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Construction Management 3 > Contract Strategies and Procurement > Flashcards

Contract Strategies and Procurement Flashcards

1
Q

What is tendering?

A

Tendering is the industry name for obtaining an offer from a contractor, which can then be accepted by the employer to form a binding contract

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2
Q

Outline the tender process.

A

1)Design project - prepare tender docs
2) Choose tendering option -Tender documents ‘go out for tender’
3)Tender period - pricing the tender - tenders returned
4)Assess returned tenders
5) Select successful tender - sign contract

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3
Q

Who prepares tender documents?

A

Designers will prepare the tender documentation on behalf of the client

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4
Q

What is included in tender documentation?

A
  • Invitation to tender and detailed tender instructions
  • Conditions of contract and contract data
  • The payment mechanism
  • Works information - drawings, specifications, health and safety information.
  • Site information
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5
Q

What are the three main types of tender option?

A

Single Bid, Two-bid options, Framework Agreements

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6
Q

What is open tendering?

A

Any interested party can bid, work advertised in relevant publications

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7
Q

What is selective tendering?

A

Invitation sent to pre-selected firms for option to apply

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8
Q

What is pre-qualification tendering?

A

Assessing capabilities/suitability of a contractor before inviting them to submit tenders

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9
Q

Advantages of open tendering?

A

Competitive
Transparent (no favourites)
Cost savings - people under bidding each other
New firms can enter market

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10
Q

Disadvantages of open tendering?

A

Time consuming
Price over quality
Unqualified candidates
Limits to long-term relationships

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11
Q

Advantages of slective tendering?

A

Quality assurance
Competitive pricing
Client has more control
Improved contractor client relations

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12
Q

Disadvantages of selective tendering?

A

Time consuing
Not transparent (potential bias)
Limits for new comapnies
Only suitable for larger projects

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13
Q

Advantages of pre-qualification tendering?

A

-Combination of open and selective
-Client can ensure only the most qualified are invited to tender
-Reduced risk
-Streamlines tender process
-Great transparency with no bias- assessed objectively

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14
Q

Disadvantages of pre-qualification tendering?

A

Lengthy process
Cost of resources for selction process
Limited competition, reduced amount of bidders

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15
Q

What is negotiatied procurement?

A

Client goes directly to preferred supplier and negotiaties instead of formal tendering process

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16
Q

Advantges of negotiatied procurement?

A

Contractor is known so client has more control and certainty
Time-saving
Opportunity for innovation
Improved client/contractor relationship

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17
Q

Disadvantages of negotiated procurement?

A

Non competitive
Bias
Disagreements on scope due to lack of tendering process

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18
Q

What is two-bid tendering process?

A

Involves pre-qualification followed by bid for tender

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19
Q

Advantages of two-bid tendering process?

A

Contractor has full understanding of process
Greater cost certainty
Reduced risk of delays

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20
Q

Disadvantages of two-bid tendering process?

A

Might not price as competitively as one-bid
Time consuming
Costly additional pre-qualificaiton

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21
Q

What are framework agreements?

A

Long term agreements between client & contractor/s to procure goods and services

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22
Q

Advantages of framework agreements?

A

Consitent pricing
Better client contractor relations
Better colaboration due to long term
Reduced procurement times

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23
Q

Disadvantages of framework agreements?

A

No variety/chance of lowering price
Reduced motivation from contractor
Client is committed to using same contractors even if better options become available

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24
Q

How long is the tender process?

A

4-8 weeks. Designers and clients answer any queries

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25
Q

How is a tender chosen?

A

Tender report compiled by desinger, client tries to balance quality,time and price

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26
Q

What happend when a tender is accepted?

A

Letter of acceptance to winner
Unsucceful tenders get notified - list of tenders names and prices sent out. Tender document becomes ocntract document.

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27
Q

What is a contract strategy?

A

Determines the contract links between the employer, the designer(s), the contractor and sub-contractors (works contractors)

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28
Q

What is a contract link?

A

Rights and obligations under contract terms.

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29
Q

What are adminstrative links?

A

Administration of contracts

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30
Q

What are the factors affecting contract strategy choice for a client?

