ANALYSIS OF CONVENTIONAL PROCUREMENT STRATEGIES AND THEIR APPLICATION

ANALYSIS OF CONVENTIONAL PROCUREMENT STRATEGIES AND THEIR APPLICATION

CHAPTER ONE: INTRODUCTION

1.1       BACKGROUND

The importance of well functioning construction industry is beyond doubt since all human being in modern societies are directly affected by its processes and products (Cheung, et al, 2001). Whereas, one of the backbones of the economics of many countries is the construction industry, (Oladipo M. A., 2003) described the construction industry as the hub of the economy.

In order to increase the chances for construction projects to be successful and result in improved end product; practitioners, researchers and society at large have therefore called for a change in attitudes, behavior and procedures, (Walker, et al, 2002). Partly responsible for such poor performance, traditional or conventional procurement strategies which is characterized by a ‘win – lose’ scenario was identified (Walker, et al, 2002). Attributing to this situation, the traditional procurement method which has been strongly existing and embedded in the construction for many years is seen as one of the major factors.

Procurement has been seen to be process of obtaining or buying supplies of something like fixed assets (land, building, etc) especially for individual and government, (Oladipo, M. A., 2003).

It is also a factor contributing to the overall client’s satisfaction and project success. Procurement strategies and their applications are of importance in construction industry, (Laedre, O. et al, 2006).

However, one must not be carried away by which ever method of procurement strategies proposed for a construction project, the major issue is the different types of procurement are contractual obligations, responsibilities and line of communication between the parties. One thing to remember is that which ever method that is used, the statutory duties of the professionals are always distinct and mandatory. Hence the engagement of a builder in the procuring contract is statutorily required and highly recommended whichever procurement strategy that is adopted, (Laedre, O. et al, 2006).

According to (Feldman B., 2006) the major factor that contributes to the underperformance projects with cost, time overruns and low quality is the bid contracting which is common in traditional procurement. Regardless of any differences between projects, clients tend to choose those procurement strategies they have a habit of using in the process of executing any project. (Laedre, O. et al, 2006).

The need for conventional procurement strategies and their application in construction industry cannot be ignored, despite numerous benefits, several problems have been observed on the use of procurement strategies in the course of executing both public and private construction projects in Nigeria. Therefore, this issue raised the researcher’s interest to know the right procurement strategies to be adopted in the construction industry particularly Nigerian construction industry as various procurement methods available metamorphosized from the need to improve construction project delivery, that is, project completion within budget and time, the emphasis of procurement methods is on optimizing all project constraints involved in project delivery namely, time, cost and quality, (Feldman B., 2006). Procurement strategies of projects within these constraints have continued to be a challenge to the design team, the contractors, and managers of investments hence the need to investigate the conventional procurement strategies and their application in construction industry. (Laedre, O. et al, 2006).

 1.2 THE NEED FOR THE STUDY

This study will be significant in a number of ways as it provides an insight into the types of procurement methods in use in construction industry in  Nigeria. It also enable stakeholders, clients, contractors and consultants to be aware of procurement performance for their future project endeavours in Nigeria and other developing countries. The study will contributes to literature in procurement strategies and its application in procurement strategies and its application for academic and for the society at large using the appropriate procurement strategies for their project delivery.

1.3     STATEMENT OF THE RESEARCH PROBLEM

Procurement methods have individual strengths and weaknesses, which must be carefully calculated by clients and industry alike. There are a number of different types of procurement routes available for clients to select. Each different type of procurement (Traditional, Design and Build, Construction Management, etc) has its own advocates and inherent strengths and weaknesses.

Selection of an absolute optimal procurement method is difficult, because even the most experienced client or contractor does not know all the potential benefits or risks for each method. Procurement is, therefore, a succession of ‘calculated risks’. Industry and academia have consistently focused on reducing this risk through the use of innovative methods of procurement. (Babatunde, S. et al, 2010)

The difficulty which sets construction industry procurement far apart from anything else, is the complexity of projects. Factors such as ground conditions, topography, logistics, weather, available technologies, finance, labour availability and services, all affect the performance of a project to be completed on time, on budget and to a high quality, (Feldman B., 2006).

Procurement, being a series of risks, has different methods that transfer varying levels of risk onto the client or contractors. The most used method, according to the Royal Institution of Chartered Surveyors (RICS) Contracts in Use survey (2007), is the Traditional method of procurement.

Essentially, this research investigate the analysis of conventional procurement strategies and their applications by exploring the suitability of the key principles of procurement strategies and its application in the execution of projects in Nigeria construction industry.

1.4  AIM AND OBJECTIVE

1.4.1    AIM

This research analyze the conventional procurement strategies and their application in the Nigeria construction industry with a particular references to some selected construction firms in Jos Plateau state.

1.4.2    OBJECTIVES

In order to achieve the above aim, the following specific objectives of shall be pursued:

1. To articulate the variants in procurement methods used in the construction industry.
2. To identify the factors generally considered in making choice of procurement method.
3. To investigate the role of procurement strategy in project management.
4. To analyse the challenges encountered in the application of the various types of procurement strategies or method used in the construction.

1.5 METHODOLOGY

Field survey research method will be adopted in carrying out the research, together with information from construction professionals and contractors regards to the procurement strategies in Nigeria construction industry. Questionnaire will be used to gather information (data) from the respondents, review of past similar works, journals, conference / seminar papers and online resources will also play a vital in data collection.

1.5.1    DATA COLLECTION

The data shall be collected after the design, distribution and collection of questionnaires to some professionals in the Nigeria construction industry. The questionnaire will contain various questions for response on the analysis of conventional procurement strategies and their application in Nigeria construction industry.

1.6       SCOPE AND LIMITATION

1.6.1    SCOPE

Analysis of conventional procurement strategy will cover the various ways through which building materials can be procured in some construction firms.

1.6.2    LIMITATION

This research work will cover the analysis of conventional procurement strategies and their application in some selected construction firms in Jos Plateau state. The primary and secondary sources of data shall be limited to articles from various types of journals, conference papers, published and unpublished past work as well as the use of questionnaire to gather responses from the professionals for analysis only and thereafter draw conclusions and infer.

As it has been noted that, no one is self-sufficient. The following are some of the problems encountered by the researcher which tend to limit the scope of this research work.

They include:

1. The researcher encountered problem in financing the project. Lack of funds was a major obstacle to the research work.
2. The researcher being a student was faced with the problem of the needed time to carry out the research.
3. The attitude of respondents in giving out accurate and reliable information contributed as constraints to this research work.