Procurement And Tendering

Question 1

What is the difference between procurement and tendering?

Answer 1

Procurement is the strategy by which goods and services are attained for a project.
Tendering is a process within the procurement strategy, and it is about how a price is obtained for the goods and services e.g. a bidding process and how the contractor will be appointed.

Question 2

What is tendering?

Answer 2

The method of obtaining a price and resources to carry out required works for a project. A bidding process to obtain a price

Question 3

What key procurement routes are there?

Answer 3

Traditional
Design and Build
Management Contracting
Construction Management

Question 4

What factors govern the procurement route selection?

Answer 4

It is based on the clients requirements for time, cost, quality and risk.

Question 5

What is traditional procurement and when will it be used?

Answer 5

• Traditional is a linear form of procurement where the design is completed by the Client’s team, prior to any engagement with a contractor.
• It is the longest procurement method as there is no overlap between the construction and
• Provides cost certainty before the construction works commence.
• Quality tends to be higher as the Client is in control, however the Client takes on the risk for the design.
• Time certainty is obtained at tender as the works are fully designed.
• The information created by the team can be with or without bills of quantities, includes the drawings and specifications.
• This route is beneficial as post contract changes are easier to arrange and value.
• This route does not allow for buildability or ECI (unless a 2 stage tender process)

Question 6

What is Design and Build and when will it be used?

Answer 6

• Design and Build is a procurement method where the Client’s team develop a set of Employer’s Requirements for the contractor to then develop the design and build to accordingly.
• It allows time benefits as the construction works can start on site whilst the design is progressing.
• The contractor takes on the risk of the design
• There is a risk of quality being compromised as the contractor could derogate for commercial benefit
• Whilst cost certainty can be obtained early, the price tends to be higher as the contractor prices for risk of taking on the design.
• There is a single point of responsibility for the design and construction
• Benefit from Contractors expertise

Question 7

What is Management Contracting and when is it used?

Answer 7

Management Contracting is a procurement method whereby the works are undertaken by different trade contractors and a management contractor is appointed to manage them. There is therefore one single point of contact for the packages.
The route has substantial time benefits as construction works can commence quickly.
It is used when works need to start ASAP. Based on this, there is little cost certainty until the last package is contracted.
Beneficial for large and complex or specialists projects, where it is best suited to appoint individual sub-contractors for the package.

Question 8

How can a project be tendered?

Answer 8

Open Tendering
Selective Tendering
Serial Tendering
Negotiated Tendering

Question 9

What is serial tendering?

Answer 9

Used when a client has regular programme of works, or a number of phases of similar work. The first phase of works is competitively tendered, then following phases are negotiated based on the original schedule of rates so the cost is based on prices based on the competition.

Question 10

What is open Tendering?

Answer 10

Where the tender is open to all. There is no control over the quality of tenders to be received. The best way to obtain the most competitive price and is therefore required for public projects.

Question 11

What is selective tendering?

Answer 11

When a pre-selected list of contractors are invited to provide a price for the works (typically no more than 6).

Question 12

What is single stage tendering?

Answer 12

Obtaining a competitive price of the whole of the works. Tenderers bid for a full designed package.

Question 13

What is Two-stage tendering?

Answer 13

A contractor is selected in the 1st stage via a competitive tender based on prelims, OH&P, construction programme and method statement. It allows early engagement of the contractor. The 2nd stage is then negotiated to obtain the price for the works.

Question 14

What are the main methods of choosing a contractor?

Answer 14

Open Tendering

Question 15

What is open tendering?

Answer 15

Any contractor is allowed to bid for the projects

Question 16

What are the advantages of open tendering?

Answer 16

Really competitive prices can be received

Question 17

What are the disadvantages of open tendering?

Answer 17

Quality of tenderers is not controlled

Question 18

What is selective tendering?

Answer 18

Restricts the number of tenderers who can bid for the job by pre-selecting a limited number to tender

Question 19

What are the two types of selective tendering?

Answer 19

Single Stage and Two Stage

Question 20

What is single stage tendering?

Answer 20

Process whereby all contractors bid for the works against a full completed design package.
Advantages include:
Competitive Price is obtained
Price is based on the same tender information so easier to undertake a comparative analysis

Question 21

Why was traditional deemed as the best route for Leadenhall and single stage negotiated tender?

Answer 21

Traditional was the best as it allowed the client to retain control of the design. The cost and programme certainty is attained prior to entering into contract.

Single Stage was the best route as it enabled the design to be completed prior to pricing exercise, therefore enabling cost and programme certainty (subject to no changes).

Question 22

Leadenhall - What procurement options were considered?

