The document provides a comprehensive guide to construction procurement strategies, highlighting three main approaches: traditional, design-build, and management-based. Each method has unique characteristics, risk allocations, and suitability for different project types, with the traditional method being the most widely used. It emphasizes the importance of understanding project requirements, stakeholder roles, and risk management to effectively choose the appropriate procurement strategy.

1. A GUIDE TO CONSTRUCTION PROCUREMENT
STRATEGIES
SARAH FOX
500 Words Ltd
(2015)

2. Page 2 © 500 Words Ltd, 2014
Construction Procurement Strategy
A guide to help you understand the right procurement strategy for your project
Procurement means the framework in which development projects are designed, financed,
constructed, used, transferred and residual disputes resolved. The three main procurement
strategies1
(in order of use) are traditional, design-build and management-based.
Each procurement route has some of these elements, like layers in these circles:
 Detailed documentation setting out the requirements of the key stakeholders;
 A variety of competing definitions of success, both for the project and for the varied members
of the project team;
 Competitive selective tendering for contractors, and sometimes consultants;
 Significant number of parties;2
 Risk management activities;3
 Numerous agreements setting out the respective roles and responsibilities of the project
team members;
 A variety of paymasters from whom cash must flow efficiently;
 Balancing of time, cost and quality aspects, though possibly not as consciously as the
employer might like;
 Transfers of risk for certain elements of the project from the employer-developer to those
best able to minimise or manage the risk events;
 Provision of design services;
 Control and monitoring by stakeholders, related to their interests;
 Creation of project teams, comprising multi-disciplinary, flexible and temporary workforces;
 Management of the varied processes, communication, changes and events arising;
 Commissioning of facilities to be built, owned, operated and/or transferred;
 Maintenance of the facility.
Traditional: involves the contractor undertaking to build in accordance with designs provided by
the employer (and his design team).4
Design and build: the contractor both designs (completes the design) and builds according to the
employer’s brief and specification.5
This allows the contractor to use its experience to reduce the
cost of the construction, without affecting the value to the client. This is sometimes referred to as
‘turnkey’ when the contractor also purchases the site and/or operates the facility.
Management based: instead of a contractor, there is a manager6
who offers co-ordination and
management skills; the actual work of construction is carried out by subcontractors and
specialists.
“Which procurement method is likely to prove the most appropriate in a given
situation will depend upon the nature and scope of the work proposed, how
the risks are to be apportioned, how and where responsibility for design is to
be placed, how the work is to be coordinated, and on what price basis the
contract is to be awarded.”7

3. Page 3 © 500 Words Ltd, 2014
Traditional Procurement
Traditional procurement, according to the NBS Survey 2012 (and confirmed in the 2013 Survey),
still dominates the industry, with roughly 70% of projects being undertaken traditionally.8
In this approach, the client directly appoints and manages consultants who carry out services
relating to design, cost control and contract administration. The client also directly appoints the
main contract who is responsible for carrying out the works, and all workmanship and materials
(whether or not the contractor subcontracts elements of the works to others).
In this procurement strategy:
 a full set of documents setting out the works to be completed must be prepared before the
invitations to tender (ITT) are sent out;
 design is carried out by the consultants although some elements of design can fall on the
contractor (e.g. using a Designed Portion in JCT 2011 SBC);
 the client retains direct control over the design, and by so doing the standards for quality;
 where the contractor was provided with full design information in the ITT, there is
considerable cost certainty for the employer, subject to changes after commencement;
 the provision of information and instructions between the employer and his team and the
contractor is critical to avoid allegations of delay.
Design And Build
Design and build is used on roughly 25% of projects, according to the NBS Survey (2012)9
so it is
significantly below the use of a traditional procurement strategy, but nearly ten times more
common than any one of the alternative management-based procurement strategies.10
Design and build comes in many different guises. The extent of the ‘design’ carried out by the
employer’s team determines the level of design responsibility which the contractor will
undertake:
“Design has been defined as devising an arrangement, then specifying the
components needed to realise that arrangement, and lastly detailing a
method of joining or erecting those components. Design can mean the overall
concept or form of the building, it can relate to the component parts including
specialist installations, or can be the result of meeting specified criteria for
durability, performance etc.”11
A design and build contractor can proceed from outline plans, concept design or detailed
specifications. So the contractor may tender on the basis of complete design and construction
responsibilities12
or for developing the information provided in the ITT by the client’s design team.
This can (and should) affect the contractor’s design obligations in the main contract – although
not the standard of care. In this procurement strategy:
 the contractor’s liability for design may be limited by the terms of the contract, thus negating
or diminishing the concept of the contractor being the single point of liability for design and
construction;
 the client lacks direct control over detailed aspects of the design, and so quality;
 the client takes the benefit of the contractor’s expertise in buildability;
 the contractor takes more responsibility for completion to time;
 the client requires an independent contract administrator to protect his interests during the
carrying out of the works, has no cost consultant to assist with valuation.

