UK procurement guide - introduction
This procurement guide explains the main forms of procurement used for construction projects in the UK.
The reader should note that Construction procurement has been developed over many years and continues to do so. This procurement guide summarises the principal types of procurement methodologies and contractual agreements in the broadest terms, as well as the various tendering process routes that can be adopted.
Construction procurement is a complex scenario that requires a good knowledge of the construction process, including the design process and sequencing (programming) requirements of the Client. Indeed, you should always remember that in Construction, all too often the only Constant on a Project can be Change.
So, please remember that there are always numerous issues that need to be considered when deciding upon the method of procurement for a construction project. The decisions made will of course ultimately determine the Form of Contract used to define the obligations and responsibilities between the Parties.
Procurement is the term used to enable the process of creating a contractual relationship. There are four essential elements:
- The intention to create a legal relationship.
Some of the factors which influence the procurement process include:
- the experience of client and the business case for the project including any particular requirements that the client may have.
- the client’s desired programme for development, including the timing of the start and finish dates.
- the nature, size and complexity of the project.
- the state and completeness of the designs.
- the degree of cost certainty, or conversely the requirement for risk aversion.
- the need for competitive prices.
- the apportionment of risk between client and contractor.
Additional specialised routes have also been and in some cases continue to be used by public authorities. These are:
- PFI – the private finance initiative;
- PPP - Public Private Partnership; and
- PRIME contracting.
In the latter case variants of PRIME contracting have been adopted by the NHS, Defence Estates and several ‘blue chip’ private sector organisations. PFI, PPP and PRIME are not dealt with here.