Strategic Procurement Issues Inherent In A Hospital Project Construction Essay

Strategic Procurement Issues Inherent In A Hospital cat Construction EssayHealth oversee of the society is the top c at a timern of the government. The government is committed to improving the bore of c be of every last(predicate) the people therefore the poor quality of the infirmary edifice became a major cin one caserned. The aim is to restore and improve quality deli real of health services to local community undeniable betterment of the facilities. There are two pickings available in front of trust and as per the government report the trust has forty eight months to improve the hospital infrastructure. The chief decision maker and the head of the estate at trust with the consultation of central government have been provided two optionsTo renovate the existing come alonging orTo set up a virgin hospital on a derelict site, this was formerly used by heavy industry owned by city council.This come out is an judging of the procurance options rule and go on novation procural method under the private finance initiative and the issues that awake using the outline during the project. After examine the carefully and assessing the entire clients (the Trust) requirement, for the proposed hospital, the report recomm closings grammatical wrench of a new hospital on the derelict site and the use of design and build procurement system. This is because the design and build procurement option offers exist effective, time bound, good quality and sustainable project delivery.The proposed design and build procurement system has the characteristics of achieving the issue of clients requirement fitly and under the P.F.I. (private finance initiative) depart give the best value for money with a focus on the public sector procurement as mentioned in the project brief. It overly mites to time savings and achieve value for money and the required quality as per ground situation. The report also assessed the dangers using the supplement chain succeedment under the scheme of private finance initiative involve in the project and their solution as the success of the project is concerned. in the long run an effective sum up chain management with T.P.I (Third party inspection) procedure has also been recommended for efficiency in the project delivery in order to meet the quality standard required by the hospital trust.INTRODUCTIONThis report seeks to address all the strategic braid procurement issues inherent in a hospital project and an conquer advice assumption to the chief executive of the trust. The process is to map the effective stakeholders and their influence on the project.There is a brief of the project from substructure by way of design with drawing of the new build make as required a lot of detailed changes to convert the derelict industry into hospital construction to make a proper use of the building as well as to make an appropriate use of the adjoin of the building.The operation and precaution after construction in long run is major concern for providing a better and superior quality of services therefore design and build novation under P.F.I. is best option available.STATEMENT OF WORK2.1 Scope of projectClient ObjectivesThe time seems to be major constant as the Trust has given only 48 months of time to improve the structure and facilities and for the Construction of the new hospital building.As the estimate are final to 90 m Pounds the cost is also the major constant for the client obtained the certainty in cost to obtain best value for money with in a focus on the public sector procurement.The quality is also the major concern as the new build site is non developed properly and the trust has to jump the road works, parking, hard and soft landscaping, drainage and some other external works for the use of hospital running, Provision of office accommodation, a restaurant / caf area and ostensibly some form of warehouse and delivery areas.To preserve and develop and make appropriate us e of the existing flora and fauna at the site of new build to make it more than eco-friendly environment for the hospital patient and working of staff.It has been assumed that the present derelict bridge is just opposite the site of the building and near the flora and fauna to make appropriate use of the derelict pedestrian bridge, it can be develop for the site scene / landscape. sThe speculate prevails that there is an existing mineshaft, which has to be close effectively so that it should non effect the environment of hospital contact in the future.There is need to conform to the construction management program to maintain supply chain management for effectively completion of project on time and maintain quality of temporal used and be in cost effective.Scope of the projectSupply chain management procedures to be adopted so that all the real(a) should be procure well in advance for the timely completion of the project and as all the material has to be procure by contractor by T.P.I. (third party inspection) by Independent body has been suggested to maintain the quality if the material used.The client has maintained PEP plan for control and mathematical operation mea sealedment equivalence between the New builds site and Old Refurbishment.The following point has been taken to make comparison between New Building by using derelict industry and the Refurbishment of old building as per the client (TRUST Hospital) requirement. The survey aggroup after analysing following points comes to conclusion that the use of new building for the construction of the hospital as an appropriate decisionThe Survey team has assumed that the derelict