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Selecting a procurement model

Understand the different types of procurement models available for a TAFE project and develop a procurement strategy.

Developing a procurement strategy

A procurement strategy should be established during the project definition, funding and approvals phase. It will identify the project’s preferred procurement model and may also consider:

The procurement strategy will likely be subject to approvals within the project’s governance structure.

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A procurement strategy generally includes:

When considering the most appropriate procurement model, analyse:

Types of procurement models

Public construction projects can be delivered through a variety of procurement models including:

Common procurement models used by TAFEs include:

For business-as-usual projects, construct-only (lump sum) is commonly used. However, there may be cases where you engage trades personnel on a time and materials basis.

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Generally, TAFEs tend to procure construction through the following procurement models:

Construct-only (lump sum or fixed-price contract)

Under a construct-only model, the TAFE undertakes all design work and the contractor is responsible for construction in accordance with the detailed design specification. Under this scenario, you will typically engage a specialist design team to develop the detailed, fully documented design that forms the basis of the request for tender (RFT) documentation. The tender process is primarily focused on achieving the best price for constructing the detailed design. The contractor’s design innovation is not a primary consideration as the design has been undertaken by the TAFE, noting some limited construction innovation may be possible.

The construct-only model is typically employed when the TAFE:

Design and construct

In the design and construct model, the TAFE undertakes a limited level of design work to inform the preparation of an output specification to be released to the market as part of the tender. The contractor is responsible for completing the detailed design in accordance with the requirements outlined in the functional brief and technical specification. Under this scenario, you will typically engage a specialist design team to help develop the reference design, associated functional brief and technical specification required for the request for tender (RFT) documentation. As the detailed design is undertaken by the contractor, interface risks between the design and construction process is reduced, and design innovation can be achieved.

The design and construct model is typically employed when:

Design, novate and construct

Design, novate and construct is a variation on the design and construct model. In this model, the contractor is responsible for finalising the design. As part of the RFT, the TAFE will include a higher level of design than under the design and construct model and require the contractor to either complete the design or improve upon the detailed design. To assist the TAFE in developing the design for the RFT, you will need to engage a specialist design team.

At the time of construction contract award, usually once the design is finalised, but not the detail of the construction, the TAFE’s design (and often the design team) is novated from the TAFE to the contractor. This model ensures the contractor is incentivised to ensure the facility is fit-for-purpose and if the design team is also novated, continuity of the designer’s input from project inception to completion. Following novation, the contractor and the designer will either develop or improve upon the detailed design provided as part of the RFT. The contractor takes on full responsibility for the design including payment of the post-novation designer’s fees. However, it is recommended that the design team be engaged to fully document the critical design elements to ensure compliance with statutory construction codes and standards prior to novation.

The design, novate and construct model is typically employed when:

Construction management

Under the construction management model, the TAFE engages a construction manager to manage construction works on its behalf. Typically, the TAFE will manage the project scoping and engage the designer and the trade contractors directly, via the construction manager, who acts as the TAFE’s agent. The TAFE is responsible for paying the designer and trade contractors directly, as well as paying a management fee to the construction manager.

The construction manager performs a purely management role and does not take on any delivery risk. The construction management model typically requires less in-house delivery expertise than other procurement models by outsourcing the construction management to a third party. The TAFE will take on design, time, cost and quality risk. Under this model, the TAFE may also consider the use of incentive payments to the construction manager to encourage the delivery of the project on time and on budget.

The construction management model is typically employed when the TAFE:

In addition to the commonly used procurement models outlined above, for medium complexity and high-value-high-risk (HVHR) projects you may also wish to consider the following forms of procurement.

Partnership arrangements

A partnership arrangement can take various forms and may involve an ongoing commercial arrangement between the TAFE and the private sector, including the utilisation of private finance for opportunities such as:

A partnership arrangement may be appropriate for large, complex projects such as precinct opportunities and where there is an opportunity to leverage investment from industry to create innovative solutions that align with the TAFE’s strategic objectives.

As part of a partnership arrangement, the TAFE may also seek to engage a contractor to deliver new purpose-built facilities for its teaching and training requirements, with associated maintenance services over the long term, such as a 25-to-30-year operational period. Under this type of arrangement, you might consider the preparation of an output-based specification that allows tenderers to respond to providing design, financing, construction, maintenance and operations of those facilities. This approach is more akin to the Partnerships Victoria social infrastructure availability public-private partnership (PPP) model. The investment in facilities would need to be significant to consider this type of procurement model (or it could provide benefit where new purpose-built facilities are linked with broader commercial development opportunities, such as those outlined above).

Partnership arrangements are typically bespoke procurement arrangements. To assist in navigating this type of procurement strategy, you may wish to consider engaging appropriate advisors for support throughout all stages of the project.

While commercial opportunities are most likely to be realised under partnership arrangements, you should seek to optimise value creation and capture under any procurement model as best practice.

Managing contractor

The managing contractor model involves the TAFE appointing a head contractor (the ‘managing contractor’) to engage subcontractors to deliver the works. The managing contractor is responsible for administering these subcontracts and may accept some delivery risks. Generally, you will need to negotiate a fixed lump sum management fee with the managing contractor as well as potential incentive payments for achieving cost and schedule targets. Under this procurement model, you will need to engage the managing contractor early in the process to manage the scope definition, design documentation and construction of the works. The managing contractor model is best used for:

Other forms of procurement are less common within the TAFE sector but may be applicable depending on the project. Further guidance on these models and when to use them can be found in the National Guidelines for Infrastructure Project Delivery.

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Updated 31 December 2025

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