Procurement and Tendering Flashcards
What is Tendering?
An important phase in the procurement strategy involving:
- The bidding process,
- How a price for the works will be obtained and agreed
- Process of appointing a Contractor
What is typically included within Tender Documents?
• Invitation to Tender Letter • Form of Tender • Contract Conditions • Instruction to Tenderers • Employer’s Requirements • Pricing Document • Appendices: o H&S documentation (Pre-construction Information) o Key Surveys o Planning Permission o Design Responsibility Matrix o Risk Register o etc, etc…
What should be included in a ITT?
- Date for return
- Address to return to
- Site visit details if applicable
- Proposed programme length
- Confirmation of receipt of documents
- How tender should be submitted
What is a Form of Tender?
- Document used to record the main contractor’s price for completing the building project (i.e. tender price)
- Form a contractor signs to confirm price and programme
What is a “Certificate of Bona Fide Tender”?
- Completed by the Main contractor to confirm that he has not communicated his tender to other parties
- Usually inserted after the form of tender
What does the Instruction to Tenderers include?
- Sets out conditions of tender
- Details what is expected to be returned
- Proposed Scoring Matrix
- Any applicable questionnaire
- Details for arranging site visits
- Details for submitting tender queries
What would you typically include in a tender report?
• Review with design team for their input • Issue to client and follow up with meeting to review • Includes: o Executive summary and recommendation o Introduction o Tender procedure o Tender pricing o Programme o Qualifications o Highlighting any errors found o Remaining risks o Next steps
How would you go about a tender process (Assume Single Stage Selective for a Private Client)?
- Consult with design team and client to create a contractor shortlist
- Prepare PQQ to be issued to contractor’s
- Review returns to select contractors who are suitable
- Gather & prepare all tender documentation
- Issue tender documents with cover letter
- Hold mid tender interviews
- Collect and respond to all contractor queries
- Review tender submissions (normalisation, clarifying exclusions)
- Hold post tender meetings to clarify things
- Consult design team on their opinions
- Write and issue Tender Recommendation Report
What is Serial Tendering?
- Hybrid of Competitive Tendering and Negotiation
- Involves the preparation of tenders based on a typical or notional bill of quantities or schedule of works
- The rates submitted can then be used to value works over a series of similar projects, often for a fixed period of time following which the tender procedure may be repeated.
When is Serial Tendering likely to be used?
- On simple and small scale projects.
- Where the client has a regular programme of works that they would like to be undertaken by a single contractor
- Often minor works, maintenance work e.g. Measured Term Contract or Framework
What will the tender documents contain for Serial Tendering?
- The buildings that will be covered by the works
- The term over which works may be required (often between one and five years)
- An estimate of the likely total value of the works that will be required over the term and an estimate of the likely size of individual orders.
What is Open Tendering?
- Allows anyone to submit a tender, generally in response to an advert or online portal giving notice that the contract is being tendered e.g. OJEU
- Not often used for private projects.
- Common for public projects or projects that have an element of public funding as they may be required to use open/public tendering by the UK Public Contracts Regulations 2015.
- High degree of competition and fairness, however costly and slow process. Can get bids from unsuitable contractor’s.
What is a Framework Agreement?
- Often used where Clients have continuous construction work over a period of time in which orders can be issued on a call-off basis
- Reduces procurement timescales
- Increases learning curves and reduces risk by using framework agreement
- The framework contract documents should define the scope and possible locations for the works or services likely to be required during the defined time period. They should describe the contract conditions that will be used for pre-construction services (such as design), and/or the contract conditions that will be used to execute the works.
- Sometimes, the framework might have optional contracts as part of it. Such as D&B intermediate or minor works contracts which can be picked and chosen depending on the specific works to be undertaken.
Setting up a Framework Agreement
- A description of the contract conditions to be used and assumptions regarding preliminaries.
- The starting and completion dates of the agreement.
- Requirements and obligations regarding insurance, bonds and warranties.
- A description of how the project will be managed in its various stages and the basis of remuneration.
- A description of inflation, interest and retention percentages to be applied.
- A description of incentive mechanisms to be applied.
- A description of dispute resolution procedures.
- A request for schedules of rates and time charges to be submitted and a breakdown of resources and overheads to be applied to design, or manufacture and installation (including any proposed subcontractor or sub-consultant details).
