Introduction This report is providing suitable advice of features of the procurement system, construction contracts and tendering method of building a Maori church in Tauranga CBD

Introduction This report is providing suitable advice of features of the procurement system, construction contracts and tendering method of building a Maori church in Tauranga CBD. In the construction industry, choose a suitable project procurement method is often a very difficult decision, it is involving multiple stakeholders, such as client and contractors, it is important work to outcomes of any construction project. in this report will list all possible options of the client’s needs and procurement risks, procurement method selection and contractual arrangement and tendering method, and will explain the advantages and disadvantages while discussing the client's responsibility and risks. is also will comment on all possible method and make recommendations that the most suitable method of the project. Task 1. Project background (pass/not achieved) Introduce project background Tauranga is an important settlement of Maori tribes in history. To commemorate history and protect Maori culture, the local council allocated funds and acted as an client to build Maori churches in CBD. The church is a single-story building with an area of about 600 square meters, which fully reflects the characteristics of traditional Maori architecture, and uses traditional Maori construction methods as much as possible. The local council has provided the necessary funds and can add funds at any time. At the same time, the local council hopes that the building can be completed as soon as possible. The council needs to collect historical relics to decorate the church after the completion of the construction, and open to the public before the 183th anniversary of the signing of the Waitangi Treaty. Task 2. Client needs and procurement risks Produce a list of questions you would ask the client to identify the client’s needs and explain why you believe each question is important. 1. Expected completion date Determine whether the project construction time is sufficient 2. Project budget, how to raise funds Determine the basic unit price of the project and whether it is financially guaranteed. 3. Requirements for building quality, high, medium or low Determine the customer's quality requirements 4. Is it accepted that higher construction quality leads to cost overruns and time delays? Is it acceptable to pay higher costs for reducing construction time? Determine the priority of cost, time and quality 5. To what extent can the customer endure delays in the construction period or increase in costs? Determine the customer's risk tolerance 6. Will definitive architectural drawings be provided at the start of construction? Is it possible to change the design in the future? Determine the complexity of the project and the possibility of future variation. Provide answers to the questions you have asked the client – you should be guided by the location and project type allocated to study. If the answers can’t be obtained from the scenario, make reasonable assumptions. 1. The construction should be completed three months before the 183th anniversary of the signing of the Waitangi Treaty, that is, November 2021 2. The project budget is 240,000 NZD, and the funds have been arranged in the parliamentary budget at the beginning of the year and deposited in the trust account 3. Highest construction quality 4. The quality of the building must be guaranteed, and the willingness to increase costs and time delays for this purpose. In the case that the completion time will not exceed the deadline, expect not to overspend 5. However, cost overruns cannot exceed 30%, and the time delay cannot exceed one month. 6. Architectural drawings with details will be provided at the start of construction, and there should be no major variations in the future. Explain all client’s risks associated with his project requirements/needs. This project is a single-storey building of 600 square meters, and the construction is not complicated. The client has prepared sufficient funds and can add budget at any time. The customer's risk is mainly time risk and quality risk. Maori churches require the highest construction quality, and the client has a clear deadline for completion. Use template provided to assess client needs. Explain your reasoning for the different weights ‘allocation. Criteria Weighting Description of Client Needs reason The customer has a clear time early completion required Time 5.00 requirement Customers can afford important of a competitive overspending and are willing to Cost 3.00 price pay more for quality and completion ontime hight quality of product, in terms of material and High quality requirements Quality 5.00 workmanship and design concept important the project risk profile and Don't want to take the risk of Risk 4.00 transfer of risk from client construction time and quality important does the single point of responsibility for design and Hope the contractor can take construction need to be with responsibility Responsibility 4.00 contractor is a firm price needed before any commitment of construction Additional funds can be added at given, is the project completed any time Certainty of Cost 3.00 within the budget important Certainty of Time project completion on time Hope to complete on time and critical to operation allow very limited delay 4.00 building needs to be highly Single-story building, simple specialised, technically advanced Complexity 2.00 structure or highly serviced important ability of accommodating design change Provide complete drawings when during design and construction starting work, low possibility of Flexibility 3.00 stage /variations necessary or variation possible after work has begun on site Task 3: Procurement method There are many different procurement methods in the construction industry, the choice of procurement method is important to the success of construction project, it is a system that assigns specific the responsibilities and authorities to contractor and client. In this part will discuss the difference of the processes and advantage and disadvantage of all possible procurement methods options for the project. All possible procurement