UK: Procurement Options For Your Middle East Project

Last Updated: 27 March 2015
Article by David Savage


Procurement in general refers to the process of obtaining a product or service. Specifically in the construction industry, it means the way in which the responsibilities for design and construction of a construction project are allocated, including the risks and responsibilities associated with the project.

There are several procurement options available, each with its own advantages and disadvantages. It is therefore vital to identify the client's key requirements in order to identify which procurement routes would be best suited for a particular project.

The key client requirements to consider are:

1.1 time;

1.2 price; and

1.3 quality.

In addition to those three major factors it is useful to consider the value, size and nature of the project as well as the experience and expertise of the project team.


The main procurement routes are:

2.1 Traditional

The key element of the traditional procurement route is that the design function is kept separate from the construction of the project. The employer engages a professional team to design the works and a contractor to execute that design (see Figure 1).

The same professional team will administer the building contract on behalf of the employer.

The employer's design team is usually responsible for all design of the project and the contractor carries out the development in accordance with the supplied design. There is a clear division of risk between the employer and the contractor, with the design team being responsible for design and the contractor being liable for construction. The architect will generally fulfil the role of project manager responsible for endeavouring to achieve the time, cost and quality requirements of the project.


2.1.1 certainty of design as all the detailing should be worked out by the professional team prior to the contractor pricing the works;

2.1.2 employer retains control of design (but bears risk of errors and omissions in tender information);

2.1.3 with the contractor building to a complete design, it should be easier for the employer to minimise time and cost overruns;

2.1.4 there should be greater certainty in the fixed building contract price as the design is already completed before construction;

2.1.5 as the contractor has limited or no input into the design, traditional contracting may be particularly suited for luxury projects as the contractor does not have the discretion to institute design changes in order to save on costs.


2.1.6 takes longer than other forms of procurement as limited scope for overlapping design and construction;

2.1.7 design risk (i.e. the cost of any design changes required) lies with the employer;

2.1.8 little incentive to the contractor to point out any problems or missing information prior to signing of the contract, as the contractor is likely to be able to claim additional fees and an extension of time in respect of any variations;

2.1.9 there is less flexibility for the employer to institute design variations once construction has begun and, generally speaking, the overall timescale from design stage to completion of construction is likely to be longer than the alternatives;

2.1.10 variations by the employer during construction may increase costs;

2.1.11 adversarial – "them and us" syndrome between contractor and professional team;

2.1.12 lump sum approach encourages contractors to "bid low and claim high";

2.1.13 split design responsibility – often difficult to allocate blame.

2.2 Design & Build

The contractor will carry out the design of the project and submit a price for meeting the 'employer's requirements' for the building. Normally the professional team produce the employer's requirements and then either the contractor employs his own professional team (see figure 2.) or the employer's professional team are novated to the contractor (see figure 3.)

Commonly the contractor is made responsible for all design and construction in the project, referred to as "single-point responsibility".

Design and build is frequently used for budget and business developments (where the highest level of quality is not required) as it offers the benefits of cost and programme certainty. However, the employer will have less opportunity to control development once construction has begun.

Design and build contracting is occasionally referred to as "package" or "turnkey" contracting. This is slightly inaccurate as a true package or turnkey contract is generally considered to be one where the employer has little or no input into the design. This route should perhaps be avoided unless an employer is highly experienced.

The employer needs to fully understand the risks involved and ensure that these are allocated and documented accordingly. Whichever procurement route is chosen, strong teamwork will be required for the development to be designed and built to budget and schedule, and in accordance with performance objectives.

There is a tension between over-detailed specification (undermines the ability of contractor to propose economic solutions) and the need for quality control (risk that the contractor will cut corners and provide the minimum quality required to meet the brief).


2.2.1 one point of contact (and responsibility) for the project;

2.2.2 greater price certainty;

2.2.3 popular with funders due to single point responsibility;

2.2.4 design and build imposes a discipline, not least on the employer, to define the brief fully at an early stage. Given this, the advantages of overlapping design with construction can lead to a shorter duration;

2.2.5 given the higher degree of co-ordination at an earlier stage, through the single point of responsibility, variations during construction tend to be fewer and the risk of post contact price escalation reduced;

2.2.6 the design risk lies with the contractor;

2.2.7 brings the skills of the contractor to the design; ECI etc

2.2.8 in terms of liability for defects, the employer need not establish who is responsible for the defect nor whether or not the defect stems from defective design or construction. The contractor will be liable. It is therefore a relatively low risk process for the employer;

2.2.9 it is useful for:

  1. standard building types (e.g. industrial or warehouse use) and particularly where early return on capital investment outweighs considerations of design excellence and capital cost;
  2. buildings using proprietary systems where the manufacturer of the system might well become the main contractor e.g. repetitive housing or low cost hotels based on assembly of factory pods; and
  3. building types in which some contractors have become specialist e.g. highly serviced laboratory buildings.