Industry was closed due to competition in market and is not old more than 10 years as the Old hospital is approximately 70 to 80 years old. So structure needs more maintenance after constructionIt has been analysed that the old building has to be Control demolished which is still not mathematical with the current running o f the hospital in the existing building.As its suggested that ramp should be used in hospital instead of stairs for the movement of patient from one floor to another and horizontal in case of requisite like fire etc, when lifts cant be operate. So the construction of ramp in new building is easy else its very difficult to provide ramp in the old building.The derelict industry site has a wide range of flora and available in its surrounding which is best for the environmental policy of the NHS.From the studies of project brief it has stated that the hospital used for the acute care and accident and emergency so there leave behind be a helipad willing be preferred to Trust at the diddley macadam area for landing of helicopter in case of emergency services through the helicopter, as well the new build site is well connected to road for quicker services through road as well.The new build site is also have provision for the future extension as the development are taking place in the surrounding area over decades of time.The specialist installation such as heating, ventilation and air condition is easy in new building spell during the regaining it is quite difficult to replace the new with old one and difficult in after maintenance.Project StakeholdersThe stake holders are of the essence(predicate) part in the overall process of project success so all the beneficial stakeholders are identified related to subject and their influence are clarify properly. As Walker and Marr states that a stakeholder is a term used for individuals or groups who have a connection to or an association with an government activity. They have a stake, claim, or vested entertain in the day to day operation of the Project.The only way of business to know their value will be to determine exactly who their stakeholders are..and to quest them. The urgency to adapt to stakeholder power and leverage it as a business strategy is not just a business fad it is a winning approach and the more satisfying way to do business - WIN WIN Solution.A commitment to sustainability is broader, deeper and of substantially greater strategic value to a company than merely reporting on environmental outcomes. One goal of sustainability initiative is to realize long term business benefits by building non-financial performance measures- issues key stakeholders care about into business processes. When we have gained commitment from our stakeholders, it enhances our business performance, growth and higher stock value over time. All stakeholders whitethorn be important, but nobody said they were all equal.(Walker and Marr, 2001)Extended StakeholderismThe customers, employees, and owner, or investor would consider the immediate, or core, stakeholders because these are the one we live with every day. But as in our families we have close relation with and obligation to the rest of the family as well the extended stakeholder of the business.Business depend upon on forging powerful relat ionship with what we would label extended stakeholders, those individuals outsides an organization beyond customers who are important to the business, such as suppliers, alliance partners, community leadership, the media , and the government.Immediate StakeholdersExtended StakeholdersIndividual investorsInstitutional investorsCustomersEmployeesUnionsSuppliersAlliances PartnersIndustry associations topical anaesthetic communitiesConsumer/ user associationSpecial interest groupMediaGovernment regulatorsCompetitorsOutside board directorsThe general public (Beyond local communities)Financial AnalysisLendersEducation leadersThe Status of Stakeholder LoyaltyThere is value in evaluating and classifying stakeholders according to different levels of commitment to the project. Survey research can/has determine peoples position regarding the firm and their truth to it. Their answers can/has used to position the stakeholders on a spectrum of. How positive or negative they feel towards the fi rm and. How likely or unlikely they are to tolerate loyal or continue supporting the firm in the future.We would normally people in a simple matrix. There are four possible combination of high and low attitude and behavior in this matrix, so we can segment the stakeholders as being truly loyal, accessible, trapped, or high riskBehaviourPositive NegativeTruly LoyalAccessibleTrappedHigh run a riskHighATTITUDELowThe happy stakeholder relationship passes through four stages, called the Four Gates of Engagement Awareness, Knowledge, Admiration, motion.