Procedures for design and construction

Promoter’s obligations

Before a promoter can start on a civil engineering project it will be necessary

to undertake a number of studies. These may comprise:

• market demand studies to define what are the needs the proposed project

should meet, such as the size and quality of the project output or benefit;

• economic and financial studies to decide for how long a period it is economic

for the project to cater for the foreseeable demand, taking into

account the cost involved and how the project is to be financed;

• feasibility studies to ensure the project is engineeringly practicable, confirm

its probable cost, and decide what methods should be adopted for the

design and construction;

• legal studies to ascertain what statutory or other powers must be obtained

to construct the project, including environmental approvals.

These studies are all interconnected. For the market and financial studies,

the promoter may appoint economic advisers because a major problem to be

resolved is how large should the project be (in terms of output or capacity)

and whether it would be economic to phase the construction in stages.

The feasibility studies will need to investigate different options for providing

the output, to ascertain how practicable it is to adopt phased construction,

and what difference this would cause to capital outlays and their timing.

Legal advice will be necessary to obtain powers to purchase land, gain

access, alter public rights of way, abstract water, discharge waste, gain planning

approval, and meet environmental and other objections. A number of

outside bodies may have to be consulted on these matters.

Special procedures, including presenting the case for a project before a public

inquiry or gaining parliamentary approval can be necessary for many types

of work. For projects internationally funded it will be necessary to meet the

extensive requirements of funding agencies, such as the World Bank, Asian

Development Bank, United Nations Fund, or European Community regulations.

These requirements are often complex and may necessitate the employment

of a firm of consulting engineers experienced in such work, together with

financial and economic advisers.

It can take 2 years or more on a major project to conduct all the studies

required and negotiate the powers required for construction. Even on a small

project these matters can seldom be completed in less than a year.

Importance of feasibility studies

Feasibility studies of an engineering nature are needed for most construction

projects. It can be an advantage to a promoter if he employs an independent

consulting engineer to check the technical feasibility and cost of the project. The

consulting engineer should be able to bring extensive design and construction

experience in the type of work the promoter needs, and be able to offer economic

solutions to problems his experience tells him are likely to arise. The

value of an independent consultant is that he uses only his professional judgement

in deciding what will serve the promoter’s interests best. Such a consultant

should have no relationship with any commercial or other firm which could

have an interest in favouring any particular kind of development.

In the initial stages, the studies usually concentrate on various options for

the location, design and layout of the project. The studies may include different

methods for producing the required results, such as the alternatives of

building a dam or river intake or sinking boreholes or buying water from an

adjacent company to produce a new supply of water. Accompanying this

work there will be data gathering and analysis, followed by the development

and costing of alternative layouts and designs, so the promoter can be assisted

to choose the scheme which seems most suitable.

Site investigations are particularly important, and sufficient time and money

should be spent on them. Although they cannot reveal everything below

ground, inadequate site investigations are one of the most widespread causes

of construction costs greatly exceeding the estimate. On large or specialist

projects, trial constructions or pilot plant studies may be necessary such as,

trial construction of earthworks, sinking of test borings for water, setting up

pilot plant to investigate intended process plant, or commissioning model

tests of hydraulic structures.

The feasibility studies should include a close examination of the data on

which the need for the project is based. Many instances could be quoted where

large sums of money have been saved on a project by carrying out, at an early

stage, a critical examination of the basic data the promoter has relied upon. This

data has to be tested for accuracy, reliability, and correctness of interpretation.

Options for design

The following shows the principal design options commonly adopted.

(a) Design by promoter or a consultant

The whole of the design, including all drawings and specifications, is completed

before construction tenders are sought – except for drawings not needed for

tendering purposes, such as for concrete reinforcement.

A promoter may have sufficient staff to undertake design work ‘in house’

or he may put all design out to a consultant, or divide the design work

between them.

On schemes involving different types of engineering, design may be let out

in separate ‘packages’ to different specialist consultants. For instance the design

of an industrial estate may be packaged into – roads and drainage; water

supply and sewerage; power supplies, and landscaping. For large schemes

the promoter may appoint an overall consultant with wide experience to

co-ordinate the inputs of the specialist design consultants.

Some elements of design may be left for the construction contractor or his

sub-contractors to undertake, such as the design of heating and ventilating

systems, or the cladding for a building. Specialist suppliers may need to

design their product or services to suit the project.

Advantages are:

• The promoter can check all aspects of the design to ensure they meet his

requirements before construction starts.

• Competitive tenders for construction are obtained on a clearly defined

basis encouraging construction contractors to submit lowest prices.

• The risk of having to make alterations to the work during construction is

minimized, giving a better chance of the project cost not exceeding the tendered

price.

