Procurement and Tendering Flashcards
What is Traditional Procurement
- Design seperated from construction
- Client appoints consultant to design
- Contractors then invited to tender
+/- Traditional Procurement
Advantages
* Retain control design
* Better price certainty
* Completed before design - all tenders based on same thing
Disadvantages
* Project duration could be longer due to extended pre contract design
* Design risk sits with client
* No input from contractor
* No overlap between design and construction
Types of Traditional Procurement
Lump sum (Low client risk)
Re-measure (Medium client risk)
Cost Reimburse (High client risk)
When might Traditional be appropriate
- Employer has specific design requirements
- Cost certainty is important
- When programme may not be client priority
What is Design & Build Procurement
- Main contractor appointed to both design and construct
- Client issued Employers Requirements, MC responds with Contractors Proposal
- Design risk transferred to contractor
+/- Design and Build Procurement
Advantages
* Single point responsibility for D&B
* Contractor takes risk for D&B
* Can SOS sooner
* Harness expertise from MC
Disadvantages
* Relies on quality and detail in clients brief and employers requirements
* May be premium built in for MC risk
* Harder to compare returns
* Less control of aesthetics and quality
When might Design and Build be appropriate
- Need SOS early
- Client wishes to minimise risk
- Complex projects benefit from contractor input
What are Employers Requirements
- Produced by client
- Sets out requirements in relation to project
- What design and construction is basedon
What are Contractors Proposals
- Prepared by contractor, response to ERs
- Design produced based on ER which will need further development
Is D&B good for refurbishment projects
Yes as risk of existing building is with contractor
What is Construction Management
- Trades contracted to client
- Client directly appoints multiple trades
- Client has Construction Manager to programme and coordinate the works
+/- Construction Management
Advantages
* Speed to SOS
* Shorter as overlap D&B
* CM can contribute to design and project planning
* Prices may be lower due to direct contract with trades
Disadvantages
* No price certainty until last package been let
* Risk with client
* Client has losts of consultants and contractors to manage
Why might Construction Management be appropriate
- Large complex projects
- Early SOS
- Flexibility in design
- Price certainty before not key
- Client experienced
What is Management Contracting
- Trades contracted to Management Contractor
- MC appoints trades
- MC paid fee based on construction costs
- MC has contractual link with each trade and is responsible for overall works
+/- Management Contracting
Advantages
* Shorted as overlap with D&B
* Contractors can contribute to design
* Single point responsibility (MC)
Disadvantages
* No price certainty until last package let
* Change in design to later packages may effect packages already let
* Little incentive from MC to reduce cost
Why might Management Contracting be appropriate
- Input from MC
- Early SOS
- Flexibility in design
- Cost certainty not priority
What decides the Procurement Route
Clients objectives and key drivers in terms of Time, Cost, Quality and Risk allocation
What is Procurement
Overall act of obtaining goods and services
What is Tendering
Method of obtaining a price and resources necessary to carry out required works
What is Single Stage Tender
- Usually dont at RIBA stage 4
- Tenders price for whole construction works
- Compete on identical information
- Returns analysed in terms of cost and quality
+/- Single Stage
Advantages
* Client gets lump sum cost
* Competitive pricing
Disadvantages
* No input from contractor
* Relies on detailed and well thought out design and tender docs
* Programme implication to include tender period
If you had a £25mil new build on a D&B contract with a single stage tender, how long would you allow for the tender period
- Tender period largely depends on complexity of the project
- 10 - 12 weeks as it may take time to interpret the ERs
What is Two Stage Tender
Stage 1
* Tender enquiry documentatin issued to tenderers
* Preferred MC chosen on quality of bid, quality of team, prelims and OH&P
* Preferred contractor joins team on consulting basis using Pre construction services agreement
Stage 2
* Preferred contractor works with team to complete the design
* Once design has progressed, contractor enters into detailed contractor negotiation to agree price
+/- Two Stage
Advantages
* Early MC appointment to gain technical input
* Early SOS (design & tender overlap)
* Increased opportunity to VE and identify risk (Traditional)
Disadvantages
* Lack of cost certainty at second stage
* Additional fee for pre construction
* Potential for negotiation stage to fail
* No incentive for contractor to mitigate risk (Traditional)
What is Pre Construction Services Agreement
Allows client to employ contractor before main construction contract
What is Buildability
- Ability for a design to be constructed and maintained efficiently and safely
- Typically refers to early pre construction advice from a contractor
Advantages on Buildability
- Improves efficiency in construction
- Can save programme and cost
- Make building more efficient to maintain
What is Negotiated Tender
Where single contractor is approached and appointed based on experience and expertise
+/- Negotiated Tendering
Advantages
* Simple, no tender analysis
* Quick form of tendering
* Client has flexibility over choice
Disadvantages
* Less cost certainty before commitment
* Premiuim paid due to lack of competition (difficult to prove value for money)
What is a Form of Tender
- A formal statement the contractor fills in
- MC to put company name, address and sum
- Formal acknowledgement
When seeking tenderers, in addition to price what else would you look for
- Track record
- Proposed team
- CVs
- Methodology
- Programme
When tenders have been submitted, what should be examined
- Arithmetical errors
- Pricing errors
- Pricing methods
- Qualifications
- Check form of tender
- Compare against ER
What happens if tender is late
- If public sector, documents cannot be accpeted
- If private, client may accept but would recommend they not
How to deal with errors in JCT
Option 1 - Standby or withdraw
Option 2 - Standy or correct if genuine error
Dangers of accepting a low tender
- May not priced all works
- Lower quality
- May try to recover costs once on site elsewhere
What would you do if you considered a contractor tendering may be in financial difficulty
- Check companies accounts
- Request references
- Consider a performance bond
- Consider PCG
- Raise concern with client
On what ground would you advise to re tender
- Not enough returns
- Tender procedure believe to be compromised
- Design changes been too significant
If in a contractors return they have an item marked as provisional, what would you do
See further info, ask for it to be removed
Recommended Contract for particular Procurement Route
Traditional (Lump Sum)
JCT Standard w/ and w/o quants
JCT Intermediate
JCT Minor Works
NEC Option A
Traditional (Re-measurement)
JCT Standard w/ Approx quants
JCT Measured Term
NEC Option B
Design and Build
JCT Design and Build
JCT Major Project Construction
NEC Option A-E
Purpose of PTE
- Last cost check before tender
- Design should be sufficiently developed
- Used to compare against returns
If delivery programme is tight, how can you give comfort to contractor regarding damages
Contract can include LAD free period - e.g. first 3 weeks no levied
If the team has asked for an alternative programme in return and the alternative is longer, would you expect costs to increase
By asking a contractor to complete a project in a period which is too short, you could be paying premium e.g. acceleration.
Therefore if programme extends you could pay less as you are not paying OOH works
Are you aware of any guidance notes issued by RICS associated with tendering strategies
Tendering Strategies 1st Edition
