Level 3 - Procurement and Tendering

Question 1

Who is responsible for design in a traditional procurement route?

Answer 1

The Client is responsible for design, the contractor is only responsible for the design of their temporary works, and their Contractors Design portion.

Question 2

N1. What is Procurement?

Answer 2

• The overall act of obtaining goods and services from an external source, which includes deciding on the strategy of how these goods are to be obtained by reviewing the Clients requirements.

Question 3

N2. What is Tendering?

Answer 3

• The bidding process to obtain a price, and also the process of appointing a contractor.

Question 4

N3. What factors can influence the chosen procurement route?

Answer 4

• Clients appetite for risk.
• Budget.
• Desired quality.
• Timings.
• Funding availability.
• The type of project.

Question 5

N4. What is a Traditional Procurement Method?

Answer 5

• The most common form of procurement.
• Where a client appoints consultants to design the project, prepare the tender documents which are issued to contractors for pricing, usually on a single-stage competitive basis.

Question 6

N5. Who is responsible for design in a traditional procurement route?

Answer 6

• The Client is responsible for design, the contractor is only responsible for the design of their temporary works, and their Contractors Design portion.

Question 7

N6. What is a Contractors Design Portion?

Answer 7

• Included within a contract, whereby a contractor will take on design responsibility for a specific portion of the works.

Question 8

N7. What must the contractor have if they take on a Contractors Design Portion?

Answer 8

• Takeout and Maintain Professional Indemnity Insurance.
• Provide copyright licenses for designs to the Client.
• Provide appropriate levels of skill, care and due diligence.

Question 9

N8. What types of traditional procurement routes are there?

Answer 9

• Lump Sum.
• Re-measureable.
• Cost Reimbursement.

Question 10

N15. How do the risks differ for the Client for each traditional procurement route contracts?

Answer 10

• Lump sum = low risk for the Client with regards to both finance and quality, unless design is incomplete.
• Re-measurement = Higher risk to the client finance wise due to lack of agreed final price.
• Cost Reimbursement = High Risk Financially, no incentive for contractor to cover costs.

Question 11

N16. What common forms of JCT Contracts do you know?

Answer 11

• JCT Standard Building Contract 2011.
• JCT Intermediate Building Contract 2011.
• JCT Design and Building Contract 2011.
• JCT Minor Works Contract 2011.
• JCT Major Works Contract 2011.
• JCT Management Building Contract 2011.
• JCT Construction Management Contract 2011.

Question 12

N17. What is a re-measurement contract?

Answer 12

• Where the design can be described but the Quantity Cannot.

* Design must be detailed enough to be able to produce rates from it, based on an approximate bill of quantities.

Question 13

N18. Are re-measurement contracts fixed price?

Answer 13

• No, the final price is not ascertained until completion.

Question 14

N19. What are the benefits of using a Re-measurement contract?

Answer 14

• Allows for a quick start.

* Easier to make changes to the design, as the changes are just re-measured.

Question 15

N20. What is Design and Build?

Answer 15

• Where a single point of responsibility is created for both the design and construction of a project through the Contractor.

Question 16

N21. What is the Design and Build process?

Answer 16

• Typically, Client will appoint consultants to produce concept designs and create the Employers requirements.
• Client will then give these Concept designs and the employers requirements to the contractor, who will price to design and build the job based off these designs and requirements.
• Typically, the Clients design team will be novated to the Contractor, to help keep design continuity within the project.

Question 17

N22. What is Novation?

Answer 17

• A process where the contractual benefits and burdens are transferred from one party to another.

Question 18

N23. Does Novation mean the Contractor is responsible for the service provided to the Client by the design team prior to novation?

Answer 18

• No, unless they agree to be.

Question 19

N24. Can Design and Build be lump sum?

Answer 19

• Yes, so long as the employers requirements are detailed and clear.
• Ambiguity in these requirements will cause confusion and extra cost.

Question 20

N25. What takes precedence, the Employers Requirements or the Contractors Proposals?

Answer 20

• The Contractors proposals should be an indication of how the contractor intends to comply with the employers requirements; not and indication of how the contractor wishes to construct the project or allocate risk.

Question 21

N26. What is Management Contracting?

