Procurement and Tendering Flashcards
What is procurement?
The act of obtaining goods/services for a project.
What factors determine procurement route selection?
Client objectives.
Time, cost, quality, risk.
Name all four procurement routes?
Traditional procurement.
Design & Build.
Management contracting.
Construction Management
What is Traditional Procurement?
Separate design and construction. Employer appoints consultants and contractors tender based on scheme.
Key advantages of traditional procurement?
Employer retains design control.
Design is mostly finalised before build tender.
Reasonable price certainty.
Key disadvantages of traditional procurement?
Project duration can end up being longer.
Limited contractor input on buildability.
Design risk retained by employer.
When is traditional procurement appropriate?
Employer has specific or detailed design requirements.
Cost certainty is important.
Programme length isn’t important.
What is design & build?
Contractor completes design and executes construction phase of the project.
Advantages of design & build?
Earlier on-site start.
Benefit of contractor experience.
More risk rests with contractor.
Disadvantages of d&b?
Design only as good as employer requirements.
Complex to compare tender returns.
Employer has less control.
When is D&B appropriate?
Where early start on site is needed.
Employer lower risk profile.
Buildability input on complex projects.
What are employers requirements? (ER)
Used to describe document produced by employer to set out requirements.
What are Contractor’s Proposals? (CP)
Response to employers requirements, produces detailed design information.
What is construction management?
Employer directly appoints sub-contractors, and hires a construction manager to manage the sub-contracts with no contractual link.
Advantages of construction management?
Speed for early start on site.
Prices could be lower due to direct contracts with trade contractors.
Employer has contractual link with contractors.
Disadvantages of construction management?
Price certainty not achieved until last trade package is let.
Procurement requires an experienced employer/client.
Employer must manage all contractors themselves.
When is construction management appropriate?
Experienced client.
Early start on site.
Flexibility to make changes to design with smaller impact on time/cost.
What is the riskiest procurement route for the employer?
Construction Management.
What is Management Contracting?
Employer appoints a management contractor to manage the entire building process, who appoints trade contractors.
Direct link with trade contractors.
Advantages of management contracting?
Management contractor helps with buildability.
Single point of responsibility.
Disadvantages of management contracting?
Price certainty not achieved until last package let.
Requires proactive employer.
When is management contracting appropriate?
Flexibility required.
Early start on site.
Buildability input from mgmt contractor needed.
Difference between management contracting and construction management?
Management contracting has direct links to the contractor, construction management has direct links to the employer.
What is a framework agreement?
Umbrella agreement that a party enters with one of more suppliers.
How long do frameworks last?
Typically 4 years, but can range between 2-10 years.
Advantages of having a framework?
Strong relationships and collaboration.
Time saving.
Rates and prices already agreed.
Disadvantages of having a framework?
Contractors and suppliers can become complacent.
Can be restrictive to new suppliers.
Why might employers choose a framework agreements?
Continuous commission of work.
Invite tenders on a call-off basis.
What is project partnering?
A broad term used to describe collaborative approach.
Ownership of risk is spread between the parties.
Key advantages of partnering?
Overall programme can be shorterend.
Risk of conflict reduced.
Better communication.
Better predictability of time and cost.
Disadvantages of partnering?
Less opportunity to understand other potential partners.
Difficult to find the right partner.
What is tendering?
Process by which employer invites contractors to place a bid for work on a construction project.
Difference between procurement and tendering?
Procurement is the act of obtaining goods and services and the strategy of how.
Tendering is a phase in procurement that obtains a price through bidding.
What are the three main tendering options for construction projects?
One Stage
Two Stage
Negotiated
What documents are included within a tender pack?
ITT.
Contract conditions.
Tender scoring matrix.
Project information.
PCI.
Quality questions.
What is a bona fide tender?
Bid submitted in good faith, that completely meets the conditions of bidding requirements. No collusion.
What is OJEU?
Official Journal of the EU.
Houses public sector contracts over procurement thresholds.
RICS guidance for tendering strategies?
Tendering Strategies.
What is a PQQ?
Pre-Qualification Questionnaire - contains:
- Company details.
- Insurances.
- Finances.
- Experience.
- H&S records.
- Environmental policy.
- Equal opportunities policy.
What is the purpose of a PQQ?
To reduce the number of potential tenderers to those who could be successful.
Where can businesses get a credit check?
Dun & Bradstreet.
Experian.
What is single stage tendering?
All competitors given a chance on identical tender documents.
Advantages of single stage tendering?
