UK construction sector context 11

If the essential relationship between risk and price were recognized, it would have another important effect. It would render unnecessary any discussion of such emotive issues as whether the passing of the risk to one party or the other contractor is ‘unfair’ or ‘immoral’. As Wallace (1986) points out, any discussion about whether or not a particular risk should be so included in the price is a discussion of policy, and not of ‘fairness’, ‘morality’ or ‘justice’. But this is only true to the extent that contractors and sub-contractors can truly be said to have the option as to whether to price for risk.

1.3.3The involvement of participants

An important aspect of the way that people belong to groups is the partial involvement of participants. Any member of an organization is typically a member of many organizations simultaneously. People have interests outside their work: they may be members of professional institutions, their project membership may arise as a consequence of their belonging to a firm, and so on. In other words, it would be wholly wrong to expect exclusive and total devotion to a project from those who take part. It is inevitable that participation in any organization, project or firm is partial (Scott 1981).

The piecing together of each of the specialist skills that are needed produces an organizational structure and a pattern of relationships that are temporary. It is temporary because the project team will be disbanded after the project is completed as the team is no longer required. This feature is another of the distinguishing features of construction project management and is sometimes referred to as the creation of a temporary multi-organization (Cherns and Bryant 1984). This phrase indicates not simply the transience of a project but also the fact that people become involved by virtue of their membership of another organization; whether professional institution, firm, partnership or other group. In order to understand the way that contractual relationships are regulated in construction projects, it is important to note that everyone who becomes involved with a project presumably intends to detach from it at some point. For this reason, organizational structures in construction projects are constantly changing as different people come and go from the collective effort.

1.4PROCUREMENT METHODS

The dictionary definition of procurement is the acquisition of things, usually on behalf of someone else (Brookes 2003). ‘Construction procurement’, in simple terms, often refers to the strategic process of how contracts for construction work are created, managed and fulfilled, as in the BS ISO 10854 which uses the term in this narrowly defined sense. But the term is often used to embrace more than this. The procurement process in construction typically involves much more than mere purchasing, and its definition usually extends to funding and organizing construction at all stages of development (Hughes et al. 2006, British Standards Institution 2011). A comprehensive definition currently under discussion in the drafting committee of BS8534 is:

12 Construction contracts

The strategic processes of funding, organizing, managing and decisionmaking in a construction project (or programme) at all stages of development, including the creation, management and fulfilment of contracts for construction work, consultancy and advice throughout the supply chain networks that collectively achieve construction output.

Therefore, in construction, the procurement of buildings and structures requires an understanding of a complex web of ideas from a range of academic disciplines. Most large organizations have a procurement department that deals with the purchase of day-to-day supplies for the business. The acquisition of buildings and structures is typically far more complicated than that, and requires specialized skills to manage it. Many different companies and organizations interact during the process. As we have seen, some have statutory roles, some specialize in design, some in construction and so on. Components and materials have to be brought together in a unique combination and this requires great technical understanding. How businesses operate in this context requires a good understanding of business economics and of risk. How a construction project team is assembled and evolves during a project requires an appreciation of organizational theory and of the management of people. How contracts are used to tie different roles into a project requires an understanding of contracts and contract law; the fundamental purpose of this book.

This introductory Chapter has described in very general terms the types of participant in the construction process. It has highlighted some of the reasons that people become involved and outlined some of the formative influences of the major interest groups. The fact that each of the participants has his or her own reasons for becoming involved is important for those who seek to control contractual relationships and avoid disputes. The characteristic patterns of participants’ involvement and the disposition of risk among them constitute the procurement method, or procurement system for a project. A range of procurement methods is described in subsequent Chapters, after a discussion of the major roles typically involved.