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A Potted History of Design and Build
“What has become known as the traditional method of constructing building projects requires the
separation of the works of the designer from those of the constructor. They each do their work in isolation
from each other and have separate legal responsibilities towards the client. During the latter half of the last
century numerous attempts have been made to find alternative procurement solutions, which to many is a
failure of the traditional method of project development…Design and build is not a modern-day concept. In
centuries past it was the only procurement arrangement that was available. Its roots originate in the
ancient master builder concept, where responsibility for both design and construction resided in a single
individual.
Design and build can be traced to ancient Mesopotamia, where the Code of Hammurabi (1800BC) fixed
absolute accountability upon master builders for both the design and construction of projects. In classical
Greece, great temples, public buildings and civil works were designed and built by master builders… [e.g.]
the Parthenon and the Theatre of Dionysus…
During the Renaissance, architecture and construction evolved as separate professions and the presence of
master builders disappeared…project complexity, in both design capability and in construction methods,
increased during this time as the need arose for specialists in design and specialists in construction.”
13
Design and build became popular again in the 1970s and in 1981 JCT published the first standard form
construction contract to adopt this ‘new’ procurement strategy.
Management-Based Procurement
In the 1980s,14
new procurement strategies were trialled with the objective of overcoming specific
risk transfer issues, better reflecting the increasing fragmentation of the industry (contractors no
longer employed their own workforce), and speeding up the project procurement and
construction processes.
There are three forms of management-based procurement: construction management,
management contracting and prime contracting.15
The common feature of these procurement
strategies is that the manager is chosen specifically because of its experience or reputation for
being able to manage the construction process, rather than (simply) for its construction
experience. The manager normally does not undertake any of the design or construction work.
One of the drawbacks to the effective use of management-based procurement, is that clients and
their advisers tend to amend the provisions of the standard form contracts in order to represent a
risk balance similar to, say, traditional contracting. Peter Hibberd, JCT, considers that
“…a substantial majority [of clients are] seeking to place full onus for the specialist's work
on the general contractor. Perhaps this… is one of the reasons why management
contracting and construction management have never taken much share of the market,
despite having some obvious attractions.”16
This totally misses the point17
and is one reason for the paucity18
of projects being completed
using management-based procurement strategies, despite some clear benefits.
The very public use of management contracting on the British Library project, and the use of
construction management on Holyrood, both of which were massively over budget and years late,
may have also sealed their fate!

5. Page 5 © 500 Words Ltd, 2014
Summary
A quantitative and/or qualitative evaluation of different procurement strategies is incredibly
difficult and highly complex “because there are both successful and unsuccessful projects that
have used identical means and methods of construction procurement.”19
A good example is the
comparison between the Wembley and Arsenal football stadia, both of which adopted a JCT DB
contract but with vastly different results! The NBS Survey (2012), cited above, noted that:
“It’s interesting that almost none of the respondents mentions the type of
contracts used or the process of contract administration as a cause for the
perceived increase in disputes… Respondents see disputes increasingly
resulting from how people behave towards one another in the current
environment.”20
In order to decide what procurement strategy is appropriate, you need to consider your client’s
objectives, the payment routes intended, how design and construction obligations are to be
allocated and which party is accepting specific risks such as time, cost and quality: “The
construction industry is rarely concerned with providing off-the-shelf products; most projects
involve unique designs, with purpose-written specifications to be finished in a time which is often
difficult to predict. Construction clients must balance the importance of cost, quality and time
because it is rare for all three to be satisfied.”21
The best way of evaluating alternative procurement strategies is to have a good working
knowledge of their key differences (as well as reading the related standard forms from one
publisher so you understand how they are intended to operate in practice). The comparison
overleaf is adapted from ‘Which Contract?’ by Cox, Clamp and Lupton.
For the purposes of the table, there are three distinct project phases:22
Pre-procurement
1. Commit to
Invest
the point at which the client decides in
principle to invest in a project, sets out
the requirements in business terms and
authorises the project team to proceed
with conceptual design
Tender process and contract
award
2. Commit to
Construct
23
the point at which the client authorises
the project team to start the
construction of the project
Contract and supplier
management
3. Available
for Use
the point at which the project is
available for substantial
occupation/use, which may be in
advance of completion
Occupation and defects
rectification
Disposal
This guide is provided by Sarah Fox of 500 Words Ltd, a professional speaker and trainer who
helps you write simpler contracts and understand complex ones, including the right procurement
strategy for your project. She is also author of the 500-Word Contract™.
To find out how she can help send Sarah an email: sarah@500words.co.uk or ring her mobile:
07767 342747.

