What Procurement Method Fits Concurrent 
Design and Construction of Buildings?
Corresponding Author: Kiiras, Juhani
Author(s): Kiira, J., and Huovinen, P.
Organisation(s): Construction Economics and Management, Helsinki University of Technology (Finland)
The suggested paper is related to our completed research program, titled ”New national procurement methods for building in Finland” which was funded, as a part of the national PROBUILD Program, by Technology Development Centre in Finland (TEKES). 

In Finland, fast-track methods, that enable overlapping design and construction phases, have been adopted based on negoatiated contracts featuring billing the direct costs plus fee. The latter means that the price is left floating. Although a direct-costs-plus-fee contract may include a condition for the target or maximum price, owners here do not in general appreciate the fact that price levels are determined without using a competitive bidding approach.

In this paper, we search for and specify new procurement methods and contract conditions that would allow the use of competitive bidding approach even in fast, concurrent construction of new buildings. Alternative procurement methods can be grouped as follows:

(*) by scope; methods concern building design and construction works, but also solely construction works (packaged in various ways) 
(*) by payment mode; methods concern lump sums, direct-costs-plus-fee contracts with incentives (e.g. CM or MC contract) but also condition for guaranteed maximum price 
(*) by way to invite tenders; methods concern negoatiated and competitive approaches. 

In principle, new types of building contracts covering both design and construction enable shortening the throughput time of a project (contract) as a whole, i.e. adopting concurrent design and construction approach. However, if owner aims at closing a design-and-construct contract through using open or restricted competitive bidding approach, this normally just increases the total throughput time. Instead, it seems that a negoatiated contract approach (with several candidates) allows shorter or faster implementation of the project as a whole. 

For example, a new program-and-construct (PC) contract has proved to be valid in the first pilot projects in Finland. Alternatively, we have developed and piloted new engineer-and-construct contracts, i.e. owner chooses first one of the CM contracts, i.e. in-house or external construction manager, then hands out a program-and-design-contract (PD) to a consultant, and finally hands out ”packages” where each subcontract includes both engineering and works (for that specified technical scope). This latter approach is similar to purchasing of components within manufactu-ring industry.

In addition, owner can use one of various CM-at-risk contracts as well as trade contracts that enable concurrent programming, engineering, and construction while they allow, at the same time, full competitive bidding for procuring individual work packages.