• The promoter is not committed to proceed with construction until he sees

tendered prices and accepts a tender.

(b) Outline designs provided with detailed design by others

The promoter draws up outline designs and a specification of his requirements.

He appoints a firm or firms of specialist designers to carry out detailed

design, and then engages a management contractor to co-ordinate both the

detailed design and the construction. This type of arrangement can be seen in

some management contracts .

(c) Layout design by promoter; detailed design by contractor

The promoter specifies functions and design standards, and supplies layout

plans. The contractor then undertakes the detailed design before proceeding with

construction. The works may be relatively small, such as the design of a retaining

wall; or fairly extensive such as the design of an intake and drainage pumping

station, or the structural and reinforced concrete design for a water tower.

Advantages are:

• The contractor can adopt designs suiting his constructional equipment and

his usual construction methods, enabling him to tender his lowest price.

• The cost of making design alterations during construction do not fall on

the promoter.

Disadvantages are:

• The design may tend to suit the contractor more than the promoter.

• Control over design details is lost to the promoter.

• The contractor must increase his price to cover design risks.

(d) Functional specification by promoter: design by contractor

The promoter specifies the functions the project is to perform, for example

the size, quality and performance criteria for the intended works. He also

provides drawings showing the location of the intended works and draft layouts

for them, and may specify standards for design. The works required may

be extensive, such as design of a road, or the civil works and plant for sewage

treatment works. The contractor undertakes the layout and detailed designs

to the standards required.

This is the basic set-up for design and build (D&B) contracts where most

of the design responsibility is held by the contractor. The advantages, disadvantages

and complexities of such contracts are dealt.

Options for construction

(a) Direct labour construction

The promoter uses his own workforce to carry out construction. This gives the

promoter full control of the work and flexibility to alter it. However, with no competition

on prices, costs can be high unless management of the work is efficient.

Direct labour construction was common for works in Britain and for all sizes

of projects overseas until the 1950s. It has continued overseas where sufficiently

experienced local contractors are not available. Local authorities and public

utilities in the UK continued to use direct labour for such as re-surfacing roads,

constructing minor roads, laying water mains or sewers, etc. until the 1980s

when the government required such jobs be opened to competition from contractors.

Direct labour construction can be undertaken by consulting engineers on

behalf of the promoter. The consultants hire the necessary labour and plant, and

order the necessary materials, using money provided by the promoter. This procedure

was widely adopted up to the 1950s for projects in the UK and overseas,

and can still be used now. It was used on some works for raising the Essex side

of the Thames tidal defences 1974–1984. Given a small team of engineers and

some skilled foremen to guide local labour under a resident engineer with strong

managerial capacities, direct labour under the control of a consulting engineer

has often been notably successful in keeping a project to time and budget.

(b) Construction divided into trades

Apractice often followed in developing countries is to split construction work

into packages by trade, for example, brickwork, carpentry, etc. because local

contractors often provide only one type of trade work. ‘Self-build’ houses

in the UK often use this approach. The same approach on a larger scale is sometimes

adopted for complex building projects, with a management contractor

appointed to co-ordinate the work ().

(c) Main civil contractor supplies all ancillary services

Most civil engineering works incorporate services of an electrical or mechanical

kind, such as for heating, lighting, ventilation and plumbing. It is usual

to permit the contractor to choose the sub-contractors who provide such services,

subject to the approval of the promoter. The promoter, however, must

make provision in the design to accommodate such services.

An advantage to the promoter is that co-ordination of the sub-contractors

then rests with the contractor, and if they delay him, that is his responsibility.

Adisadvantage is that if the promoter specifies (i.e. ‘nominates’) some particular

supplier of services or goods, the promoter then becomes responsible

for any delay caused to the civil contractor by the nominated firm.

(d) Civil contractor constructs; promoter orders plant separately

When major plant such as generating plant, pumps, motors, or process plant

has to be incorporated in civil engineering works, there is an advantage in the

promoter letting separate contracts for such plant. This may be essential in cases

where plant is on such long delivery time that it must be ordered before the

construction contract is let. Adiscussion of the measures necessary to co-ordinate

the plant contracts with the construction contract.

Advantages to the promoter are that he has direct access to the plant supplier

to specify his requirements and agree all technical details. He can receive

plant drawings in good time to complete the structural designs.

Adisadvantage is that, if the plant supplier is late on his promised delivery,

the promoter may have to pay the contractor for delay. To guard against this,

plant delivery times quoted to the civil contractor can allow a ‘safety margin’

on the plant supplier’s quoted delivery time. The majority of all projects

incorporating major plant are managed satisfactorily on this basis.