A

Timescale
Knowledge
Funding
Risk acceptance

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31
Q

What are the factors affecting contract strategy choice for a designer?

A

Experience (team)
Benefit of contractor involvement
Clients improvement

32
Q

What are the factors affecting contract strategy choice for a contractor?

A

Availibility of work
Future work
Payment and risk

33
Q

What is a traditional contract?

A

Seperate design and construction
Design appointed first
Design complete by contrator appointment
Designer acts are contractors admin during construction

34
Q

What is a design and build contract?

A

Project requirements clearly states in contractors brief
Could include prelim design
Throurough checks at tendering process
Good for simple
Good for complex - lots of intricate construction techniques

35
Q

What are the advantages of traditional contracts?

A

Clients design requirements fully understood by designers
Early design work can be approved
Changes/pausing of project are cheaper as design is seperate from construction
Client has more price certainity

36
Q

What are the disadvantages of traditional contracts?

A

Strategy is slower overall
No teamwork
More misunderstanding of tender docs
Can’t tell if defects are due to design or construction
Delays are clients fault

37
Q

What are the advantages of D&B contracts?

A

“Buildability” can be incorporated into design
Clients only buy services from one organisation
Client not responsible for design delays
Quicker to contract completion
Quicker site start -design parallel w construction
Less misunderstandings between designers and constructors

38
Q

What is novation?

A

Legal mechanism where one contract is trasnferred for another. Rights and obligations passed from one party under contract to a third party

39
Q

What are the benefits of novation?

A

No loss of knowledge from preliminary designer
Helps client achieve well devloped design
Possible mismatches in designer/contractor can be rectified

40
Q

What are ‘managament’ contract strategies?

A

Contractor is appointed early to a contract with the employer.
The ‘management contractor’ or ‘Construction manager’ does not undertake any actual construction work.
The management contractor or construction manager works on management, liaison and coordination of construction work and ‘partnering’ with the employer and design team during the design stage.

41
Q

What are the advantages of ‘management’ contract strategies?

A

Contractor can input to design stage with construction expertise
Good for large/complex projects
Work packages for subcontractors can be phased
Management contractor takes responsibility of sub-contractors
5-10% fee of construction cost

42
Q

What are the disadvantages of managemnt contract strategies?

A

Contrator carries interface risk
Late payments to sub-contracotrs

43
Q

What is interface risk?

A

Problem with one contract often has affect on contracts that interface it, delays can add up

44
Q

What are contruction management strategies?

A

Construction manager manages & coordinates contractors
Normally QS or proj managers
Not contractually liable for contractors performance

45
Q

What are the advantages of construction management strategies?

A

Works contractors are direct contractors to the employer and the employer has input into their selection.
Work packages are awarded as the project progresses so some changes can be accommodated.
Good for early start on site (often with incomplete design)
Construction manager is paid a fee.

46
Q

What are the dsiadvantages of construction management strategies?

A

Client carries interface risk
EU regs on every contract, must be advertised as such

47
Q

What is a partnering stratergy?

A

Collaborative management - client and contractor
Share risks and rewards
Non-binding
Each retains own identitity

48
Q

Two types of partnering strategy?

A

Strategic - more than one project
Project - One off

49
Q

3 elements of partnering?

A

Agreed mutual objectives
Problem solving mechanism
Commitment to continuous improvement

50
Q

How is partnering set up?

A

Contract awarded to successful tenderer
Tenders invited to partnering workshop
Partnering charter is created

51
Q

What are the advantages of partnering?

A

Reducing tendering times and costs
Anticipating and avoiding disputes
Securing contractors best staff
Reducing duplication of management and supervision
Achieving quicker start to construction

52
Q

What is an alliance?

A

Groups of companies who agree to cooperate and to share gains and losses in some way
Alliances can be between contractors or designer and contractor(s)
Do not form an actual company, CONTRACTURALLY BINDING

53
Q

What is a joint venture?

A

Participants form an actual company as a LEGAL entity

54
Q

What is a consortium?

A

International joint venture company owned by at least 3 organisations

55
Q

What are the advantages of alliances and joint ventures?

