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TENDER ISSUE: Michael Read (left) and Lloyd Clark from Match say the design and construct model avoids many of the common pitfalls of the tender process. Photo: Attila Csaszar

Tender woes prompt ‘flight to safety’

The traditional tender process for construction procurement may be exacerbating problems associated with the tight construction market.

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Utilibiz Pty Ltd, Victoria Park WA
Owners need to acknowledge some responsibility for market conditions, and widen their contracting strategy options to include Alliances, ECI's (Early Contractor Involvement)and GMP's (Guaranteed Fixed Price). There are some features of these alternative contracting models that assist in lowering commercial risk and assisting the industry to be more sustainable. Considerations should include shared objectives and outcomes, shared commercial risk, tendered transparent margin, direct cost reimbursement and shared risk/reward mechanisms. These alternative models are particularly useful for projects that feature complexities and risks that are hard to price out without close collaboration with the owner, and the opportunity to investigate and design out risk. The combination of a tight market and the traditional D&C approach for complex projects is a recipe for potential failure.

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