(Walker and Marr, 2001)Recognition of project through from initiation through design, construction, operation, and maintenance and their consequent impact on the project procurement issueAs the new build site has proposed the following points are suggested for the constructionAs there was a mine shaft present in the surrounding of the site so a case study has been done to investigate the Bearing capacity of soil for the construction of the hospital building.The design is be eco-friendly basis on the following pointsTheir should be proper ventilation and natural Light and air arrangement for the patient health and to keep staff working spirit up for efficient working.The CLC (cellular light weight concrete) blocks are hollow and hence will uphold in maintaining the internal temp of the room and also help in reducing sound level as hollow blocks are good insulator of heat and sound. As CLC blocks are also help to eliminate the crack between the brick and concrete and hence it will lead to less maintenance in future better value for money.The large tar macadam area, surrounding the site should be developed as the helipad so that the emergency cases can be delight through the helicopter easily and promote land will be used for the recreational activities of the staff.The derelict bridge can be developing for pedestrian to cross the road as the abutting arterial road will become more congested during peak periods. RisksMiler and lessard (2001) states that the successful projects are not selected but shaped with risk resolution in mind. Risk is the possibility that event, their resulting impact and dynamic interactions may turn out differently that anticipated and construction is nothing special compared with other industries because we simply carry out projects to a specified timescale using teams of specialist for design and construction by marshalling appropriate resources to overcome the physical and technical power involved. So to manage risk is almost important for the successful completion of project in Time to keep certainty in cost and achieve the appropriate quality. bump watchfulness PROCESS guess ASSESSMENTIDENTIFYING HAZARDSAssess probability and consequencesPrioritiesRisk control measureRemoveContractuallyInsuranceRetainSelf financeReduceEliminate/substituteReduce chanceReduce effectResidual riskRISK MANAGEMENTRisk management Process(Gunn 2008)To superintend the risk, the ri sk register should be maintained at siteRISK REGISTERItemDescriptionRiskWithout controlControlsResidual riskActionHMLCost ImpactTime impactOthers(CIOB (2002) (Chartered Institute of building code of practice for project management, 3rd edition. Blackwell edition)PROCUREMENT RISKProcurement MethodBalance of RiskClientContractorTraditional Lump sumClient Led design and builtContractor -led design and builtManagement contractorConstruction managementContractor Finance (PFI)Finance seeConstructionFinance formConstructionFinanceDesignConstructionFinanceDesignConstructionFinanceDesignConstructionFinanceDesignConstructionHughes and Murdoch (2000) states that the apportionment of risk in design and build contracts is unique among procurement methods. This uniqueness is brought about by the single point responsibility and by the nature of the relationship between employers requirement and contractors proposal.The following points are considered for risk management in Design and builtMoneyCo mpletion of the projectDefault by employer or contractorTimeQuality mensuration of performance and benchmarkedAkintoye, Beck and Hardcastle (2003) indicated the PEP plan is a live, dynamic management document that records the project strategy, institution, control procedure and responsibilities. It is updated regularly during the projects life cycle and used by all parties both as a means of communication and as a control and performance measurement tool. Value management and other activities lead to the completion of various reports that are contained in the PEP.Examples of items that PEP should contain areThe options appraisal incorporating the clients value system.The user needs the strategic brief.The performance statement of all aspects of the project, the project briefThe project execution strategyThe form of contract, partnering agreement, etcThe contract specifications / drawings etcProject reporting procedure and particularly the procedure for information distribution, and communication, between the clients project team consultant and the contractorThe executive summaries and action plan from value management workshop reportsThe risk management strategy and latest risk epitomeThe required completion date including for any phaseHolroyd (2003) considered that this is not about lowest price, but ultimately about best overall value for money. Partnering implies excerpt on the basis of attitude to team working, ability to innovate and to other efficient solutions. We think that it offers a much more satisfying role for most people engaged in construction and the introduction of performance measurement and competition against clear targets for improvement, in terms of quality, timeliness and cost, as the principal means of sustaining and bringing discipline to the relationship between clients, project team and their suppliers. The evidence we have seen is that these relationship, when conducted properly, are much more demanding and rewarding than those b ased on rivalrous tendering. There are important issue here, particularly for the public sector. He also consider Latham Report that effective partnering between client and contractor with teamwork and a win-win approach helped to bring the Sizewell nuclear power station to completion on time and within budget. But there is still scope of improvement in productivity and cost reduction, especially if design and construction team could be kept together. Akintoye, Beck and Hardcastle (2003) consider that PFI is the principle model of PPPs in the UK NHS.Procurement RouteTo aim an appropriate procurement strategy is most important to achieve value for money, cost certainty and in time and of best quality. Holroyd (2003) states that clients who know what they want, who do not change their minds, and who states cl proterozoic what they want, tend to procure projects that do represent value for money.As Masterman states that the formulation of the most appropriate strategy is one of the m ost important tasks that the client has to undertake the projects life. The project strategy