United Arab Emirates
Answer ... In the United Arab Emirates, the traditional method of procurement remains the most commonly used. Employers often adopt a single-stage selective tendering process whereby the design consultant is engaged to complete the design before employing the contractor on a build-only basis.
More recently, however, the two-stage tendering process has become increasingly attractive to developers involved in complex and large-scale projects. In the first stage, the contractor is engaged during the design phase to develop the design and concept together with the employer on the basis of a pre-construction services agreement. In the second stage, the contractor and employer enter into a design-and-build lump-sum contract.
United Arab Emirates
Answer ... By adopting a two-stage tendering method, the employer and contractor may exchange a substantial amount of information on the requirements of the project during the design stage. Moreover, most subcontract packages will have been tendered at the first stage. In fact, by way of a pre-construction service agreement, the employer and contractor may agree on:
- the total value of the subcontract packages;
- the price for preliminaries;
- overheads; and
- profit margins.
Having this agreement in place prior to entering into the building contract enables the employer and contractor to agree on a realistic lump-sum price for construction as early as possible.
Notwithstanding the above, involving the contractor at such an early stage of the design may result in the contractor gaining significant leverage when negotiating the price for construction, given its familiarity with the design and concept by the end of the first stage. This leverage may be exploited to inflate the contract price.
United Arab Emirates
Answer ... The choice of procurement method is influenced by, among other things:
- the employer’s management capabilities;
- the desired quality standards; and
- cost objectives.