Property development requires sufficient planning and due diligence. The timely completion of construction projects in the real estate industry is crucial to investors’ abilities to meet market needs. Real estate developers have to rely on procurement to outsource for contractors and suppliers capable of providing competent services as relates to a specific area. There are three main types of procurement in property development.
General contracting procurement method
General contracting is the traditional method of procurement, which involves separate design and construction processes. In this regard, the developer appoints a separate design team that creates the engineering schematics and designs as regards a given project. The designs are then submitted to a property developer or construction contractor for implementation.
To be successful, both parties must work together. This is one of the most popular procurement methods in construction. It is cost-effective as the developer sets the budget from the onset and gets the contractors to work within the specified limits.
Design and build procurement method
The design and build procurement method puts the responsibility of designing and building property on the same contractor. In this arrangement, only two parties are involved, namely the contractor and the property developer. The property developer outlays his or her ideas to the contractor who then proceeds to set the design and requirements before building it. This option is favorable among property developers as it reduces the risk of errors in the construction and design process since only one party undertakes the whole project.
Construction management procurement method
In construction management, both the design and construction elements in property development are separated, just as in the traditional method. However, the property developer has the responsibility of appointing the various levels of management within the construction phase to oversee the overall construction process.
The construction specialists, in this regard, have the responsibility of fulfilling the developer’s demands as far as the property development process is concerned. Suppliers and subcontractors, therefore, have to work hand in hand in the course of the construction process. This process is quite disadvantageous as it is time and resource-intensive and is thus not suitable for small projects whose completion time is strict and short. In addition, the room for error in the multi-party construction process is quite high.