ALLOCATION OF PROJECT RESOURCES AND THE INADEQUACY OF THE TRADITIONAL PROCUREMENT SYSTEM

Transcription

1 UDK ALLOCATION OF PROJECT RESOURCES AND THE INADEQUACY OF THE TRADITIONAL PROCUREMENT SYSTEM P. D. Rwelamila, A. Ngowi Abstract Technology in the construction industry is becoming more complex and composite, and new practices are increasingly becoming transient and expedient. In thls environment the trahtional procurement system (TPS) has been criticised for being unable to cope with the complexity and the dynamic nature of the current industry in allocating project resources. Consequently new procurement processes are being introduced and utilised as the panacea in dealing with the objectives of the project economic system. Research to date has however focused on the techcal aspects of project procurement in a conservative way and little or no cognisance is taken of the related management issues addressing the appropriate way of allocating project resources. This paper argues that, for illost projects the problem is not the inability of the trahtional procurement system to meet the requirements of a demanding industry of managing the objectives of the project economic system, rather that the fault lies within the management of the "human aspect" within that system. The paper proposes that the trahtional procurement system needs to be applied utilising modem management approaches. The paper proposes that the use of Total Systems Intervention (TSI) would provide a framework within which an informed choice can be made as to the most appropriate methods in dealing with human behaviour as a relationship between ends and scarce means which have alternative uses in a construction project. P. D. Rwelamila, Department of Buildmg Sciences, Royal Institute of Technology, Stockholm, Sweden A. Ngowi, Department of Civil Engineering, University of Botswana, Gaborone, Botswana

2 Keywords: Management, procurement system, total systems intervention. Alociranje projektnih resursa i nepodobnost tradicionalnog sustava ugovaranja Saietak Tehnologija u gradevinarshu postaje sve kompleksnija i sloaenija, a novi postupci postaju sve kratkotrajniji i ~Cinkovitiji. U tom se okruziu kritizira tradicionalni sustav ugovaranja kao nesposoban da se nosi sa sloienoscu i dinamicnom prirodom u danainjem gradevinarstvu pri odredivanju mjesta projektnih resursa. Stoga se uvode i primijenjuju novi procesi ugovaranja kao univerzalni lijek za postizavanje ciljeva projektnog ekonomskog sustava. Istraiivanja su se, medutim, usredototila na tehnicke aspekte projektnog ugovaranja na konzenlativan natin, te se malo ili nikako ne pridaje znacaja srodnim pitanjima vodenja projekta kojim se traii odgovaraiuci nacin alociranja projektnih resursa. Rad tvrdi da za vecinu projekata, problem nije da tradicionalni sustav ugovaranja ne moie ispuniti potrebe zahtievne privrede koja podrazumijeva upravljanje ciljevima ekonomskog sustava projekta, nego je problem u upravljanju "ljudskog aspekta" u tom sustavu. Rad predlaie da tradicionalni sustav treba biti prinlijenjen srodnim upravljackim natinima. Takoder, predlaie se koristenje CSI (cjelokupna sustavska intervencija) koja bi dala kostur u kojem bi se ii~ormirana odluka mogla ostvariti u vezi njoj primjenjive nietode djelovanja sa ljudskim ponasanjem kao veza izmedu ciljeva i rijetkih natina dostignuka koje imaju razne uporabe u graditeljskom projektu. KljuZne rijezi: menadiment, sustav ugovaranja, totalna inverzija sustava 1 Introduction The project client's principal objectives (parameters) are cost, time, quality and utility. According to Rwelainila and Savile [l], these are referred to as client's objectives pyramid. Organizational structures of coilstruction projects must be established in order to manage these project parameters. Successes and failures related to a project organizational structure must be measured on the basis of these parameters. The project organizational structure, which is the collective action required to acquire the design, management, and installation inputs is referred to as a procurement system. Thts paper focuses on the traditional procurement system (TPS). According to documented evidence, tlus system has been in existence since 1870, when Cubitt in London in the United Kingdom first began to offer the services of a general contractor. Prior to that, building work tended to be procured as a series of direct contracts between the client and the trade contractors. This is the essence of what is today called construction management [2].

