacity and fees.
An interesting point made by CIRA, 1994 pg 14 arguing against competition was that Sub-Contractor input at an early stage cannot be described sufficiently to allow good competition. It is because the Sub-Contractor helps explain the works needed and bids consist of an factor of judgement anticipated to imperfect design. CIRA also mentioned that in the beginning competition is a period consuming and expensive process and costs may outweigh any value kept. However the advantages of selecting the most suitable Sub-Contractor for the job could outweigh this initial investment. Competition can have useful exceptions to its use through complicated deals where only 1 Sub-Contractor gets the specialist knowledge needed. Or is services are needed urgently and there is not enough time to attempt the competitive process properly.
Competitive tendering, where in fact the most affordable bidder gets honored the deal, is deeply inlayed in the construction industry and can be dangerous in the long-term as the necessity to minimise transactional costs will reduce quality and client satisfaction. The focus on cost competition, and the original adversarial Main Contractor - Sub-Contractor associations, results in repeated changes in engaging firms from one construction project to another. This makes collaboration between them difficult. Partnering resulting in solo sourcing between Sub-Contractors and Main Companies has been cited as effective approaches to overcome these troubles and add value to a job. (Dainty, 2001) recognized the following barriers to integration from the subcontractor viewpoint:
Financial/cost-related issues related to competitive tendering based on price, which has developed adversarial relationships that bring about serious problems with regard to payments;
Planning/time-related issues, such as bogus expectations on part of the primary company and unrealistic schedules; and
Attitude-related issues, such as arrogant conducts, exclusion of the subcontractor from the first phases, lack of praise once and for all performance, poor site management tactics, and lack of knowledge of subcontractors' problems.
Latham (1994) identifies partnering as a contractual arrangement between two celebrations for either a specific amount of time or for an indefinite time period. The parties consent to interact, in a marriage of trust, to achieve specific primary objectives by maximizing the potency of each participant's resources and expertise. It is because of this, that principal contractors are oblivious of the fact that sub contractors may bring added value to the structure job (Dainty et al. , 2001).
Conversely authors such as (Dimitri, 2006) recognise competitive tendering as a stunning procurement mechanism, rousing and promoting competition, hampering corruption and appealing more potential subcontractors to price work. Even though the single sourcing procedure has shown appealing results, there are a few cases where subcontractors have considered it didn't add any value, although some main contractors have observed little benefit in forming alliances with firms that they do not regularly use (Dainty et al. 2001).
Egan (1998) seems that sub companies should be engaged in the look team as early as possible. A disagreement which is echoed by Briscoe et al. (2004), who thinks that sub contractors should be procured early on, therefore need knowledge and potential to exercise value engineering and other advancement exercises. The principal reason for selecting sub companies is their advancement and knowledge, definitely not for the cheapest price. However, high undertaking sub contractors use their technology and knowledge, and could deliver an improved service at a lesser price. Low undertaking sub companies offer only on good deal, while high doing companies offer value (Garrison, T. 2006).
The next stage of the research will feature the Research Strategies to be used to capture the empirical data, including information on the research strategy to be followed, data collection techniques, test selection and management of the researcher's role.
When undertaking a study project consideration must be studied to ensure that any material included within the task causes no damage or potential harm to anyone, or organisation.
"Ethics is the science that deals with conduct, in as far as this is considered as right or wrong, good or bad. " (Dewey, 2008)
An 'Ethics Review Checklist' has been completed (Appendix A) which has outlined a potential area for endorsement. This is because of the methods of research being performed which involve individual participation. These activities specifically include questionnaires; to ensure they are carried out in a morally accurate and moral manner the next steps will be studied.
Ensuring that the topics have the choice to offer voluntary consent the questionnaire will be set up in a manner that participants can choose out of answering either specific questions or not get involved at all. That is honoured by all questionnaires being given to the subject matter via e-mail, permitting applicants to return the report in their own time and at their own will with no pressure to react, therefore you will see no reason for the participants to feel uncomfortable.
All questionnaires granted will be directed with a involvement consent form and information sheet. The questionnaire refers to this documentation via a disclaimer that by going back the survey the subject agrees to the terms and conditions and level of privacy affirmation as disclosed in the consent form. This disclaimer ensures the topic that careful consideration is being taken to ensure that participants and particular companies remain anonymous, to avoid any possible injury. Things will be described by job role only without reference to name or company to eliminate any things of commercial risk or harm to reputations.
