The Best Procurement System to Use in Sri Lanka

Arafath A

May 2015

Expect where stated otherwise, this Dissertation is based entirely

on the authors own work

Acknowledgement

I wish to thank everyone who has offered fullest support and cooperation for my successful
project. I express my indebtedness to each and every individual who has spent time to make
this project in shape for our career.

First and foremost, I would like to express my appreciation to my Supervisors Ms. Vajira
Edirisinghe for their guidance throughout the preparation of this dissertation. I would also
like to extend my deepest gratitude to all my friends who have helped me directly and
indirectly as well.

Finally, I would like to extend my sincere thanks to all the individuals from the industry who
had given me all the necessary information regarding the project.

Table of Contents

Acknowledgement

Table of Contents

ii

The Best Procurement System to Use in Sri Lanka

2

List of Abbreviations

CHAPTER ONE
1.1

Background.................................................................................................................- 1 -

1.2

Aim.............................................................................................................................- 3 -

1.3

Objectives...................................................................................................................- 3 -

1.4

Methodology...............................................................................................................- 3 -

1.4.1

Introduction..-3-

1.4.2

Research Approach...-3-

1.4.3

Research Process.. -4-

1.4.3.1 Literature Review..-41.4.3.2 Research Problem Statement.-41.4.3.3 Case Study Design-41.4.3.4 Data Collection.-51.4.3.4.1 Data Collection Technique-51.4.3.4.2 Interview Structure and Process...-5-

1.5

1.4.4

Data Analysis....-5-

1.4.5

Summary...-6-

Structure of the Study.................................................................................................- 6 -

CHAPTER TWO
2.1

Introduction................................................................................................................- 7 -

2.2

Importance of procurement systems...........................................................................- 8 -

2.3

Building Procurement System....................................................................................- 9 -

The Best Procurement System to Use in Sri Lanka

3

2.2.1

Separate Procurement System...........................................................................- 10 -

2.2.2

Integrated Procurement Systems.......................................................................- 11 -

2.2.3

Management Oriented Procurement System.....................................................- 12 -

2.2.4

Collaborative Procurement System...................................................................- 13 -

2.4

Factors which Need to be Considered for the Selection of Procurement System....- 13 -

CHAPTER THREE
3.1

Introduction..............................................................................................................- 16 -

3.2

Procurement Systems Practice in Sri Lanka.............................................................- 17 -

3.3

Reasons for non availability of other procurement options in Sri Lankan Context. - 19 -

3.4

Barriers for Adapting Alternative Procurement System in Construction Industry of Sri

Lanka ..................................................................................................................................- 20 3.3.1

Factors Related to Clients.................................................................................- 21 -

3.3.2

Factors Related to Contractors..........................................................................- 22 -

3.3.3

Factors Related to Consultants..........................................................................- 22 -

3.3.4

Environment of Government and Political.......................................................- 23 -

3.3.5

Factors Related to Research and Development (R&D) Institutes in Sri Lanka - 23 -

3.3.6

Factors Related to Professional Institutes in Sri Lanka....................................- 24 -

3.3.7

Factors Related to Standard Conditions of Contract.........................................- 24 -

CHAPTER FOUR
4.1.

Introduction..............................................................................................................- 25 -

4.2.

Case Study- Divisional Hospital at Kattankudy.......................................................- 25 -

4.2.1

Clients Requirements.......................................................................................- 26 -

4.2.2

Project Characteristic........................................................................................- 26 -

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4

4.2.3

Details of the project.........................................................................................- 27 -

4.2.4

Reason for the Separated Procurement System for this Project........................- 28 -

4.2.5

Reason for Avoiding the Other Procurement Systems......................................- 29 -

4.3.

Case Study- Base Hospital at Chilaw.......................................................................- 30 -

4.3.1

Satisfactory of Project Result............................................................................- 31 -

CHAPTER FIVE
5.1

Introduction..............................................................................................................- 32 -

5.2

Traditional Procurement System..............................................................................- 32 -

5.2.1
5.3

Design and Build Procurement System....................................................................- 34 -

5.3.1
5.4

Advantages and Disadvantages of Traditional Procurement System................- 33 -

Advantages and Disadvantages of Design and Build Procurement System.....- 34 -

Analysis the Kattankudy Divisional Hospital Project under D&B procurement system
..................................................................................................................................- 35 -

CONCLUSION AND RECOMMENDATIONS .............................................................. - 38 REFERENCES ...................................................................................................................- 41 -

List of Abbreviations
The Best Procurement System to Use in Sri Lanka
5

PSP

: Procurement Selection Parameters

ICTAD

: Institute for Construction Training and Development

SL

: Sri Lanka

UK

: United Kingdom.

D&B

: Design and Build

PFI

: Private Finance Initiative.

PPP

: Public Private Partnership

JV

: Joint venture

BOQ

: Bill of Quantity

BOT

: Built, Operate, Transfer

BOO

: Built, Operate, Own

BOOT

: Built, Operate, Own, Transfer

GDP

: Gross Domestic Product

BOI

: Board of Investment

R&D

: Research and Developments

ADB

: Asian Development Bank

CHAPTER 1
INTRODUCTION
1.1

Background

In any country, the construction industry plays a major role, which is given that considerable
contribution to the national economy (Rameezdeen, 2002). Thus well being of national
construction industry is of paramount importance for economic development and long term
growth of a country.
According to Macdermott and Rolwlinson (1999) the acquisition of new buildings or space
within the buildings, either by directly buying, renting or leasing from the open market or by
designing and building the facility to meet a specific need.

The Best Procurement System to Use in Sri Lanka

6

Each and every project in construction industry has its own style. Suitable procurement
systems should be chosen for the construction industry projects so that we can avoid
unwanted problems and can quickly achieve the desired goal. Selecting the wrong
procurement system may cause project failure and dissatisfaction of overall performance
(Rameezdeen, 2006). Client/ consultant should consider various factors which are influencing
the procurement systems in regard to the project. It is possible to reduce the overall project
construction cost by the average of 5% through the appropriate procurement system (Alhazmi
and McCaffer, 2000).
Selection of appropriate procurement system is very difficult for the clients as each
procurement system has its own characteristics and disadvantages. Selecting the right
procurement system is crucial and is a very complex task for the client and/or the project
team. According to research, when selecting procurement system the client/ consultant should
consider various factors, such as; client requirements, objectives and external environment
factors (NEDO et al., 1985, cited Luu et al., 2003).
Clients are presently using different types of procurement routes due to greater advantages
being achieved by alternative procurement systems. This new procurement method has
shown, when implemented to give much better results than the previous system therefore the
new method is now been introduced (Cheung et al., 2001).
The instantaneous need in the Sri Lankan construction industry the selection criterion for a
procurement method is very vital. According to Najeeb (2005), Rameezdeen (2007), various
different procurement systems are rarely used in Sri Lankan construction industry. A review of

current practice of procurement system in Sri Lankan construction industry reveals that the
majority of projects are procured using traditional Measure and Pay procurement method
(Rameezdeen, 2007)
The clients are hesitant to choose a procurement method other than the traditional measure
and pay in Sri Lanka. It can be reasoned out as the poor awareness, afraid to take the risk on
the other systems and the knowledge about the procurement systems existing. Furthermore, it
can be said the industrial practitioners are not willing to implement the different types of
procurement. This premonition should be taken out from the industry for its constant
development in future.