consist of a number of sub strategic areas, which needs to be examines in detail so that appropriate decisions can be taken as to which sub strategy should be adopted.The following points should includeMilestone schedule timeQualityFinancial targets, sustenance and cost planningThe role of the client and the third partiesThe client project objectivesEnvironmental issuesSafetyLegal and insurance issuesTechnical and design philosophyProject/ work breakdown structureRisk managementProject constraintsPublic relation/ communicationThe appropriate method of procurement mostly depends upon the followingWhether the organisation is publicly or private owned or fundedThe level of knowledge and experience within the organisation in dealing with the construction industry and implementing building project.Whether the project is needed by the client to accommodated his/her own industrial or commercial activities or whether the project is needed to lease, or sell, to other.The activities carried out by the organisation and the resulting project typology.Categorisation of building procurement SystemSeparated Integrated Management DiscretionaryOrientedTheConventionalSystemDesign Variation British partnering of PropertyBuild Design FederationBuild SystemPackage Develop ConstructionDeals ManagementTurnkey Construct Management Design spotting ManageDesign and BuildIn DB there is a single point responsibility for both the design and construction of the project. The clients benefits from the contractors expertise early(a) in the project.Research (Gidado and arshi 2004) suggest that there may be as a many as six versions of design and build. For instance, Rawlinson (2008) reports on the recent successful use of develop and construction with a two stage tender and tendering arrangement, a novated design, open book method of accountinging and with the risk and value benefits of a col laborative approach all on the same project.Types of Design Build ArrangementExtreme VarietyA Employer led Design Develop and constructDesign and Build (Single stage tender)Z Contractor led design Design and build (two -stage tender)Negotiated design and buildDesign and manageTurnkeyThe client may wish to provide the contractor with minimal information in the form of an outline brief. This will leave the design and built contractor fully amenable for the conceptual and detail design in order to meet the employer requirements.An alternative twist on develop and construct, is to novate the architect or design team to the contractor once the contract has been awarded. This variant is known as novation design and build because the clients architect, and may be other member of the design team, are de jure passed over to the contractor in order to produce the detailed aspects of the design. The novation arrangement should be agreed with the architect when he is first appointed.In th is way, the client will maintain an interest in the design but the contractor will pay the continuing design fees through to contract completion and become responsible for the entire design.The Tender documents will contain details of the clients consultation and the proposed novation procedure, together with a requirement that the contractor who is eventually awarded the contract will have to submit responsibility for the total design of the project, including the initial work carried out under the clients aegis. In other words it is as if the consultants by the contractor, including the level of fees, have been determine by the client, although normally this is a matter for negotiation between the contractor and the design team.DESIGN AND BUILD CLIENT LED DESIGN RELATIONSHIPThe group being novated to DB Contractor.(WILEY-BLACKWELL, 3rd edition, construction planning, programming and control 2009 32)Procurement strategyThe choice of building procurement systems available to cl ients is now so wide that the need to carry out the selection of the most appropriate method depends upon the critically study of the clients (TRUST) requirement in a disciplined and objective manner. (Masterman 2006)The procurement of a construction is chosen upon the clients project requirement and a balance between time, quality and cost. After considering entire client requirements critically and the suppose budget. JCT Design and Build novated system contract is most appropriate for the construction of hospital for the trust as According to International Commission on building (CIB W92) the procurement process is a strategy to satisfy clients development and/ or operational needs with respect to the provision of constructed facilities fro a discrete life cycle. (Masterman 200626) under the JCT 05 design and build conditions, it is perhaps worth noting the practice that the employer identified a design team and the same team will become the contractors team once the contractors is appointed under a design and build form of contract and the payment terms may be either stage payments or biweekly payment. Periodic payments are normally monthly, whereas stage payments are based on agreed cumulative values linked to stages or milestone as stated in the contract particulars. The payments period from the payment request date is specified in the contract as 14 days. (Davison 2006)We can write it as the option chosen for the design and build is on the cost effective and time management as steffen and Jeffery in Stakeholder Power states that as proven by the corporeal raiders, one of the fastest means of raising stock value is to boost profit by cutting costs. This ushered in the era of crash dieting by large companies also known as reengineering or downsizing. (Walker and Marr 