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MC Competency Questions > Procurement and Tendering > Flashcards

Procurement and Tendering Flashcards

1
Q

What is procurement?

A

The overall process of acquiring a building.

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2
Q

What are some of the considerations that affect the choice of procurement route?

A
  • Time
  • Cost
  • Quality/Function
  • Risk apportionment
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3
Q

Can you name some procurement routes?

A
  • Traditional
  • D&B
  • Construction management
  • Management contract
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4
Q

What is traditional procurement route?

A
  • Where the client team completes the design, and a contractor is then appointed to the works being tendered.
  • The client retains control of the design team and is responsible for their performance.
  • The contractor accepts the financial risk of completing the works to the tendered design within the contract period.
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5
Q

When would you use a traditional procurement route?

A
  • A complex project where the client wishes to retain the control of the design.
  • Where cost certainty is a priority.
  • Where design quality is a priority.
  • When the design is full developed.
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6
Q

What are some benefits of a traditional procurement route?

A
  • It is competitive.
  • Having a design led process ensures quality.
  • Client is familiar with the industry.
  • Client retains control of the design.
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7
Q

What are some negatives of traditional procurement route?

A
  • Sequential process can elongate the overall programme.
  • There is limited design input from the contractor.
  • There is a dual point of contact, to the design team and contractor.
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8
Q

What is a D&B procurement route?

A
  • Where the contractor is appointed to design and construct the works.
  • The tender documents include the ERs and the contractor responds with the Contractors Proposals including programme and price for the works.
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9
Q

What is the difference between traditional and D&B procurement route?

A
  • The design is completed in the traditional route prior to the works being tendered, whereas design is partially complete/not started before works being tendered.
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10
Q

When would a D&B procurement route be used?

A
  • For a simple project where the focus is on functionality unless a very comprehensive set of ER’s have been prepared.
  • Where programme and fast tracking is a priority.
  • Where there is less likelihood of changes.
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11
Q

What are some benefits of a D&B?

A
  • Having a single point of responsibility for the design and construction.
  • Potential for fast tracking.
  • Inherent buildability as the contractor’s expertise is harnessed during the design.
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12
Q

What are some negatives of D&B?

A
  • Preparing the ERs can be challenging.
  • Cost of tendering is high.
  • Comparing tenders is difficult if there is large amounts of design to be done.
  • Post-contract changes can be expensive.
  • Functionality can take place over aesthetics.
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13
Q

What is the construction management procurement route?

A

Where the works are carried out by a number of different trades managed by a construction manager. The contractual links are between the client and the trades.

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14
Q

When would a CM or MC procurement route be used?

A
  • High quality complex projects.
  • Where an early start on site is required.
  • An experienced client.
  • Where price certainty is not a priority.
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15
Q

What are some benefits to CM or MC?

A
  • Potential for fast tracking.
  • Changes in design can be accommodated without paying significant premium.
  • Design, procurement and construction activities are flexible.
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16
Q

What are some negatives of CM?

A
  • No price certainty until the final package is procured.
  • The client has multiple points of contact.
  • It demands a proactive, informed client.
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17
Q

What is management contracting?

A

Where the works are carried out by a number of trades that report to and are contracted by a management contractor.

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18
Q

What is the difference between CM and MC?

A

The difference is with the contractual links, so CM the links are between the client and subcontractor. With MC the links are between the MC and subcontractor.

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19
Q

What are some negatives of MC?

A
  • Little incentive for management contractor to reduce costs.
  • No price certainty until final works contract let.
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20
Q

What is a framework agreement?

A

An agreement for an agreed period between members of a supply chain that promises works will be given to these parties in the event that such work is required.

Not a guarantee of work, but a promise that aims to harness the benefits of continuity.

Advantages:
- Reduces procurement costs by avoiding repetition.
- Establishes long term relationships.
- Reduces procurement time as selection process has been completed.

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21
Q

What is tendering?