The Best Procurement System to Use in Sri Lanka

7

SL construction industry use ICTAD document, published by the Institute for Construction
Training and Development (ICTAD). In the United Kingdom (UK) construction industry
many routes are used including Design and Build. According to Royal Institute of Charted
Surveyors (RICS) research, in UK Design and Build (D&B) procurement is used since 1995.

1.2

Aim

Identify and analyze the factors influencing the The Best Procurement Route to Use in Sri
Lanka.

1.3

Objectives

1. Identify and analysis the different types of procurement systems which are used in the
construction industry and identify the factors to be considered for the procurement
selection.
2. Analyse and identify the current procurement systems in Sri Lanka and the barrier for
alternative procurement system.
3. Identify and analyse the selection of suitable procurement system for two projects and
investigate the factors that were considered before selecting the procurement system
also investigate the satisfaction of overall performance.
4. Compare the traditional design and build procurement system and analyse the
Kattankudy hospital project under Design and Build procurement system.

The Best Procurement System to Use in Sri Lanka

8

1.4

Methodology

1.4.1 Introduction
The aim of this chapter is to describe the research process of this study.

1.4.2 Research Approach

Research approaches are about establishing research activity, including the collection
of data in accordance with the research aim (Easterby-Smith et al., 2002). This research study
adopted case study research methodology in order to accomplish an in-depth investigation
regarding the selection of construction The Best Procurement System to Use in Sri Lanka.
Case study research method provides an opportunity for the depth of the analysis of many
methods (Kumar, 2005). Case study research method was selected mainly because it provides
access to real context of the construction procurement practice and investigate to find out the
best suitable procurement methods to construction project in Sri Lanka.

1.4.3 Research Process

The research process of this study, which was based on case study research method covered
the following stages: literature review, problem statement, case study design, data collection,
data analysis, and conclusion.
1.4.3.1 Literature Review
The literature review was started with background study which was conducted to identify
broader research area of procurement methods used in construction industry and problems for
the interested study. To address the research problem, aim, objectives, methodology, scope
and limitations for this study. Then the comprehensive literature review was conducted to
explore the theoretical status of the research such as definitions, types of construction
procurement, selection of construction procurement method and effects of construction
procurement. The literature search was done in publications such as conference papers, web
publications, thesis, dissertations, books and journal articles available in common databases
1.4.3.2 Research Problem Statement
The research problem emerged as what is the best suitable procurement method benefits the
constrctuion projects Sri Lanka?. This research problem was strengthened through a
comprehensive literature review.
1.4.3.3 Case Study Design

The Best Procurement System to Use in Sri Lanka

9

In case study design there were two aspects to be considered: identification of case study
analysis method and case selection. of case study analysis method was contracting
organization since this study was focused to investigate the methods used in the costruction
project and to find out the best suitable procurement method . Because, the investigation to be
done within construction of different construction organizations in order to achieve reliable
outcome. Second step was selection of cases, where researcher obtains a sample that is
uniquely suite to the study.
Three Studies were carried out in completed hospital construction sites of C3 - C5 grade
contracting organizations in this research, based on access and time limitations. This study
selected multiple cases to provide multiple sources of evidence.

1.4.3.4 Data Collection

1.4.3.4.1 Data Collection Technique
Semi-structured interviewing was used as a data collection technique in this research study.
Main purpose of semistructured interview is simply to collaborate certain facts that the
investigator already thinks that have been established (Yin, 1984). In this research study
semi-structured interviewing was carried out among related professionals (eg. Resident
Engineer & Project managers) based on their past experience to formulate solutions for the
best procurement selection in the construction process. Having selected semi-structured
interviewing as data collection techniques, the next sections present detailed information of
such methods.
1.4.3.4.2 Interview Structure and Process
the interview guidelines of this study were mainly designed to capture data related to the
objectives of the study and the interview questions were developed based on the literature
review. The interview guidelines, the first approach is to identify the background information
of the selected project. The second investigate the current situation of procurement method
used for the project. The third section explored barriers, benefits and best practices of
procurement selection. In this research study, these interviews were carried out with project
managers and project engineers of selected construction sites within three case studies. This
study expected to select interviewees who often have direct connection with the project
decision making process. In absence of such criterion (due to availability of such personnel
and access on to them) interviews were conducted between different roles of the construction
sites who were considered as most appropriate. All interviews were conducted within site
The Best Procurement System to Use in Sri Lanka
10

offices. During the interview each interviewee was asked for information, opinions and
insights based on an identical set of questions. This approach increased the comparability of
results and facilitated the organization, analysis and evaluation of information collected.
Face-to- face interviews were held with the selected participant of each case study. Most of
interviews were carried out in English medium. The data collected through the readable
version of interview transcripts was developed through manual transcribing. To address moral
issues during the interview process.

1.4.4 Data Analysis

The sequence for coding was based on the order that the interviews were held. First, similar
concepts were identified by going through each sentence in each transcription. Then,
concepts were coded under main themes and or sub themes. Having identified responses that
fall within different themes, discussed the main themes and sub themes emerged across cases
and developed detailed cross-case analysis.
Then final stage of the data analysis was conclusion drawing. According to Naoum (1998),
conclusions include a note of key issues or findings of the research study. Therefore, the
conclusion included all key findings through the empirical study and suggestions and
recommendations for the improvement of particular context researched.

1.4.5 Summary
This chapter has presented research approach and research process use in this research study

1.5

Structure of the Study

Chapter One:

This chapter presents the background to the study, aim, objectives,

methodology and structure of the study.

Chapter Two:

This chapter discusses the various types of procurement systems which

are being used in the construction industry and identifies the factors
that are needed to be considered before selecting the appropriate
procurement system.

Chapter Three:

This chapter discusses the current procurement systems used in Sri

Lanka and the barrier for the alternative procurement systems in terms
of internal and external environmental factors.

The Best Procurement System to Use in Sri Lanka

11

Chapter Four:

This chapter discusses about the suitability and unsuitability of

procurement system for two projects and the factors needed to be
considered as well as analysis of the overall project satisfaction.

Chapter Five:

Analysis of the advantages and disadvantages of Traditional and

Design & Build procurement systems and analysis of the Kattankudy
divisional hospital under design and build procurement system.

Chapter Six:

Conclusion and Recommendation.