3 The essence of TPS is that construction work involving simcant architectural input, is undertaken with the client contracting and the architect as the principal design consultant. A separate contract is entered into between the client and the structurallcivil engineer. Later, a separate contract is entered into by the client and the contractor/builder. In other words, the designer designs, and the builder builds. In order to achieve this, the architect must co-ordmate all of the design input from the various technological design specialists, so that a single comprehensive set of documents can be put out to tender. In those projects involving mainly civil works, and where no architect is needed. the civil engineer is the consultant designer and only two contracls are undertaken, namely: between the client and the civil engineer; and, between the client and the contractor~builder. There has for some time ken a strong indication that construction projects sueer from inappropriately defined procurenlent systems [3]. Researchers and writers on construction management are increasingly stressing the need for procurement systems to be tailored to meet particular project needs (41 [5]. Wlule these views are a reflection of appropriate hnking i.e., an acknowledgement of changing technology in the construction industry, and clients requirements becoming more complex, composite and sophisticated, a number of performance studies on projects utilising the TPS have generally blamed the TPS itself, contendmg that it is out of date, inefficient, expensive and does not adequately reflect an appropriate relationship between the client and the contractor [61 [71 [S]. This paper seeks to present the argument that the TPS is basically used as a "default system". Furthermore, it shows that TPS has been used merely because consultants have failed to consider the issue of appropriateness. It argues against this approach which has resulted in an indirect acceptance of a situation that the TPS, as defined in conventions and standard documents wihn the industry, is meant to work precisely as defined. This paper proposes that the use of a modern management approach, namely : Total Systems Internention would provide the framework wihn which an informed choice can be made as to the most appropriate methods for addressing project procurement issues. Finally, conclusions are drawn, from wihn a management perqxcbve, as to the sigruficance of understandmg the role and basic framework of the traditional procurement system within the construction industry. 2 The TPS - in theory Accordmg to Hughes 121, the TPS should be used where : 1. The client has conunissioned, and taken responsibility for, the design of the works (Cl); 2. The design is complete at the time of selecting the contractor ((72): 3. Prime cost sums, including nominated sub-contracts, do not form the major proportion of the contract sum (C3); 4. The architect or engineer appointed by the client is adequately experienced to cope with the co-ordination of the design team, to lead the design effort, and to co-ordinate the interface between design and fabrication (C4); 5. The client wishes to use a quantity s~eyor/cost engineer to plan and control the finance of the project, in conjunction with the architect or engineer (C'5);

4 6. The client wishes the contractor selection process to be based upon the contractor's estimate of price and for the contractor to bear the risk of costs exceeding prices (C9; 7. The client wishes to reserve the right, via nomination, to select the subcontractors for certain parts of the work (but see (iii) above) (C7); 8. It is important that an acceptable negotiated fonn is used in order to ensure a fair and familiar distribution of risk (C8); and, 9. The client does not know what else to do, and the consultants do not raise the choice of procurement system as an issue (C9). Tlle above TPS project characteristics are referenced (Cl, C2 etc.) to facilitate cross referencing later. A combination of one or more of these proiect characteristics could occur on projects following the TPS. It may happen that a contract is let under circumstances which do not accord with those given, but it is suggested that such projects would be better served by the TPS in an adjusted version (hybrid versions of the TPS) or, by another procurement system outside of the TPS franlemrk. The TPS could be adjusted by adopting a process wluch employs a range of approaches (or systems nletaphors) in order to encourage creative thnking about the respective project and the inherent complex issues involved i.e., those which are not compatible with the basic framework of a typical TPS that project consultants have to confront. The process and logic of applying TSI to aid the TPS and other hybrid versions of TPS will be discussed after looking at the results of using TPS under those circumstances which are not in accordance with the typical basic framework, and that do not consider appropriate adjustments that could be implemented. 3 The TPS - in practice As indicated above, the TPS has been severely criticised for being out of date, inefficient, expensive and, for not adequately reflecting the appropriate relationship between the client and the contractor. In order to establish the reasons behind these claims, it is important to look at the performance of the TPS, or systems which are perceived to be the TPS, in terms of their ability to meet the client's brief The data has been drawn from research conducted in Botswana. Comparisons are made with sinilar trends and occurrences in the United Kingdom. Due to lack of space and bmvity, a few salient findings will be discussed. In order to look at the TPS. or other systems perceived to be the TPS, with respect to meeting the client's brief. the four feasible objectives of the client wluch primarily define that belief need to be addressed. These are: time, cost, quality and utility [l] [9] [lo]. Furthermore, that if a project is percei~ed by the client to have complied with the established standards set in the brief in terms of these four parameters, it can be argued that the procurement system utilised for the respective project has been successful.