method Traditional Design Bid Build: in this project, the principle selecting an architect to prepare all church design, after finish design, the architect releasing those documents to contractors. The advantage is the client will fully be engaged during the design process and the design team have an incentive to design a quality church and oversee their design requirement during construction. The disadvantage is the architect’s limited ability to establish to estimate the cost, it will be costly for redesign if the bids are higher than the budget. (Peter,2008) Design& build: The client only manages a single point of contract from the beginning. The designer and contractor work together as a team and provide unified project suggestions to fit the schedule and budget of the client. The advantage is the client can be engaging with the contractor and design team in the earlier stage and trying to achieve more practical or buildable solution. In terms of cost, the contractor takes on the financial risk. However, as the contractor is responsible for the design, they may make cost savings here. The disadvantage is in terms of quality, the contractor may choose the cheap route. it means that the quality may do not adequately ensure to reach the client’s anticipated requirements. anther risk is that the client may have to pay more money and time, if there have any request for changes. (Peter,2008) Novated design-build method: The designer is appointed by client to carry out all the details design and prepare concept, then “novated” to the contractor. The advantage is “novation” helps client to achieve good design in the early stage of the project, have a more realistic understanding of the cost in the bidding stage, and improve the certainty of the overall cost. The disadvantage is the contractor and design team may have different priorities. The designer is focused on the outward of the design and the requirement of the client, where the contractor is concerned with buildability or cost and programmed targets. (Peter,2008) Turnkey procurement method: All the design and construction of the project are decided before builder begins the work by the client, and the contractor will add all the specified criteria at the agreed price and by the fixed date. The advantage is reduced client work, timeline and cost overrun, is because the contract places the responsibility for the entire project upon the contractor. The disadvantage is the client will have a limited ability to participate in the activities related to the project. the cost may higher to the turnkey contractor than another kind of contract, because those budgets are presented before the design. Development & construct: Under the “design-bid-build” method, the design for the construction of the project is prepared by the designer which hired by the client, then the contractor will award the project and carry out the construction. The advantage as the project response by one contractor, all difficulties and challenges can be identified by the contractor at the early stage, is easier to simplifying the construction and effectively delivering the project. The disadvantage the client lacked involvement in the whole process of the project, because the contractor was responsible for the project from the very beginning. Management Orientated: The client directly hires different subcontractors for the project. The client has a main contractor who is responsible for managing the subcontractors but does not sign contracts with the subcontractors. The advantage is the main contractor engage with other subcontractor from very early stage, they can utilize their full expertise to provides advice to influence the design and construction. The disadvantage is all the risk is between client and the subcontractors, the main contractor simply manages them on behalf of the client. (paul,n.d) Construction Management: the client directly employs a construction manager and multiple subcontractors instead of employing a single Main Contractor. the client places individual contracts with separate subcontractors. the construction manager only provides their professional expertise The advantage is time save because the roles and responsibilities are all clear and design and construction are working at same time. The disadvantage is need very experienced client and over relies on the expert construction manager, the manager has to enough expiries to control of time and information. (paul,n.d) Suitability Procurement Method Best three procurement method and responsibilities and risk of client Traditional Design Bid Build Under the traditional DBB Procurement system, the responsibility of the client is must guarantee the plans with full relation of all the information and provide all the liability, plans and specification to the contractor. Because the client is through the bidding form to obtain the tender and select the appropriate contractor. the risk is that because DBB method is liner process, thus is no chance to reduce the time from design stage to procurement stage then to construction stage. this may rise the cost or expose the project to inflation. there are also have some unforeseen conditions happens during the project, this may lead changes or renegotiation of the contract Design & Build Under the Design & Build method, the client can hire a contractor to be responsible for the design and construction. but the client hired the contractor before the design stage start, so the project fixed price is unable to determine. instead, the client signs the contracted with the contractor under the concept budget. If the contractor gives the price in advance, there may be the possibility of sacrificing the quality. Construction Management The client appoints a design team to in carried out the whole design, then hire a construction manager to manage the overall project. the construction manager only provide advice by utilize their professional expertise and do not take any risk. the risk is that the client needs to strict control over the time and cost, because after all the trades packages are released, the implementation time and cost can be determined. therefore, the client and construction manager must have rich experience to execute this method. (Procurement &Tendering,2017) Task 4: Contractual Arrangements and Tendering Methods Possible Contractual Arrangements for Each Recommended Procurement Method The type of procurement method used in the implementation of projects influences the project outcome, the connection that the parties involved have with the project’s design, the contractual duties of these parties, and the terms and conditions of the project. Therefore, project clients must select the procurement method that provides the most desirable results (Braimah & Ghadamsi, 2012). The potential contractual arrangements for the CBD Tauranga Maori Church construction project include Design Bid Build Procurement Method, Design-Build Procurement Method (DB), and Public-Private Partnership Procurement Method (PPP Method). 