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Procurement and Tendering > Level 1 Questions > Flashcards

Level 1 Questions Flashcards

1
Q

What is procurement?

A

The process of obtaining goods and services

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2
Q

What considerations affect the choice of procurement strategy?

A

Client:

  • Type
  • Experience

Project:

  • Nature of the project
  • Scope of the works
  • Size / complexity

Delivery:

  • Time / speed
  • Cost
  • Quality
  • Risk / desired risk allocation
  • Single or dual responsibility?

Market Conditions

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3
Q

What are the typical sections within a procurement report?

A
  • Introduction
  • Executive summary and recommendation
  • Key Considerations
    • Project type
    • Client objectives
    • Market conditions
  • Procurement options
    • Overview of options
    • Allocation of risk
    • Pro’s and Con’s
  • Forms of contract (that are suitable for the different procurement routes)
  • Conclusions and recommendations
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4
Q

What is traditional procurement?

A

A method of procurement where the design is fully developed (typically to stage 4) before going out to tender

The design process is separate from construction

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5
Q

Advantages of traditional procurement?

A
  • Cost - high cost certainty
  • Cost - usually tendered on a competitive basis = value for money
  • Cost - best comparison of tender bids as all tenders are based on the same measured information
  • Cost - good basis for valuations of variations / IVs
  • Quality - Client is responsible for design
  • Widely understood procurement route
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6
Q

Disadvantages of traditional procurement?

A
  • Time - slow process, full design is required before going out to tender
  • Buildability - no contractor input in terms of buildability, programming or construction methodology
  • Risk - risk is dependent on status of design, must ensure design is 100%
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7
Q

What is design and build procurement?

A

Where the contractor is responsible for both design and construction of a building

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8
Q

Advantages of design and build procurement?

A
  • Time - shorter programme length as design and construction can be overlapped
  • Cost - reasonable cost certainty (however costs will include for risk)
  • Responsibility - Single point of responsibility
  • Risk allocation - most of the risk is allocated over to the contractor
  • Buildability - contractor input in terms of buildability, programming and construction methodology
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9
Q

Disadvantages of design and build procurement?

A
  • Quality - client has to commit to a concept design early
  • Quality - ease of fabrication may be prioritized over quality / aesthetics
  • Quality - the client has little to no control over the design
  • Can be mitigated by:
    • Novating the design team
    • Robust set of ERs
  • Cost - variations from the original brief can be difficult to arrange and expensive
  • Cost - harder to compare tenders to ascertain value for money
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10
Q

What is management contracting?

A

Where the client appoints a full professional team and a management contractor who is responsible for managing the works

The works contractors will be appointed by the management contractor, and are directly and contractually accountable to him

MC paid a fee

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11
Q

Advantages of management contracting?

A
  • Time - design and construction can overlap
  • Quality - the client retains overall design control through the professional team, works packages are individually tendered meaning the best works contractors will be appointed
  • Buildability - mc to input on buildability, programming and construction methodology
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12
Q

Disadvantages of management contracting?

A
  • Cost - there is no cost certainty at the outset of the project, and a total cost is only known once the final package is let
  • however, each of the works packages can be procured using a competitive tendering procedure
  • Cost - the appointment of the MC is usually by negotiation and their services can be quite costly
  • Experience - client experience required
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13
Q

What is construction management?

A

Where the client appoints a design team and enters into an agreement with the construction manager

These trade contractors are appointed by the client and are directly and contractually responsible to him

The client therefore assumes a major role in directing the project, whilst leaving the management of it to the construction manager

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14
Q

Advantages of construction management?

A
  • Time - design and construction can overlap
  • Quality - the client retains overall design control through the professional team, works packages are individually tendered meaning the best works contractors will be appointed
  • Buildability - CM can input on buildability, programming and construction methodology
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15
Q

Disadvantages of construction management?

A
  • Cost - there is no cost certainty at the outset of the project, and a total cost is only known once the final package is let
  • however, each of the works packages can be procured using a competitive tendering procedure
  • Cost - the appointment of the MC is usually by negotiation and their services can be quite costly
  • Experience - client experience required
  • Risk - client retains all the risk
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16
Q

When is a design and build procurement route suitable?

A
  • Early start on site required
  • When the client wishes to minimise risk
  • For complex projects which can benefit from the contractors input
  • Where the client does not want to retain full responsibility over the design development
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17
Q

When is a traditional procurement route suitable?

