QUANTITY SURVEYING AND

ESTIMATION
LECTURE 3

Project Delivery Methods

Tender Evaluation

PROJECT DELIVERY METHODS

What project parties are involved in the project and how

they interact with each other (organizational structure).
Choice of an organizational structure should be related to
project objectives and constraints.
When plans are completed and the owner is interested in
securing the low price, the use of competitive bids is
suggested. The competitive bidding results in the type of
contract that many are familiar with.
A negotiated contract should be used when construction
should start before plans are completed or when the many
unknown factors of the project make an accurate estimate
impossible. When many changes are expected and when
inspection and supervision cannot be done efficiently, the
negotiated type of contract should be used.
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PROJECT DELIVERY METHODS

Traditional or Standard Approach (D-B-B)

Simplest method

Design has to be completed before construction can start.

Design and construction done separately by two parties

Design Bid-Build is effective on projects

Where the owner needs both professional design services and
construction services
Where the designer does not require detailed knowledge of the means
and methods of construction.

Appointing
Consultant

Appointing Main
Contractor

Designing

Constructing

PROJECT DELIVERY METHODS

Traditional or Standard Approach
Advantages:
Price competition - offer lowest cost of a project
Total cost is known before construction starts
Well established and easily understood
Clearly defined roles for all parties
Well documented approach used in most government projects
Insurance and bonding are well defined
Disadvantages
Long time
Least-cost approach requires higher level of inspection
Initial low bid might not result in ultimate lowest cost or final best
value.
Design does not benefit from construction expertise
Conflict between owner, contractor and A/E

PROJECT DELIVERY METHODS

Direct labor

Owner organization performs both the design and

construction using its in-house labor force.
Used by large authorities
The owner performs both the design and the
construction
May use consultants for some specialized designs
Most suitable for small projects
Can be used when expertise are available
Low risk projects
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PROJECT DELIVERY METHODS

Design-Build Approach

A single organization is responsible for performing both

design and construction.
Involve a single contract between the project employer and
a design-build contractor.
The contract might be negotiated with a single designbuilder or result from competitive proposals.
The selection can be based on low price or on a set of value
criteria (experience, staff, bonding capacity, etc.).
Appointing design & construction
contractor
Tendering

Designing

Constructing

PROJECT DELIVERY METHODS

Design-Build Approach
Advantages:

One contract that may include know-how

Minimum owner involvement

Used for fast-track projects in order to reduce time

Co-ordination between design and construction and easier in implementing

the changes (flexibility in the selection)

Disadvantages

Cost may not be known until end of the construction

High risk to contractor and more cost to owner

Design-build company may reduce quality to save cost

Reduced opportunities for smaller, local construction firms.

Fewer competitors and increased risk may result in higher initial costs.

Traditional funding may not support fast-tracking construction

PROJECT DELIVERY METHODS

Turnkey
Similar to the design-build approach but with the
organization being responsible for performing
both design, construction, and project financing.
Owner payment is then made at the completion
(when the contractor turns over the key).
An example is franchise projects in which a new
branch of a restaurant chain needs to maintain
the same design, construction quality, and food
service quality.

PROJECT DELIVERY METHODS

Build-operate-transfer (BOT)

A business entity is responsible for performing the design,

construction, long-term financing, and temporary operation of
the project.
At the end of the operation period, which can be many years,
operation of the project is transferred to the owner.
This approach has been extensively used in recent years.
An example of its use is in express routes such as Faisalabad Lahore GT road.
A consortium of companies shares the cost (design,
construction, financing, operation, and maintenance) and the
profits gained from user fees, for a stipulated number of years.
Project returns to the government to become publicly owned.
This approach has also been used extensively in large
infrastructure projects financed by the World Bank in parts of
the world that cannot afford the high investment cost of such
projects.

PROJECT DELIVERY METHODS

Professional construction management (PCM)

Owner appoints a PCM organization (also known as

Construction Management Organization) to manage and
coordinate the design and construction phases of a project
using a teamwork approach.
The design may be provided by specialist design firms and
in some cases by the PCM organization.
With high level of coordination between the participants,
innovative approaches of design and construction (i.e., fast
tracking) can be adopted.
The PCM organization aims at holding a friendly position
similar to that of the consultants in the traditional
approach.
The services offered by the PCM organization overlap those
traditionally performed by the architect, the engineer, and
the contractor.

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PROJECT DELIVERY METHODS

Professional construction management (PCM)

This may include: management and programming of

design; cost forecasting and financial arrangements;
preparation of tender documents; tender analysis and
selection of contractors; selection of methods of
construction; recommendations on construction economics;
planning and scheduling construction works; materials
procurement and delivery expedition; provision for site
security, cleanup, and temporary utilities; supervision of
control of construction contractors; construction quality
assurance; cost control; costing of variations and
assessment of claims; and certification of interim and final
payments to contractors.
The use of PCM approach, therefore, should be considered
when there is a need for time saving, flexibility for design
changes is required, and owner has insufficient
management resources.

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CONTRACTUAL RELATIONSHIPS

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TENDER EVALAUTION
Evaluation

may be 2 stages
Pre-tender or Pre-Qualification

Ensure that contractors are

Reputable
Capable
Experienced

Pre-Contract

Ensure that contractors

Fully understand the contract
Bid is realistic
Proposed resources are adequate

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PRE-QUALIFICATION EVALUATION

General experience (Marks:35)

Personal capabilities (Marks:15)
Engineers
Associate Engineers

Equipment capabilities (Marks:20)

Financial soundness (Marks:30)
The Evaluation Criteria is based on the factors given
in sub-paras of Instructions to Applicants and shall
result in fail/pass on the basis of minimum prescribed
requirements. The `pass Applicants should be
allowed to participate in the Tender.
The applicant must secure at least 50% score in each
category.

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GENERAL EXPERIENCE

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PERSONAL CAPABILITIES

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EQUIPMENT CAPABILITIES

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FINANCIAL POSITION

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ADVANTAGES OF PRE-QUALIFICATION
Encourage realistic bids (competing against
qualified bidders)
Assess interest of prospective bidders in bidding
process
Make any adjustments/modifications in the bidding
documents (lack of interest by the prospective
bidders)
Eliminate the un-qualified bidders
Help the bidders to form joint ventures with other
firms
Reduce the problems associated with low priced bids
from bidders of doubtful capability

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ASSIGNMENT # 1

Describe in detail the advantages and disadvantages of

turnkey methods, direct labor approach, BOT and
professional construction management (PCM) methods.
Describe the measurement units of major materials used
in the constructions industry and collect their unit rates
(price) from the local market of any city.
Dates and locations need to be mentioned for each
material.

Crush (all available and sizes), cement (all types and industry),
bricks (all classes), steel (all types), marble, tiles, glass,
aluminum, paints and varnishes (all types), wood/ timber, labor
rates, shuttering or formwork, scaffolding, pipes for water
supply and sanitary system, etc.

Submission: April 09, 2015

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QUESTIONS?

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