Procurement Flashcards
What is Procurement?
Acquiring the services needed to complete a construction project
What is Tendering / Request for Proposal
The bidding process to obtain a price & how the successful contractor is appointed.
What is important to consider during the Procurement process?
Time, quality, cost & risk.
What are the different forms of Procurement?
”- Traditional Lump Sum / Stipulated Sum
- Design and Build
- Construction Management
- Management Contracting”
Explain Traditional Lump Sum / Stipulated Sum procurement?
”- Least risky with level of certainty as design, cost and duration inherent in the strategy. Slower process.
- Design is complete before RFP.
- Contractor selected on best value and not necessarily lowest price.
- Contractor assumes responsibility and financial risk for the construction of the building works to the design produced.”
Explain Design & Build procurement?
”- A single contractor assumes the risk and responsibility for designing and building the project, usually for a Lump Sum.
- Construction can start before design is complete.
- Design team can be appointed to carry out preliminary design based on Employers Requirements.
- GC may obtain control over the design team through novation - switching contract.
- Client can give single point responsibility.
- Proposals can be difficult to compare given the difference in design, schedule, etc.
- Contains Employers Requirments
“
Why does Design and Build procurement appeal to clients?
Because it gives a single point of responsibility for the entire project
Explain Construction Manager procurement?
”- Client employs the design team, with a construction manager engaged as a fee earning professional to manage, schedule and co-ordinate the design and construction activities.
- Work carried out through trade contractors, often specialists, through direct contracts with the client for distinct trade or work packages.
- Good route if speed of completion is desired.
- Little cost certainty as trade proposals come later.
- Contractor provides expertise without financial risk.
- CM takes over Schedule and Pricing responsibilities.
- Client should have a strong presence. Appoints a PM to assist with CM direction.
- Design & construction overlap.
- Client bears much of the risk.”
Explain Management Contracting procurement?
”- A MC manages the whole building process for a fee on top of construction costs.
- MC has direct contract links with subcontractors. No link between client and subcontractors.
- Client employees the design team but is responsible for the risk of their delay.
- Fast track route as full design does not have to be complete.
- Cost certainty only once trades awarded.
- MC identifies bidders.
- Client should have adequate risk management.”
What is the difference between Management Contracting and Construction Management?
“In construction management the client is in direct contractual relationships with the trade contractors, the construction manager is not.
In management contracting the client is in a contractual relationship with the management contractor, who is in contractual relationships with the trade contractors”
What do Construction Management services include?
“a. Procurement advice
b. Advising on appointments
c. Advising on buildability
d. Defining KPIs for trades
e. Cost planning and cost control
f. Preparing a construction schedule
g. Identifying subcontractors & trade buyout”
Explain Partnering procurement?
Partnering is a cooperative relationship between business partners formed in order to improve performance in the delivery of projects.
There are three main types of contractor selection techniques?
“1. Open Tendering - anyone can provide a proposal. Usually Public work.
2. Selective Tendering - a shortlist drawn up by the project team.
3. Single Contractor Selection (Sole Source) - Contractor selected then negotiation process begins.”
“What are the main types of RFP procedures?
Can you name some different ways of tendering work?”
“1. Single Stage (Competitive) - RFP to a number of contractors. Bids based on identical documentation. Detailed design available (RIBA stg 4)
2. Two-stage (Competitive) - Where time is constrained. Early appointment of the contractor who can input on design. Design being developed. (RIBA stg 2/3). Awarded on team, General Conditions, Fee & Insurance.
3. Negotiated (Sole Sourced) - single stage with a singular contractor. Price is negotiated. Faster than above but loses competitive advantage.”
“What are some advantages and disadvantages of single stage tendering?
”- Advantages:
o Increased competition
o Cost of construction is often lower
o Ensures only capable contractors submit a tender
- Disadvantages:
o Does not allow early contractor involvement
o It is market dependent”
What is a Pre-Tender Estimate
Estimating the cost of the project before an RFP is issued based on the available design. This is to inform the client if they can afford the proposed development and as a basis of comparison against returned proposals.
“What would you expect to see in the first stage of a two stage tender?
”- General Conditions
- Level of OHP
- Indicative Schedule.”
“What are some advantages and disadvantages of two stage tendering?
”- Advantages:
o Enables early contractor involvement
o Encourages collaboration
o Contractor can help identify and manage risk
- Disadvantages:
o Cost certainty may not be achieved before construction begins
o Additional fees involved with a PCSA
o Contractor gains leverage as they continue to a second stage, so reduced competitiveness”