A
  • Where time is available for 2 sequential processes
  • Where the client wants to retain responsibility over design / design team
  • Where the client wants cost certainty
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18
Q

When is a management procurement route (MC / CM) suitable?

A
  • For large, complex projects
  • Early start on site required
  • CM / MC buildability can be put to use
  • Client has enough experience
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19
Q

What other methods of procurement are commonly used in the industry?

A
  • Design build finance operate (contractor to operate it for a period of time)
  • Design build operate (contractor to operate it for a period of time)
  • Public private partnerships - public & private sector collaborate
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20
Q

What is tendering?

A

The bidding process, to obtain a price, how the contractor is actually appointed

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21
Q

What are the main types of tendering procedure?

A
  • Single stage
  • Two stage
  • Negotiation
  • Early contractor involvement
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22
Q

What is single stage tendering?

A

A form of tendering strategy for obtaining a price for the whole of the construction works, typically carried out at stage 4

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23
Q

What is two stage tendering?

A

Where the contractor is engaged earlier in the design stages via a PCSA to work alongside the client to develop the design, assist with buildability, programming and construction methodology

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24
Q

What is negotiated tendering?

A

A negotiated tender is similar to a single-stage competitive tender, however the process involves 1 preferred contractor who bids for the works, after which a firm price is negotiated with the clients professional team (PQS)

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25
Q

How is the first stage of a two stage tender assessed?

A
  • Quality of the bid
  • Quality of their team
  • Preliminaries price
  • Overheads and profits allowances
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26
Q

What are the main advantages / disadvantages of negotiated tender

A

Advantages:
- Quick process to obtain a price

  • No programme implications of a long tender process

Disadvantages:
- No competitive advantage, can’t ascertain value for money

  • Not suitable for public procurement as most public sector projects need to demonstrate value for money
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27
Q

What are the main advantages / disadvantages of two stage tender

A

Advantages:
- Contractor involvement may reduce outstanding design / construction risk

  • Contractor involvement for buildability / programming / construction methodology
  • Ability to overlap tendering and design

Disadvantages:
- Lack of competitiveness during 2nd stage

  • Programme implication to include a tender period
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28
Q

What are the main advantages / disadvantages of single stage tender

A

Advantages:
- Competitive price, ascertain value for money

  • Widely understood form of tendering

Disadvantages:
- Time consuming process

  • (if SS traditional) - no contractor involvement
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29
Q

What is Early Contractor Involvement?

A

ECI is a form of negotiated tender but emphasis is put on the contractor as the lead designer from the outset of the project

This is beginning to be seen in infrastructure projects where the early appointment of a contractor can significantly affect the direction of the emerging design

Contractor selection is similar to two-stage tendering as it is done not on a cost basis but rather on the quality of the team and bid

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30
Q

JCT Practice Note 2017

A
  • General guidance document on procurement
  • Describes best practice for tendering in the construction industry
  • Looks at the tendering process as a whole from shortlisting and PQQ to recommendation and award
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31
Q

BS 11000-1 Collaborative Business Relationships – what is it?

A

The release of the British Standard (BS) 11000-1 Collaborative business relationships: A framework specification in 2010 has had a significant impact on large infrastructure companies and strictly relates to partnering projects.

The partner-selection phase gives guidance on how to select and evaluate proposed partner bids; for any large PPP/PFI scheme the existence of the BS should be understood, particularly its effect on the partner selection stage.

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32
Q

The RICS Construction Policy

A

The RICS Construction Policy was published in 2013, which contains important guidance, particularly relating to current trends; the policy also called for governments to increase transparency in its construction contracts and to simplify the procurement process.

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33
Q

What are the reasons for having a robust tendering strategy?

A

Robust tendering techniques can help to ensure positive tender results through:

1) Accountability
2) Auditability
3) Ensuring everything has been picked up
4) Parity
5) Helping to reduce claims of corruption; and
6) Ensuring that the correct price has been paid for the proposed works.

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34
Q

Producing the Pre-Tender Estimate

A
  • Final estimated cost of the project
  • Allows the employer to understand if they can afford the development
  • Provides a basis for analyzing the tender returns
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35
Q

What tendering strategy is most suitable for:

1) Traditional
2) D&B
3) MC / CM

A

1) Single stage
2) Two-stage
3) Negotiated or two-stage

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36
Q

What are some contractor selection techniques? When should you begin to think about contractor selection?

