Tendering forms part of the procurement strategy and involves: - The bidding process to obtain a cost for the works; and - How a contractor is appointed.

Procurement and Tendering Flashcards by Elliot Price

What is procurement?

The overall act of obtaining goods and services from external sources (for example a building contractor) and includes decision making with regards to how the goods are to be acquired by reviewing a client’s requirements (i.e time, quality and cost). and their attitude to risk.

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What is tendering?

Tendering forms part of the procurement strategy and involves:

The bidding process to obtain a cost for the works; and
How a contractor is appointed.

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What is the difference between procurement and tendering?

Procurement is the overall act of obtaining goods and services from external sources (for example a building contractor) and includes decision making with regards to how the goods are to be acquired by reviewing a client’s requirements (i.e time, quality and cost). and their attitude to risk.
Tendering forms part of the procurement strategy and involves the bidding process to obtain a cost for the works and how a contractor is appointed.

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What is two-stage tendering?

The first stage of the process involves first-stage tender enquiry documentation being issued to preselected bidding contractors at RIBA stage 2 / 3. At this stage the works are still being designed.
The contractors then submit their bids which do not give a lump cost for the entirety of the works but confirm their preliminaries costs, proposed sub letting of the works (sub contractors) and their overhead and profit allowances.
The preferred contractor then joins the design team on a consultant basis using a pre-construction services agreement.
The preferred contractor then works with the design team to complete the design before presenting a bid for the works.

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What is negotiated tender?

A single contractor is provided with the tender documentation by the client and then submits their initial cost to carry out the entirety of the works.
The client’s professional team then negotiates the cost of the works with the contractor to achieve a final cost.

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What are the advantages and disadvantages of single-stage tendering? When would you utilise single stage tendering?

Advantages:

Ensures that only capable and approved firms submit tenders (as they are preselected from an approved list).
Client gets cost certainty as they are provided with a lump sum for the works.

Disadvantages:
- The full design has to be prepared before the works can be tendered which is not suitable whereby total programme length is important.

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What are the advantages and disadvantages of two-stage tendering? When would you use two-stage tendering?

*Advantages:**
Allows the contractor to contribute to the design and early planning of the work (so increases buildability).
Allow the contractor to commence works on sections before the entirety of the design is complete.
*Disadvantages:**
Hard to replace the contractor is second stage negotiations break down.
Risk of increased cost for retendering works if second stage negotiations have broken down.
The second stage is not a competitive process so the contractors cost may not be competitive.
*Two-stage tendering is suitable for:**
Projects that are complex (require contractor’s input on design).
When programme length is important.
Projects whereby the magnitude of the works are yet unknown.

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What are the advantages and disadvantages of negotiated tendering? When would you utilise negotiated tendering?

*Advantages:**
The contractor is usually approached because they have carried out similar works and to the required standard before so there is greater certainty of cost and quality.
Time and cost savings by reducing input into the tendering process because only a single tender needs to be analysed.
Time saving on tender process allows earlier commencement of the works.
*Disadvantages:**
Lack of competitive tendering may increase the cost for the works.
Negotiation process needs to be structured and controlled otherwise there could be adversity between the parties before works have even commenced.
You would usually utilise negotiated tendering when overall programme length is a priority over cost and whereby the client wants to replicate the quality of a project that the contractor has delivered before.

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What are the main procurement routes?

Traditional.
Design and build (single and two stage).
Management Contracting.
Construction Management.
Framework agreements.
Partnering.

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What is design and build procurement? When would you utilise design and build procurement? What contract would you use?

Design and build is whereby the contractor is responsible for the design, planning organisation, control and construction of the works to the employer’s requirements.

I would utilise design and build when…

The client has a need to make an early start on site as the design can be developed during the construction phase.
The client wishes to minimise their risk in relation to the design of the works, this may be due to risky nature of the works for example replacement of combustible cladding.
The design is complex and contractor input is needed to ensure buildability.
The client does not want to or is not bothered about retaining control over the development of the design.
The JCT Design and Build, 2016 contract would be used.

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What is management contracting? When would you utilise management contracting? What contract would you use?

A procurement option whereby a client employs a management contractor to contribute to design and manage the works.
The management contractor has direct contractual links with all of the works contractors and has the responsibility for the works without carrying them out.
The management contractor breaks down the project into suitable works packages and selects works contractors through competitive open book tenders.
The client then then reimburses the cost of the works packages to the management contractor in addition to their fee.
I would utilise this procurement route when:
1. The client values an early start and overall project length over cost.
2. The works are extensive.
3. The works are complicated.
I would use the JCT Management Contract, 2016.

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What are the advantages and disadvantages of design and build?

Advantages:

There is a single point of responsibility for the design and construction of the works.
Works can commence earlier on site as the design and construction process can overlap.
Contractor involvement with the design ensures buildability and expertise are incorporated into the design. It also promotes innovation in design (contractor’s not constrained by detailed design) which leads to cheaper and faster construction.