2001)The Procurement strategy is chosen on the basis of following criteria noted in the NEDO report. NEDO has suggested eight procurement factors to be considered at the procurement stag e. Of these, the three main considerations areCost certainty of the market price at the bid submission and final account stages.Time the overall timing of the project from inception to completion.Quality the clients required standard of design and workmanship as expressed in the specification.Five other considerations were also highlighted as being influential on the choice of the procurement route. These areComplexity Complexity of the building design, layout and services provision.Controllable variation How sure is the client of his requirements? The cost of variation of the contract may prove difficult to agree and assess.Degree of completion Does the client wish to create competition at the design and construction stage of the project?Client Responsibility Does the client wish to be directly involved in the decision making during the project.Risk in the project Commercial risk, occupation risk, design and construction risk.Taking the following factors into account, decis ions has made in relation toChoice of appropriate Procurement strategy for managing the contract (JCT- Design and Build)The Clients requirement stated in the TaskConsidering the clients brief and assessing the projects feasibilityConsidering the Project FinanceDecided how to procure and manage the design and constructionConsidering the realistic time period for the overall project.(Williams and Cooke 2009)As the time period is of high priority and the early starting of the project is the must as the Clients required the project to beCompleted as quickly as possible (because time is money a month delay in project not even counted the construction charges but also a lot of overhead and industrial charges also)Completed by specific date (that must be achieved to retard the govt about the proper running of the hospital)Completed on time once it commence (with no time slippage by starting the project at once under design and build procurement method)5040 35%30%3025 %206%10 2% 2%0JCT9 8 JCT JCT JCT JCT OtherStandard Intermediate Minor with ManagementForm Form Works Contractors +Agreement Design Major ProjectsSUPPLY CHAIN MANAGEMENTHOLROYDS (2003) suggest that the supply chain role is critical to achieving sustained improvement and forward thinking. In the context of extensive sub-contracting this is perhaps more so. Partnering, correctly implemented, will provide benefits comparable to those obtained by the integrated project process. (Trevor M. Holroyd, Buildability, Thomas Telford Publishing, Thomas Telford Ltd, 1 Heron Quay, London 2003)Some major clients have assembled their own stand lists of preferred suppliers according to requirement of their projects so that their project can be managed on a more long term and integrated basis while retaining an appropriate degree of competition and control. These suppliers or supply chain partners, include architects, engineers, main contractors, specialist contractors and suppliers of a variety of goods and services . The supply chain can be defined as the entire chain of processes that exist between the point at which a need for goods or services arises to the point at which the end user receives them and payment is made to the supplier. Problem is that one part of the chain impact directly on all subsequent stages, and proactive management of the supply chain is therefore fundamental to providing an efficient and effective procurement services to the organisation.(Cooke and Williams 2009)The contractor should be given the whole responsibility for the procurement of all material under the contract and a T.P.I (Third party Inspection by Individual body Trust) must be considered to achieve the best quality of material procurement.The demand point here is that the supply chain links, all the activities between suppliers and customers in a timely manner. The material will be procured at to the lowest degree 8 weeks before the schedule of use to maintain progress in time.Adversarial Relationshi p Collaborative RelationshipFragmented Lack of Process CustomerProcesses Customer steering integration SatisfactionThe role of SCM (supply chain Management) addressing the key problems in construction.(Fewings 2005)Cooke and Williams 2009 describes that the fast track system as a management approach aimed at the early completion of the construction phase using a combination of innovative procurement methods, industrialisation of the construction process and the use of work package contractors in order to benefits from their expertise, especially as regards their design input. The benefits of system includeOverlapping of work package both during design and constructionLess duplication of lying-in and wasteLess uncertainty and inefficiency at work package interfaceThe use of innovative construction methodsIncorporation of cutting edge technologiesMore violence on the standardisation, pre-assembly and modularisation of the construction processAs a consequence, the fast-track syst em has the propensity to deliver completed projects in remarkable timescales.Identification and justification of relevant formsThe subroutine if this work is to examine the standard forms of contract most commonly used in the construction industry today. Standard forms look in at least three directions at once. One of these is towards the wider law, be it the law of contract, and be it statute law or common law, with its constant accretion arising out of decided cases. In addition all of this forms considered are entire co