A
  • Open tendering (such as public procurement)
  • Selective tendering
  • Single contractor selection

It is advisable for project teams to start considering suitable contractors as soon as the project begins

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37
Q

What is the aim of the pre-qualification process?

A

1) Relevant experience?
2) Relevant financial standing / funding requirements?
3) Suitable H&S record?
4) Adequate tender period?
5) Assurance they are keen to submit a tender

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38
Q

What is the UK Governments Pre-Qualification Questionnaire -

A

The UK Governments standard form of PQQ is PAS 91 2013 Construction Prequalification questionnaires. This is mandated for central government departments, and the government recommend that the entire supply chain should adopt it.

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39
Q

How do you assess a suitable tendering period?

A

1) The complexity of the project
2) The size of the project
3) Time of year (i.e. pubic holidays such as Christmas and Easter)
4) Market conditions
5) The type/stage of the tendering procedure (i.e. single stage, 1st stage of a 2 stage, etc)

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40
Q

How does tendering procedure affect deciding on a suitable tendering period?

A

1st stage of a 2 stage tender:
- Based on prelims, OH&P and qualitative part of bid

Single stage tender:
- Contractor to submit a full price, need to allow enough time for them to receive quotations from the supply chain

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41
Q

What are the implications of not allowing a long enough tender period?

A
  • Artificially high tenders (contractor deems there is too much risk involved)
  • Artificially low tenders (contractor has missed important information)
42
Q

What are tender extensions?

A
  • Contractors can request tender extensions during the tendering period
  • If an extension is given it should be given to all contractors
  • Advisable for the PM to build in some float in case of an extension request
43
Q

Why might a contractor request a tender extension?

A
  • Underestimating the amount of work
  • Current commitments
  • Tender addenda being issued
  • Leaving the tender too late
44
Q

What are the typical tender documents issued?

How does this differ with D&B or CDP elements?

A
  • Invitation to tender letter
  • Form of tender
  • Bona fide tender certificate
  • Instructions to tenderers
  • Design information (ERs if CDP or D&B)
  • Preliminaries
  • Pre-construction information
  • Pricing document
  • Schedule of contract amendments
  • Tender query schedule
45
Q

What is an invitation to tender letter?

A

A letter that formalises that the contractor is being invited to tender

46
Q

What is the form of tender?

A

The form that the contractor signs and returns with their proposed tender (price and programme, alternative proposals)

47
Q

What if the contractor wanted to issue an alternative tender?

A

They would still have to issue a compliant tender and then an additional tender for the alternative proposal

48
Q

What is a bona fide tender certificate?

A

For the contractor to sign to confirm that their tender submission is genuine and without the intention to deceive (bona fide)

49
Q

What is an instructions to tenderers document?

A

Sometimes called conditions of tender, this document sets out:

1) What to return and by what date
2) Outline of the project
3) Proposed dates for interviews (mid / post)
4) Anticipated start / completion dates
5) Details for arranging site visits
6) The proposed scoring mechanism
7) How errors are to be dealt with
8) Details for submitting tender queries

50
Q

What is important to note regarding the invitation to tenderers document?

A

It does not form part of the contract pack so any important information that will need to be included in the contract docs should be included in the preliminaries / ER docs

51
Q

What information does the preliminaries document set out?

A

Describes the project in detail and sets out the contractors contractual obligations

Sets out:

  • Completion strategy (sections etc)
  • The base date
  • Fluctuation procedures
  • Rate of liquidated damages
  • Method of payment
  • Insurances required
  • Performance guarantees required
  • Dispute resolution procedures
52
Q

What format should the design information be in when issuing to tenderers?

A
  • All design info must be correctly referenced
  • Drawing register included
  • Revisions of each drawing referenced
53
Q

What are some typical appendices to tender documentation?

A
  • Health and safety documentation
  • Surveys
  • Planning information
  • Risk register
54
Q

What project specific factors / abnormals affect a tender?

A
  • Working hours (OOH)
  • Client internal procedures to follow
  • Third party agreements
  • Concurrent activities on site which affect programme
  • Project phasing / sequencing
55
Q

Methods of issuing tender packs?

