Level 3 - Procurement & Tendering Flashcards
If your client was building a hotel and quality of finish and programme were the most important factors what procurement route would you advise, and why?
Two stage tender
Where would you look to for procurement and tendering guidelines?
Tendering strategies 1st edition - RICS guidance note
What tendering strategies are available?
- Single stage
- Two stage
- Negotiated
What is the difference between tendering and procurement?
There is often confusion in the industry about the
differences between tendering and procurement. The
terms are sometimes used interchangeably without
thought given to their actual meaning. They are distinct
activities in the construction process and it is
necessary to properly understand them to be able to
explain the differences.
• Procurement is the overall act of obtaining goods
and services from external sources (i.e. a building
contractor) and includes deciding the strategy on
how those goods are to be acquired by reviewing
the client’s requirements (i.e. time, quality and
cost) and their attitude to risk.
• Tendering is an important phase in the
procurement strategy but procurement involves
much more than simply obtaining a price.
Tendering is:
• the bidding process, to obtain a price; and
• how a contractor is actually appointed.
What is single stage tendering?
The most common type of tendering strategy is the
single-stage competitive tender for obtaining a price for
the whole of the construction works. Invitation to
tender documents are issued to a number of
competing contractors who are all given the chance to
bid for the project based on identical tender
documentation.
This is usually done at RIBA Stage 4 so that the
tendering contractors receive the most detailed
information to base their bid on. The bidding
contractors are given a predetermined amount of time
to submit their tenders. These are then analysed, in
terms of cost and quality, before a single contractor is
declared the preferred contractor. They then ultimately
enter into a building contract with the client to deliver
the tendered works.
What is two stage tendering?
Two-stage tendering has become more common in
recent years and is often used where time is
constrained (as it enables design and tendering to
overlap). It is also used if the design process would
benefit from the technical input of a contractor in the
later design stages. In this sense it is used to obtain
the early appointment of a contractor.
The process involves first-stage tender enquiry
documentation being issued to bidding contractors at
RIBA Stage 2 or 3. Rather than requesting a bid for
constructing the entire project (which is still in the
process of being designed), the preferred contractor is
chosen on the basis of the quality of their bid, the
quality of their team and their preliminaries price and
overhead and profits allowances. The preferred
contractor then joins the design team on a consultancy
basis using a pre-construction services agreement
(PCSA). The preferred contractor then works with the
professional team to complete the design, usually to
RIBA Stage 4, before presenting a bid for the works at
this stage.
What is negotiated tendering?
A negotiated tender is effectively a single-stage tender
with a single contractor who returns with an initial
price. This is then negotiated with the client’s
professional team (usually the professional quantity
surveyor (PQS)).
The benefit of this route is the speed with which a
price can be obtained for the works. However, the
competitive advantage of a formal bidding process is
compromised. Also, many public bodies and
government departments will not allow negotiated tenders except in exceptional circumstances as it is
difficult to prove that value for money in the current
market has been achieved.
Can you provide me with an example of tender scoring?
Assessments might consider some of the following criteria:
Price. Relevant experience. Understanding of the requirements. Past performance. Technical skills. Resource availability. Management skills and systems. Proposed methodology (this might include mobilisation plans, design proposals, and non-compliant proposals if these have been allowed). Compliance with the requirements set out in the invitation to tender.
Please provide an example of some procurement routes?
1 Traditional contract
2 Design and build
3 Management contracting
4 Construction management
What is traditional procurement including the pro’s and con’s of this method?
Good for:
Quality – full design pre tender
Design flexibility – variations & instructions
Specialist subcontractors – Named specialist update to standard building contract sbc11
Design control – through the architect / contract administrator
Contractor’s Designed Portion – such as mechanical and electrical engineering
Cost – there may be lump sum cost benefits unless are multiple changes made
Not suited for:
Time – require full detailed pack pre tender
Cost – not a benefit if many changes made
Incomplete drawings – lead to delay, costs and claims of negligence
What is D&B procurement including the pro’s and con’s of this method?
Good for:
Time – Fast track, overlap of design and construction
Cost – lump sum / Guaranteed maximum price
Single point of responsibility – Contractor design and build responsibility
Has good price certainty
Easy to arrange changes in the design
Novation – can benefit quality.
Low risk for the client
Variations can be accurately valued
Not suited for:
Quality – cheapest route to meet contract specification can lead to low quality products/ build quality.
Design flexibility – request for changes will have cost/time implications
Contractor carries risk for construction
Client exposed to claims for buildability
Design could affect the buildability of the project
What is Management contracting procurement including the pro’s and con’s of this method?
Good for:
Complex / specialist projects – individually appointed packages to best suited sub-contractor
Potential cost saving – competitive tender
Time - it is possible to overlap design and construction
Quality – each package subcontracted to specialist
Design flexibility – changes can be made throughout construction, although there are potential cost implications.
Not suited for:
Inexperienced clients – risk high
Fixed cost - Prime cost basis per package.
Lack of available specialists – would leave gaps in work to be undertaken.
What is Construction Management procurement including the pro’s and con’s of this method?
Good for:
Complex / specialist projects – individually appointed packages to best suited sub-contractor
Time - It is possible to overlap design and construction
Design flexibility – changes can be made throughout construction, although there are potential cost implications.
Potential cost saving – competitive tender
Quality – each package subcontracted to specialist
All building types
Efficiency – Early appointment of the construction manager to aid programme
Inexperienced client – risk high as appointing trade contractors
Fixed cost - Prime cost basis per package.
Lack of available specialists
