The impact of procurement method on costs of procurement

Collaborative working methods offer the hope of reduced waste, lower tendering costs and improved outputs. The costs of tendering may be influenced by the introduction of different working methods. Transaction cost economics appears to offer an analytical framework for studying the costs of tendering, but it is more to do with providing explanations at the institutional/industry level, not at the level of individual projects. Surveys and interviews were carried out with small samples in UK. The data show that that while tendering costs are not necessarily higher in collaborative working arrangements, there is no correlation between costs of tendering and the way the work is organized. Practitioners perceive that the benefits of working in collaborative procurement routes far outweigh the costs. Tendering practices can be improved to avoid waste, and the suggested improvements include restricting selective tendering lists to 23 bidders, letting bidders know who they are competing with, reimbursing tendering costs for aborted projects and ensuring that timely and comprehensive information is provided to bidders.

Developing a system for assessing the costs associated with different procurement routes in the construction industry

In developing techniques for monitoring the costs associated with different procurement routes, the central task is disentangling the various project costs incurred by organizations taking part in construction projects. While all firms are familiar with the need to analyse their own costs, it is unusual to apply the same kind of analysis to projects. The purpose of this research is to examine the claims that new, ways of working such as strategic alliancing and partnering bring positive business benefits. This requires that costs associated with marketing, estimating, pricing, negotiation of terms, monitoring of performance and enforcement of contract are collected for a cross-section of projects under differing arrangements, and from those in the supply, chain from clients to consultants, contractors, subcontractors and suppliers. Collaboration with industrial partners forms the basis for developing a research instrument, bused on time sheets, which will be relevant for all those taking part in the work. The signs are that costs associated with,with tendering are highly variable, 1-15%, depending upon what precisely, is taken into account. The research to date reveals that there are mechanisms for measuring the costs of transactions and these will generate useful data for subsequent analysis.

Comparative costs of the commercial process in different construction procurement methods

The commercial process in construction projects is an expensive and highly variable overhead. Collaborative working practices carry many benefits, which are widely disseminated, but little information is available about their costs. Transaction Cost Economics is a theoretical framework that seeks explanations for why there are firms and how the boundaries of firms are defined through the “make-or-buy” decision. However, it is not a framework that offers explanations for the relative costs of procuring construction projects in different ways. The idea that different methods of procurement will have characteristically different costs is tested by way of a survey. The relevance of transaction cost economics to the study of commercial costs in procurement is doubtful. The survey shows that collaborative working methods cost neither more nor less than traditional methods. But the benefits of collaboration mean that there is a great deal of enthusiasm for collaboration rather than competition.

Exposing the myth of the 1:5:200 ratio relating initial cost, maintenance and staffing costs of office buildings

In an attempt to focus clients' minds on the importance of considering the construction and maintenance costs of a commercial office building (both as a factor in staff productivity and as a fraction of lifetime staff costs) there is an often-quoted ratio of costs of 1:5:200, where for every one pound spent on construction cost, five are spent on maintenance and building operating costs and 200 on staffing and business operating costs. This seems to stem from a paper published by the Royal Academy of Engineering, in which no data is given and no derivation or defence of the ratio appears. The accompanying belief that higher quality design and construction increases staff productivity, and simultaneously reduces maintenance costs, how ever laudable, appears unsupported by research, and carries all the hallmarks of an "urban myth". In tracking down data about real buildings, a more realistic ratio appears to depend on a huge variety of variables, as well as the definition of the number of "lifetime" years. The ill-defined origins of the original ratio (1:5:200) describing these variables have made replication impossible. However, by using published sources of data, we have found that for three office buildings, a more realistic ratio is 1:0.4:12. As there is nothing in the public domain about what comprised the original research that gave rise to 1:5:200, it is not possible to make a true comparison between these new calculations and the originals. Clients and construction professionals stand to be misled because the popularity and widespread use of the wrong ratio appears to be mis-informing important investment and policy decisions.

Adapting the homes of older people: A case study of costs and savings

Meeting the demand for independent living from the increasing number of older people presents a major challenge for society, government and the building industry. Older people's experience of disabling conditions can be affected by the design and layout of their accommodation. Adaptations and assistive technology (AT) are a major way of addressing this gap between functional capacity and the built environment. The degree of adaptability and the differences in the average cost of adaptation of different types of property are large and there is major variation within property type. Based on a series of user profiles, it was found that a comprehensive package of adaptations and AT is likely to result in significant economies arising from a reduction in the need for formal care services. This finding is sensitive to assumptions about how long an individual would use the adaptations and AT, as well as to the input of informal care and the nature of their accommodation. The present study, which focused on social housing, has implications for how practitioners specify ways of meeting individual needs as well as providing a case to support the substantial increase in demand for specialist adaptation work.

