Discuss the benefits of entering into a partnering relationship in the design and construction of civil engineering projects
Discuss the range of benefits that the client, contractor and supply chain can expect to see when entering into a partnering relationship in the design and construction of civil engineering projects. Explain what disadvantages are there and what management systems you would suggest to minimise them?
1.0 What is a partnering relationship in procurement?
Patterning relationship, partnering, or alliance, is another procurement method used in construction projects. The method indicates a collaborative approach where two or more parties collaborate to design finance, construct, and operate a public or private project. When two or more entities take up partnership agreements, then the skills and expertise of both entities are used. Partnership implies more than a financial arrangement, and it is sustained through trust and personal friendships. One party may have expertise in design, while the other has expertise in construction and material supply. The project efficiency, quality, control over cost and schedule, is improved, when diverse skills are brought together. Trust, teamwork, commitment, common objectives, and communication between the partners are very important. Attempts by one party to dominate over the other, can result in the partnership breaking off. Strong and clear contracts are essential for the partnership to succeed. Risks and rewards are shared between the project partners on equitable business (Bygballe et al. 2010).
Contracts and costs are managed on an open book basis, with the project estimates approved by all parties. The partners can either share the costs equally, or distribute the costs, as per their funding capacity. Managing the project is done either jointly or by sharing the responsibilities. A project manager oversees and manages all the project activities. The nature of the project is important in deciding on the revenue sharing arrangements. For example, in a large commercial complex construction project, the partners may decide to obtain a share in the income obtained from selling or leasing the space. In addition, each partner is given a certain amount of the real estate, which he can sell or lease. In other cases, a partnership firm is formed, and the partners obtain equity, equal to the investment (Roe & Jenkins, 2003).
2.0 Advantages and disadvantages of partnering relationships
Several advantages and disadvantages are evident in this type of procurement method as follows;
- The advantages are that there is a pooling of resources, and each party contributes in the form of funds, design and project management expertise.
- The project has flexibility, in terms of project scope, features, design changes, procurement methods, and other aspects.
- The main disadvantages are that the whole project depends on trust and close relationship between the partners. If there is fallout between the partners, or if one partner becomes insolvent, the project will come to a standstill.
- Unless the contract terms are clear, liabilities of a partner are transferred to the project. This means that if a partner goes insolvent, then the creditors can claim a transfer of the partnership in the project.
- Partnership projects can also develop a lenient attitude and censure, resulting in penalties in case a partner delays executing the assigned responsibilities.
- The method is not cost efficient since there is no competition for the services offered. A partner can inflate the costs and other partners often accept the inflated prices. This can prove detrimental in the end (ECI, 2014).
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