5 3.1 Research studies Research puradigm: Two separate research projects were carried out in Botswana in order to address what was being referred to as 'the problems of using the traditional procurement system (TPS). These stuhes attempted lo address certain elements that are measurable within the TPS, in order to investigate if appropriate nxthods are used in selecting this procurement system. The aim was to establish from various builhng projects stakeholders the characteristics of their projects. This was necessary because an increasing number of participants in the Botswana construction industry were expressing great concern over the poor quality of builhngs. Most building projects in Botswana are purported to be procured using the TPS, hence poor quality of buildmgs was linked to the TPS Architects and quantity surveyors study A survey of Botswana architectural and quantity surveying firms was carried out via a medium of postal questionnaire. The research sample was drawn from a register of Botswana Institute of Development Professions (EIDP). All registered firms of architects and quantity surveyors were sent questionnaires. These amounted to 13 and 11 Jrn1.r ofarchitects and QuantiQ Suwt.yors respectivelv. The number of replies that were suitable for analysis amounted to: 10 (77%) and 8 (73%) architectural and quantiq suweyingjrms respectively. The TPS characteristics as inhcated in section 2 above were tabulated, and respondents opinions were sought regarhng the characteristics of their projects. The results of the survey are shown in Table 1. Table 1. Architect and quantity surveyors' opinions regarding the characteristics of their projects True More true Difficult More False than false to say false than true Arc Qs Arc Qs Arc Qs Arc Qs Arc Qs Project % % % % % % % % % % characteristics (Ref section 2)

6 As indcated in Table 1, the majority of archtect and quantity surveyor respondents are in agreement that characteristics (Cl), (C3), (C4), (C5), (C6), (C7) and (C9) represent common characteristics of most of their public building projects. The majority of architects (90%) and quantity surveyors (95%) are in agreement that characteristic C2 does not conform to most of their public buildng projects. Architects and quantity surveyors are in agreement over characteristic C8, they are of the opinion that it is false to say that an acceptable negotiated project contract fornl is normally used to ensure fair and familiar distribution of project risk. Architect and quanti& surveyor responrients are in agreement that the dominant procurement system in the Botswana public building sector is not what is generally purported to be. Although the TPSproject management structure and its respective standard forms of contract is used for most of the public building projects, these findings suggest that hybrid versions of the TPSare used in the BotLswana public building sector Twelve large building projects study Rwelamila [I I] surveyed twelve large building projects in Botswana where the TPS was said to be in use. It was found that delays in construction time had occurred on eighty percent (80%) of the projects, primarily due to late design. As indcated in section 2 above, the typical TPS is a system in which linear relationships exist between each of its key activities i.e., design is developed, bills of quantities and other descriptive documentation is prepared, a contractor is selected and construction is commenced, with a full set of worlung drawings and schedules. If tlus linear relationship is not possible, the TPS needs the application of the Total Systems Intervention approach in order to cope wth the sociological complexities inherent in tlus environment. Furthermore, it was established that-on those projects where information delays had ocmred, they were characterized by prime cost sums fonning major portions of the contracts sum (refer to C3 in section 2), by poor documentation, and a f&quent break-down in commun~cation between the partles involved. Whilst the procurement system used was said to be the TPS, it is clear that hybrid versions of TPS were, in reality, in use Implications of the surveys Both studes have demonstnted that the problems inherent in the Botswana construction industry are not necessarily the fault of the TPS, but conceivably the failure of the parties involved to fully understand the role of, and the typical basic framework of the TPS. The application of a modern management approach to problem-solving, namely: TSI, will aide in facilitating an understandmg of the TPS and the appropriate adjustment to be made for each particular project. 4 The application of TSI In order to highlight the application of TSI approach, a brief philosophical idealom underpinning TSI will be given. Secondly, an overview of the TSI approach will be given.