Feedback will be granted to topics that helped in the research thanking each subject matter for his/her time and input; including a listing of the findings once all research has been populated.
In range with the Data Protection Action 1998 upon completion of the study all completed questionnaires and very sensitive data will be demolished, including any stored on hard disk and in the recycle bin. Two hard duplicate magazines of the done article will be produced for the college or university, in addition with one electronic digital; these publications may be accessible for public browsing in the college or university catalogue which is disclosed in the participation information sheet.
I plan to conduct lots of case studies for research; therefore it is incredibly important that every case study will be alphabetically referenced, with no mention of any information that may identify the average person, project, location, contractor, customer or consultants. All materials will remain unidentifiable including any diagrams, illustrations or drawings used. This ensures that all parties engaged can be assured that there will be no information detailed in the record which could probably cause injury. All sensitive materials collated will be handled due attention, and destroyed in the correct manner either by shredding hard copies or deleting the information from hard disk.
Any supplementary research carried out will be wholly and appropriately recognized to the writer and source throughout the dissertation by means of Harvard referencing.
A valuable aspect to the research pertains to Objective 2: the possibility to study the engineering establishments current views and execution used in a subject that, although producing much discussion, is conditions of research in its embryonic stages.
One research method which will be adopted, related to research strategy, is a questionnaire. What is a questionnaire approach and just why is it ideal for this research?
Cohen and Manion (2007: 317) express a questionnaire accordingly:
The questionnaire is a trusted and useful tool for collecting survey information, providing organised, often numerical data, having the ability to be administered without the occurrence of the researcher, and often being comparatively straight forward to analyse. '
According to this meaning, a questionnaire is therefore worried about seeking individual's views, facilitating this researcher's drive to probe deeply into answering the thesis question as to which procurement way provides more value by seeking representative's views. Cohen and Manion's classification also provides merit to a questionnaires functional consideration, aiding the justification for using this researchers chosen research strategy and data collection approach.
The questionnaire has been structured using mostly qualitative research as it is linked to in-depth exploratory research. Enabling the opportunity for 'quality' reactions exist through wide open finished questions, probing individuals thoughts and views. Denzin and Lincoln (2003) maintain that qualitative research involves learning 'things in their natural adjustments, attempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them'.
The things have been preferred through convenience sampling, a non-probability approach to sampling as they have been solely targeted. Convenience sampling was used because of its expediency through issuing questionnaires to staff in the company that this researcher works, and subcontractors whom this researcher has dealt with. Through creating a prior association with the content a much better rate of come back has been achieved, with subject matter wanting to indulge more in the research. Furthermore further time will be put in by each individual on providing more detailed responses further boosting the thoroughness of this newspaper. Respondents are structure professionals and range from job assignments such as estimators to surveyors and project managers to directors. The wide selection of job roles gives me the levels of unbiased data required to reach a conclusion. This method of research has been selected with desire to that subject matter ideas and insights can lead to other, more detailed and representative research.
Two different questionnaires were given via electronic mail to a pre filled list of employees with one questionnaire granted to subcontractors and the other to main companies. The purpose of this was so that the questions could be designed to suit either the service provider or subcontractor, it was important to collate both views to reach an accurate finish. The idea behind using E-mail to distribute and collate the questionnaires was that it is a lot more reliable than circulation by post, much easier to manage and monitor, whilst being convenient to people encouraging a larger participation as well to be more environmentally friendly and affordable. Limited qualifications data was wanted such as position in company and level of industry experience when i thought other information would be irrelevant rather than unpack the central question. A couple of no more than ten questions asked per questionnaire, it was experienced that no more questions were required as a final result can be attracted from the results which by using fewer questions the participant is much more likely to add as you won't encroach on their working day. The questions have been organised in a standardised manner so that they can be interpreted and analysed efficiently, there is a balance between open and shut down questioning.
Framework for Data Analysis
Limitations and Potential Problems
Convenience sampling suits this area of analysis because it is industry specific, by concentrating on known topics this reduces the constraints of the research as there is only one researcher so physically sourcing or random sampling would be very frustrating with no warranty of the grade of results. A perceived restriction with using questionnaires for research is they are limited in amount. This is mainly justified because of the lack of time available as students. To negate this risk the things were carefully chosen to ensure a high rate of questionnaire come back and an elevated level of specific answers.