Disadvantages:

It may be hard for a client to prepare a sufficiently comprehensive brief.
Harder to compare tenders as the contractors each have their own designs rather than pricing for fully defined and designed works.
Designs submitted may also be uninspiring as contractors may emphasise quickness of construction over quality.

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What is construction management? When would you utilise construction management? What contract would you use?

A procurement strategy whereby the client engages directly with specialists for the design of the works via individual contracts. A construction manager is then employed on a consultant basis to plan, coordinate and monitor the works.
The construction manager coordinates the design team and has no contractual links with the specialist contractors or the design team. They prepare the programme, determine prelims and then break down the project into suitable works packages and obtain and evaluate tenders.
I would utilise construction management when:
1. The client is uncertain of the extent of works to be carried out.
2. Those clients that want to commence works on site quickly and is less concerned about cost certainty.
3. The client is an ‘expert’ and would benefit from the simple and direct legal relationships as they allow for effective redress of latent defects should they arise.
JCT Management Contract, 2016.

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What are the advantages and disadvantages of the construction management procurement route?

Advantages:

The construction manager can be appointed early on and can contribute to the design and planning process.
Project duration is shortened as there is an overlap between the design and planning.
Offers flexibility in design and the works as specialist contractors are let in stages.
The simple and direct contractual link between the client and expert contractors allow easy redress regarding latent defects.
Cost for the works packages may be lower due to direct contracts between the client and expert contractors.

Disadvantages:

Client needs to be an ‘expert’ to manage the various contracts between them and specialist contractors and consultants.
Can be difficult to select a suitable construction manager as selection is based on skill and not cost of a tender submission.
Puts risks of the performance of specialist contractors largely on the employer as the construction manager has little responsibility.
There is little incentive for the construction manager to reduce costs associated with the works as their payment is fee based.
The price of the works is not confirmed until the last package of works has been let.

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What are the advantages and disadvantages of the management contracting procurement route?

Advantages:

Overall project duration is shorter due to overlapping design and construction
There is contractor contribution to the design and planning process
Changes can be accommodated in packages not yet let if they have no further
impact
The works are let competitively at current market prices on a firm price basis

Disadvantages:

Can be difficult to select a suitable construction manager as selection is based on skill and not cost of a tender submission.
Puts risks of the performance of specialist contractors largely on the employer as the construction manager has little responsibility.
There is little incentive for the construction manager to reduce costs associated with the works as their payment is fee based.
The price of the works is not confirmed until the last package of works has been let.

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What are framework agreements? When would you utilise them? What contract would you use?

Framework agreements allow client’s that are consistently instructing construction work to invite tenders from contractors to be carried out over a prolonged period of time on a call off basis as and when required.
Could use JCT FA, 2016.

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What are the advantages and disadvantages of framework agreements?

Advantages

Reduces costs related to tendering works.
Allows quick start on site.
Integration of supply chain.
Continuity of finishes end product.
Allows development of long term and strong relationships.

Disadvantages

Reduced competition resulting in higher overall project cost.
Contractors must be able to undertake all types of work - this may not be the case if not considered before creation of framework agreement.

What are contract documents?

Documents that evidence the details of the building contract.

What documents would make up the contract documents for a JCT Design & Build Contract?

Employer’s requirements: Can be a brief written performance statement, sketch drawings, planning permission drawings or detailed drawings and bill of quantities.
Contractors proposals: These can be equally as brief or extensive as the employer’s requirements.
Contract sum analysis: The CSA could be a full bills of quantities produced in accordance with NRM2 schedule of rates, or a simple elemental cost breakdown.
The building contract: JCT Design and Build, 2016.
A BIM protocol (if applicable): This creates the requirement for the contractor to provide specified BIM at defined levels of detail and incorporates provisions which supports the production of deliverables for ‘data drops’ at defined project stages.

What documents would make up the contract documents for an Intermediate Building Contract?

Drawings.
Specification.
Schedule of works.
Contract sum analysis.
Employer’s requirements for any contractor designed portions.
The building contract.

What is the Tendering Strategies guidance note (1st edition)?

A guidance note that summarises what tendering is and how tendering processes are used to establish a contract price.
Review different types of tendering and negotiation strategies and their involvement in procurement.
Looks at the practical issues of producing an invitation to tender and assessing tender returns.
The document also splits up the information into the three competency levels.

What are the three main types of tendering?

Single stage.
Two-stage.
Negotiated.

What is early contractor involvement (ECI)?

A form of tender strategy that is very similar to that of negotiated tendering but emphasis is put on the contractor as the lead designer from the outset of the project.
It is still in its’ infancy but is set to become more prevalent as buildings become more complicated.

Why is it important to have robust tendering strategies?

Accountability.
Auditability.
Help reduce claims of corruption.
Ensuring the correct price has been paid for the proposed works.

What is the pre-tender estimate? Why is it carried out?

* Estimate of what the anticipated contract sum will be. * Important to undertake to: 1. Determine whether the works are financially feasible for the client. 2. Provide a basis for comparison when tenders are returned - aids tender analysis.

How would you choose you the most appropriate tendering stately?