What are Preliminaries in a Tender?
- Prelims address and communicate to the contractor items that are not directly related to the measured works
- Helps contractor price management of the project e.g. site establishment, security, safety, welfare etc
- You can use NBS to produce prelims
Can you give example of typical items you would see in Preliminaries?
- Management and staff
- Site establishment
- Mobilisation and demobilisation of staff
- Site office and welfare set up
- Temporary services
- Security
- Health and Safety
- Temporary works
- Cleaning
- Sites consumables
- Bonds, guarantees and warranties.
What are Subcontractor Preliminaries?
• NRM1 Definition: ‘Preliminaries that relate specifically to building work which is to be carried out by a subcontractor. Costs associated with subcontractor’s preliminaries are to be included in the unit rates applied to sub-elements and individual components.’
What is NBS?
- National Building Specification
- Construction specification used by architects and other building professionals to describe the materials, standards and workmanship of a construction project.
- Can be used to draft Preliminaries & General Conditions
Give examples of NBS Prelims you have come across?
- A10 Project Particulars
- A11 Tender & Contract Documentation
- A12 The Site / Existing Buildings
- A13 Description of the Works
What are Preambles?
A preamble is an explanation of a document, commonly found in contracts, specifications and bills of quantities. It can help with the interpretation of the document.
A preamble might include: • A description of the parties to the contract. • The background to the document. • Tendering procedures. • The objectives of the project.
What is the difference between Prelims and Preambles?
- Preliminaries = Prelims address and communicate to the contractor items that are not directly related to the measured works e.g. Site Establishment, Security, H&S, Welfare.
- Preamble = is an explanation of a document, commonly found in contracts, specifications and bills of quantities. It can help with the interpretation of the document. A preamble might include, a description of the parties to the contract, the background to the document, the objectives of the project, etc
What Is OJEU?
- Official Journal of European Union
- Part of a EU directive relates to opening up public procurement.
- It is used as a publishing forum for Public Sector Tendering. All contracts from the public sector over a certain threshold have to be advertised across the EU.
- Since Bexit this is now replaced by UK ‘Find a Tender’ service.
Find a Tender thresholds?
Central Government
Supply, Services and Design Contracts £122,976
Works Contracts £4,733,252
What is the process for Find a Tender?
What is the process for Find a Tender?
• Advert/ notice along with tender info/documents are published on the Find a Tender online portal
- Contractors can search on the site and find opportunities to submit tenders for
- The advert/ notice must be open for a certain length of time
- The regulations provide certain procedures to follow to make sure analysis is not bias
What is the minimum number of bidders required when using Public Procurement?
- Minimum 3 for procedures involving negotiation
* 5 for restricted procedures
What is a Pre-Qualification Process?
- Where contractors have to go through a process of qualifying themselves to bid for the works
- Commonly used as part of a selective tendering procedure but can also be used for open tendering whereby any contractor can go through the qualification and if they are successful, they can bid for the works. In this case, it helps limit the number of tender returns for public projects
What is a PQQ?
- Pre-Qualification Questionnaire
- Sets out a series of questions for potential tenderers to answer regarding their level of experience, capacity & financial standing
- Answers to these questions enable the client to produce a shortlist of suppliers that are likely to be most appropriate for the project
What is usually included in a PQQ
Depends on project type, but typical questions could be:
• Company details (legal status)
• Details of insurance cover
• Financial information (recent accounts) e.g. Dun and Bradstreet Report
• Relevant experience
• Information about technical & professional ability
• H&S policy
• Environmental management policy
• Equal opportunities policy
• Relevant references & CV’s
• BIM assessment to determine BIM capabilities
• Company accreditations / awards e.g. Considerate Contractor etc.
What would you do if the lowest tender also has the lowest quality spec?
- The implications should be spelled out to the client. Lowest cost doesn’t always mean best value. E.g. higher maintenance costs
- It is the client’s decision ultimately
How many contractor’s would you usually put on a shortlist?
- D&B = say 2-4, due to time and cost implications, contractor’s want to think they have a chance of winning
- For other contracts = say 5 – 6, to get a balance between competition and contractor care in pricing
What should be examined/looked for in a submitted pricing document?
- Arithmetical errors (comp checking)
- Pricing errors (Omissions / Duplications)
- Pricing methods (front loading)
- Qualifications
- Exclusions