Procurement Flashcards
- What is procurement?
- The overall process of acquiring construction work or services
- What should be considered when selecting a procurement route?
- The specifics of the project
- The client objectives regarding cost, time, control, quality and risk
- Experience
- Objectives
- Stakeholders
- What are the main procurement methods?
a) Traditional / general contracting
b) Design and build
c) Management contracting
d) Construction management
e) Maintenance
f) Term Contracting
- What is traditional procurement?
- The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified
How does traditional procurement work?
- The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team for the contract sum within the contract period
- The client takes the responsibility and risk for the design and design team performance
- When might traditional procurement be appropriate?
a) If the employer has had the design prepared
b) If the design is substantially completed at time of contractor selection
c) The client wishes to retain control over the design and specification
d) Cost certainty at start on site is important
e) The shortest overall programme is not the client’s main priority
- What contracts might be used for traditional procurement?
- JCT – minor, intermediate, standard with quantities
- What are the advantages of traditional procurement?
a) Competitive fairness and transparent process – increase value for money
b) Design led – can ensure quality
c) Price certainty before commencement
d) Well known procedures
e) Changes are reasonably easy to arrange and value
- What are the disadvantages of Trad Procurement?
a) Overall project duration may be longer than others – sequential process
b) No input into design and planning by the contractor
c) Strategy based on price competition – could lead to adversarial relations
d) Dual point of responsibility – design team for design and contractor for construction
e) If design not complete at time of tender, cost and time certainty are reduced
- What is design and build?
Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements
- How does D and B work?
The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works
Which Contract is appropriate for DB?
JCT D&B 05
- What are the advantages of design and build?
a) Single point of responsibility for design and construction
b) Earlier commencement on site
c) Early price certainty
d) Benefit of contractor’s experience harnessed during design
- What are the disadvantages of D&B?
Provisional Sums
Requirement to create comprehensive brief
Client must commit to a concept design early
Variations are difficult to arrange and often expensive
Harder to compare tenders – harder to determine if getting value for money
Aesthetic quality may be compromised
May be less real competition due to fewer design and build firms
- How much design input will the contractor have in D&B?
- This depends on the amount of design work the employer has already had completed at time of tender
- Can range from full design to production information and coordination only
- Who carries out the design for the contractor? (D&B)
- It may be outsourced to a separate design company (contractor retains responsibility)
- They may have in-house design capabilities
- OR the client’s team may be novated
- What is novation?
- A new contract that transfers the rights and obligations of one contractual party to a new third party i.e. design rights and obligations of architect transferred to contractor
- If the design team is novated, what should the client put in place?
- A collateral warranty to the design team to give them remedies for breach of contract
- What is management contracting?
- A management contractor is employed to contribute their expertise to the design and to manage construction and is paid a fee for doing so
- How does M.C work?
- The management contractor has direct contractual links with all of the works contractors
- They have the responsibility for the construction works without actually carrying them out
- Not all the design need be completed before the first works contractors start work
- The MC selects the works contractors through competitive open book tenders
- The client reimburses the cost of these packages to the MC plus their fee
- The MC’s role is low risk – get prime cost plus a fee
- When might MC be appropriate?
- Where the client does not want cost certainty before commencement
- Where an early start on site in a priority
- What contract might be used for MC?
- JCT – Management Contract 05
- What are the disadvantages of MC?
a) The price for the works is not received until the last package has been let
b) Changes to the design of later packages may affect packages already let - expensive
c) There is little incentive for the MC to reduce costs
d) May become a ‘post box’ system
e) In practice, the MC has little legal responsibility for the defaults of the works contractors
- What is construction management?
- The employer places a direct contract with each fo the trade contractors and utilises the expertise of a construction managers who acts as a consultant to coordinate the contracts
- How does CM work?
- The trade contactors carry out the work
- The construction managers supervises the construction process and coordinates the design team
- The CM has no contractual links with the trade contractors or members of the design team
- Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works
- When might MC be appropriate?
- On large, complex projects were the advantages of CM can be put to use e.g. upfront buildability knowledge, programme advise, specialist input from trade contractors
- Where early start on site is key
- Flexibility in design, procurement, construction strategy
- Where price certainty before commencement is not key
- Where the client is experienced in construction
- What are the advantages of MC?
a) Overall project duration reduced by overlapping design and construction
b) Construction manager can contribute to the design and project planning processes
c) Roles, risks and relationships for all parties are clear
d) Changes in design can be accommodated without paying a premium
e) Prices may be lower due to direct contracts with trade contractors
f) Client has means of redress to trade contractors through direct contractual links
What are the disadvantages of MC?
a) Price certainty not achieved until last trade package is let
b) Changes to later packages may adversely affect packages already let - expensive
c) Need an informed, pro active client
d) Client has a lot of consultants and contractors to deal with – not just one – more fees
- What is the difference between management contracting and construction management?
- Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t
- Under management contracting, the MC is in direct contractual relationships with the trade contractors and the client is in contract with the MC only
How do you identify the client requirements before recommending a procurement route?
- Through detailed discussions with the client and design team to identify their priorities in terms of cost, time, quality, risk, control requirements and experience
- If the client wishes to start on site asap what route would you recommend?