CHAPTER 2
BUILDING PROCUREMENT SYSTEM

2.1 Introduction
There are several definitions for construction procurement given by various sources.
Procurement is understood simply as getting things done. According to Love et al. (1998),
Masterman (2002), McDermott (1999), describe client adopt the organisational structure to
manage their construction project in terms of design and construction (cited Rameezdeen and
Silva, 2002). Further, Mohsini and Davidson (1989) cited Peter McDermott (1999) defines
the acquisition of new buildings or space within the buildings, either by directly buying,
renting or leasing from the open market or by designing and building the facility to meet a
specific need.

The Best Procurement System to Use in Sri Lanka

12

The increasingly complex and varying demands placed upon its construction industry by the
clients not only come about from the need to offer more refined commercial and industrial
working environments at minimum cost and maximum speed. But additionally from the fact
that client organisation are also complex with different categories of customers requiring
discrete solution to their procurement needs (Masterman and Gameson, 1997).
On the other hand clients or property developers influence their professional advisers and the
contractual arrangements and select a contractor with right commitment to meeting project
targets. Furthermore inexperienced clients are lead by their advisors and contractors and are
offered what the construction team thinks is best. In balancing all these difficulties proper
selection of procurement is extremely vital.
According to Bennett and Grice (1999), cited Chan et al (2001), the correct choice of
construction procurement method will lead to a successful project ending. However the result
of a wrong choice of procurement method will lead to an overall general dissatisfaction or
even project failure. Therefore, the appropriate procurement method is essential to achieve
the goals and to also achieve the best value for money.
This chapter explains the general classification of procurement methods, which is used all
over the world. And briefly discuss the factors which are influencing the section of
appropriate procurement method.

2.2 Importance of procurement systems

If one would like a second-hand building the prospective owner can obtain one by looking at
what is available on the market and at the price that it is marked at before then making a
choice. One can even do this with certain kinds of new building and buy a small home or a
small industrial unit in the same way that one would buy a car or TV set. However, this
method is not available in the case of other types of new buildings, which are designed and
constructed to individual order and it is the difficulties of procurement under these
conditions.
Different types of clients determine their project success by different criteria or by different
weightings of the basic criteria, and it are necessary for members of the construction industry
The Best Procurement System to Use in Sri Lanka
13

to be aware of these various basic characteristics in order to assist them in the selection of the
most appropriate procurement system for their particular project.
The choice of procurement system is a key strategic decision. Clients of the construction
industry depend upon the advice given in order to decide the most suitable method of
procuring their project from start to end. The client's requirements need to be matched
however this can sometimes prove difficult as the client tends to be vague and inaccurate.
The capability of industry is important especially if customer satisfaction is to be attained and
. Each method has different demands, risk allocations and responsibilities. The studies of
NEDO (1985), Masterman (2002), Frank (1998) (cited Rameezdeen and Silva, 2002) and
different authors has given different definition and according to that they are summarized in
to four broader classifications in this study as follows,

2.3Building Procurement System

There are several standard routes or processes in relation to the construction stage. These
need early deliberation when procuring construction. Each method has different demands,
risk allocations and responsibilities. The studies of NEDO (1985), Masterman (2002), Frank
(1998) (cited Rameezdeen and Silva, 2002) and different authors has given different
definition and according to that they are summarized in to four broader classifications in this
study as follows,
Separated

Integrated

Management Oriented

Collaborative

Measure & Pay

Design and Build

Management Contracting

Partnering

Lump Sum

Package deal

Construction Management

Joint Venture

Prime Cost

Turn Key
Develop & Construct
Private Finance Initiative (PFI)

The Best Procurement System to Use in Sri Lanka

14

Figure A Contract Procurement Categories

(Source: Masterman, 2002)

2.2.1 Separate Procurement System

The separate procurement system is a very common contracting method in the construction
industry. It was popular until the 1960s, which it was then called a Traditional System. The
main features of traditional system are rigid separation of design from construction
(Masterman 2002, Samuel 2010).

Usually client appoints the consultant team to verify the design. This team will help to
complete the project according to the clients satisfaction. Once the design completed by the
consultant team, then it is used as the basis of a competitive bidding process to select an
appropriate contractor (Samuel, 2010).

Lead designer of the project has to go through different stages such as design development,
tendering, contract administration, supervision of works and finally handover the completed
project. There are three sub-categories under this system, namely;

The Best Procurement System to Use in Sri Lanka

15

Measure and Pay Contract

This contract is being used in world at large. In this method, the contractor
adopts some form of measurement and is paid for the work on the basis of
quantity multiplied by rate, based on BOQs, which is prepared from
drawings, specifications and agreed by contractor (Rameezdeen and Silva,
2002).

Lump Sum Contract

Contractor enters into a contract for a fixed price, but in single sum for the
total contract work and not intended to be adjusted by variation or
reimbursement (Bagnal et al, 1999)

Prime Cost Contract

The contractor is appointed by competition or negotiation. They are receiving
only the agreed cost of the work and an agreed amount to cover profits. There
are several types of prime cost contracts available as Cost plus percentage cost
plus fixed fee, target cost (Mark et al. 2007).

2.2.2 Integrated Procurement Systems

This procurement system calls as implies, basically the design and construction are integrated
together (Masterman, 2002). The consultant is appointed on the behalf of client, and then the
consultant will give the responsibilities to the main contractor to complete the whole project
accordance with the agreed performance specification. The contractor is then responsible for
the design and construction risk, which gives greater protection for client. There are some
variants under this system.

Design and Build Contract

The contractor delivers the project to the client through the simultaneous work
of design and construction. For this system, the ideal building projects are

The Best Procurement System to Use in Sri Lanka

16

those that can be well defined by the client during the bidding and negotiation
stage (Harris and McCaffer, 2006).

Package Deal Contract

Sometimes this procurement system is called as Design and Build (Ashworth, 1996).
The contractor is responsible for the whole project such as; design, planning, controls
the construction and generally satisfying the clients requirements (Ashworth, 1996).

Turn Key Contract

When the project is completed it can immediately start using the project since
it will have been fully equipped including furnishings by the contractor

(Aswroth, 2006)
Develop and Construct Contract
The client assigns design consultants to prepare conceptual design drawings .
Once assigned the contractor will complete the design and construct the
project (Samuel et al, 2010).

Private Finance Initiative (PFI)

It is a type of public private partnership (PPP) where project financing rests
with the private sector. This allows combining with resource of the public and
private sector in the quest of the more efficient service provision (Bagnall et
al., 1999). Major variants are;
BOT Built, Operate, Transfer
BOO Built, Operate, Own
BOOT Built, Operate, Own, Transfer

2.2.3 Management Oriented Procurement System

The management orientated procurement system tries to bridge the gap between the design
and construction process (Rameezdeen, 2002). This famously has two widely practicing
variables in the industry all over the world. Which are:

Management Contracting

The Best Procurement System to Use in Sri Lanka

17

The contractor appointed on the basis of fee in the early stage which means,
he/she entering in the design stage to assist and advice the design team. He/she
is the responsible for the work carried out by separate work contractor (Potter,
1995).

