Procurement and Tendering

Question 1

What are the key differences between private and public sector procurement?

Answer 1

Within my area of practice, my experience is only with private sector procurement. However, my understanding of the key differences is how they are regulated, with public sector procurement being under great scrutiny and regulation. Private sector, on the other hand, only has to prove value to the shareholders.

In the European Union, public sector procurement over a given threshold (revised every two years) is logged in the OJEU. Since the UK’s exit of the EU, it is no longer subject to EU Law, and public sector procurement above a given threshold is logged in the FTS (Find a Tender Services). For global projects, the UK is part of the WTO’s Government Procurement Agreement (GPA).

Question 2

What are the benefits of a traditional procurement route?

Answer 2

• Client owns design - L&F on Aviva
• However, client owns design risk
• Suited to more experienced clients
• Typically doesn’t have ECI
• Appropriate where the works contain a large amount of unknowns, and a contractor would not be able to price this under D&B.

Question 3

What are the benefits of a D&B procurement route?

Answer 3

• Client transfers risk to contractor
• quicker start on site as design and build can overlap
• benefit of contractor input on buildability
• communication - single point of contact for client.

Question 4

What are the benefits/drawbacks of single stage?

Answer 4

• single stage the contractor provides a cost for all of the works
• if elements are unknown, the contractor will likely price this risk in the form of large provisional sums.
• shorter tender period (due to only one stage) so possibly less professional fees
• Large time investment for contractors - could lower appetite

Question 5

What are the benefits of two stage?

Answer 5

• two stage does not provide a whole cost at the first stage. Tender returns are based on programme, prelims, OH&P, the project team etc, then the price of the main works is firmed up during the 2nd stage prior to entering into the main contract.
• protects client as less provisional sums
• time to assess suitability of the project team and collaboration
• the market prefers two stage due to the high cost of single stage. This provides benefits to my clients through increased competition for projects.

Question 6

How is value achieved during a second stage tender?

Answer 6

• requirement for 3 sub-contractors per package
• Agree OH&P
• Detailed breakdown of package and reviewed by specalists -e.g., Arcadis MEP QS.