Procurement And Tendering Flashcards
What is the difference between procurement and tendering?
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.
What is tendering?
The method of obtaining a price and resources to carry out required works for a project. A bidding process to obtain a price
What key procurement routes are there?
Traditional
Design and Build
Management Contracting
Construction Management
What factors govern the procurement route selection?
It is based on the clients requirements for time, cost, quality and risk.
What is traditional procurement and when will it be used?
- 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)
What is Design and Build and when will it be used?
- 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
What is Management Contracting and when is it used?
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.
How can a project be tendered?
Open Tendering
Selective Tendering
Serial Tendering
Negotiated Tendering
What is serial tendering?
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.
What is open Tendering?
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.
What is selective tendering?
When a pre-selected list of contractors are invited to provide a price for the works (typically no more than 6).
What is single stage tendering?
Obtaining a competitive price of the whole of the works. Tenderers bid for a full designed package.
What is Two-stage tendering?
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.
What are the main methods of choosing a contractor?
Open Tendering
What is open tendering?
Any contractor is allowed to bid for the projects
What are the advantages of open tendering?
Really competitive prices can be received
What are the disadvantages of open tendering?
Quality of tenderers is not controlled
What is selective tendering?
Restricts the number of tenderers who can bid for the job by pre-selecting a limited number to tender
What are the two types of selective tendering?
Single Stage and Two Stage
What is single stage tendering?
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
Why was traditional deemed as the best route for Leadenhall and single stage negotiated tender?
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).
Leadenhall - What procurement options were considered?
Traditional and Design and Build.
Leadenhall - Providing examples, explain how you analysed each procurement option against some of the objectives?
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.
Leadenhall - How did the choice of procurement route impact quality?
Enabled quality to be prioritised during the design as Client retained control.