Competitive tender process.
Fixed price.
Disadvantages of single stage tendering?
No buildability input from the contractor.
Price is as good as design.
Too much competition.
How long would you allow for a tender period?
Dependent on complexity. 12 weeks would be reasonable.
What is two stage tendering?
Stage 1 - Employer provides outline design and contractors complete for preferred status. Preferred contractor joins as consultant on PCSA.
Stage 2 - Contractor enters into detailed contract negotiation to agree on final price.
Advantages of two stage tendering?
Early appointment of contractor to work in parallel with design team.
Earlier start on site.
Increased value engineering opportunities.
Disadvantages of two stage tendering?
Contractor has less incentive to price second stage competitively.
Cost of contractor pre-con fee.
Potential for negotiation stage to fail.
What is a negotiated tender?
Single stage tender between employer and one contractor.
Advantages of negotiated tender?
Simplicity.
Speed.
Flexibility in terms of choosing preferred contractor.
ECI.
Disadvantages of negotiated tender?
Possibility of delay if negotiations are long.
Cost premium due to lack of competition.
Reliance on party trust.
How do you justify value-for-money in a negotiated tender?
Insist on open book approach when agreeing subcontracts, with min. of 3 quotes to be provided for each element.
What is a “form of tender”?
Contractor usually signs and returns it.
Acknowledgement that tenderer accepts T&Cs of tender docs.
What information is included in “form of tender”?
Tender sum.
Date until which price is valid.
Construction period.
When seeking tenders for construction work, what additional information might be requested?
Track record of previous experience.
Proposed team and hierarchy.
Methodology.
References.
Programme.
H&S.
Social Value strategy.
When tenders are submitted, what should be examined for compliance with ITT?
Calculation errors.
Pricing errors.
Check that form of tender is signed.
Resolve qualifications.
What happens if a tender is submitted late?
Public sector - documents accepted.
Private sector - discussed with employer to understand if they would accept.
What is the danger of accepting a very low tender submission?
Contractor may be lowballing with a view to recovering costs with claims/variations.
Poor financial position of contractor.
Inaccurate pricing.
How do you deal with qualifications in tender submissions?
Unauthorised qualifications may invalidate tender.
Parties should resolve before signing.
How do you deal with errors in tender submissions?
1 - tenderer given details of errors, and can confirm or withdraw.
2 - tenderer can confirm or amend it to correct errors.
What would you do if the contractor with the lowest tender was in financial troubles?
Company accounts will be reviewed to assess financial stability.
Performance bond.
PCG.
When would you advise a client to re-tender a project?
Not enough tenders returned.
Tendering procedure is compromised.
Design changes since original tender.
How would you deal with a front-loaded tender?
Request that contractor remove front loading.
How do you reduce the risk of contractors pulling out during the tender process?
Ensure tender information is accurate.
Ensure tender period is sufficient.
Go through PQQ.
What is contract sum analysis document under D&B?
CSA is an alternative pricing document to a Schedule of works or BoQ.
What is included in a tender analysis report?
List of tenders received.
Initial totals.
Qualifications.
Adjustments.
Revised sum.
Comparison of tenders.
If a tender was on time but project was delayed, what would you check?
Check the “form of tender”, which would show how long price was valid for.
If you think delivery programme is tight, how can you give comfort to the contractor regarding LDs?
Can include a LD free period.
What is a Pre-tender estimate?
PTE is a last cost check before issue to tender.
Can be used to compare against tender submissions.
What if tender prices are higher than Pre-tender estimate?
Could be due to market conditions.
Reconcile to find differences.
Could value engineer.
Where must a tender be posted publicly in the UK?
Find a Tender
What are the PCR Thresholds updated earlier in 2024?
Central/sub gov Supplies and services - £139k/£213k
Light touch regime - £663k
Works - £5.3m
What is normalisation?
Highest value tender given score of 100%. Other tenders scaled up to match so a like for like comparison can be made. Difference in scoring is made larger.
What is MEAT?
Most Economically Advantageous Tender.
Alternative aspects other than price alone:
- Quality.
- Technical Merit.
- Aesthetic.
- Accessibility.
- Social.
- Environmental.
- Innovation.
Changes in Procurement Act 2023?
Increased Competition.
Increased supply chain engagement w/ SMEs.
Simplified procedures.
What is included in a tender evaluation report?
Summarises process and results of assessing bids.
S&W of each bidder.
Evaluation Criteria.
Final Ranking and Recommendation.