* All three main tendering strategies (single stage, two stage and negotiated) can be used for almost all procurement routes but some suit certain strategies than others. * **_Two-stage tendering_** - useful when early start on site is required as tendering and design can be overlapped. Using a two-stage tender can benefit design and build procurement whereby design risk is passed on to the contractor, project will benefit from their early involvement. * **_Single-stage tendering_** - more suitable for traditional projects where traditional procurement where greater level of design is needed before going to tender (unless the project is particularly complex - may then need contractor involvement during design stage).

How did the new RIBA Plan of Work 2013 improve / change from the older 2007?

Now recognises changes in the industry and specifically the adoption of two-stage tendering techniques and that tendering can be carried out at various stages of the design life of a building.

What are the advantages and disadvantages of the main tendering tendering method in relation to the main procurement routes (Management, Traditional and D&B)?

What are the main types of contractor selection?

* Open tendering: Anyone who expresses an interest in the project can tender, usually used for public procurement. * Selective tendering: Selection from a list of approved contractors or from a list of framework contractors. * Single contractor selection: used for negotiated tendering technique.

How would you confirm a suitable tender period? What can you do if you need to extend the tender period?

* Time of year (bank holidays / christmas shutdown). * Size and complexity of the project. * Market conditions. * Ask contractor's what they deem to be reasonable. * Can grant a tender extension particularly if all contractors are having issues. * Dont want tender period to be too short - contractors will drop out or submit poor quality tender submissions.

What are the usual vetting requirements of you clients for contractors?

* Proof of appropriate PII and PLI. * Gonstructionline Gold / Silver - can check things like PII and PLI and if they're up to date / valid on constructionline.

What process do you follow for tenders that are returned?

* Open tenders issued from our tender return inbox in the company of another surveyor in the office.

Talk me through the process from start to finish of the tender process?

What tender documentation to you include in your tender packs?

* NBS preliminaries and preambles. * Pricing document. * Employers requirements (if using Design and Build procurement). * Design information - technical drawings with drawing issue sheet so contractor knows how many drawings there are to review. * Appendices - Pre Construction Information, asbestos surveys, technical surveys (CCTV drainage), building condition survey. * Form of tender.

For the tender returns for Spring Place what queries did you issue to the contractors and what query impacted the tendering contractor's proposed contract sum the most?

* One contractor had substituted items from the finishes schedule including the new roof system and crittal glass windows which were required to meet the BREEAM targets for the project.

What should you do if you find a tender has an arithmetical error?

- According to the JCT tendering guidance note, the employer has agent / the CA has two options: 1. Notify the tenderer of the errors and give them chance to confirm or withdraw their tender. If withdrawn the next most financially advantageous tender is analysed. If they confirm their tender then a letter of endorsement should be included within the priced documents prior to acceptance. The endorsement should confirm that all rates / costs in the documents (excluding contingencies, PS and prelims) are to be considered as reduced or increased - endorsement should be signed by both parties. 2. Notify the tenderer and give them opportunity of confirming or correcting it. If the tendered elects not to amend then an endorsement will be required to confirm this. If the tenderer elects to amend their tender then they should be either given access to the original tender to make adjustments or confirm their adjustments in a letter. The letter is then appended to any tender acceptance letter.

What should be included included in the tender report?

- List of tenders received. - Initial tender return totals. - Any qualifications identified. - Any post tender adjustments following queries / analysis. - The revised tender sum. - Comparison of the tender returns - in a tender analysis document. - Comparison with the pre-tender estimate. - Recommendations.

4Give me an example of when you have utilised a D&B contract

* Lytton House, Putney High School.

What is your role description when utilising a Design and Build Contract? What are the main differences acting as a CA as opposed to acting as a EA? What is the role of a Project Manager?

**_Contract Administrator_** * Party who is solely responsible for administering the contract for the employer. * Impartial role that only exists at the point a contract is entered into (when contract exists). **_Employer's Agent_** * Party who is identified in the contract and who acts on behalf of the employer in **_all_** matters, effectively as if they are the employer. * The EA carries out certification and decision making functions under the contract (they can administer instructions), however they need to act impartially. * The EA's will need to check the scope of service and limits on authority in their terms of employment. **_Project Manager_** * Party specified in the contract and manages a team to develop and deliver a project for an employer, often from project inception stage, making key decision on behalf of the employer and giving instructions to the contractor. * The Project Manager is to remain impartial with regards to the contract.

How do did you ensure that the contractors tenders complied with your design criteria?

How and when did you do periodic checks to ensure that the works aligned with the specification?

* I will consult the contractor's programme and have them confirm the dates of key works so I can plan my site visits accordingly. For example for façade repair works at Lytton House in Putney I ensured that I attended site the first day that cleaning works to the masonry were to be undertaken, I was able to check the result to an isolated area to ensure to ensure the results aligned with the ER's prior to cleaning of the wider elevation.

What is a framework agreement?

Allows a client to invite tenders from suppliers of goods and services to be carried out over a period of time on a call-off basis as and when required.