Procurement and Bidding

Question 1

What are the steps to Procurement Management?

Answer 1

First, plan what you need to contract
Next, plan how you’ll do it,
Next, send out your contract requirements to sellers. They will then bid for the chance to work with you,
Next, you pick the best one and sign a contract,
Next once the work begins you make sure the contract is being followed,
Once the work is done, you close the contract and do the paperwork
(Plan-Plan-Send-Pick and Sign-Follow-Close-Paperwork)

Question 2

What are the different type of owners?

Answer 2

Private, Public, PPP(Public-Private Partnership)

Question 3

What is a Private Owner?

Answer 3

individuals, partnerships, corporations, or a combo

Question 4

What is a Public Owner?

Answer 4

Government-(federal, provincial, municipal)

Question 5

What is a PPP?

Answer 5

Public-Private Partnership: Partnership between a private and public organization designed to procure private financing of a public project

Question 6

What is a Procurement Management Plan?

Answer 6

it has details how the procurement process will be managed. Such as: types of contracts, metrics, delivery dates, how vendors and contractors will be managed.
-The procurement plan is a subsidiary of the project management plan

Question 7

What are the different types of Contracts?

Answer 7

• Fixed Price/Fixed Sum
• Cost Reimbursable
• Time and materials
• Negotiated Contracts
• Combined Bidding and Negotiation

Question 8

What is a fixed Price Contract?

Answer 8

• Legal agreement between the OWNER and the ENTITY providing the goods or services at an AGREED-ON PRICE
• offers predictable costs when the scope of work is clear
• RESPONSIPILITY is focused on the CONTRACTOR to provide the needs of the project
• the project team monitors the quality and schedule

Question 9

When does risk occur with a fixed price? Why?

Answer 9

Occurs during project change. If changes are made, they are often very expensive. To compensate for this the contractor often creates a contingency fund in the budget to account for any changes that could occur.

Question 10

When is a fixed price used with price Adjustment?

Answer 10

-during long project lengths, most often a inflation-adjusted price.

Question 11

What is an Fixed Price with Fee Incentive?

Answer 11

Provides an incentive or penalty for the contractor to complete an important milestone.

Question 12

What is a Fixed Unit-Price Contract?

Answer 12

• It provides the service or materials at standard rates

- The amount needed may not be known accurately, but the price per unit is fixed.

Question 13

What are the different types of fixed contracts?

Answer 13

fixed total, fixed unit, fixed with incentive, fixed fee with price adjustment

Question 14

What is a Cost-Plus Contract (Cost Reimbursable)

Answer 14

• Owner pays the contractor costs of service plus some profit
• used when the scope of the work or the costs are not well known, This will reduce the amount a contractor would put in the bid contingency.

Question 15

What is a flaw in the cost reimbursement contract? (cost Plus)

Answer 15

The contractor may be less motivated to find ways to reduce the overall cost of the project.
-Also requires good documentation of costs

Question 16

What is the Plus in “Cost Plus”?

Answer 16

• Percentage Fee ( provide contractor with profit that is a percentage of the costs eg.10%)
• Incentive Fee (used to encourage performance and cost-reduction behaviour)
• Award Fee (reimburses the contractor for expenses and provides a fee based on performance)

Question 17

What is a Time and Materials Contract?

Answer 17

• Contractor charges hourly rate for labour, plus a supplies cost. plus percentage of total costs. This is used on small project and has an uncertainty of risk.
• The project assumes the risk

Question 18

What is a Negotiated Contract?

Answer 18

• Forgoes the competitive bid process. The owner negotiates a contract with a PRESELECTED CONTRACTOR
• Most are Cost-Plus

Question 19

What is a procurement Plan?

Answer 19

• Occurs after a decision about what good and services has been made.
• The procurement team then: selects an appropriate contract relationship, prepares RFQs and RFPs, evaluate these, award and sign the contract, manage the quality and time, manage and close the contracts

Question 20

What are some things to consider when selecting the contract approach?

Answer 20

• unique skill or labour?
• Supplier, vendor, partnership?
• RFP, RFQ?
• How well known is the scope?
• What are the risks?and who assumes them?
• What is the cost in advanced?

Question 21

What is soliciting bids?

Answer 21

The process of requesting price and and supporting information from bidders, usually a RFP,RFQ.

Question 22

What is the difference between RFQ and RFP?

Answer 22

A RFQ focuses on PRICE, if the bidder can meet the quality and schedule requirements, the lowest bid should be accepted. A RFP accounts for price, but focuses on meeting the project quality and schedule requirements

Question 23

What is contract A/B?

Answer 23

When the owner accepts a bid, the bidder’s obligation under Contract A is to enter into Contract B, in accordance with its bid. (Basically the contract before the contract). This prevents the bidder from withdrawing any bid during the specified acceptance period. Contract B’s obligation is to perform the work in accordance with the contract documents.

Question 24

What are some of the owner’s obligations when soliciting a bid?

Answer 24

• ensure that all bidders receive the same information, at the same time.
• ensure there is no missing, misleading or inaccurate information.

Question 25

What are the different types of bids?

Answer 25

• Open bid call-Publicly advertised
• Invitational bid call- preselected list
• Bid Depository- a system designed to collect and register subcontractors bids and then transmit them to the prime contract bidders.

Question 26

Is a bidder able to modify their bid anytime before the closing time?

Answer 26

Yes

Question 27

What is the Gross Revenue?

Answer 27

total amount of money earned

Question 28

What is a Bidding Efficiency?

Answer 28

it is a ratio of the profit actually won to the amount of money that could have been made had all the competitors bids been known prior to the bid letting.

Question 29

What is Bidding Tradeoff?

Answer 29

Lowering your bid increases your odds of being chosen for the project. However, this lowers your profit margin. It is important to try find happy medium. The optimum bid comes at a markup at 12.5% of the costs of the project.