Introducing assistive technology into the existing homes of older people: Feasibility, acceptability, costs and outcomes

We examined how far, and at what cost, the housing stock could be modified to accommodate the assistive technology (AT) necessary to enable older people to remain in their own homes. A multidisciplinary team devised seven hypothetical user profiles for 10 case study areas, with five local authorities and five housing associations in England and Wales. Each profile was considered at two times, five years apart, with the users' functional abilities deteriorating in between. In addition, in-depth interviews were carried out with a sample of 67 older people in the case study areas about their use and experience of a wide range of AT. The interviews showed the need to listen to older people and that they welcomed AT when it addressed a perceived need. The results showed that the extent of adaptation required of buildings to accommodate a user's needs varied greatly. It was also found that there was confusion about the terminology of AT, including the idea of the 'smart house'. The study shows that the adaptability of the housing depends on a range of factors and costs.

EOQ, JIT and fixed costs in the Ready-mixed concrete industry

The successful implementation of just-in-time (JIT) purchasing policy in many industries has prompted many companies that still use the economic order quantity (EOQ) purchasing policy to ponder if they should switch to the JIT purchasing policy. Despite existing studies that directly compare the costs between the EOQ and JIT purchasing systems, this decision is, however, still difficult to be made, especially when price discount has to be considered. JIT purchasing may not always be successful even though plants that adopted JIT operations have experienced or can take advantage of physical space reduction. Hence, the objective of this study is to expand on a classical EOQ with a price discount model to derive the EOQ–JIT cost indifference point. The objective was tested and achieved through a survey and case study conducted in the ready-mixed concrete industry in Singapore.

A model for comparative analysis of inventory costs of JIT and EOQ purchasing in the ready mixed concrete industry

A model for comparing the inventory costs of purchasing under the economic order quantity (EOQ) system and the just-in-time (JIT) order purchasing system in existing literature concluded that JIT purchasing was virtually always the preferable inventory ordering system especially at high level of annual demand. By expanding the classical EOQ model, this paper shows that it is possible for the EOQ system to be more cost effective than the JIT system once the inventory demand approaches the EOQ-JIT cost indifference point. The case study conducted in the ready-mixed concrete industry in Singapore supported this proposition.

Exploring costs and benefits of HACCP: a pilot study in the dairy and meat products industry in the European Union

Since 1995 the Directive 93/43/EEC prescribes the application of HACCP principles in food production. However, despite the major importance of food safety, there is a fundamental lack of information on the economic impact of this directive. This project aims to study costs and benefits of HACCP, including the impact of HACCP on public health. Due to the complexity of the issue, we propose to start with a pilot study, limited to dairy and meat products industry in NL, UK and I. Information will be obtained at two levels: production chain and public health. Integration of these results will result in recommendations at the levels of EU member states and industry for regulation and supporting measures, and in recommendations for an effective and efficient approach for a more comprehensive project on costs and benefits of HACCP, covering major parts of the food industry in EU member states.

Lag-1 sparing in the attentional blink: benefits and costs of integrating two events into a single episode

When people monitor a visual stream of rapidly presented stimuli for two targets (T1 and T2), they often miss T2 if it falls into a time window of about half a second after T1 onset-the attentional blink. However, if T2 immediately follows T1, performance is often reported being as good as that at long lags-the so-called Lag-1 sparing effect. Two experiments investigated the mechanisms underlying this effect. Experiment 1 showed that, at Lag 1, requiring subjects to correctly report both identity and temporal order of targets produces relatively good performance on T2 but relatively bad performance on T1. Experiment 2 confirmed that subjects often confuse target order at short lags, especially if the two targets are equally easy to discriminate. Results suggest that, if two targets appear in close succession, they compete for attentional resources. If the two competitors are of unequal strength the stronger one is more likely to win and be reported at the expense of the other. If the two are equally strong, however, they will often be integrated into the same attentional episode and thus get both access to attentional resources. But this comes with a cost, as it eliminates information about the targets' temporal order.