(e) Civil contractor orders all plant

On a large and complex project there may be an advantage in requiring the

civil contractor to order plant, as specified and pre-agreed by the promoter

with the plant supplier – provided the time for construction is long enough

for plant to be delivered in time.

Advantages are:

• The civil contractor can be left to arrange delivery of pieces of plant to suit

his construction programme.

• The civil contractor has direct contact with the plant supplier to agree to

the details of any storage or lifting requirements.

• The promoter avoids the risk of delaying the contractor by not getting the

plant supplier to deliver in time.

Disadvantages are:

• The plant supplier will not start manufacture until the civil contractor

places his order.

• To complete the civil works design, the promoter may have to pay the

plant supplier a fee for providing layout drawings in advance.

• If the promoter asks for some alteration to the plant, or a ‘works test’ on the

plant shows the need for some amendment, delivery may be delayed causing

the civil contractor to claim for delay.

• The plant supplier may increase his charges if he thinks his risks will be

increased by having to rely on the civil contractor for payment.

(f) Plant supplier arranges building design and construction

Where the supplier of process plant exerts a dominating influence on the design

of a project, the promoter may ask him to employ a civil engineering contractor

as sub-contractor to construct the works to accommodate the plant. The plant

supplier may then use some firm to design the civil works, or else he passes this

also to the civil contractor.

Some plant suppliers, however, will not agree to this procedure, on the

basis that either they have no experience of construction work or do not wish

to be involved in it.

Construction using forms of management

contracting

An alternative to the promoter or his consultant drawing up and letting contracts

for construction of a project, is for the promoter to use a ‘management

contractor’ to do this. There are two main forms of management contracting.

(a) Construction management

This term is used to mean the arrangement under which the promoter

appoints a manager with his own staff to organize the letting and supervision

of construction contracts which are placed by the promoter. Design may be by

the promoter’s staff, or can be placed as a separate design package or packages

let by the promoter, but supervised by the manager.

An advantage is that an experienced construction manager should be able to

avoid or minimize the problems of co-ordinating contractors. Disadvantages

include the separation of the promoter’s design requirements from construction

supervision, and the extra cost of the manager and his staff.

(b) Management contracting

This is an arrangement more commonly adopted for complex building constructions

rather than for civil engineering works. Under it the promoter appoints

one contractor to manage all the construction inputs by letting contracts himself.

These ‘works contracts’ are effectively sub-contracts to the management

contractor. Many may be labour-only contracts, while others are for ‘supply and

erect’. The promoter may retain rights to approve or disapprove appointment of

a works contractor. The promoter may also let a separate design contract, which

is placed under the administrative charge of the management contractor.

Advantages are that the promoter is relieved of the responsibility for the

letting of the many sub-contracts used, and the co-ordination of their inputs to

meet the design required.

Disadvantages are that the speed of construction depends upon the ability

of the management contractor to get efficient sub-contractors working for

him. Some projects have been highly successful; others have suffered disastrous

delays. Also, if construction starts before designs are sufficiently complete,

any design alterations found necessary later can result in delays and

excessive cost over-runs. Atangle of legal claims and counter-claims can then

arise as each of the parties involved – the promoter, management contractor,

designers, and works contractors – tries to make others responsible for some

or all of the cost over-run. The price risk to the promoter is relatively high,

since the terms of a typical management contract permit extra costs and risks

to pass straight through to him from the works contractors.

Management contracting was initially much favoured for large building

developments with associated civil engineering work; but there has been considerable

debate concerning its merits and the number of jobs using the method

has declined.

Design and build procedures and other options

(a) Design and build or ‘turn-key’ contracts

Contracts of this type are often for a lump sum which can suit a promoter who

wants certainty of price, and who can be given a clear idea of what he is being

offered. For instance, the contractor may be able to offer an ‘off the shelf’

design for a type of structure he has previously built and can show the promoter.

Where this is not the case, the promoter may provide a drawing of

what he requires and stipulate design requirements, for example, design

processes and parameters to be used.

Advantages are:

• The promoter does not have to employ a separate designer.

• Construction can start before designs are complete and any consequent

changes found necessary are the contractor’s responsibility.

• Control of the design process permits the contractor to keep costs as low as

possible by such measures as – using parts of previous designs, minimizing

the need for complicated form work, and tailoring dimensions to suit

the contractor’s equipment.

• For uncomplicated or traditional civil engineering work, or repeat structures

of a kind the contractor has done before, a turn-key contract can give

a promoter a satisfactory job at lowest price.