6. Page 6 © 500 Words Ltd, 2014
Comparison of Procurement Strategies24
Traditional Design and Build Management-based
Most suitable
employers/
developers
Client wants control over
design and quality; able to
provide time to make
decisions, manage change,
provide instructions; wants
independent advisers
Experienced client able to
evaluate tenders on design,
buildability & quality (lack of
independent advice). Client
needs single-point responsibility
& minimal involvement
Experienced client with
existing teams of advisers
and good processes for
decision-making
Most suitable
projects
Full tender documentation
available before contract
Tender requirements clear
(changes afterwards expensive)
Complex, large-scale
projects requiring additional
management expertise &
good planning
Time for
design &
construction
phases
Total project time longest
time - complete design
required before contract
award. Time certainty by
commitment to construct
Reduced time period over
traditional as design &
construction proceed in parallel.
Longer pre-tender phase
Shortest total project team
as early start on site,
multiple elements proceed
in parallel. Contractor
flexibility during works
Scope for
competition
on cost
Separate competitions for
design services & works.
Detailed brief enables
effective evaluation of
construction tenders
Competition for post-award
services & works. Tender
evaluation on price & product. No
direct client benefit from
subcontract competition
Most effective competition
for design, works &
subcontract packages. Value
engineering key element.
Direct benefits to client
Management
& control of
quality
standards
Designers set & monitor
quality & functionality for
client. Contractor
responsible for
achievement. Low levels of
buildability as no contractor
input to design
Higher levels of buildability as
contractor completes design.
Client has no direct control over
quality & functionality (and may
not have own supervisor)
Highest levels of buildability
as contractor involved
before commitment to
invest. Increased
specialisation of supply
chain (i.e. higher quality?)
Flexibility to
change
specification
Client retains flexibility for
design changes after
commitment to construct
Contractor flexibility in
developing details & proposing
solutions during tender &
construction
Client retains flexibility for
design changes at any time
until works packages
completed
Certainty of
price
No cost certainty during
design phase. Cost certainty
after commitment to
construct. Cost monitoring
at all stages
Best for price certainty, but
higher overall cost if transfer of
design risk to contractor (single-
point responsibility). Cost of
changes can be high
No firm price at
commitment to construct.
Contractor not responsible
for managing cost of works
Clarity of
remedies for
design
Design team responsible for
design & monitoring,
contractor for workmanship
Contractor responsible for design
and workmanship. Client may
have independent monitoring
Complicated contractual
framework with limited
remedies
Separation of
design and
management
Clear lines of accountability.
Clear division of design
(consultants) &
management (contractor)
Integration of design and
management. Largely self-policed
by contractor. Efficient?
Clear separation of design
and management. Systems
conducive to ‘buck-passing’
Degree of
client
involvement
Low as delegated to
contract administrator/
architect
Medium as CA (employer’s
Agent) has lesser role
Variable but high preferable
as more risk taken by client
& needs hands-on control
Summary Better for cost and quality Better for time and cost Better for time and quality