Construction Management
The contractor is appointed to manage the construction process on the basis of
fee. He/she supervise the trade contractors and may coordinate the work of
design team (Porter, 1995)

2.2.4 Collaborative Procurement System

The basic feature of collaborative procurement systems is the collaboration between two or
more parties to achieve successful project objectives through fair dealing, commitment, and
shared investment (Valanne and Huon 1999, cited Wipulanayake 2004).There are two major
variants;

Partnering
It is a long term contractual relationship between two or more organisation.
This relationship requires openness between the parties, trust and an
understanding of each others individual expectations and values (Sir Michael
Latham 1994, Construction Industry Institute 1991, cited Denise, B, 2003).

Joint Venture (JV)

Under this contract client has to deal with not a single contractor, but a group
of contractors acting as a single contractor. Once the contract is agreed, there
should be a central project management team in a place for the client to deal
with so that the contract can be run normally (Denise, B, 2003).

2.4Factors which Need to be Considered for the Selection of Procurement

System

The Best Procurement System to Use in Sri Lanka

18

Recently there have been significant changes in the construction industry such as technical
and economic condition. At the same time basic requirements of clients also change. There
are new procurement systems which have been developed in the construction industry to
fulfil the clients requirements. Cost, time and quality are the three most important parameters
of project performance. Even though, there are other factors (internal and external factors)
also contributing directly or indirectly to the selection appropriate procurement strategy in
term of value for money for the project (Kumaraswami and Dissanayake 1998, Chen et al
2003, Seeley 2002).

Studies of Moshini (1993), Masterman and Gameson (1994), Rowlinson (1999), Walker
(1989), Alhazmi and McCaffer (2000), Kumaraswami and Dissanake (1998) cited
Rameezdeen (2007), overall factors affecting the procurement selection can be grouped under
three main criteria.

Figure B Conceptual frameworks for the determination of selection criteria

(Source : Macro level factors affecting the construction procurement selection: a multi criteria
model)

The type of building procurement chosen by the client is of importance due to the complexity
of the situation, with a wide range of objective criteria and procurement arrangement. What

The Best Procurement System to Use in Sri Lanka

19

needs to be considered is vast for the client as they have to make the appropriate choice in
regards to procurement arrangement (Jeyamathan, 2009).

Design input: does the client want to influence the design and, if so, to what extent?
Client control: how hand-on does the client wish to be in the management of the

project?
Cost certainty: what level of cost certainly does the client require before signing the

contract and on completion of the project?

Risk taking: is the client prepared to accept the risk by direct management or does he

wish to transfer it to third parties?

Flexibility: to what extent is the clients brief likely to be changed during the

execution of the project?

Market conditions: how are market conditions likely to change during the course of

the project with possible consequences for design or construction?

Programme security: how crucial is the final completion date?
Value of money: does the client want to contribute to and take benefit from value
management and value engineering, and how will any resulting savings be shared?

By using a list of criteria to come to a conclusion to the right procurement method for a
building project, allows the client to clearly see their key goals and objectives.

The Best Procurement System to Use in Sri Lanka

20

CHAPTER 3
PROCUREMENT SYSTEM IN SRI
LANKA

3.1Introduction

Most of the procurement systems are briefly described in the previous chapter however there
are limited numbers of procurement systems practiced in Sri Lanka (Najeeb, 2005). There are
only limited choices of procurement system used during the early. And these procurement
systems has several catalyst of changes which have occurred on the procurement systems
during later part of the 20th century to meet new requirements. These systems have a greater
demand from clients, contractors and the professions of Sri Lankan construction industry
(Thanuja, 2009).
Although, any procurement systems can be used for any kind of construction project, they
must be appropriate to the circumstances to get maximum benefits. Kumaraswami (1996)
argued that drawing upon example from Sri Lanka, the achievement of technological
transfer from developed to developing countries has been dissatisfied by the use of
inappropriate procurement systems.

The Best Procurement System to Use in Sri Lanka

21

The liberalisation of the economy in 1977 stimulated, additional private and public sector
investment in buildings and other infrastructure projects in Sri Lanka which gave
unprecedented opportunities for local and foreign private contractors. Consequences of these
changes were that limited choice of procurement systems evolved. However, changes have
occurred in building procurement because the clients are more conscious of the need to
change and they are looking for alternative procurement procedures. This means client are
able to get the project completed quickly within a reasonable cost limit and acceptable
standard of quality.

The Sri Lankan construction industry generally remains poorly organized, highly fragmented
and low in productivity and it is also not well established and advanced as in developed
countries (Shiyamini et al, 2005). Under these circumstances, Sri Lankan construction
industry has four popular systems practiced in most of the projects; i.e. measure and pay,
lump sum, prime cost and design and build. There are a fair few management oriented
procurement systems used in Sri Lanka, as identified through the past survey (Shiyamini et
al, 2007).

3.2Procurement Systems Practice in Sri Lanka

Construction industry in Sri Lanka is now becoming more popular. It is quickly growing.
Today it has now become a very influential and governing factor of the construction industry.
Therefore the growth in the property development could be regarded as a key to the
development of all sectors in the economy.

The instantaneous need in Sri Lankan construction industry the selection criterion for a
procurement method is very vital. In the context of the Sri Lankan construction industry,
numbers of different types of procurement methods are being used very rarely compare to
other country (Shiyamini et al, 2007). Sri Lankan construction industry has not developed.
Therefore, they are widely using traditional procurement method such as Measure and Pay.
The Best Procurement System to Use in Sri Lanka
22

A review of current practice of procurement system in Sri Lankan construction industry

reveals that the majority of projects are procured using traditional Measure and Pay
procurement method (Rameezdeen and Shiyamini, 2007). The reason for popularity of this
procurement system is that due to the government influence. Government is the major client
in Sri Lankan construction industry. Further they do not want to take alternative procurement
method (Shiyamini et al, 2007). Also most of the time this unbending separation of the
consultants and the contractors do not allow the emergence or the other procurement systems
in the industry (Maqdul, 2014).
The following table indicate the trend of procurement system in Sri Lanka, with research
conduct by Rameezdeen and Ratnasabapathy cited A.L. Joseph et al. et at. (2008).

Trend in methods of procurement in Sri Lanka in year 1977 to 2003

% of Use (Average)
Procurement System
Measure and Pay
Lump Sum
Prime Cost
Design and Build
Management Contracting
Joint Venture
Total
Source: Impediments to the Development

1977 - 1982

1987 - 1987

1997

81
86
91
96
00
55
50
58
50
64
12
10
8
7
10
10
8
5
4
3
22
31
28
35
21
1
1
1
1
1
0
0
0
3
1
100
100
100
100
100
of Design and Build Procurement System

2001
- 03
72
5
1
22
0
0
100
in Sri

Lanka

According to above research, traditional procuring method seems to be strong. Also Maqdul
(2014), Anuradha (2014), said this has not been changed yet.