A
  • traditional method (post)
  • Via email
  • Online E-tendering
56
Q

How do you respond to pre-tender queries? Is it good to see a number of queries?

A

Tendering queries must be clarified and then issued to all contractors, names of the contractors should not be mentioned

Method of responding to queries should be listed out in the ITT documents

For any tender queries which may give rise to tender addendums, it;s important to word them in such a way that they can be included in the contract documentation

It’s positive to see queries as it shows the contractors are reviewing all the necessary documentation

57
Q

Is it good to issue tender addendums?

A

Issuing addendums is undesirable as it gives the impression that the project team is disorganised

Sometimes this is inevitable, where it is known that additional information will be issued this should be included in the ITT documents

Examples of typical addenda include:

  • Release of surveys
  • Change of client objectives
  • Additional design information
58
Q

What are the benefits of carrying out mid-tender interviews?

A
  • Opportunity to meet those working on the tender
  • Tenderers can raise queries face-to-face
  • Often carried out on site, so can be combined with a site visit
  • Opportunity for the client’s team to assess the
    progress of each tenderer so far
  • Opportunity to reaffirm commitment from both parties

Other notes:
- Especially useful for large / complex projects

  • Any important information disclosed in the interview should be formalized as a query and issued to all
59
Q

Why might a contractor withdraw from the tender process?

A
  • Consider it too risky
  • Other commitments / not enough resource
  • Believe they wont be competitive enough
60
Q

What is the process of tender withdrawals?

A

Instructions for withdrawals should be listed in the ITT documents

If more than 1 tenderer withdrawal, there is the option of cancelling the tender and starting the process again with new tenderers

If it is agreed that new tenderers can be introduced, then all tenderers should be notified and all tenders given any necessary extension (as agreed with the new tenderers)

61
Q

What if a tender is late?

A

Public procurement projects – late tenders should not be considered

Private procurement projects – clients should be advised which tenders were late and if they wish them to still be considered then they must provide an explicit instruction to do so

62
Q

What is the process of tender opening?

A

A tender opening form should be filled out:

  • Tender price
  • Programme
  • Alternative submissions
  • Key Comments / Clarifications
  • A confirmation that all tenders have been submitted or not

Another qualified construction professional should be present to witness the opening of the tenders

Client / other members of the design team should be invited to the tender opening

Once complete, the tender opening form should be signed and dated by all parties as this will form part of the tender report

63
Q

What is the process of reviewing tenders?

A

1) Complete tender opening form
2) Issue to client / design team for technical review
3) Check for errors and conflicts
- Arithmetical check
- Logic check to programme
- Any non-compliant clarifications
- Any conflicts of interest?
4) Raise tender queries
5) Normalization of tender returns
6) Post-tender interviews (if applicable)
7) Tender recommendation

64
Q

What are some examples of post-tender queries?

A
  • Where items haven’t been priced
  • Where key information is missing
  • Conflicts in information
  • Non-compliant clarifications
65
Q

What’s important to remember when issuing post tender queries?

A

Care must be taken to ensure that the contractors are not being given another opportunity to resubmit their tender

Therefore queries should be worded in such a way that the tenderers are restricted in their response

66
Q

What methods of normalization are there? Which is best?

A
  • Average price
  • Highest price
  • PTE allowance

Important thing is ensuring a consistent application

67
Q

How should the contractors submit their OH&P price in their tender?

A

Should split overheads and profit to show the allowance for each item

68
Q

Why is including a risk register in the tender documents for a D&B project important?

A

It’s useful to include a risk register in the tender documents as it clarifies which risks remain with the client and which ones are to be carried by the contractor

The risk register can then be used to base their priced risk allowance on and can be normalised to understand if any contractors have excluded key risks

69
Q

When should post-tender interviews take place?

A

Once the normalisation process has been taken place and the initial queries dealt with, as this helps to inform the tender interview process

70
Q

How should post tender interviews be carried out?

A
  • Only once the normalisation / initial query process is finalized
  • Structure agreed in advance
  • All tenderers invited to the interview should be given the same structure and the same outline queries
  • Agree which team members to attend
  • Any agreement made in the PTI should be confirmed in writing
  • Any significant information which comes out of one interview should be given to all tenderers to allow them to respond accordingly
71
Q

What matters might a post-tender interview cover?

