Pre-Contract Risk in International PFI Projects
- 5.2k Downloads
In life there are risks: in driving a car, crossing the road or playing various sports. So too in business although in many cases such risks are associated with financial consequences. Firms are subject to market volatility, and hence the ability to realistically provide expectations based upon a risk versus reward trade off. This chapter discusses the relationship between risk management and the use of Prime Contracting which is becoming one of the popular choices of procurement systems for large scale construction projects, as encouraged by two principle Government supported industry reviews reported in the publications ‘Constructing the Team’ (Latham 1994) and ‘Rethinking Construction’ (Egan 1998). These two review publications have supported an almost universal client requirement to achieve the benefits of increased value in infrastructure projects from the facilities management and ergonomic perspectives in both the private and public sectors. As a first step many UK clients have moved away from competitive tendering to favour the use of contracts with closer supply chain management through advances in both project and long-term strategic partnering arrangements between themselves and their facilities providers, constructors, designers and occasionally with some of their second-tier supply chain members. Although there are a number of examples showing an increased use in ‘partnering’, the actual extent of this commitment has been found from UK studies to vary in practice (Galliford 2000; Burtonshaw-Gunn 2001).
KeywordsSupply Chain National Audit British Standard Institute Project Risk Supply Chain Integration
Unable to display preview. Download preview PDF.
- British Standards Institute (1996) Guide to Project Management, BS 6079, British Standards Institute, London.Google Scholar
- Burtonshaw-Gunn, S. A. (2001) Strategic Supply Chain Management: Critical Success Factors for Partnering Relationships in the UK Construction Industry PhD thesis, Manchester Metropolitan University, Manchester, UK.Google Scholar
- Chartered Institute of Building (2002) Code of Practice for Project Management for Construction and Development, Blackwell Publishing, UK.Google Scholar
- Defence Estates Organisation and the Tavistock Institute (1999) ‘Building Down Barriers Programme’—Prime Contractor Handbook of Supply Chain Management Sections I and II May 1999.Google Scholar
- Egan, Sir John (1998) Rethinking Construction. The Report of the Construction Task Force to the Deputy Prime Minister, on the Scope for Improving the Quality and Efficiency of UK Construction. July 1998.Google Scholar
- Galliford (2000) Partnering Survey.Google Scholar
- Latham, Sir Michael (1994) Constructing the Team, Final Report of the Government/ Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry, HMSO, London, July 1994.Google Scholar
- National Audit Office (2003) PFI: Construction Performance. Report by the Comptroller and Auditor General HC371 Session 2002-2003: 5 February 2003. The Stationery Office, London.Google Scholar
- Menheere, S. C. M. and Pollalis, S. N. (1996) Case Studies on Build Operate Transfer, Delf University of Technology, The Netherlands.Google Scholar
- The Royal Society (1992) Risk: Analysis, Perception and Management. The Royal Society, London, UK.Google Scholar
- The Association of Project Management (1997) Project Risk Analysis and Management guide, Simon, Hillson and Newland (eds.).Google Scholar