Procurement and Tendering Flashcards
What is the difference between tendering and procurement?
Procurement is the overall act of obtaining goods
and services from external sources (i.e. a building
contractor) and includes deciding the strategy on
how those goods are to be acquired by reviewing
the client’s requirements (i.e. time, quality and
cost) and their attitude to risk
Tendering is an important phase in the
procurement strategy but procurement involves
much more than simply obtaining a price.
Tendering is:
* the bidding process, to obtain a price; and
* how a contractor is actually appointed
What factors influence the selection of a procurement route?
Speed, Cost, Quality, Risk
Procurement methods?
- Traditional
- D&B
- Management Contracting
- Construction Management
How does management contracting work?
i. Employer appoints a Management Contractor, and the Management Contractor then appoints the trades direct, through a number of works contracts
ii. Management Contractor’s remuneration is based on the cost of the works packages plus agreed fees (to cover the Management Contractor’s overheads and off-site activities)
How does construction management work?
employer appoints separate trade contracts to carry out the works, and a construction manager to oversee the completion of the works for a fee.
What is the difference between management contracting and construction management?
Employer has a direct relationship with the sub-contractors under construction management and appoint someone to manage the project. Whereas, management contracting, the relationship is with the contractor who appoints the sub-contractors
ASOS – What was included within the tender information?
i. An invitation to tender letter
ii. The form of tender or ‘tender submission’
iii. Preliminary documents and information around pre-construction and site management
iv. Contracts and contract conditions
v. A tender pricing and specs document
vi. Design drawings and project specs
vii. Tender return form
What is a pre-construction information plan + who produces that?
i. document which provides the information already in the Client’s possession, or which is reasonably obtainable, to relevant CDM Duty Holders, such as Designer(s), Contractor, or Principal Contractor
ii. The Principal Designer
What is the content included within a pre-construction information plan?
i. Description of the project
1. Programme dates, details of client/designers
ii. Client’s considerations and management requirements
1. Security of the site
2. Welfare provisions
3. Traffic management
iii. Environmental restrictions and existing on-site risks
1. Site boundaries
2. Asbestos
iv. Significant design and construction hazards
1. Materials requiring particular precautions
v. The health and safety file
1. Description of the required format and any conditions relating to its content
ASOS - Negotiated with the phase 2 contractor – what were those reasons?
i. Exiting contractor relationship
ii. Ability to re-use rates from previous phase
iii. Contractor had knowledge of the building/lessons learnt
KN – Why did you advise single stage traditional tender?
i. Cost certainty
ii. Client retains control of the design
iii. Competitive pricing
iv. Sufficient time in the programme to enable this option
What does OJEU stand for?
Official Journal of the European Union - This is the publication in which all tenders from the public sector which are valued above a certain financial threshold according to EU legislation, must be published
How would you deal with a front-loaded tender?
Front loading is generally not a pricing error
- Request contractor removes front loading, if the contractor refuses, this may be ground for disqualification
On what grounds would you re-tender?
- Insufficient tenders returned
- Procedure was compromised
- Significant design changes
- If the client wishes to delay the tender
What is the purpose of a tender report?
The tender report provides an audit trail for the selection process and might include:
* The background to the contract.
* The scope of the contract.
* Pre-qualification criteria.
* The tender evaluation criteria.
* Reasons for rejection of unsuccessful tenders.
* Reasons for the recommendation.
* A summary of any post-tender negotiations.
* Comparison with the pre-tender estimate.
* Any implications for the project.
What is a tender report?
- Brief history of tender process
- Analysis of each tender submission + subsequent negotiation
- Report should conclude with clear recommendation of most suitable contractor
Pros and Cons of traditional tendering?
Pros
1. Competitive pricing
2. Client retains control of design
3. Price certainty
4. Easier to value changes
Cons
1. Project Duration may be longer
2. No design input from contractor
3. Strategy based on price competition
4. Client retains responsibility for design
5. If design is not complete at tender, cost and time certainty may be reduced
Pros and Cons of D&B tendering?
Pros
1. Single point of responsibility for design and construction
2. Earlier commencement on site
3. Early price certainty
4. Contractor buildability advice
Cons
1. Client has to commit to concept design early in project
2. Variations from brief may be difficult to agree
3. Difficult to compare tenders
4. Low quality
Pros and Cons of Construction Management?
Pros
1. Project duration reduced due to design and construction overlapping
2. Prices may be lower due to direct contact with s/c
3. Roles, risks and relationships are clear
Cons
1. Price certainty not achieved until last package is let
2. Need an experienced client
3. Client has many consultants and contractors to deal with
Pros and Cons of Management Contracting?
Pros
1. Retain control of design
2. Move risk or procurement onto contractor
3. Flexible with design changes
Cons
1. Not suitable for inexperienced client
2. Works begin prior to knowing final design
3. Less price certainty
What is a framework agreement?
List of contractors selected by the client after a formal tendering procedure to work over a long period of time
Pros and Cons of framework agreement?
Pros
- Preferential costs and rates for long term delivery arrangement
- Repeat work
- Only negotiate once
- Guarantee work stream
Cons
- May take time to secure a project
- Doesn’t always deliver value for money
- Complacency
What is project partnering?
Project Partnering is a long-term structured management approach whereby two or more organisations commit to mutual objectives, trust (as a means) and joint problem-resolution methods to pursue improved cost effectiveness and continuous improvement in high-risk construction projects
Pros and Cons of Partnering
Pros
- Conflict is reduced
- Better value for client
- Better predictability of time and costs
Cons
- Difficult to find a strong partner
- Less opportunity to find out what other contractors can offer