Methodology & Rational Behind the Questions
Questions issued to Sub-Contractors
Interviews were dismissed as a potential research strategy; the explanation behind this is because unlike questionnaires they aren't private. Therefore interviewees may restrain from their true feelings or not give the maximum amount of aspect in their answers. This researcher has counteracted this by using open concluded questions in the questionnaire permitting the topic the possibility to exhibit concerns and genuine views with the data of total incognito; further substantiating that by by using a questionnaire matters as valid empirical research because of its is suitability and relevance to this research paper. This researchers own main data has been accumulated because of the lack of previous literature on this subject; nearly all accessible information can be involved with customer and contractor human relationships and not contractor/subcontractor relationships.
This chapter unveils the results of the review described in Chapter 3 Methodology. This research specializes in acquiring the views of Sub-Contractors and Principle Companies in relation to one sourcing or competitively tendering Sub-Contract deals.
The first question - Question 1. 0 - was: 'Do you are feeling that repeat use the same subcontractor improves the working marriage in terms of talking about site issues/valuations?'
17 (81%) of themes questioned thought that working with the same Sub-Contractor enhances the working relationship with 4 (19%) arguing against the majority. One respondent responded positively: 'A collaborative working relationship forms the basis of the much stronger method of on site conversations and subsequent quality of versions. ' Another mentioned: 'It must be two ways, with both gatherings fully buying in to the benefits. ' One member conjectured that repeat business can improve working associations however; sometimes this is tested credited to commercial pressures. No Main Company respondents stated a reason behind why do it again use the same Sub-Contractor will not improve the working romantic relationship. The replies from Main Service provider personnel claim that there is still an issue with collaborative working. Although 81% of respondents looked at repeat work with the same Sub-Contractor in a wholly positive light, 19% noticed differently.
The second question - Question 2. 0 - was: 'Do you think that repeat use the same subcontractor provides higher quality of workmanship?'
This question gave rise to many blended views with 57% of the content surveyed believing that repeat use the same Sub-Contractor will give a higher quality of workmanship. This is accompanied by 33% voting against the idea and 10% of the themes voting maybe. One subject matter voting against the statement mentioned, 'it gets the potential to, but often contributes to complacency. ' Substantiating this theory further another respondent pointed out subletting, whereby Sub-Contractors were permitting the task to others or to individuals whom wouldn't normally be at all enthusiastic about forging good connections. Contrary to this three respondents commented saying that repeat work gives the Sub-Contractor a knowledge of the grade of workmanship expected of them. The replies suggest that this is an obvious region of improvement for Main Contractor and Sub-Contractor relationships. Some respondents experienced constant ideas that anticipated to subletting and a higher turnover of personnel craftsmanship quality can be hit and miss. The reason behind the divide could very well be due to job location, many Sub-Contractors are large countrywide companies with offices spread over the united states. Despite using the same firm in a single area whom succeed, some other office will use different groups whom may underperform.
The third question - Question 3. 0 - was: 'By working carefully with a specific subcontractor on lots of assignments, do you are feeling that disputes happen less frequently?'
81% of respondents experienced that disputes happened less frequently when working directly with Sub-Contractors on a number of assignments. 14% of subject matter experienced that working carefully with Sub-Contractors on a number of projects bared no correlation to the occurrence of disputes that occur on site. This is followed by 5% who have been undecided and voted maybe. One respondent stated that it's not down to the Sub-Contractor as a company but is based if the same management from the Sub-Contractor is engaged from job to project as to whether disputes take place. Another respondent experienced that disputes occur less since there is more trust, and idea from both gatherings that the outcome will be mutually beneficial. This view was also reinforced by another respondent who stated: 'A more comfortable working environment brings about fewer disputes. ' The replies suggest that fewer disputes appear by working directly with Sub-Contractors. The theme that was obvious throughout the replies was that disputes can always appear but the manner in which they are solved will be based upon the relationship between the two get-togethers. Disputes can have a dramatic effect on a jobs value; the studies demonstrate that by working closely with repeat Sub-Contractors fewer disputes appear increasing productivity and for that reason there's more potential for higher value to be achieved.
The fourth question - Question 4. 0 - was: 'Do you feel that working directly with a subcontractor at tender stage provides more value in your bet through innovation and value executive?