7. Page 7 © 500 Words Ltd, 2014
Further Resources
For a better understanding of the trends in the construction industry and the use of construction
contracts you should obtain and read these reports which together provide an excellent overview
of the state of the construction industry, as well procurement issues from an industry perspective:
 The Latham report25
 The Egan reports26
 The RICS Contracts in Use Survey27
 The Worstenholme report28
 The Equal Partners report29
 Construction Statistics Annual Report 201230
 Government Construction Strategy 2011.
1
Procurement also refers to strategies, methods, contracts. Route is the preferred term for these notes.
2
It has been estimated that, even on smaller projects, up to 200 people may be involved in different roles.
3
Although few of the standard form construction contracts require the parties to deal with risks proactively and before the
commitment to construct. See further ‘the Abrahamson Principles’ on risk management.
4
Although the actual demarcation between design and workmanship is far from clear: Rotherham MBC v Haslam Milan & Co
Ltd (1996) 78 Build LR 1 (CA).
5
A document prepared by an architect or engineer to provide technical information on the quality of materials and
workmanship required.
6
Known as a management contractor, prime contractor or construction manager.
7
Cox, Clamp & Lupton (2007 Which Contract? Choosing the appropriate building contract, RIBA Publishing, London, page 32.
8
Of the 1000 respondents, 70% were consultants, 20% contractors and 10% clients. These respondents provided differing
information on the use of traditional procurement: ranging from 49% contractors, 59% clients and 72% consultants.
9
Consultants say 22%; clients say 26% and contractors 38%.
10
The Survey showed that 8% of projects used either PPC2000 or JCT Constructing Excellence forms of contract, but not the
percentage of projects adopting partnering as a procurement strategy.
11
Cox, Clamp and Lupton (2007), page 31.
12
This can make tender evaluation very complex.
13
Ashworth (2001), cited above, pages 137-8.
14
In 1987, the JCT issued the Standard Form of Management Contract (MC87 now MC 2011) together with related documents
necessary for management contracting; and, in 2002, the JCT published a Standard Form Construction Management
Documentation (CM02 now CM/A 2011).
15
According to the Defence Estates' (now DIDO) definition, prime contracting is: 'A single company assuming responsibility for
the delivery of the contracted requirement on time, within budget (defined over the lifetime of the project) and fit for the
purpose for which it was intended: and that includes demonstrating the contracted operating cost parameters can be met.'
16
Agreements promote risk reduction (2010) 21 6 Cons Law 14.
17
You should always be wary of trying to shoe-horn any other standard form contract into the (near ubiquitous) JCT SBC risk
structure.
18
The RICS (2009) Contracts in Use Survey confirmed that construction management represents less than 10% of contracts by
value (and only 15 instances out of 1400). Management contracting, on the other hand, was found by the Survey to be
being ‘used sparingly’. The NBS Survey (2012) showed these strategies to have been used on between 2-6% of projects.
19
Ashworth (2001), chapter 9. The quote continues: “It is now believed that personal factors of all those involved have a
major influence on the possible outcomes.”
20
Page 7. If the procurement strategy can define the way the parties behave to one another then the strategy can make a real
difference.
21
Brook, M (2008) Estimating and Tendering for Construction Work (4
th
edition). Butterworth-Heinemann. Oxford. Pages 85-6.
22
According to various government publications - the definitions are taken from Chapter 16 Key Performance Indicators and
Benchmarking of the 2009 DTI Annual Statistics. See also the OGC Guide ‘Introduction to Public Procurement’.
23
PPC2000 requires the all the project team members to confirm that ‘to the best of [their] knowledge the project is ready to
start on site’ before the parties sign the commencement agreement and commit to construct the project.
24
Adapted from Cox, Clamp & Lupton (2007).
25
Latham, Sir Michael (1994), Constructing The Team: Final Report of the Government/Industry Review of Procurement and
Contractual Arrangements in the UK Construction Industry, London: HMSO
26
Department Of Trade and Industry (1998) Rethinking Construction: The Report of The Construction Task Force London:
Hmso; Strategic Forum For Construction (2002) Accelerating Change (Chairman: Sir John Egan), London: Rethinking
Construction C/O The Construction Industry Council.
27
RICS (2012) Contracts In Use, A Survey Of Building Contracts In Use During 2010.
28
Constructing Excellence (October 2009) Never Waste A Good Crisis A Review Of Progress Since Rethinking Construction And
Thoughts For Our Future. This report contains a summary of the major reports into the construction industry since 1994
(Appendix A).
29
Construction Clients’ Group (2009) Equal Partners: Customer and Supplier Alignment in Private Sector Construction.
London: Business Vantage available from Constructing Excellence
30
Available via the Office For National Statistics website.