1. The Design Bid Build Procurement Method (DBB) The DBB procurement method is also known as the traditional system of procurement. This is the major procurement method that is used in construction projects. The DBB is comprised of completely separate design and construction stages (Kwak & Park, 2016). This means that the contractors often start construction when they have a complete design of the project from the client’s architect and engineer, which is an advantage of this procurement method (Kwak & Park, 2016). However, in most cases, the project design is changed and communication among the parties involved in the project is often poor leading to inefficient handling of conflict and challenges that may arise along the way (Kwak & Park, 2016). Figure 1: A sample Design Build Bid (DBB) procurement contractual and coordination relationship (Source: Adamu et al., 2017). The lump-sum price-based contract is often used with the DBB procurement method. The non-adjustable final price or budget for the project is provided at the beginning of the project. In the case of the CBD Tauranga Maori Church construction project, the lump-sum contract may not be the best option considering that the payment is made once. There is a high chance that the contractor may be overpaid or underpaid. The (re)measurement contracts may be a better approach considering that for this type of price-based contract, the budget is created at the beginning of the design process but is adjusted once the design is completed to cater for any implemented changes. The unit price contract may also not be practical in this case considering that the contractor is paid per unit of work completed. There is a chance that this type of contract will be pricey for the client. However, the contractor may benefit through the implementation of maximum profit margins considering that every cost is well calculated. The best approaches for this project would be cost reimbursement and guaranteed maximum price, which are both cost-based contracts. With these two contracts, it is easier for both the contractor and the client to monitor the budget and prevent losses. However, the better approach is the cost-reimbursement contract because, unlike the guaranteed maximum price, it does not have a maximum budget that cannot be exceeded. Setting such limitations is inconvenient especially during the early stages of the project when the exact cost cannot be estimated accurately. 2. The Design-Build Procurement Method (DB) The DB procurement method is the opposite of the DBB procurement method since the design and construction methods overlap each other. In this case, only one party, the design-build contractor, provides both the design and construction services (Kwak & Park, 2016). This means that the contractor may begin the construction by completing the design of the project. This method allows for the correction of errors or adaptation of new design ideas during the construction process. However, these changes cause delays in the project’s schedule and an overrun in the project’s budget (Kwak & Park, 2016). Figure 2: A sample Design-Build (DB) procurement coordination and contractual relationship (Source: Adamu et al., 2017). The possible contractual arrangements for the CBD Tauranga Maori Church Project include lump-sum contracts, (re)measurement contracts, unite-price contracts, costreimbursement contracts, and guaranteed maximum price. The lump-sum contracts may not apply in this case considering that the design and construction phases are overlapped and there is a chance that the budget and schedule of the project will change. The (re)measurement contract may be a good option considering that once the design process is over the budget is adjusted. This may work for the DB procurement method considering that the design and construction are done simultaneously, which will prevent both the contractor and the client from incurring losses. The unit price contract may also apply in this case considering that case the contractor is paid per unit of work completed. However, there is a high chance that the estimated budget may be exceeded in the process. The guaranteed maximum price may not apply for this procurement method considering that a maximum price is fixed for the project’s budget yet this type of contract is flexible. The cost-reimbursement contract is another alternative in this case considering that the project’s design and budget are likely to be adjusted during the construction process. However, the best alternative for the DB procurement method is the (re)measurement contract. 3. The Public-Private Partnership Procurement Method (PPP) The PPP procurement method is a long-term agreement that requires the contractor to construct a new asset or modify an already existing asset whose construction will be funded by an external entity but ownership will be maintained by the government (The Treasury, 2015). This type of procurement method is often applied in the construction of public infrastructure and community facilities. Figure 3: A sample Public-Private Partnership (PPP) procurement coordination and contractual relationship (Source: NZSIF, 2009). In the case of the construction of the CBD Tauranga Maori Church using the PPP procurement method, the lump-sum price-based contract is not the best option. This price-based contract provides a fixed budget, yet there is a chance that the budget will change, forcing the government to cater for the deficit. The (re)measurement contract is one of the potential contract