7 Lastly, comments will be made on its application to the TPS and hybrid versions of the TPS. 4.1 Introduction In an industry characterised by accelerating change, increasing uncertainty and growing complexity, it is apparent that these hybrid fornls of the TPS as discussed in the above surveys, are used without due consideration to their implications in managing the primary project parameters. The approach of using hybrid forms of the TPS without changing the tradtional management structure and its respective contractual arrangements has neglected to take cognisance of the project dyilamics. Furthermore, the approach has left crucial human-related management issues unanswered [l 1 ] [ 171 [ 181. It is contented by Flood [19], that the management of project parameters can be improved via an effective approach to management that assumes the organisational structure is that of a sociccultural system i.e., the aspect of culture is included within the management scenario of the hybrid TPS. The socic-cultural perception of the project organisation, is underpinned by the philosophy of idealogy of critical systerns thinking. Critical systems thlnking has developed as a direct result of the criticisms levelled at the earlier systems approaches [20]. The philosophical idealogy of critical systems thinking is defined by the three commitments, namely: to critique (constant questioning of the practice of all procurement systems), to emancipation (recognition of project personnel with the project organisation and their potential for full development via free and equal participation in the management of the project), and to plzlralisrn (a realisation that all procurement systems have a contribution to make. and that no single procurement system is suecient to address the full range of probleinatic situations facing various building projects) [20]. This innovative way of thlnking encourages a change in one's perception of the global environment as a whole, and hence the project procurement system, and provides the philosophical underpinning for a new approach to planning, designing, and "problem solving" [21]. The approach is that of Total Systems Intervention (TSI), a brief overview of which is presented hereunder. 4.2 Total systems intervention (TSI) There are three phases of TSI, namely: creativity, choice and impleinentation Creativity The creativity phase requires the use of systems metaphors that focus attention on Merent aspects of the project organisation's functioning in order to encourage project managers to thmk creatively about the project through the procurement system The intention is that at the end of the creativity phase a dominant metaphor will emerge which highlights the main concerns and interests of the procurement system and provides the basis for a choice of an appropriate intervention methodology.

8 4.2.2 Choice The choice phase requires that an appropriate systems-based intervention methodology that suits the characteristics of the organisation's situation (established during the creativity phase), be chosen. Flood and Jackson [2 11 propose a two-dimensional framework that is aimed at aiding this decision-inalung process. The first dimension refers to the co~nplexity of the system that constitutes the problem situation i.e., simple and complex systems. The second dimension pertains to the relationship between the individuals or parties who stand to gainnose from a systems involvement i.e.. unitary, pluralist or coercive. Table 2 depicts a summary of the appropriate systems inethodology within each of the problem contexts and the underlying metaphor that is established during the creativity phase. The outcome of the choice phase is that a donunant systems methodology will be chosen. Table 2 Systems methodologies related to systems metaphors and problem contexts [2 11 Systems Methodology (Examples) Systems Dynamics Viable Systems Diagnosis Strategic Assumption Surfacing and Testing (SAST) Interactive Planning Soft Systems Methodology (SSM) Critical System Heuristic Assuinptionsl Problem Contexts S-u C-u S -P C - P C-P S-Co Undelying Metaphors Machne, Team Organism, Brain, Team Machine, Coalition, Culture Brain, Coalition, Culture Organism, Coalition, Culture Machinel Organism, Prison Note : S is simple, C is complex, U is unitary, P is pluralist, Co is coercive Implementation The implementation phase's task is to employ a particular systems methodology in order to transform the dominant vision of the project andlor the procurement system (the TPS or hybrid

9 versions of TPS), its structure and the general orientation adopted towards concerns and problems, into specific proposals for change. The aim of tlus phase is to bring about coordinated change in those aspects of the project and/or the procurement system currently fundamental to its effective and efficient functioning The application of TSI Creativify - The establishment of the appropriate systems metaphor to be utilised is solely dependent on what aspects of the organisation within the procurement system you are wishing to highlight. For example : If you are wishing to establish the participants to the procurement system, and their perceptions of each other and the procurement system itself, then the adoption of the culture metaphor is seen to be the most appropriate under these circumstances. Choice - According to Table 2, the adoption of the culture metaphor allows you the choice of three methodologies, namely: SAST, Interactive Planning, and SSM. In order to narrow the options down, the solution would be to analyse the problem contexts and the other underlying systems nietaphors wihn those system methodologies and choose the nlethodology that best suits the requirements for the analysis of a particular project. Implementation - This last stage would involve the use of the chosen system's methodology to modify/adjust the procurement system so as to meet the requirements of a pmcular project. 5 Conclusions This paper is not trying to glorify the TPS or its hybrid versions as universal systems which are appropriate for all types of projects. It is arguing from the premise that what has been referred to as the TPS shortfalls are not necessarily true, because certain basic considerations (Section 2 : [2] and intrinsic hu~nanisticl systemic/ management factors have been neglected by project managers/client representatives in applying the hybrid versions of the TPS. It must be acknowledged from the outgoing arguments that. generally, the TPS is often used as a "default procurement system" i.e., it is used merely because consultants have failed to consider the issue of its appropriateness. Hybrid versions of the TPS by which clients procure buildings/other structures, and contractor's sell their services, have occurred in recent years, largely because of the dnve for value for money. At much the sanle time, project parameters standards (quality, tine, cost and utility) have begun to decline and it seems apparent to suggest that one of the main reasons for hs is the fact that the TPS hybrid versions have been used without appropriate consideration to the implications these versions may or may not have on the overall performance of a project. In order to address the implications of these hybrid versions of the TPS, a new approach to planning, designing, "problem solving" and evaluation needs to be adopted. In examining the complexities inherent in the traditional procurement system and its hybrid versions, the Total Systems Intervention (TSI) approach may be seen to be an appropriate intervention