The design and build

procurement system is a next alternative procurement option but it is not popular due to there
being an inadequate in-house design teams in contractors organisation (Joseph et al., 2008).
In the case of design and build contracts it takes time for design approval by consultant with
modification of developer (Shiyamini, 2009). But it will save the time at pre contract period
in some stages. The advantages of design and build contracts cannot be achieved in Sri
Lankan context due to non availability of talented in house design team in contractors

The Best Procurement System to Use in Sri Lanka

23

(Shiyamini, 2009). These types of contracts in small scale occurred in Tsunami housing
construction projects in very low frequency (Maqdul, 2014).

3.3Reasons for non availability of other procurement options in Sri

Lankan Context
Turn Key procurement systems are used in very luxurious construction projects (Rosli et al,
2006). Condominiums and luxurious housing projects which are directly use developers/
clients money up to selling stage. As a small poor country clients as well as developers are
poor in relation to other developed countries. This is the major reason for not choosing to use
this type of procurement system. But this type of contract was used in small scale projects for
Tsunami housing and this was used at a very low frequency (Pathirana, Senior Project
Engineer at Sierra Construction Ltd, 2014).
Management Oriented procurement system have been used in some projects in Sri Lanka but
it was not successful and did not meet the expected level of satisfaction. The advantages of
this system have not been clearly identified by developers and some implementation
difficulties are present in the Sri Lankan context itself (Maqdul, Senior QS, 2014). This
procurement method is more suitable for experienced clients in fast tract projects (Samuel,
2010). Unfortunately Sri Lankan Clients and consultants have not identified the worth of this
management oriented procurement option.
Collaborative procurement systems have not been successful unlike management oriented
procurement systems in Sri Lanka. It requires greater need of professionalism and the risk
present is very high due to the amount of team work required (Mark et al, 2007).
Collaborative procurement system was used by Sierra Construction for the international
project (Pathirana, Senior Project Engineer, 2014).

The reason behind the Sri Lankan professionals using the conventional system is due to the
dominance of the system in the market. It has been found that the public contracting entities
extensively use the Measure and Pay rewarding method for the design and build system even
though that the lump sum technique is conventionally used for design and build system. In
various instances they bid for lump sum contractual method and later change to Measure and
Pay method, due to the difficulties faced after the commencement of the project. This ensures
the unfamiliarity of Sri Lankan public contracting organizations with the D&B system. In
The Best Procurement System to Use in Sri Lanka
24

addition, most of the private contracting organizations have less experience with D&B
projects due to the controlling of the traditional purchase of goods and/or services system in
the market. Consequently, most of the contractors professionals are unwilling to work for
D&B projects in Sri Lanka (Joseph, 2008).
In Sri Lanka, the clients are hesitant to choose a procurement method other than the
traditional measure and pay. Further, it can be a reasoned out to be due to: poor awareness,
being afraid to take the risk on the other systems and the lack of knowledge about the
procurement system existing. Also, it can be said the industrial practitioners are not willing to
implement the different type of procurement. This premonition should be taken out from the
industry for its constant development in future.

3.4Barriers

for Adapting Alternative

Procurement

System

in

Construction Industry of Sri Lanka

There is several alternative procurement systems used worldwide. For example, Design and
build is very popular in many countries such as UK, China, USA, etc. (Shiyamini et at, 2007).
In Sri Lanka Design and Build (D&B) contract document was published by ICTAD few years
ago. But it is not popular unlike traditional systems Joseph et al (2008) has identified several
significant factors for the barrier in terms of internal and external environmental factors. They
are as follows:
1. The Sri Lankan government does not give much support to alternative procurement
systems
2. Research and development institutes only contribute a very small amount towards the
development of alternative procurement systems in Sri Lanka
3. Clients lack of knowledge in regard to alternative procurement systems
4. Professional contractors are unfamiliar with alternative procurement systems which
are available
5. Clients lack of experience with alternative projects
6. Governments first choice that the design and build procurement system is the only
one considering time factor
7. Consultants have their own power to select the procurement system for the projects
8. Poor relationship between the clients and the consultants
The Best Procurement System to Use in Sri Lanka
25

9. Inadequate in-house design team in contractors organisation

10. Effect of political environment in procurement selection
11. Consultants professionals have negative sense with alternative procurement methods.
12. Inadequate cover by the Standard Conditions of Contract
13. Ministry of Finance contributes very little to alternative procurement system
14. Professional institutes contribute very little to the growth of alternative procurement
system in Sri Lanka.

3.3.1 Factors Related to Clients

Clients are essential in the construction procurement selection. According to Joseph et al.
(2008), clients lack of knowledge regarding alternative procurement systems is the major
restriction to the development of alternative procurement system in Sri Lanka. Contractors
and institutes are not willing to educate their clients in alternative procurement systems.
Therefore, the client does not change the type of procurement system they require and stick to
the traditional procurement system as that is all they know (Maqdul, 2014).

Further, the client does not have much experience with alternative procurement systems.
Most clients do not want to take an extra risk to choose alternative procurement systems also
(Joseph et al., 2008).

For example, design and build procurement system is very popular and widely used in other
countries but it is not popular in Sri Lanaka. This is due to the clients inadequate knowledge
and lack of experience in design and builds procurement system. These implement a negative
impact to the growth of design and build procurement systems in Sri Lanka (Maqdul, 2014).
Furthermore the client is more concerned with keeping costs down.

In Sri Lanka, the government is a major client in the construction industry and its policies and
regulations sometimes restrict the choice of suitable procurement system by the client
The Best Procurement System to Use in Sri Lanka
26

(Rameezdeen, 2002). If a client organisation, which belongs to the government sector,

decides to construct a building, they have to adopt Institute for Construction Training and
Development (ICTAD) condition of contract, which govern all separated procurement
systems. Few years ago they have published Design and Build Condition of Contract
document (http://www.cida.lk). This is the major restriction to have other procurement
system such as management oriented, collaborative procurement system in Sri Lanka.

3.3.2 Factors Related to Contractors

In Sri Lankan construction industry contractors are not familiar with alternative procurement
process. This is the other barrier for the development of new procurement system (Joseph,
2008). The cause is that the traditional system is dominated the Sri Lankan construction
market. Therefore contracting organisations have lack of experience.

For example, in Sri Lanka most of the contractors go for the joint venture with design teams
for design and build projects as contractors find it easier to outsource the design team. Also
the contractors' professionals are unwilling to accept the changes when involving in D&B
process due to the uncertainty and strict culture of the Sri Lankan construction professionals
(Joseph et al., 2008).

3.3.3 Factors Related to Consultants

Joseph et al. (2008) points out that the consultants have the power to choose the procurement
system. Therefore they do not use a proper defined method to select the procurement system
for the projects. For that reason, the selection has been unfair and not a logical approach. As a
result the consultants are selecting the traditional procurement systems which are well-known
to them. This is the other restriction for the use of alternative procurement systems in Sri
Lanka.

3.3.4 Environment of Government and Political

The Best Procurement System to Use in Sri Lanka

27

The Government is a major client in the Sri Lankan construction industry (Shiyamini et al.,
2007). Government policies have an impact on the economy and its regulations, which
restrict the choice of a procurement system.