solutions for the PPP procurement method considering that the budget for the project is adjusted after the design process is completed. However, there is a chance that the government may be forced to incur some costs considering that the PPP is a one-off payment type of procurement process. The unit price contract is also not practical in this case since the external body funding this project will make a single payment according to the PPP procurement method. The guaranteed maximum price contract is a potential solution for the PPP procurement method since a maximum budget is set for the project. However, the costreimbursement contract may not apply in this case considering that it may encourage some corrupt individuals to overestimate the budget. Therefore, the best contract for the PPP procurement method is the guaranteed maximum price because of the lump sum funds that are disbursed by the external bodies that fund these projects. Possible Tendering Methods for each Procurement Method 1. Tendering Recommendations for DBB The single-stage tendering method involves the one-time issuing of an invitation to tender to potential contractors. These contractors are then offered a chance to bid on the same tender (Garner, 2015). This may apply to the DBB, which requires the completion of the design before construction commences. The two-stage option allows the design and construction processes to overlap (Garner, 2015). This may not apply to the DBB which requires the design and construction phases to be done separately. The negotiated tender is similar to the single-stage tender only that the contractor is provided with opportunities to revise the budget (Garner, 2015). Therefore, the most suitable tendering method for the DBB procurement method is the single-stage tendering option. 2. Tendering Recommendations for DB The single-stage tendering method may not be suitable for the DB procurement method considering the systematic nature of this tendering procedure (Garner, 2015). The DB allows the overlapping of the design and construction phases, which is not the case for the single-stage tendering method. The two-stage tendering method allows extra input towards the design stages (Garner, 2015). This is suitable for the DB procurement method considering that the design and construction phases of this procurement method overlap each other. The negotiated tendering method is more similar to the single-stage tendering method (Garner, 2015). Therefore, the two-stage option is the most suitable tendering method for the DB procurement method. 3. Tendering Recommendations for PPP The single-stage tendering option provides a potential tendering solution for the PPP procurement method. This is because the PPP involves the provision of financial resources by a third-party organization/company, which is often non-negotiable (Garner, 2015). The two-stage tendering option does not apply in this case considering that the governments applying for financial resources from the third-party companies have to provide proof of project. The overlapping of the project’s design and construction phase that takes place in the two-stage tendering process cannot be applied in this case (Garner, 2015). The negotiated stage tendering option is also a potential solution but the lack of opportunities to revise budgets and reapply for additional funds makes this tendering option impractical (Garner, 2015). Therefore, a single-stage option is the most suitable tendering method for the PPP procurement method. Task 5: Recommendation with Reasons 1. Procurement method The project is about build a Maori church in the Maori land, we recommended using construction management method to complete the project. Due to the particularity of Maori land and culture, client need to hire a construction manager who familiar with Maori culture and highly skills about the matters relating to the Maori land. The construction manager will be working with the design team and provide advice about elements of Maori art and architecture, the construction manager will also help the contractors to complete the liturgical space and carving and painting inside church. Therefore, the construction manager playing an important role to build a church with religious and historic in this project. 2. Contractual Arrangement From the report complied above, the most suitable contractual agreement for the CBD Tauranga Maori Church Project is the Public-Private Partnership contract. Since the most appropriate funding approach for the PPP procurement contract is the guaranteed maximum price approach, this type of contractual agreement is most suitable for projects that the contractor already knows the expected outcomes. This means that the contractor already has the plans, data sheets, and performance requirements of the project (New Zealand Government Procurement, 2019). The guaranteed maximum price contract is also suitable for projects that have low complexity or those with recurrent designs (New Zealand Government Procurement, 2019). The CBD Tauranga Maori Church Project’s outcomes are already known since the design of the project is already available. Also, this project is not a complex one. There is also a high probability that the project will be facilitated by funding from an external body since it is a community facility (The Treasury, 2015). 3. Tendering Method The most appropriate tendering method for the CBD Tauranga Maori Church Project is the single-stage tendering method. This construction project is a project by the government that will be funded by external or third-party organizations. Because the church project will be funded by external parties, the government of New Zealand will have to finish the design stage first and provide the required information to the funding bodies in the form of a tender (Garner, 2015). The acceptance of tender by these organizations will be accompanied by the disbursement of a fixed amount of money that will then be used in the construction of the Tauranga Maori Church Project. Since the guaranteed maximum price contractual agreement is the most suitable contractual agreement for this project, the external companies that will fund this project will provide a single lump sum payment, which will cater for all the project’s needs (Garner, 2015).