• There is also a possible advantage that collaboration between design and

construction staffs can foster innovative design which reduces costs. But if

the tender period gives insufficient time for an innovative design to be

fully worked out, the contractor may think it too risky to allow for it in his

tender. If later, the innovation proves possible, the contractor benefits and

not the promoter.

Disadvantages are:

• If the design has yet to be formulated, the promoter has to leave most

details in the contractor’s hands.

• If the promoter employs a consultant to check the contractor’s design, he will

only be able to insist on compliance with matters specified in the contract.

• The promoter may need to employ an inspector to watch the contractor’s

construction.

• Bidding costs for other than simple structures are expensive, so contractors

may refuse to bid if more than three or four are invited to tender.

If the promoter does not employ a consultant or inspector to check the contractor’s

work, his only real control over its quality and the end result is his

checking of the packages offered by tenderers before awarding the contract.

This is not necessarily sufficient because, in the limited time available for tendering,

the contractor cannot work out all the details of his design nor specify

the exact nature of everything he will supply. Thus the promoter can suffer

disappointment at what he receives; and if he then wishes to make any

changes these may be very costly or even impracticable.

(b) Design, build and operate contracts

Under this type of contract the contractor is required to operate and maintain

the works for a period of perhaps 3–5 years after he has completed their construction.

The contract may be for a lump sum, a proportion of which is payable

in stages during the operating period, or income may be derived from sales or

charges – bridge tolls for example.

Advantages are:

• The contractor is given an incentive to design and construct well, in order

to ensure low maintenance and repair costs during the operating period.

This is useful to a promoter who, for instance, wants a road built, because

problems arising from faulty design or construction tend not to be revealed

except under two or three years’ trafficking.

• The operation provision reduces the promoter’s need to check the contractor’s

work.

• The maintenance provision keeps the contractor available to undertake

repairs during the operating period, though the promoter must have powers

to act if the contractor does not undertake repairs and maintenance properly.

Disadvantages are:

• The same as those listed for design and build contracts under (a) above.

• The contractor has to shoulder added risks so his price can be high.

• The contractor’s costs of bidding are higher than for a D&B contract.

Aproblem is that repairs or excessive maintenance could arise from unforeseeable

ground conditions or, in the case of a road for instance, from traffic

loading exceeding that specified in the contract, so occasions for dispute could

arise. The promoter will also be responsible for any repairs due to an inadequacy

in his specifications for design and construction. Where design, build

and operate (DBO) contracts are for provision of buildings and process plant,

such as for water or wastewater treatment, it is the quality of the equipment

and consequent output which is principally tested by the period of operation.

Thus problems can occur if faulty performance is partly due to conditions

arising which are not covered by the promoter’s specification.

Where a DBO contract is let on the basis that the contractor also finances the

project, associating with a bank for the provision of the necessary funds, the

operating period may then be long term, for 15–20 years or more. This is

typically a Private Finance Initiative (PFI) project, described in Section 1.7.

The risks on the contractor are then increased since they include a substantial

dependency on the terms of the income he is to receive. The promoter has the

cost of setting up a long-term supervisory system to cover the operation

period and may face the risk of circumstances arising which are not covered

in the original contract.

(c) Engineer, procure and construct contracts

An engineer, procure and construct (EPC) contract is a form of D&B contract

under which a design engineer or firm of design consultants heads a team

which includes an experienced contractor and perhaps a plant supplier. The

promoter specifies his project requirements in outline which the team designs

in detail in continued liaison with him. The EPC organization arranges and

manages construction, letting specialist work packages out as necessary to

suitable sub-contractors. The promoter pays the actual cost of the work plus a

fee, subject to a guaranteed maximum price, or to a target cost with an arrangement

for the sharing of savings or excess costs on the target.

(d) Partnering

There are two types: ‘term (or full)

partnering’ which covers an intention to carry out a series of projects together

or for a given period; and ‘project-specific partnering’, i.e. co-operation for one

job at a time.

Normally a promoter negotiates a partnering agreement with his consultant

(if he employs one) and a contractor of his own choosing, usually because of

past satisfactory experience of working with him. If competitive tendering is

required, then a selected list of contractors may be invited to bid – on the basis

of experience, quality of staff available, and costs plus charges for overheads

and profit, etc. (similar to cost reimbursement contracts outlined in Section 1.3).

But if open competitive tendering is used, the advantage of basing a partnering

agreement on past successful working with a contractor may be lost.

(e) ‘Term’ or ‘Serial’ contracting

This comprises letting an ordinary construction contract for carrying out a

series of works of an identical nature – re-surfacing roads, for example – for a

given period of a year or longer. The terms of the contract set payment and

other conditions for a series of similar works which are ordered from time to

time as they are needed.