A
  • Construction methodology
  • Programming
  • Risk Assessment & Method Statements (RAMS)
72
Q

Other than carrying out an arithmetical check on the price and a logic check on programme etc, what other items might you check?

A
  • Insurances and the insurance certificates
  • Qualifications and assumptions
  • Proposed subcontractor / suppliers
  • Priced risk registers
73
Q

What factors might affect the scoring mechanism used?

A
  • the complexities of the project
  • the tendering strategy
  • the procurement route
74
Q

How might a tender negotiation be carried out?

A

The process is the same as a competitive tender up to the submission of the tender docs, as the contractor will:
- price the works

  • propose a suitable programme
  • propose a team
  • provide method statements, etc

Once the initial submission by the contractor, the clients team and contractor will review the proposal and negotiate on the submitted tender; the negotiation should:

  • focus on dealing with items which have the largest variance
  • review all items (contractual terms, programme issues, etc)
  • Once more significant items are dealt with, more on to smaller items

Any agreements / errors / changes should be formalized and recorded

75
Q

Is the JCT Tendering Practice Note mandatory?

A

Where there is more than 1 contractor, yes

  • Single stage - yes
  • Two stage - yes
  • Negotiation - No
76
Q

What is a risk of negotiation?

A

That the 2 parties are so far apart in their submissions that they can’t reach agreement

ITT docs should make it clear that the client is not bound to agree a contract sum and can walk away if an agreement cannot be made

77
Q

What key points should a tender report address when reporting on a negotiated tender?

A
  • Statement on value for money
  • Statement on the contractor’s competence
  • Highlight the main issues addressed during the negotiation process
78
Q

What other factors might a tender report have to address for more complex projects?

A
  • Third party actions (the recommendation might be on the basis of a third party action being carried out)
  • Outstanding contractual issues to be resolved
  • Alternative time tenders
  • Two stage tender - contractors scope for the second stage set out in the report
79
Q

How are alternative time tenders addressed in a tender recommendation report?

A

A tenderer may propose an alternative time tender, which may have the added benefit of also having a reduction in preliminaries cost

To ensure parity the tenderer would have to become the preferred contractor on the basis of their compliant bid

If the alternative tender was then accepted this would need to be properly communicated in the tender report

80
Q

Are you allowed to give the preferred contractor a period in which to check the design in between the recommendation and signing the contract?

A

the contractor could be given a set period to review all the documentation after being named the preferred contractor, in order to either clarify their tender sum or suggest any adjustments

  • Gives contractor a greater understanding of the project
  • Greater degree of risk transfer
  • Provides the competitiveness of a single stage but the benefits of a two-stage (coordination with design team)
81
Q

What is serial tendering?

A
  • a more advanced / hybrid form of tendering procedure
  • combines single / two stage with negotiation
  • Used for clients with a number of phases of similar work
  • Where the original tender documentation can include a section for schedules of rates to be agreed so that negotiation of future phases can be based on prices obtained in competition
82
Q

What are the advantages and disadvantages of serial tendering?

A
  • Competition achieved upon initial appointment

- As time goes on, the basis of the original tender will no longer be applicable and would need to be renegotiated

83
Q

What is term contract tendering used for?

A
  • Maintenance works
  • Minor works
  • Continuous phases of work

Completed on a schedule of rates basis

Tendering procedure for term contracts must ascertain value for money and contractor competence

84
Q

What is a framework?

A
  • Typically used by larger clients
  • Framework of approved suppliers
  • Open tenders are usually advertised for firms to apply to be on a framework and eventually included on a smaller framework of contractors / consultants
  • Once the framework is agreed, further work is based on approved list
85
Q

How does a framework invitation to tender work? (obtaining the list of approved suppliers)

A

1) Contractor selection based on agreed fees
- fee scales or rates based on project size / complexity; these are initially agreed to be on the framework, and then the contractors will be selected off the list based on those rates with no further tendering necessary
2) Mini tenders
- if the framework is in effect an approved supplier list, whereby a shortlist is taken from this then invited to tender

86
Q

What are the advantages of frameworks?

A
  • reduce procurement costs for large numbers of contracts for similar works
  • greater continuity of potential work and therefore increase competitiveness
87
Q

What are the risks with two-stage tendering?

