Procurement is the method by which a contractor's services are obtained. The method of choosing the contractor has to be determined at an early stage as this can influence the design process. There are various options
Contract documents are sent to a selected list of contractors, usually around six in number, and the date and time for receipt of tenders is specified. When tenders are received they should on no account be opened before the appointed time. The quantity surveyor checks the tenders making sure that the contractors arithmetic is correct, that the rates for labour and materials are reasonable, and that they compare favourably with the cost target. A QS may go back to ask a contractor to correct errors before compiling a report on tenders for the client. The architect may contribute to this report. If all of the tenders are higher than anticipated, the design team may go back to the contractor who submitted the most favourable price and re-negotiate which may mean removing certain items of work from the bill, or adopting lesser specifications. Once a price is accepted, contract documents should be finalised and matters such as the dates of posession of the site and completion of the works, and the initial site meeting. Once these matters have been agreed, the contract can be signed.
Both the design team and the construction team should be chosen on the basis of expertise and experience. Ideally, they should all have worked together on past contracts. Increasingly, as more and more projects involve funding from the public sector, the procurement of professional services has to be done on a tendering basis. It should be noted that there is seldom an obligation to select the cheapest price, value for money is the overiding criteria.
Accepted risks - risk factors which, in the course of a building contract, are the responsibility of the client rather than the contractor, for example, these could include unforseen problems relating to the structure of the building which is the subject of the contract, or to problems which could arise through the actions of surrounding owners. They are particularly relevant to contracts involving existing buildings and therefore to all manner of conservation work.
Architects instructions (AI's) - instructions issued by an architect, first verbally and then confirmed in writing to a site agent as work progresses on site and, as inevitably happens, questions arise over details and specifications.
Bill of Quantities - a document usually prepared by a quantity surveyor which (ideally) details the terms and conditions under which a contract is to be let, and itemises all works to enable a contractor to price the work for which he is bidding. The first main step in preparing a bill is the "taking off" or recording of dimensions from drawings or schedules of work. Similar types of work are then brought together under one item, a process known as "abstracting", all of this information is then "worked up" into the bill of quantities.
Bonds - a client may require a contractor to provide a bond for the duration of the contract, which would become availabe to the client to meet any additional expenses that might result from a failure on the part of the contractor to meet his responsibilities. Such bonds are normally 10% of the contract value and are obtained from banks or insurance companies.
Certificate of practical completion - a stage reached in the contract where the client can take beneficial occupation.
Clerk of Works - a person, usually with wide building experience, often resident on a site and acting on behalf of a client, in inspecting work, quality of materials etc during the course of a contract.
Collateral warranties - an agreement which is added to the appointment between a consultant and his client to bind the consultant into an agreement with a third party such as a funding institution.
Contingencies - a sum set aside to cover the cost of any additional or unforseen work which may be encountered once the project is proceeding on site. Contingencies are also used to pay for changes which a client may request or meet extra payments which the contractor may be entitled to.
Extension of time - an extension of time to a contract period authorised by the architect for reasons of adverse weather conditions, an unusual number of variations etc. The reasons for which an extension of time may be granted are usually given in the conditions of contract.
Final certificate - a certificate stating that the works are now complete and the client is due a full and final settlement to the contractor.
Fluctuations - increases or decreases in costs of labour and materials.
Joint Contracts Tribunal (JCT) - formed by a number of interest groups such as RIBA, RICS, British Property Federation, Association of Consulting Engineers etc as a forum for establishing the form and content of contracts for use in the construction industry.
Lump sum - a fixed price for contract work, not intended to be adjusted in any way either by variation or remeasurement. A lump sum contract therefore is a contract for an agreed amount of work for a lump sum of money.
Liquidated damages - a sum detailed in the conditions of contract which is designed to cover the financial loss a client would face in the event of late completion. The sum usually stated as a weekly or occasionally daily rate is recovered from the contractor.
Nominated suppliers - usually supliers of goods not widely available such as some traditional building materials or a particular brand of, for example, paint which the architect considers is the most suitable for the particular job.
Preliminaries - matters which feature at the beginning of a Bill of Quantities, which are relevant to the contractor in terms of his obligations and responsibilities and which will therefore influence his costings. These would include such items as names of clients and consultants, insurance requirements, length of contract, descriptions of the site in terms of its access, working areas and adjacent buildings etc, a detailed description of the work to be undertaken and the order in which it should be tackled.
Prime cost sum - an amount included in a bill of quantities to cover a particular bit of work or supply of materials to be carried out by a nominated sub-contractor or a supplier.
Provisional sum - a sum included in a bill of quantities for work that is required but cannot be sufficiently designed or specified at the outset of the contract.
Retentions - an amount, usually 5-10% held back from the sum due to a contractor, for payment at a later date. The amount will be specified in the conditions of contract. Retentions are usually released on the basis of half at the issue of the certificate of practical completion, the remainder at the issue of the final certificate.
Schedule of rates - a list of works activities usually priced at a rate per unit for example, a price might be included for building in common brick at so much per square metre.
Sequence of trades - the order in which building trades undertake their work. Traditional sequences such as the "common arrangement" are followed where possible, but they are not always applicable in conservation work.
Snagging - the term used to describe unsatisfactory work or small items of work still to be completed which are discussed/discovered during final site inspections.
Sub-contractor - persons employed to undertake specialist work beyond the capacity or capabilities of the main contractor. Domestic SCs are employed directly by the main contractor. Named SCs are on lists of firms specified by the client or his architect, and thereafter approached by whoever is tendering for the work. Nominated SCs are specialist firms selected by the client or his architect, with whom the main contractor must then work.
Variations - changes in work authorised by the architect.