- Depends on their other requirements – such as cost and quality
- If time was their overriding priority then CM or MC as they offer the fastest start on site
- This is because start on site is not dependent upon a long tender period
- BUT has consequential disadvantages in terms of cost certainty
What if clientwanted an early start but also cost certainty
- Then design and build might be the most appropriate
- Allows design and construction to be overlapped rather than being sequential
- Tenders are based on the provision of all services so the client gets a lump sum price
- What are the different forms of mechanisms in terms of cost?
Remeasurement Lump Sum Target Cost GMP Cost Reimbursable
What is GMP?
Guaranteed Maximum Price
- What is PFI?
- Private Finance Initiative;
- A government programme launched in 1992 to bring private sector project management and expertise into the public sector;
- The private sector is granted a concession to finance, design & build and operate major public projects such as schools and hospitals.
- What is Partnering?
Involves two or more organisations working together to achieve specific mutual objectives and deliver continuous measurable improvements
- What is project partnering?
Once off basis. “Project by Project basis”
- What is Strategic Partnering?
Multi project relationship
- Framework Agreement – an agreement between contractors/ suppliers and the employer. It provides and agreement to fix the T’s & C’s for future purchases. Subject to inflation agreements.
- What are the benefits of partnering?
Long term relationships Collaboration to reach project success Open book Buildability input from Contractor Reduction in cost and time Relationships for future prospects
What is a procurement strategy?
A strategy by which a procurement route is identified. This will be based on cost, time, quality, risk, complexity, ER’s
What will be evaluated in order to select criteria of highest importance with regards to a procurement strategy?
1- verifying the requirement for the project
2- considering the options (profit margins)
3- 2/3 criteria will be identified as most important (time/cost/quality)
4- implementation of strategy (selecting the route)
5- project delivery
6- post project review
What is a consultant appointment?
Where the client directly employs a consultant (QS, PM, Architect, Designer etc)
How are consultant appointments awarded?
Similar to tendering, through recommendation, previous experiences, open bidding, selective
Client produces a Request for Proposal, what would this include?
Strategic Brief Management Structure Scope of Services Form of appointment Requirement for CW's References, CV's
What is an appointment document (consultants)
RICS/JCT have appointment documents, may include: Who are the parties?
Scope of services
Fee details
Warranties required
What is a Framework Agreement?
allows clients to call off approved suppliers to tender for a project to reduce the procurement process
What is Measured Term contract?
Used where the client has a regular programme of works that is undertaken by a single contractor
Usually minor works
Based on agreed schedule of rates
Normally used with Serial Tendering
What is remeasurement contract?
Used when quants cannot be accurately measured
Contract Sum established following remeasurement
Tender will be based on Approx Quants
Differences between project and strategic partnering
Project- Once off, project by project basis
Strategic- Multi project relationship, usually on a Framework basis
What are the RIBA stages?
0 - Strategic Definition 1 - Preparation and Brief 2- Concept Design 3 - Spatial coordination 4 - Technical Design 5 - Manufacturing and construction 6 - Handover 7 - In use
What may influence time as a procurement driver?
Start on site- planning/development agreements
Certainty of delivery date
What is a remeasured contract?
o Utilised when quantities cannot be accurately measured
o Contract Sum is established following completion of construction when re-measurement takes place
o Tender is based on drawings and Approximate Quantities
Please explain the main headings in one of your tender recommendation reports?
Project Overview Scoring Criteria Qualitative Evaluation Cost Evaluation Normalisation process Unsuccessful Contractor analysis Tender Recommendation justification Post Tender negotiations PTE Comparison
If a client needed an immediate start on site, what procurement route would you advise?
Management Contracting or Construction Management- design and construction can occur concurrently, typically the most programme advantageous procurement routes
What is OJEU?
The Official Journal of the European Union (platform for public procurement) and tenders must be published if over a certain threshold
Updated every 2 years
What is the OJEU threshold for works contracts?
£5.35m Works Contracts
How have your companies professional services been procured on one of your projects?
Via a professional services agreement
What is the difference between procurement and tendering?
Procurement is obtaining the services
Tendering is the bidding process to win the contract
Tell me about a time you advised on a procurement strategy? What were the main factors for your decision?
Following a series of meetings with the project team and disciplines it was my understanding that the client required a design and build procurement route
When would you use a pre-qualification questionnaire?
To provide a short list of selected contractors to invite to tender
What are the benefits of a framework?
A selection of contractors shortlisted to be capable of providing the delivery of a project
Can you name some frameworks?
….
What sections are included within the PQQ?
Executive Summary/Recommendation Selection methodology Project objectives Scoring criteria (Pass/Fail for financial, H&S, environmental and sustainability) 70% relevant experience 30% Quality of submission
What does a novation agreement look like?
This will detail the novation scope including responsibilities into Stage 4 - Handover
Relinquish consultants of contractual relation to the client
Who takes the risk of prior to design team being novated?
The Contractor - if this is defined within the Novation Agreement
Whats included within the financial section of a PQQ?
Current assets Fixed assets Liabilities Long term liabilities Annual Turnovers Secured Work Forecast Turnover
What are factors that may affect the tender period?
Level of design
Complexity of project
What are the benefits of novation?
Retain historical project knowledge
Contractor retains design risk