A

Increased oppurtunity for large projects/framework agreements
Knowledge sharing and new skills
Share resources and expertise
Specialist equipment
Reduced admin - greater efficiency
Shared risks

56
Q

What are the disadvantgaes of alliances and joint ventures?

A

Difficult to combine the culture of different organisations.
*Organisations will have different systems and processes.
Potential ‘power struggle’ (especially if not equal shares) and leadership issues.
Potential restructuring of the original business.
Concerns about confidentiality and intellectual propertY

57
Q

What is a consortium?

A

Internation joint venture - at least 3 organisations

58
Q

What is a private finance initiative?

A

Private public partnership funding schools and hospitals etc

59
Q

What is a framework agreement in terms of contracts?

A

‘Serial strategy’ for setting up a number of similar contracts over a period of time.

60
Q

What are the advantages of a framework contract?

A

Long term agreement improving teamwork and communication
Reduce misunderstandings
Improved efficientcy with joint admin, IT, payments
Economics of scale for all participants
Joint purchasing agreements
Long term incentive arangements
Simplified contract conditions

61
Q

What are some client specific advantages of framework contracts?

A

Process of advertising and awarding work (EU Regs) only needs done once
Selection and awarding completed before full details of project known
Individual contracts can be set up quickly once framework in place

62
Q

What are some contractor specific advantages of framework contracts?

A

Long term - understand clients AND designers needs
Be involved in early planning, development
Predictability of work flow
Contractor can set up longer term relationships with suppliers and sub-contractors
Possibility of local office set up

63
Q

What are some disadvantages of framework contracts?

A

Initial tendering can be costly
Unsuccesful contractors lose touch with client
Difficult to plan for unexpected market changes
Difficult to break unsuccessful framework agreement, if broken costly and time consuming to set up a new one

64
Q

What is BREEAM assessment?

A

BRE Environmental Assessment Method

65
Q

What and how does BREEAM assess a project?

A

Awards points or credits and groups environmental impacts:
* Energy:
* Management:
* Health and Wellbeing
* Transport
* Water consumption and efficiency
* Materials:
* Waste
* Pollution
* Land Use
* Ecology.
Total number of points in each section multiplied by environmental weighting factor (relative importance)

66
Q

What is a compensation event?

A

Unexpected event that occurs out of the contractors control and may result in additional costs, time delays or changes to plan

67
Q

Name some examples of compensation events

A

Changes in laws or regulations
Unforeseeable physical conditions (injury)
Delay caused by client (site access)
Adverse weather
Unpredicted ground conditions

68
Q

Who do ‘EU Regs apply’ to?

A

Utilities Contracts Regulations (Water, Leccy, Royal Mail)
Public Contracts Regulation (Government, Police, Fire)

69
Q

What are the three type of ‘EU regs’ contracts?

A

Works contract
Services contract
Supply contract

70
Q

What are the ‘EU Regs’ for the tendering process?

A

Utility/public sector must send out PIN (periodic indicative notice)
Utility/public sector employer must ‘call for competition’
Utility/ public sector must tell tenders how tender will be assessed

71
Q

What are some technical specifications of ‘EU Regs’?

A

Cannot specify items using suppliers name
Tech specs must state charecteristics, quality and performance instead
Cannot specify item so that only one manufacturer makes it

72
Q

How may a designer be appointed under ‘EU Regs’?

A

Reccomendation
Research and interview
Open competition
Selective competition
Exisiting framework agreement

73
Q

What do invitation documents include when appointing designers?

A

Clients aspirations, budget, progamme
Management structure of project
Assumptions about procurement method
Scope of services provided
Collateral warranties
Request references
Request details and CVs of staff
Seek hourly rates for work outside proposed scope

74
Q

What is the difference between Tender and Appointment

A

Tender = Client - Contractor
Appointment = Client - Designer

75
Q

How do clients establish a framework agreement?

A

Client decides number and extent of frameworks
Type of work decided over 5 year period
Group similar work into categories
Each group advertised in OJEU
Tender and contract awarded
Appoint contractor for each category

76
Q

What is OJEU?

A

Official Journal of the European Union
Used to publish public sector procurement notices
E.g. tenders, contract awards etc.
Important for transparency

Construction Management 3 (4 decks)

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