Business Case
The Case for an Integrated, Lean, and Agile Approach
While technological advancements have revolutionized many industries, construction management has largely stayed the same.
Traditional procurement models, involving multiple independent contractors and design consultants, incur higher costs and longer timelines than necessary.
It’s time for a change—an integrated, lean, and agile approach that streamlines processes and delivers better value.
The Inefficiency of Traditional Procurement
The traditional procurement model is fragmented and inefficient.
Clients hire separate consultants to design the project, then bring in a main contractor who subcontracts various tasks.
With minimal coordination and no integration of design and construction, this approach leads to higher costs, increased complexity, and longer timelines — issues that can be solved with a more unified and streamlined approach.
The Numbers
When you employ independent practitioners in this case a separate PM, QS and a main contractor to oversee a Ksh. 4 million project for instance, what you are actually paying for is:
Main Contract Cost Breakdown:
Project Manager (PM)
Ksh 120,000
Quantity Surveyor (QS)
Ksh 120,000
Main contractor’s Overhead and Profit
Ksh 400,000
Main contractor’s Preliminaries
Ksh 400,000
Main contract Measured Works
Ksh 4,000,000
Project Manager and Quantity Surveyor
According to CAP 525 of the Kenyan law, a registered quantity surveyor can charge up to 3% of the overall project cost which includes the main contract measured works among other ancillary works. Though there is no current law supporting the PM framework, project managers also charge more or less the same percentage depending on the scope of work involved.
Preliminaries
A typical tender price includes 10% for preliminaries and 90% for measured works. Preliminaries are de fi ned as the “cost of administering a project and providing general plant, site staff, facilities, and site-based services and other items not included in the rates”
Overheads and Profit
Main contractors include overheads and profit in their costs. For developments with 2 to 50 units, this figure usually accounts for 10% of the total construction cost.
Measured Works
The measured works are made up almost entirely of the appointed subcontractors. The subcontractors typically include a 10% preliminaries themselves, so the actual main contract breakdown looks more like this for a project build cost of Ksh.4 million:
Project Manager (PM)
Ksh 120,000
Quantity Surveyor (QS)
Ksh 120,000
Main contractor’s Overhead and Profit
Ksh 400,000
Main contractor’s Preliminaries
Ksh 400,000
Main contract Measured Works
Ksh 3,600,000
Subcontractor Preliminaries (10% of 80%)
Ksh 400,000
Our Solution: Integrating the Procurement and Management Process
With Endelevu Designs’ integrated, lean and agile construction approach, you cut out a middle layer. Instead of employing a project manager, quantity surveyor, main contractor or an external construction management fi rm, the client/developer delivers the project with fewer stakeholders.
Using this construction scheme, the client/developer creates a main contracting capability in-house while also receiving the service of two professionals (project manager and quantity surveyor) at the same fee. This is what the route looks like
With traditional procurement this is much the same, with the Client/Developer being at the top of the tree while the main contractor oversees the subcontractors:
The Agile Team
By removing the extra layer of management, that is the Main Contractor, you as the client/developer get a high-quality Project Manager and Quantity Surveyor to your team to oversee and administer all works under a special purpose vehicle with both design and construction regulatory permits as offered in this case by Endelevu Designs LLP.
The Endelevu team is comprised of:
The Numbers
Main Contractors Overheads, Pro fi ts and Preliminaries
Ksh 0.00
Project Manager
Ksh 0.00
Quantity Surveyor
Ksh 0.00
Endelevu Designs LLP (cost calculated from main contract measured works below)
Ksh 612,000
Main Contract Measured Works
Ksh 3,600,000
Subcontractor preliminaries
Ksh 400,000
The Old Versus the New
On a typical project, the numbers look like this:
Item | Traditional Cost (Ksh.) | Agile cost(Ksh.) |
Design | ||
Project Manager | 120,000 | |
Quantity Surveyor | 120,000 | |
Construction | ||
Main Contract Overhead and Profit | 400,000 | |
Main Contract Preliminaries | 400,000 | |
Endelevu Agile Services | 612,000 | |
Main Contract Measured Works | 3,600,000 | 3,600,000 |
Subcontractor Preliminaries | 400,000 | 400,000 |
Total | 5,040,000 | 4,612,000 |
Difference | 428,000 |
As you can see, on a Ksh. 4 million project, you can save Ksh.428,000 when working with our agile construction model rather than the traditional procurement method.