For example, the Board of Investment (BOI) approval may affect the selection of
procurement systems. According to Joseph et al. (2008), the government started to procure
more projects using design and build procurement system from the year 2001, after
publishing Standard Bidding Document for design and build contracts. But biddings are not
open to private sector organisations.

3.3.5 Factors Related to Research and Development (R&D) Institutes in Sri

Lanka

Sri Lankan construction industry has a considerable contribution to the Gross Domestic
Product (GDP, nearly 8.5%) to the economy (Central Bank, 2014). So, the construction
industry is an important sector as it has an effect on the economy and this in turn means that
it affects inflation rates and interest rates.
The R&D institutes are very vital to construction industry compared to other countries where
R&D is not seen as so important. The contribution of R&D to develop alternative
procurement systems impacts the construction industry and pushes the introduction of new
changes to procurement systems; however this has not happened in the Sri Lankan
construction industry (Joseph et al. 2008). This is another barrier for the development of
alternative procurement system in Sri Lanka.

3.3.6 Factors Related to Professional Institutes in Sri Lanka

The Best Procurement System to Use in Sri Lanka

28

According to Joseph et al. (2008), Professional institutes contribute a very small amount to
the growth of alternative procurement system in Sri Lanka. Because few professional
institutes do not suggest design and build procurement system as to protect small and medium
contractors from involving in design and Build projects. This is another restriction for
development of alternative procurement system in Sri Lanka.

3.3.7 Factors Related to Standard Conditions of Contract

ICTAD significantly contribute to the choice of procurement systems chosen by

implementing some regulations. The condition of contract used in Sri Lanka is applicable for
separated type of procurement systems and Design and Build Procurement system only
(ICTAD). This is another barrier preventing introduction of alternative procurement system in
Sri Lanka.

CHAPTER 4
The Best Procurement System to Use in Sri Lanka
29

CASE STUDIES

4.1.

Introduction

Each and every procurement systems has its own style and appropriate procurement system
which help avoid problems which may occur. To achieve the specific goals of the project, one
needs to choose an appropriate procurement system for the project. This is important for the
entire construction project (Rameezdeen, 2006). Selection of procurement systems is
influenced by clients requirement (Gordon ,1994; Ambrose and Tucker ,1999;
Rowlinson,1999), clients characteristics (Moshini,1993; Masterman and Gameson,1994;
Molenaar,1999), project characteristics (Chen et al., 2003) and external environment factors
(Walker ,1989; Hughes,1989; Sheath et al ,1994; Alhazmi and McCaffer ,2000;
Kumaraswami and Dissanayake,1998)(cited Chen et al., 2003). The clients requirement is
the most important factor which influences the procurement selection (Turner, 1990).

The case study has been taken from the building project. It is a hospital project, which was
constructed under traditional measure and pays procurement system and design and builds
procurement system.

4.2.

Case Study- Divisional Hospital at Kattankudy

Proposed Divisional Hospital at Kattankudy is procured under separated procurement system.

The separate system, where the main elements of the project-implementation process and the
design and construction are responsible by other separate organizations. For example, design
consultants, quantity surveyor, and contractor. The client is responsible for the funding of the
project as well as the operation of the facility once completed. Also the client has to work
alongside the project team.

4.2.1 Clients Requirements

The Best Procurement System to Use in Sri Lanka

30

The Sri Lanka Red Cross Society and Internal Federation of Red Cross & Red Crescent
Societies have planned to construct a Divisional Hospital at Baticaloa district. The client is
expecting the following features together with utilities, landscaping and all services which
include: electricity, water supply and disposal:

Main building
Operation theatres
Doctors quarters
Nurses quarters
Minor staff quarters
Morgue building
Kitchen building
Parking

The client is expecting the project to be finished within 18 months. He is expecting medium
quality within a reasonable price range.

4.2.2 Project Characteristic

In the construction industry there are several types of projects such as commercial, industrial,
residential, recreational, social and large infrastructure projects. This is a kind of social
project and it is a two story building.

4.2.3 Details of the project

Project

: Kattankudy Divisional Hospital,

Baticaloa District.

The Best Procurement System to Use in Sri Lanka

31

Employer

: Sri Lanka Red Cross Society & International

Federation of Red Cross & Red Crescent Societies.

Donor
Consultant
Main contractor
Contract Sum
Type of contract
Commencement of work
Period of completion
Retention
Defect liability period
Period of interim payments
Ascertained liquidated damages
Period of final measurement

: Norwegian Red Cross

: Architects Co-Partnership (Pvt.) Ltd.
: Sierra construction Ltd
: 470 million Rupees
: Measure and pay
: 18th March 2010
: 18 Calendar months
: 10% of valuation
: 12 calendar months
: 1 calendar month
: 1/4000 of contract sum per calendar day
: 2 calendar months from the date to practical
Completion.

Date of completion

: 18th September 2012

Period of Maintenance

: 12 calendar month

4.2.4 Reason for the Separated Procurement System for this Project

Sri Lanka Red Cross Society (SLRC) and International Federation of Red Cross (IFRC) and
Red Crescent Societies (RCS) and the Architect Co-Partnership (Pvt.) Ltd. had decided to go
for separated procurement system and use Measure and pay system because the work had
been designed for a public client. The same client and consultant carried out a successful
project at Ampara in the past year. Through the experience from the previous project the
parties wanted to procure this project as a separated system. Another reason why they wanted
to go for separated procurement system was the duration of this project being eighteen
calendar months, so this procurement system was the most suitable for this kind of project.
The tendering method used for this project is an open tender, therefore only M1 contractors
(ICTAD) were capable to bid this project. It may help to select qualified and experienced

The Best Procurement System to Use in Sri Lanka

32

contractor for this project and that have competitive characteristics. Due to high competition,
the contractors offer more prices that are accurate.

In addition, it serves detailed documents in tendering as well. The design has to be fully
developed and all uncertainties must be cleared up before tenders are invited then only can
tendering costs be minimized, proper competition ensured and then the final project cost can
be seen as lower than the other procurement methods.
In our case client is more concern about the final cost of the project. Therefore, when
payments are made, there will be fewer disputes. In this arrangement the existence of a priced
Bill of Quantities enables interim valuations to be assessed easily and variations to be quickly
and accurately valued by rates. The use of this method provides a higher degree of certainty
that quality and functional standards will be met.
Further, separate procurement system need more time to achieve the desired target so this
kind of arrangement is suitable for this hospital project. A separate system can identify the
separation of design and construction. The disadvantage for this procurement system is low
team spirit and buildability. Further this will lead to conflicts between the both parties. But
there are number of project members involved for this project so team spirit is a key factor
for a successful project. Another disadvantage is the lack of communication between clients
and the project team.
According to this separate procurement system, no mistakes can be made by the designers
because complete work drawings have been developed fully and detailed out prior to
tendering this is another advantage for this procurement system. The client expected a low
level of risk management through the procurement system because the risks are generally fair
and balanced between the parties to the contractor. So the client needed to get the project
completed on the expected time, which is 18 calendar months after the time from bid. The
client is expected a medium level of speed. The aim of this hospital project is to provide a
valuable service to the people.
This construction is affected by the external environment factors which are weather
condition, civil war, market competitiveness, etc. The main disrupting factor is the weather
condition and civil war.