10 methodology for the greater attainment of sliared meaning between the parties involved in the specific procurement system, to suit the particular requirements of a particular project. Lastly, the TSI approach serves to provide insight into those issues inherent in the construction industry in Botswana and most english spenlung conlmonwealth countries, and niore specifically, the Tradtional Procurement System and it various hybrid versions. 6 References 1. Rwelamila, P.D. and Savile, P.W. (1994) Hybrid value engineering: the challenge of construction project management in the 1990s. International Journal of Project Management, Vol. 12. No. 3. pp Hughes W.P. (1991) An analysis of construction management contracts. Technical Infornration Service No. 135, C.I.O.B. 3. Carpenter, J.B.G. (1981) The UK System of Construction Procurement and What is Wrong: How to Improve. Paper to the R.I.C.S. Quantity Surveyor's 12th Triennial Conference, April, London, United Kingdom. 4. Walker, A. (1984) Construction Project Management. Granada, London, United Kingdom. 5. Rwelamila, P.D. and Wiseman, G.T. (1995) Concrete quality management: a research study of the general contractor in South Africa, Construction and Building Materials, Vol. 9, No. 3. pp Construction News (1986) BPF contract: The professionals' verdict. Construction News, October, pp Dawson, H. (1988) A client's viewpoint. Chartered Quantity Surveyor, November, pp Chartered Quantity Surveyor (1989) Talking about design and build. Chartered Quantity Surveyor, February, United Kingdom. 9. Sidwell, A.C. (1982) A Critical Study of Project Team and Organisational Forms within the Building Process. Unpublished Ph.D. Thesis, University of Aston, Birmingham, United Kingdom. 10. Morris, P.W.G. and Hough, G.H. (1986) Preconditions of success and failure in nrajor projects. Major Projects Association Technical Paper No.3, September, United Kingdom. 11. Rwelarnila, P.D. (1992) The Factors Affecting Productivity in the Botswa~ia Construction industry - the case of Gaborone. Botswana Jo.urna1 of Technology, No. 1, pp Franks, J. (1990) Building Procurement System. Second edition. C.I.O.B., Ascot, United Kingdom. 13. Hindle, R.D. (1991) Deteriorating quality standards of new housing in the Western Cape. S A Builder, September, pp

11 14. Flanagan, R. and Norman, G. (1989) Pricing Policy, in The Management of Construction Firms (Eds. P.M. Hillebrandt and J. Cannon). Macmillan, London, United Kingdom. 15. Alnian, M.G. (1989) Barriers to Quality in South African Building. MBA Research report, Graduate School of Business, University of Cape Town,South Africa. 16. Ball, M. (1988) Rebuilding Construction : Economic Change and the British Construction Industry. Routledge, London, United Kingdom. 17. Gharajedaghi. J. (1985) Towards a Systems Theory of Organization. Intersysterns Publications, United States of America. 18. Van Donk. D.P. and Sanders, G. (1993) Organisational culture as a missing link in quality management. International Journal of Quality and Reliability Management, Vol.10, No.5, pp Flood, R.L. (1993) Beyond TQM. John Wiley & Sons, Chichester. 20. Schecter, D. (1991) Critical systems thinking in the 1980's : A connective summary, in Critical Systems Thinking : Directed Readings (Eds. R.L.Flood and M.C. Jackson). John Wiley & Sons, Chichester, pp Flood, R.L. and Jackson, M.C. (1991) Creative Problem Solving : Total Systems Intervention. John Wiley & Sons, Chichester. Note: P D Rwelamila is a visiting Research Fellow to the Department of Building Sciences at the Royal Institute of Technology and is currently on sabbatical leave from the Department of Construction Economics and Management. University os Cape Town.