Answer 22

Traditional and Design and Build.

Question 23

Leadenhall - Providing examples, explain how you analysed each procurement option against some of the objectives?

Answer 23

Time - D&B would allow works to commence quicker with design and construction overlapping. Traditional requires the design to be fully complete prior to tendering therefore longer procurement process.
Cost - Traditional provides cost certainty prior to works commencing on site and post contract changes are easier to value. D&B has design risk built in and requires contractor pre-construction fee if appointed on 2-stage.
Quality - Traditional enables control of the design throughout the process therefore higher quality. The client had specific requirements of the design. D&B quality can only really be controlled if works are tendered at Stage 4.
Risk - Client retains design risk with traditional. D&B, risk is transferred.

Question 24

Leadenhall - How did the choice of procurement route impact quality?

Answer 24

Enabled quality to be prioritised during the design as Client retained control.

Question 25

Leadenhall - Explain how you negotiated the fees with the consultants to ensure best value for your Client?

Answer 25

Rates were compared with previous projects, and fee was analysed as a percentage against the previous floors. E.g. last project was 2 floors, fees are expected to be approx. 50% of previous floors.

Question 26

Leadenhall - When negotiating the costs with the contractor, how did you undertake this process?

Answer 26

This was led by the QS, however the process consisted of negotiating against the rates of the previous works which were competitively obtained, and undertaking an open book approach to ensure the most competitive sub-contract is included in the CSA.

Question 27

Leadenhall - Do you believe the Client go best value for this project when all parties were negotiated into the contract and appointment rather than going out to market?

Answer 27

I believe the Client obtained value through the knowledge of the team that was retained by negotiating with the existing team. But going out to market always provides more competitive options.

Question 28

Leadenhall - Did you produce the tender documents?

Answer 28

The tender documents were produced by the team and collated by the QS. I managed the process and aided with providing existing building information and ensuring the design team’s information was issued on time.

Question 29

Leadenhall - What was the content of the tender documents?

Answer 29

Preliminaries
Form of Tender
Pricing Document
Drawings and Specifications
Existing Building Information
Pre-Construction Information
Contract Document & Schedule of Amendments

Question 30

Leadenhall - Given the contractor was selected rather than tendered, did the tender documents include the schedule of contract amendments you mention?

Answer 30

Yes, to advise the contractor on which basis the works will be tendered.

Question 31

What is the form of tender?

Answer 31

A document prepared by the Client and their team that must be signed by the contractor as formal acknowledgement that they understand and accept the terms and conditions of the tender documents. It typically includes:

• Latest return date and time
• Acceptance of the tender T&C
• Name, address etc.
• Limitation period of the price
• Contract sum being offered to complete the works
• Signatory details.

Question 32

What does bona fide tender mean?

Answer 32

Tender provided in good faith that it is complete and signed by someone who has legal authority to sign such a bid. the bidder has not colluded with another party when compiling the documents.

Question 33

How did you decide which contractors to go out to?

Answer 33

This suitable for the project based on previous experience recommendations from team members and following a PQQ process the tenders are selected

Question 34

What is a preliminary enquiry letter and what would you include?

Answer 34

Enquiry letter is sent out to prospective tenders to confirm their interest in tendering on the job.

Question 35

What would you include in the pre–qualification questionnaire?

Answer 35

• Details of Insurance Cover
• Financial Information
• Relevant Experience
• Management Structure / Details of the Company
• Health & Safety Policy
• Environmental Management Policy
• References
• Quality Assurance Policy

Question 36

What is electronic tendering?

Answer 36

Where all the procurement and tendering processes are conducted through an online portal, Helps to streamline process and reduce cost of admin for tendering.

Question 37

Do you know of any e–tendering services?

Answer 37

Ted retendering

Question 38

What are the advantages of e–tendering?

Answer 38

I have no experience with e-tendering but I would review the RICS Guidance Note on e-tendering within the RICS Black Book

Question 39

How many contractors would you include on a tender list?

Answer 39

4-6 contractors

Question 40

How would you determine the duration of the tender period?

Answer 40

Depends on the size, value and complexity of the object, but also should be determined within the programme.

Question 41

What code of practice are you aware of relating to procurement and tendering?

Answer 41

BS:8534 - do not know in detail but will review on the British Standards Website.

Question 42

What happens if a tender is late?

Answer 42

Generally not accept. If public it is not accepted, if private then it is client discretion.

Question 43

What happens if tenders are returned and are higher than cost plan, pre–tender estimate?

Answer 43

Could be market problems, need to reconcile to identify major differences, VE process could take place on those elements.