When the client does not have any experience about the

The Best Procurement System to Use in Sri Lanka

33

construction of such a project, the client risk is greater. But the client of this project has
knowledge about similar kind of projects. When considering this aspect, this procurement
system is suitable for this project, to some extent.

4.2.5 Reason for Avoiding the Other Procurement Systems

The Separated System has been established in the SL many decades ago. Therefore clients of
the industry have been used to using it and since non-traditional methods are newly
introduced there is little awareness of the clients which are attracted towards them (Maqdul,
2014).
There is lack of firms to undertake projects with non-traditional procurement systems. Since
non-traditional methods are not long introduced the numbers of firms which actually
undertake projects with non-traditional procurement systems are very few and far between. In
non-traditional systems sometimes the power of the Architect and the Design Engineer may
be much less. Therefore they may not favour to move from the separated systems.
Nontraditional systems such as Design and Build, Management Oriented, Collaborative
Systems and Partnering are more complex. Therefore these systems are needed more
professionalism and because of the complexity the client may not understand these systems.
This creates a barrier which prevents developing these systems and therefore because of these
reasons client and consultants decided to adopt measure and pay procurement system for their
projects.

4.3.

Case Study- Base Hospital at Chilaw

Government decided to build a base hospital at Chilaw. The client required a three storied
building for OPD, clinic and paramedical unit, cafeteria and car parking. The total cost of
this project was 221 Million Sri Lankan Rupees and the construction period took two years.
The consultant of this project was R. Susil Weddikkara & Associates (pvt) Ltd and the
contractor is Maga Engineering (Pvt.) Ltd. Client and consultant decided to go through

The Best Procurement System to Use in Sri Lanka

34

design and build procurement system and was a two-stage tendering method (Anuradha,
2014).
The government decided to go through the design and build project due to single point
responsibilities. It meant clients had to deal with one single organisation this was an
advantage for the client. Since client had specific requirements there was little uncertainty
and the final project cost could be achieved and this cost was less than what it would have
been if another type procurement system was used.
Another factor was the use of an integrated procurement arrangement which enabled the
design and construction to be overlapped which resulted in improved communications being
established between the client and the contractor. These two characteristics enabled a shorter,
overall project to be achieved and project management efficiency to be improved. This was a
huge advantage for the project because it gave the client time to finish this project quicker (24
months). Also there was direct communication between the client and contractor. Therefore
the contractor could respond to the clients requirements quickly.
Often it can be that the clients brief is ambiguous and they do not communicate their wishes
precisely to the contractor. This can lead to great difficulty in evaluating proposals and tender
submissions. But in our case the client had specified his requirements clearly, therefore there
were not any problems.
In this arrangement the absence of a Bill of Quantities makes the valuation of variations
difficult and limits the freedom of clients to make alterations to the design of the project
during the post-contract period. This is one of the big disadvantages of this system. The client
should have awareness regarding the variations before he goes into the contract and he should
make sure to minimize those variations. But in this case client clearly specified his
requirements (Anuradha, 2014).

4.3.1 Satisfactory of Project Result

This project was completed on time. The reasons for this were:

The Best Procurement System to Use in Sri Lanka

35

 Client very effective management and good brief, multi-headed client problems had
been overcome
Designer clear documentation, competent clients advisors, adequate design
information and good site supervision and adequate coordination details
Contractor and designer single organisation effective management, good team work
spirit

This design and build procurement system was established to be an effective procure process
and good project management of design and construction from all participants. The whole
team gave better attention to coordination of services as time. Therefore the project outcome
was successful. The reasons for this were:

Suitable procurement method had been chosen

Suitability of project management
Careful selection of designers and contractors
Adequate project programme

CHAPTER 5
ANALYSIS

5.1Introduction

We were briefly discussing the traditional and integrated procurement system in chapter two.
This chapter will now cover the advantages and disadvantages of Traditional and Design and
The Best Procurement System to Use in Sri Lanka
36

Build procurement systems. Also analysis the Kattankudy Divisional Hospital Project under
design and build procurement system.

Past studies of Masterman (2002), Morledge et al. (2006), Mark (2007), Debbie et al. (2005),
and Construction Excellence (2005), listed several advantages and disadvantages of each
systems.

5.2Traditional Procurement System

Traditional Procurement systems have been used in the UK since the early nineteenth century
(Samuel, 2010). This system is still popular in Sri Lanka. According to Construction
Excellence (2004), Debbie et al. (2005) this system is not suitable for fast track projects but
suitable for:

All clients, including inexperienced clients

Complex projects
A developing brief
Quality and design development

5.2.1 Advantages and Disadvantages of Traditional Procurement System

According to Masterman (2002), Morledge et al. (2006), Mark (2007), Debbie et al. (2005),
and Construction Excellence (2005);
Advantages:
1. Tenders are on a like-for-like basis
2. Scheme fully pre-designed and specified
3. Early commitment to maximum price
4. Reduced estimating risk (and therefore cost to Employer)
5. Provides contractually agreed prices for valuation of variations, cost control and
analysis
The Best Procurement System to Use in Sri Lanka
37

6. Easy to control the standards

7. Two-stage tendering allows contractor to have input in to design and buildability and
helps team-building, thereby helping avoid future adversarial attitudes
8. A number of readymade contracts available for use depending on size and complexity
of the scheme and the pre-construction design timescale available - cost plus,
schedule of rates, bills of quantities (full or approximate).

Disadvantages:
1. Length of time from inception through to completion.
2. Projects over-running their contract periods Final costs being higher than expected.
3. Separation of responsibility for design and construction can delay a teamwork
approach and lead to adversarial attitudes if problems occur.
4. Late Involvement of the builder can limit his contribution.

5.3Design and Build Procurement System

The design and build procurement system is very popular in the UK, China, Canada, etc, but
not in the Sri Lankan construction industry which was discussed in chapter three. According
to Construction Excellence (2004), Debbie et al. (2005) this system is not suitable for an
uncertain or developing client brief and complex building but it is suitable for:
All clients, including inexperienced clients and also clients who do not want to be
involved in their projects
Cost certainty
Faster track

The Best Procurement System to Use in Sri Lanka

38

5.3.1 Advantages and Disadvantages of Design and Build Procurement System

According to Masterman (2002), Morledge et al. (2006), Mark (2007), Debbie et al. (2005),
and Construction Excellence (2005);
Advantages
1. Single point of contact between client and contractor.
2. If a clients requirement is precisely specified, accuracy of the final project cost is
achieved which is less than other procurement methods.
3. Design and construction is overlapped which results in better communication being
established between the contractor and the client. These two characteristics permit
shorter, overall project periods to be obtained and project management efficiency to
be much improved.
Disadvantages
1. The clients brief is often unclear and does not illustrate exactly what he is proposing
to the contractor.
2. Under this procurement system there is no bill of quantity. It is very difficult to
calculate the valuation of variations and also the client cannot make any changes in
the design.
3. Compared to other procurement systems, clients have less power to control the
features of design and aesthetics of the building.