2.2.10 tends to be more expensive – contractor will charge a premium for accepting the design risk;

2.2.11 expensive to change once brief fixed;

2.2.12 design and build, by its very nature, is a rigid system, which does not allow the employer the benefit of developing requirements and ideas, despite the facility for accommodating variations;

2.2.13 where several tenders are invited, comparison of these can be difficult, as the end product in each case is different and the final choice will be influenced by subjective judgement;

2.2.14 any variations required by the employer, after signing a contract, can prove expensive and difficult to evaluate as the employer is one stage removed from the designers. Because of this, the contract is less suitable for an employer who is not quite sure what the finished building should be like and may want to make changes;

2.2.15 there is always a risk with regard to the quality of work. If the original brief is not precise and the specification offered by the contractor equally vague, there is a temptation for the contractor to reduce standards – the contractor is incentivised to construct the works as cheaply as possible;

2.2.16 where the design team's appointments are novated to the contractor, conflicts of interest (between the professional team and the employer and the professional team and the contractor) can arise;

2.2.17 following novation of the design team's appointments to the contractor, the employer has no direct input for checking or improving quality unless he appoints other consultants;

2.2.18 some design and build contracts are qualified in some respects (e.g. ground conditions or the inclusion of provisional sums) which, to a certain extent, can negate the employer's ideal of an early known financial commitment;

2.2.19 the contractor will usually seek to uplift its price for the risk it is taking. This can be managed by providing as much information as possible to the contractor and working up the design pre-tender;

2.2.20 the form is less suitable:

  1. where architectural quality is of overriding importance;
  2. where an employer requires a building tailored to his special requirements;
  3. where there are complex planning or environmental issues;
  4. where complex refurbishment or conversion work (particularly of historic buildings) is required, as the exact scope of the building works cannot be defined until the structure has been opened up with frequent or unexpected variations often arising thereafter;
  5. where the brief cannot be defined, or the building function is of great complexity, so that a protracted period of research and investigation is necessary at the outset and might continue once work has commenced.

Two-Stage Design and Build

In 'two-stage design and build', the contractor is initially appointed on a pre-construction services agreement to assist with the preparation of the employer's design. The main contract is then re-tendered.


2.2.21 the contractor's design skills and experience can be brought to the project at an early stage;

2.2.22 minimises the contractor's risk as it has an opportunity during the pre-commencement period to influence the design and to identify and price risks;

2.2.23 attracts contractors' interest in projects while still allowing a firm price to be agreed - some contractors will not tender for one-stage design and build projects.


2.2.24 additional cost;

2.2.25 element of competition lost as the contractor initially appointed is usually retained for the second stage.

Design and Build – contract choices:

2.2.26 JCT Design and Build Contract 2005 (Revision 2, 2009) – still most used, benefit of familiarity;

2.2.27 JCT Major Projects – more control handed to contractor, which employer may want;

2.2.28 NEC3 – this contract is not designed to make the contractor a single point of responsibility – it will require amendment to achieve this.

2.3 Construction Management (only recommended for experienced employers)

The work is divided into several 'packages', each of which will be a separate trade contract with the employer.

The employer will employ a construction manager to manage the various packages of work and directly engage trade contractors to carry out each trade contract package (see figure 4.).

A construction manager is tasked to ensure that the development is designed and completed. The construction manager is responsible for instructing and co-ordinating the professionals and the trade contractors.

This form of procurement is generally only used on projects where there is a shortage of time and it is important that the contractors commence work on site as soon as possible.

2.4 Management Contracting (only recommended for experienced employers)

Management contracting is a variation of construction management where a management contractor (rather than a construction manager) employs the trade contractors, with the professionals being retained by the employer.

The work is divided into several 'packages', each of which will be a works contract. The works contractors enter into contracts with the management contractor (see figure 5.) However the management contractor is not directly responsible for default by the works contractors.

The management contractor is paid a fee plus site set-up (organisation) costs. The management contractor is engaged early on to advising on programming, buildability, packaging of work etc.

Advantages for CM and MC:

2.4.1 for the contractors only, arguably the most risk-free form of construction;

2.4.2 the professional team will focus first on the design of the early packages, so those packages may be let and the work executed whilst the design for later packages is progressed. This means an early start on site and more flexibility;

2.4.3 an employer can emphasise quality as it has the flexibility to instruct changes throughout the development and it allows for early commencement of construction since the development does not need to be fully designed in order to let early work packages. As each package of works is being tendered to specialists by the employer, construction management should lead to the lowest development cost;

2.4.4 potentially cheaper as there is no main contractor profit.

Disadvantages for CM and MC:

2.4.5 high risk for employer - the risk of interaction between the packages and design risk lies with the employer;

2.4.6 there is less cost and programme certainty – the final price will not be known until the final account of the last trade contract;

2.4.7 much more administration for the employer;

2.4.8 less popular with funders;

2.4.9 employer bears ultimate risk of insolvency or default by works contractors / trade contractors;

2.4.10 for MC only, management contractor obliged to pursue defaulting works contractors, but liable only to the extent of recovery;

2.4.11 for MC only, no real incentive for management contractor to act in best interests of employer.

2.5 Bespoke/ Hybrid Procurement

These are particularly common in international projects particularly in the engineering sector. Examples include EPC procurement, multi-contracting procurement bespoke or hybrid procurement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

David Savage
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.