Answer 21

Management contracting is a procurement route in which the works are constructed by a number of different works contractors who are contracted to a management contractor.

MC is paid on a fee basis and is brought into the project early on in the project timeline

Question 22

N27. When would you use a Management Contracting Route?

Answer 22

• On complicated projects, where you could bring on a management contractor to help improve buildability.

Question 23

N28. When would you appoint a management contractor?

Answer 23

• As early as possible, to use their experience help influence design and buildability.

Question 24

N29. Does the Management Contractor carry out any construction work?

Answer 24

• No, they are either or a fee or get paid a percentage of the build cost, on top of the construction costs.

Question 25

N30. Who are the works package contracted to in the Management Contracting procurement route?

Answer 25

• They are contracted to the Management Contractor.
• However they will typically have some form of Warranty, usually a Collateral Warranty between each trade contractor and the Client/funder etc.

Question 26

N31. What services may the Management Contractor Provide?

Answer 26

• Advising of brief development.
• Advising on appointments.
• Advising on feasibility, interfaces, buildability cost and programme.
• Defining Key Performance Indicators.
• Cost Control.
• Tendering and Managing Works Packages/Contractors.
• Managing Site.

Question 27

N32. Who undertakes the design under a Management Contracting Route?

Answer 27

• The Clients Consultant team.

Question 28

N33. What is the Management Contractor Liable for?

Answer 28

• Only his own negligence in relation to his services.

* Will have to maintain Professional Indemnity Insurance.

Question 29

N34. Is management Contracting fixed price?

Answer 29

• No, it is Prime Cost Until each package is let, then the management fee is added on top.

Question 30

N35. What is Construction Management?

Answer 30

Construction management is a procurement route in which the works are constructed by a number of different trade contractors. These trade contractors are contracted to the client but managed by a construction manager (CM).

Question 31

N36. Can you describe the Construction Management process?

Answer 31

• Client will employ consultants to produce designs. The Construction Manager is Employed as a fee earning professional to manage programme, coordinate design and facilitate collaboration.
• The Construction Manager will arrange and advise on ‘Trade Contractors’ for the employer to appoint.

Question 32

N37. Who are the Trade Packages contracted to in the Construction Management Route?

Answer 32

• They are contracted direct to the Client.

Question 33

N38. What is the Construction Manager Liable for?

Answer 33

• For his construction management services.

Question 34

N39. What services may the Construction Manager Provide?

Answer 34

• Advising of brief development.
• Advising on appointments.
• Advising on feasibility, interfaces, buildability cost and programme.
• Defining Key Performance Indicators.
• Cost Control.
• Tendering and Managing Works Packages/Contractors.
• Managing Site.

Question 35

N40. Are Management Contracting or Construction Management fast or slow procurement routes?

Answer 35

• They are fast, as they allow the design and construction phases to overlap. i.e. you can start constructing the footing before the roof design has been finalised.

Question 36

N41. What is a measured term contract?

Answer 36

• Where a Client has a regular programme of typically minor/maintenance works, which they would like a single contractor to undertake.

Question 37

N42. What is a measured term appointment based on?

Answer 37

• A schedule of rates.

Question 38

N43. How does a measured term contract work?

Answer 38

• The Client will issue an instruction for the contractor to undertake some work. The price will be calculated based of the schedule of rates.

Question 39

N44. What is Serial Contracting?

Answer 39

• Where a Client and Contractor work together on multiple projects. I.e. They will tender for the first and negotiate the rest.

Question 40

N45. What is Partnering?

Answer 40

• A concept that aims at forming a relationship between two companies to improve the performance in the delivery of a project.

Question 41

N46. What contracts do you know of that are Partnering Orientated?

Answer 41

• The NEC Suite of Contracts.

* JCT Constructing Excellence Contract.

Question 42

N47. What is a reimbursable contract (Cost Plus)?

Answer 42

• Where the contractor is reimbursed for the costs they incur, plus a fee.

Question 43

N48. When would you use a Reimbursable Contract?

Answer 43

• Where the scope of works cannot be defined or the risk is too high for works to be undertaken on price.

Question 44

N49. Who bares the risk with Cost Reimbursable?

Answer 44

• The Client as there is no contract sum.