5.4Analysis the Kattankudy Divisional Hospital Project under D&B

Procurement System

This Hospital project took more than 18 months to complete (Maqdul, 2014), it was
completed and handed over on the 23rd of July 2012. If the client and consults chose the
Design and Build procurement system, it would have been possible to complete the project
within the time period this is because this type of procurement system could have reduced the
time consumption while integrating the design and construction together, also making the
coordination for different parts of design and construction easier. On the other hand, early
The Best Procurement System to Use in Sri Lanka
39

involvement of contractor could have reduced the time required and integration of the design
of different parts, enabling easier communication and reducing the complexity and
eliminating the unnecessary delay (Mark et al, 2007).

According to Mark et al. (2007), from the client point of view, time, cost and quality are the
basic criteria. Most clients want high quality, at a lower cost, in the shortest time frame
however this is not always possible. Each procurement system has a different time, cost and
quality scenarios

Variations on the eternal triangle, shows the different priorities

Variation on the
Priority

triangle

with

eternal
different Result

priorities
Quality
Cost

Time

(Adequate time is allowed for

design and specification in order to

Cost will rise in both

counts.

Quality

achieve best quality)

Time
(Speed of completion)

Time

Cost

Both quality and cost

may both have to suffer.

Quality

Lowest Cost

Cost

Quality

The Best Procurement System to Use in Sri Lanka

40

Time

Time

may

not

prejudiced
But Quality will suffer.

be

Source: The Aqua Group Guide to Procurement, Tendering & Contract Administration
The traditional procurement system is a consequently slow process. This is due to the
separation of design and construction (www.constructingexcellence.org.uk). But the D&B
procurement system is faster than the traditional procurement system.
According to Ibiyemi (2008), the use of design and build is ever increasing with many clients
perceiving it as providing better value for money and giving rise to fewer disputes than other
procurement methods. Further, Saxon (2000) and Banik (2001) cited Ibiyemi (2008) argued
that

integration of design and construction offers better performance in time and cost resulting in
lesser defects ,In this case clients do not expect high quality (Maqdul, 2014).
The Construction Process

Source: The Aqua Group Guide to Procurement, Tendering & Contract Administration

According to Samuel (2010), Design and Build procurement systems are suitable for all
clients, including inexperienced clients. But our clients have experience in the construction
industry. Further, client has to deal with a single organisation because of the single point
responsibility (Rosli, 2006). Therefore, clients can transfer the risk to the contractor

The Best Procurement System to Use in Sri Lanka

41

(Morledge, 2006). In addition if there are any problems which occur the client/ employer
does not have to claim against different parties (www.thkp.co.uk).
Further, under the design and build procurement process, all members come under one
contractor, which means they have a long term relationship. In traditional procurement
system, it is difficult to manage the design and construction team however it is easier in
design and build procurement system.

CONCLUSION AND
RECOMMENDATIONS

The comprehensive investigation attempted to identify the best procurement route to use in
Sri Lanka as the Traditional procurement system dominates the whole construction industry.
This trend needs to change and the introduction of alternative procurement systems in the
construction market needs to occur.

The Project outcome should fulfil and satisfy the clients. The success behind every
construction project depends on the procurement system that is used to procure the building.
The selection of an appropriate procurement system is very important and is influenced by
several factors such as client requirement, project characteristics, external environmental
factors etc.

The Best Procurement System to Use in Sri Lanka

42

This study was based on lecture reviews and case studies. The lecture review was obtained
through published books, journals, magazines, and the internet and from people who are
worked at site construction industries such as Project Engineers and Quantity surveyors.

Most of the procurement systems which are practiced around the world are indentified
through the literature review. Based on lecture reviews and conversations with people
working in the construction industry in SL it can be said that the traditional procurement
system is very popular and widely used for both public and private sectors until now. Further,
the Sri Lankan government is responsible in providing all public construction; they are the
largest client to the construction industry in Sri Lanka.

There are several barriers for the introduction of alternative procurement systems. Such as:
clients have inadequate knowledge regarding alternative procurement systems also
construction professionals are unwilling to change themselves. Thus, alternative procurement
systems do not contribute to the professional institutes and research and development.

According to these case studies, choice and use of an unsuitable procurement system is not
the only reason for an unsatisfied overall performance. Other reasons include: the
coordination of building team is also vital for the success of a project. Traditional
procurement systems do not have a power of coordination process due to separation of design
and construction. Clients have to deal with many coordination problems. Under design and
build procurement system, all problems in relation to coordination still exist but they would
pass to the contractor side. Therefore, project success can be enhanced by a good team spirit
and high degree of cooperation between the project participants (www.cibse.org).

Through these case studies we are suggesting Design and build procurement system best for
Sri Lanka. It is very popular in many countries such as the UK, Canada, Greek, etc.
(Shiyamini et al., 2007). Compared to traditional systems, it has many advantages and is

The Best Procurement System to Use in Sri Lanka

43

suitable for all clients. Also it has good team spirit, which is possible for the long term
partnering for future projects such as hospitals, schools, etc.

Through these studies we have identified the major causes for poor performance within the
construction industry and it is due to the poor selection of appropriate procurement systems.
It is due to the feebleness of existing procurement systems that cause this poor performance
of the construction industry. To overcome this displeasing nature, several alternative
procurement systems were evolved. These changes reflect the Sri Lankan construction
industry as well. The following can be recommended to the probable solution;

Measure and pay is still practiced in construction industry for huge number of
projects. In the government projects, this type of systems is probably used with. The
government rules are against the alternative procurement systems, it requires the
measure and pay to be subjected based on ICTAD conditions of contract. This should
be avoided to increase the usage of new procurement systems.
Management oriented system still in initial stage in major projects, which are
considered under this study. If the project management firms had been considered
then the management oriented systems could have been in a high degree of use. In
addition, to create harmonic environment for management oriented systems especially
for management contracting sub contractors need to be strengthen.
Experienced clients try to avoid following the traditional systems rather than using the
alternative systems such as D & B, management oriented systems, etc. Inexperienced
clients, who dont have proper ideas, they can get the assistance from experts.
Most of the professionals are committed to lack of knowledge and miss proposals
over the procurement systems. So, awareness programme and seminars should be
scheduled to World Bank or Asian Development Bank (ADB) and ICTAD.

The Best Procurement System to Use in Sri Lanka

44

REFERENCES
Ashworth, A. (2006) in 5 (ed.) Contractual Procedures in the Construction Industry. Harlow:
Pearson Prentice Hall.
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