Procurement and Tendering Flashcards
What types of tender strategy?
Open tendering
Selective tendering
Negotiated
Framework tendering
What are the different types of procurement method you are aware of?
Traditional contracting
Design and Build
Construction Management
Management contracting
Can you tell me more about traditional procurement?
The client is responsible for the design, a contractor is employed to just construct what is designed by the client.
Can you tell me more about construction management procurement?
In construction management procurement a construction manager is appointed by the client to only management and coordinate the interface between the subcontractors, designers and consultants.
Can you tell me more about design and build procurement?
Design and build are procurement is used where the employers appoint the contractor to take on the responsibility of designing and constructing the project.
Can you tell me more about management contracting?
The client appoints the MC to management the construction project, who will contact designers, consultants and subcontractors to support the client in developing the project’s feasibility studies, design and oversee construction progress, and handover tasks
What are the difference in Managing contracting and construction management?
In management contracting the MCs responsible for entering into agreements with subcontractors, designers, and consultants and creating a single-touch point with Clients
In construction management the Construction Managers will coordinate the construction activities and support the client in procuring trades and required packages. Therefore, the MC will have a lighter risk profile
What are the disadvantages of traditional procurement?
- Client takes on the risk for the design
- Any changes post contract will be treated as a variation
- Longer programme - Design need to be completed to stage 4 before it can go out to tender
What are the disadvantages of design and build procurement?
- The client will have less control over the design and could therefore result in a lesser quality in design.
- The contractor will have to pay a premium as the contractor will be liable for taking on the design risk.
- If the Employers requirements are not comprehensive. There could be potential for large variations.
What are the advantages of traditional procurement?
- The client maintains control of the design.
- There is greater level of price comparison between the tendering parties
- In theory there should be grater price certainty as the design should be finalised by the client design team before the contractor is appointed.
What are the advantages of design and build procurement
- The client passes the design risk to the contractor.
- The client can benefit from the contract expertise on developing the design
- There is potential a shorter programme duration as the client is able to go out to tender without a fully completed design.
What is procurement?
The process of obtaining a good or a service
What is tendering?
The bidding process, to obtain a price; and how a contractor is actually appointed.
What is PQQ?
Set out a series of questions to potential tenderer to answer regarding level of experience, capacity financial position prior to being invited to tender.
What is the purposed of a PQQ?
Reducing the number of potential tenders to those that are appropriate for the project.
Saving time on review unqualified bids.
What might be include in a PQQ?
-Company details
-Details of insurance cover
-Financial information
-Relevant experience
-Quality assurance policy
-Equal opportunity policy
What is single stage tendering?
Invitation to tender documents are issued to a number of competing contractors who are all given the chance to bid for the project based on the same tender information.
Usually done on stage 4 design so the contractor received the most detailed information.
What are the advantage of single stage tendering?
Competitive tendering process which can lead to a more competitive price
Fixed price
What are the disadvantage of single stage tendering?
-No buildability input from the contractor
-Price is only as good as the design information
-Contractor may be unwilling to to tender on a good economic climate
What is two stage tendering?
Stage 1
Employer provides outline project design
The prefer contractor is usually chosen based on the quality of their bid, quality of their team, preliminaries and OH&P allowances.
The appoint contractor joins the design team on a consultancy basis using a PSCA.
Stage 2
Once the design has been sufficiently progressed, the contractor enters into detailed contract negotiation with the employer to agree the final price, contract conditions and programme.
What are the advantages of two stage tendering?
- Early appoint of the contractor to work with the design team
- Client can benefit from contractor’s buildability input
- Improved opportunity to identify project risk
- Earlier start on site is possible
- Increase opportunity to value engineer with the contractor’s input
What are the disadvantages of two stage tendering?
- The contractor has less incentive to price the second stage competitively
- Additional cost for contractor’s pre con fees
- Potential for negotiation to fail, going back out to market can delay programme
What is a form of tender?
- Usually signed and returned by the contractor with their proposed submission.
- Formal acknowledgement that the tenderer accepts the term of the tender documents.
- Document also includes the contractor’s price and programme.
What is typically included in a form of tender
- Tender sum
- Validity period
- Construction period
- Confirmation of the tender being genuine and bona fide
- Tenderer details and signature
- Acceptance of terms and conditions
What should be included in a tender pack?
- Form of tender
- Prelims document
- Form of Contract with any amendments
- Employer’s requirements
- Design Information
- Pricing schedule
- PCI
-Surveys and Reports
What is a negotiated tender?
Single stage tender carried out between the client and one other contractor
What are the advantage if negotiated tender?
- Simplicity
- Speed
- Flexibility
- Time and cost saving
- Early contractor involvement
What are the disadvantage if negotiated tender?
- Possibility of delays of contractor negotiation break down
- Potential cost premium due to lack of competition
- Anti competitive and exclusive
How do you justify value for money in a negotiated tender?
Insist in an open book approach when agreeing packages and a minimum of 3 quotes to be provided for each element of work
What information would you expect from a contractor’s tender return?
- Previous example of projects
- Proposed team
- Programme
- Pricing Schedule
- Logistics Plan
- Health and Safety Information
- Methodolgy or Approach
- Contractor Proposals (D&B)
- Social Value Strategy
- Diversity and Inclusion policy
How would you examine a tender for compliance?
- Arithmetical errors
- Pricing errors -items not priced
- Ensuring pricing is in accordance with specification/proposed scope
- Resolve any qualification or exclusions
- Check form of tender is completed
What happens if a tender is submitted late?
Public sector project - the document is accepted
Private sector - Discuss with employer to understand if they would like to accept. Safest option is to not consider as it could be potential fraud or collision
What is the danger of accepting a very low tender submission?
- Contractor could try to buy the project with a view to recover cost with variation an/or claims
- Could indicate the contractor is in a poor financial position or cash flow position so is eager to win work
- Areas of the project may not be priced accurately
How do you deal with errors in a tender submission?
JCT practice notes 2 options
Alternative one - Stand by or withdraw
Alternative two - Amend or withdraw
On what grounds would you advise a client to retender?
- Not enough tender returns
- Tender process is compromised
- Id tenders were not a the cost level required
- if the design has changed
What would you do if you considered a contractor submitting the lowest tender to be in financial difficulty?
- Review company account during the tender evaluation process
- Consider performance bond
- Consider PCG
What information is typically include in a tender report?
- List of tender received
- Initial tender totals
- Comparison of tender returns
- Any qualification/clarification/exclusions identified
- Post tender adjustments
- Revised tender sum
- Issues to be resolved
- Comparison to PTE
- Recommendation
What is the purpose of a PTE?
- Last cost check of the project before it is issued to tender
- Used to compare against tender submission
What happens if tender prices are high than the PTE?
- This could be down to market conditions or some other external factors such as COVID 19 or brexit.
- Reconcile the tender against the pre tender estimate to identify where the major differences are.
- The team could look at value engineering options of the price is over budget.
