Procurement & Contract Advice
Procurement and construction contract advice before anything goes to tender. We advise on the route, whether that's lump sum, design and build, construction management or early contractor involvement. Then we advise on the contract form that fits it.
Overview
When you need procurement and contract advice
Construction procurement advice covers two decisions made before tender: how a project is bought, and which contract it runs on. We help you choose the route, such as a lump sum tender or design and build, and a contract to suit it. Owners, developers, architects and project managers use it to settle who designs, who builds and who carries which risks. It's one of our pre-contract quantity surveying services.
You might need this when you're choosing between a lump sum tender and bringing a contractor in early. On a complex project, construction management or design and build may also be worth considering.
What we handle
Four ways to procure a project
Each of the four routes has different trade-offs.
Traditional / lump sum
The design is finished first, and the contractor then prices it and builds it. It works well on clearly defined projects where cost certainty at contract award matters.
Design and build
One contractor takes on both the design and the construction, so one firm is responsible for both. A clear brief matters, because the contractor designs and builds to what you specify.
Construction management
You contract each trade directly, and a construction manager coordinates them. It can suit fast-track or complex projects. The downside is that no single contractor is responsible for all the trades. The final price also isn't known until the last trade package is awarded.
Early contractor involvement
A contractor joins during design to advise on buildability, meaning how easily the design can be built, and later prices the build. It suits large or complex projects, including those where time is tight.
In New Zealand
Recognised standard forms of contract
New Zealand has several standard forms of construction contract, which are published, ready-made sets of contract terms. NZS 3910 is the standard form for building and civil engineering construction. Where the contractor also designs, NZS 3916 is the design and construct form. NZS 3917 suits contracts that run for a set period, such as maintenance, rather than a set scope of work. NZS 3902 is a plain-English form for housing, alterations and small buildings.
MBIE's guidance is written for government agencies. It says an inappropriate delivery model, meaning the procurement route, can increase risk and hurt value for money, quality and timing. Once the route is chosen, the guidance is to pick a form of contract that suits it.
Special conditions are where project-specific requirements are added to a standard form. The same guidance says to use a recognised standard form where a suitable one exists, and to limit special conditions. Too many of them can lead the contractor to price in significant risk. Risk allocation means deciding who carries which risk. MBIE's advice is to give each risk to the party best able to manage it.
What you get
A route and a contract that fit the project
The advice sets out a procurement strategy, made up of a recommended route and a pricing strategy. The pricing strategy is how the price is set, which might be a lump sum or a price based on measured work.
We also cover the contract form, the proposed risk allocation, and the commercial terms to confirm before tender.
Those commercial terms include retentions, bonds, liquidated damages and variations. Retentions are money held back from payments as security for performance. A bond is a third-party guarantee that the contractor will perform. Liquidated damages are an agreed amount the contractor pays if the job finishes late. Variations are changes to the agreed work, and the contract should say how they are handled.
Not a substitute for legal advice
We advise on the commercial and cost side of a contract. What a clause means legally is a question for your lawyer.
Who this is for
Property owners and developers use this advice when deciding how to procure a project before it goes to tender.
It also helps architects and project managers who are advising a client on the procurement route. Main contractors use it when weighing up an early contractor involvement or construction management role.
It sits alongside our tender documentation and analysis work.
How it works
How procurement and contract advice runs
- 01
Send the project details
Tell us what you're building and how far the design has got.
- 02
We talk through the options
We go through the routes and contract forms that could suit your project.
- 03
Recommendation prepared
You get a recommendation on the route, pricing strategy and contract form.
- 04
Questions before you decide
You can ask us about any part of the recommendation.
Why AMS
Why clients use us for procurement and contract advice
Tender documents that fit the route
Settling the procurement route first lets your tender documents cover what that route needs.
Reasoning you can check
The recommendation comes with its reasoning, so you can check it against what matters most on your project.
Look at the contract before you sign
A contract can still be changed before it's signed, so you can raise any concerns about its commercial clauses at that point.
Frequently asked questions
Which construction contract should I use?
It depends on how developed your design is, how certain the cost needs to be, and the risk you want to carry. MBIE's guidance says the more cost certainty you need at contract award, the more the design has to be developed before pricing. How much change you expect also matters. We weigh each route and contract form against these factors.
What is the difference between lump sum and design and build?
The main difference is who does the design. On a traditional lump sum route, your design team completes it before the contractor prices the work. Under design and build, the contractor is responsible for the design too, and late changes can be costly.
Can you review a contract I have already been sent?
Yes, our construction contract advice includes a second opinion on a contract you've been sent, before you sign it. We can look at a single clause you're unsure about, or at terms that look unusual.
What is early contractor involvement?
Early contractor involvement usually runs as a two-stage tender. In the first stage a contractor is chosen. In the second, it works with the design team and develops its price. It works best with clear conditions for awarding the contract and open-book pricing, where the contractor shows you its costs.
Is a lump sum contract a fixed price?
A lump sum fixes the price for the agreed works, but the final cost can still change. MBIE's guidance says later changes to your requirements will usually be a variation, entitling the contractor to extra cost. The contract can also include a way to adjust for rising labour and material costs. Where it doesn't, the contractor usually prices that risk in, which is often called a fixed price lump sum.
Need a quantity surveyor for your next project?
Send through your plans or a short description of the project and we will come back to you.