A
  • If the first stage is carried out too late then the contractor wont have time to interrogate and engage with the project team to influence design
  • Contractor could see the two stage process as an opportunity to integrate with the clients team then negotiate a price higher than market value

(ITT docs should outline what is expected of 2nd stage to mitigate this risk)

88
Q

What could be done to avoid the contractor using a 2 stage tender process to renegotiate a higher price?

A

Implement a target cost mechanism as part of the tender at the second stage

Can be applied as part of the second stage before the contract is let

Rewards the contractor by way of % share by beating the cost

89
Q

What impact does BIM have on tendering?

A

BIM Level 1:

  • more coordinated design
  • BIM models issued to contractors so they can understand the complexities of the project
  • more accurate measures

BIM Level 2:

  • a more accomplished 3D environment with embedded data will be available
  • government mandated by 2016

BIM Level 3:

  • fully integrated and collaborative process
  • Utilises 4D, 5D and 6D
  • tendering analysis can be restricted to comparative rates, OH&P and preliminaries as all parties will have access to the same coordinated design
90
Q

What alternative tender submissions can be issued?

A
  • Reduced programme
  • Alternative construction methodology
  • Alternative procurement route
  • Alternative design / scope options
  • Value engineering options
91
Q

Important things to note regarding alternative tender submissions?

A
  • Each tenderer should submit a compliant bid as well as an alternative so a like-for-like comparison can be made
  • Make clear in ITT docs if alternatives are accepted or not and how they are to be dealt with (usually that they will not be used as part of the review, only considered if they are the preferred contractor)
92
Q

What if a contractor issued a compliant bid which did not compete well, however they issued an alternative tender which is a favorable offer?

A

Alternative tenders can be reviewed independently of the tender competition and can be explored separate to the tender evaluation

This needs to be made clear in the ITT docs

If alternative tenders are being reviewed on this basis the other contractors must be given an opportunity to submit a like-for-like alternative to maintain parity

93
Q

Should alternative tenders be considered in public sector projects?

A
  • Should be avoided as they tend to cause issues unless explicitly allowed for by the client
94
Q

What if a contractor hasn’t priced for preliminaries?

A

If they haven’t priced, then it is a non-compliant bid

Could have included these in the rates? If so, provide a breakdown

Provide an opportunity to price the prelims but don’t allow a long period of time

95
Q

What if an unsuccessful tenderer had a value engineering proposal that was favorable?

A
  • Moral and legal uncertainty, if theres any doubt seek legal advice
  • If its a common construction technique, it might not be unreasonable to use it
  • If its bespoke design, there might be intellectual property rights on it
  • If its bespoke, the client should at least communicate with the unsuccessful contractor to ascertain whether it can be used to make the issue transparent
  • If they refuse then further advice would need to be taken but there may be a compromise, such as the losing contractor paid their tendering costs or paid an agreed license fee for the use of their idea
96
Q

How are errors dealt with in tender documentation?

A

In accordance with the JCT Tendering Practice Note 2017:

Alternative 1 - tenderer given details of the errors and given the opportunity to confirm or withdraw

Alternative 2 - given the opportunity to confirm the offer or for amending it to correct genuine errors

97
Q

Do you issue responses to tender queries to all contractors?

A

You do with pre-tender queries, post tender queries are kept confidential between each contractor

98
Q

How could your reduce the risk lack of quality in D&B?

A

Novating designer to contractor

Tendering at more developed stage

Ensuring robust ER’s

Tendering to contractor’s clients have worked with before

99
Q

You talk about normalisation, how would you normalise a provisional sum?

A

Usually you would provide the prov sum value so normalisation wouldn’t be required as the contractors would include the same value

100
Q

What are Employer’s Requirements?

A

Typically used on design and build projects or on a traditional contract where the contractor is to design discrete parts of the works

They provide a description of the client’s requirements, including; the specification for the building, the scope of services required from the contractor and an allocation of risk for unknown items

101
Q

What are Contractor’s Proposals?

A

Prepared by the contractor in response to the employer’s requirements. These present the contractor’s suggested approach for designing and constructing the building, along with their price.

102
Q

What are the Public Contract Regulations 2015?

A

The Public Contracts Regulations 2015 implement parts of the 2014 EU Procurement Directives, defining the rules for purchasing of goods and services above certain price thresholds by public contracting authorities in the UK

Procurement and Tendering (4 decks)

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