13 respondents (62%) sensed that working meticulously with Sub-Contractors at sensitive level provides more value to a bid submission. One respondent responded with 'only if the Sub-Contractor is guaranteed to be focusing on the project. ' Another respondent commented with 'by working closely with subcontractors, this leads to improved relationships, this means that both parties will be more open and genuine, adding value. ' The remaining 8 respondents (38%) assumed that by working closely with Sub-contractors at tender stage brings no additional value to a bid submission. Commenting in some instances that it's possible to produce more value, depending on original design but it is becoming more difficult to be innovative and what a decade ago was viewed as Value Engineering is now being incorporated as standard.
The second part to the fourth question - Question 4. 1 - was: 'Do you feel this practice occurs frequently or enough?
71% of respondents thought that the practice of liaising with subcontractors at sensitive stage did not occur as frequently as it should. 19% of respondents were undecided and voted maybe with 10% saying that they felt this practice occurs frequently. Question 4. 2 captures the reason why behind the respondents chosen answers.
The third part to the fourth question - Question 4. 1 - was: 'If your answer was No to question 4. 1, why do you believe this to be the circumstance?'
Supporting the view that the practice of liaising with subcontractors at sensitive stage does not occur as much as it should one respondent explained: 'supply chain integration has progressed substantially prior to the latest economical downturn and now client pressure is focused on most reasonably priced rather than affordability. ' Another respondent believed that Main Contracting businesses tend to be more risk averse so technology is not searched for enough; however Value Anatomist is completed quite vigorously during the bid process. Normally this is through the basis of trimming cost by reducing specification alternatively than looking into true value. Two respondents put it right down to not fully participating with the chosen tenderers and having less information offered by tender. To analyse question 4. 0, used it is experienced that although Sub-Contractor insight at tender level is recognized as a very important process and contributes value to a job it does not occur nearly normally as it should. This is despite Sub-Contractors being seen as specialist tradesmen with expert knowledge in their field of knowledge. The barrier to this interaction appears to be the use of competitive tendering, used one subcontractor may be talking about the bid with the primary Contractor at sensitive stage whilst costs but still is aware of he/she will be up against competitors once the design is complete; thus minimizing any incentive to give specialist advice. In the event the Sub-Contractor spends huge amounts of time and effort on a sensitive offering valuable advice the information is often utilised however the Sub-Contractor is not often awarded on quality and helpfulness but purely on lowest price. Which will not always lead to more value in the offer due to modifications, disputes etc. As a result of this regular practice Sub-Contractors are less inclined to easily partake in value executive discussions.
The fifth question - Question 5. 0 - was: 'Do you believe it is worth meeting with subcontractors whom have expert complex knowledge of just work at bidding stage for innovative building solutions?'
81% of respondents believe that it is worth meeting with Sub-Contractors at the bidding stage of a agreement with 19% disagreeing. One respondent said that in come situations the Main Builder would not be willing to simply accept the risks involved with some impressive ideas. Two firmly advocated the methodology especially when bidding on theoretically complex assignments with risky elements. One went on to state that without support from the resource chain, Main Companies cannot grasp the range of the works. The responses from question 5. 0 substantiate further the reasoning behind the reactions involved 4. 0. Without Supply Chain type, maximum value potential cannot be achieved.
The 6th question - Question 6. 0 - was: 'Do you are feeling the structure industry has modified its approach to subcontractor / service provider relationships within the last 10 years'?
81% of respondents experienced that the industry has evolved its method of Sub-Contractor/Main Contractor associations within the last 10 years. One respondent who reinforced the change stated that the Supply String development has shifted to a different level to engage with and talk about benefits with Sub-Contractors, which leads to do it again business. One respondent thought that the try to partner in the 1990's lost momentum and did not work, however the evolution of two-stage in the last decade has generated better functions and views this as the second stage of partnering. Further helping the situation for change one respondent explained that the benefits of collaborative working at tender stage are obvious and that Main Contractors are motivated by the personal savings/ enhanced margins that may be created through cooperation. 14% of respondents thought that there has been no change in the past decade the truth is regardless of the Latham (1994) and Egan (1998) informing the industry that change is needed. The remaining 5% believed there may have been some change over the past decade. It had been expected that a higher percentage of respondents would have disagreed and explained that the industry hasn't changed as considerably within the last decade. Nonetheless it would be incorrect to say that little or nothing has been achieved as advised by quotations from senior industry professionals in Building (1999 Industry chiefs suspect the impact of Latham, 12th February, 9. ):
'The report has already established no impact whatsoever. They have simply made people stop and think, and they extended as before. '
'To day, the Latham report has had hardly any, if any, effect on the development industry. '
The understanding within the development industry may be that hardly any has changed, but in reality there's been a subtle transformation of the culture of the industry. (Structure Reviews 1944 -98 by Mike Murray). The study supports this assertion.
The 7th question - Question 7. 0 - was: 'What positive characteristics would you expect from an operating relationship with an integral Sub-Contractor?'
This question was open ended, numerous respondents taking a similar stance to the question. A listing of expectations that Main Contractor employees bottom part a good working romance on are the following:
Good safe practices, which causes higher quality
Good quality of workmanship
Good at time management
Right price first time
Good technical advice
Work well as a team with good on-site working relationships
Good tender level support, especially with design type.
Open to suggest value engineering options
Suggestions on more efficient and safer ways of working
Good Main Companies Discount
Early notification of any issues and a mature attitude for coping with them
More amicable dispute resolution
Sub-Contractor is economically sound especially of these monetary downturns.
Despite the economical downturn we still maintain our supply chain target and try to use them whenever you can, rather than tender to an wide open market of untried Sub-Contractors.
Engaging with lots of key Sub-Contractors at tender stage produces benefits. Yet, in my experience, it surpasses hold those discussions with an increase of than one builder, a good group, alternatively than solitary sourcing. Solo sourcing remains an unproven approach to procurement.
Main Service provider Views
This research has advised that Main Company/ Sub-Contractor interactions are no longer totally characterised by a history of discord, litigation and adversarial process's. Instead, collaborative working between Main Companies and Sub-Contractors has been accepted as the key method for a jobs success and consequently additional value. Through repeat working with Sub-Contractors a relationship built on trust is produced reducing the probability of serious disputes, should a dispute occur normally, this is mutually agreed on site for the great things about both parties. The Main Contractor knows the amount of quality to expect from the Sub-Contractor through duplicate working; however this is an area of improvement with the intro of sub letting work which can lead to sub standard craftsmanship.
A key finding from the study was that by creating partnerships at sensitive stage can add increased value through ground breaking ideas, technological developments, value engineering and efficient ways of working. It is acknowledged that the primary Contractor realises these potentials with 62% of the votes however 71% of respondents feel this does not happen in practice. The research shows that the reasons behind having less partnerships at sensitive stage through impressive ideas were because of the increase or present risk for the Main Contractor therefore rarely instigate
What have you think you would find? What did you get?
Does size of task effect which way is most beneficial?
Does intricacy of project effect which route is best? - (Solitary source)
Competitive tendering may stifle communication between buyers and sellers, stopping the buyer from using the subcontractor's competence.
Construction sectors clients have a job to learn too, as EGAN remarked that for his tips to be executed, major clients must invest in fulfil their responsibility to be able to improve efficiency and quality of development.
Competitive tendering promotes competition and hampers corruption.
Single source strategies such as design and build will enable contractors to look for more innovative means of construction, because they have got greater input during the design process and therefore much greater opportunity to apply ground breaking construction alternatives.
Conclusions and Recommendations
The overall goal of this research was to enhance a knowledge of the impacts that tendering subcontract packages through negotiation or competition have on the projects value. The specific research goals were to:
Identify and check out the forces generating single source and competitive tendering procurement routes.
Evaluate critically the construction establishments current views and opinions, compiling the behaviour of professionals.
Explore and measure the advantages and disadvantages for each approach to procurement.
Formulate and propose tips on the procurement path that provides more value to a engineering project.
This section will revisit the study objectives above, summarise the studies of the research work and provide conclusions predicated on the findings. Tips for future research will be reviewed, in conditions of how to progress this study. Notably, the contribution of this research to the introduction of adding potential value through chosen procurement routes will be clarified. By implementing this composition it is supposed that the study work will be concluded so as to reflect on set up objectives stated in the beginning of this research have been met, including account of the value of this analysis. Direction will be offered how this research work can be progressed.
Research Aims: Summation of Conclusions and Resulting Conclusions
Research Goal 1: Forces driving a car one source and competitive tendering procurement routes.
The literature recognized the main explanations why Sub-Contract plans are procured using competitive tendering through: promoting and rousing competition; reducing the chance for price inflation; fair market price finding; transparency and helping to prevent corruption. Some authors
Research Objective 2: The structure market sectors current views and thoughts.
Research Objective 3: Advantages and disadvantages for every single procurement path.
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