A

A method of obtaining the resources required to carry out the works.

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22
Q

Can you name some different ways of tendering?

A
  • Single stage.
  • Two-stage.
  • Negotiated.
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23
Q

What is single stage tendering?

A

Where all the works are tendered within one stage.

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24
Q

What are some advantages and disadvantages of single stage tendering?

A

Advantages:
- Increased competition.
- Cost of construction is often lower.
- Ensures only capable contractors submit a tender.

Disadvantages:
- Does not allow early contractor involvement.
- It is market dependent (quite often contractors don’t like).

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25
Q

What is two stage tendering?

A

Where the works are tendered in two stages.

First stage tendered on prelims, OH&P and programme along with any design informaiton sufficiently developed to price.

Second stage the remaining design is tendered, usually on a negotiated basis with the appointed contractor at the first stage.

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26
Q

What are some advantages and disadvantages of two stage tendering?

A

Advantages:
- Enables early contractor involvement.
- Encourages collaboration.
- Contractor can help identify and manage risk.

Disadvantages:
- Cost certainty may not be achieved before construction begins.
- Additional fees involved with a PCSA.
- Contractor gains leverage as they continue to a second stage, so reduced competitiveness.
- Potential that parties may not agree to the contract sum – leads to additional costs to retender.

27
Q

Why would you use a single stage over two-stage?

A
  • Quicker tendering process.
  • Maintains a higher level of competitiveness.
  • Cost certainty.
  • Builability input is less important
28
Q

Why would you use a two-stage over a single stage?

A
  • Early involvement with a contractor. (Buildability)
  • Construction works required to start earlier (project dependant)
29
Q

What is negotiated tendering?

A
  • A form of selective tendering where a contractor is chosen, and the contract sum is then negotiated with them.
  • This is typically used where the client has a preference for and trust in a particular contractor.
30
Q

What are the advantages and disadvantages of negotiated tendering?

A

Advantages:
- Used when the client has worked with the contractor before and knows that they can trust them.
- Can be quicker than competitive tendering.
Disadvantages:
- Loss of competitiveness.

31
Q

What is a PCSA?

A

A Pre-Construction Services Agreement.

It is an appointment document between contractor and client, sets out the services and fee that should be provided during the second stage of tender.

32
Q

When would you expect this to be used?

A

When entering the second stage of a two-stage tender.

33
Q

What would a PCSA include?

A
  • Scope of services.
  • No obligation to enter into a formal contract.
  • That only documented services will be paid for.
  • That if the client does not appoint the contractor, the client has no liability for losses.
34
Q

Can works be undertaken under a PCSA?

A
  • Yes, but it is not advised.
  • The purpose of a PCSA is to gain consultant services from the Contractor in order to develop and procure the project as a stand alone service, rather than build it.
  • As no insurances or contractual clauses are included, I would recommend using a letter of intent to be more appropriate.
35
Q

What is a Pre-Qualification Questionnaire?

A

A questionnaire that a contractor fills out that assess the suitability of contractors in order to tender for works.

36
Q

What type of information is requested in a PQQ?

A
  • Relevant experience
  • Management structure
  • Financial accounts / Insurance information
  • Health and safety record
37
Q

How did you undertake the PQQ process?

A
  • I formed a long list of contractors.
  • I then contacted this long list with information about the project and asked if they would like to be involved in the PQQ process.
  • Then I would issue interested contractors with the PQQ document to complete, specifying when it was to be returned.
  • When returned I would use these to prepare a scoring matrix in order to form a preferred list of contractors.
38
Q

How did you put together a long list of contractors?

A
  • Through previous contractor’s I had worked with, recommendations from the design team, suggestions from the client and colleagues.
39
Q

Why are financial accounts important?

A
  • Gives an indication of performance and to see if there are any trends in their accounts.
40
Q

How did you use the PQQ process to prepare a list of preferred contractors?

A
  • I prepared a scoring matrix and ranked the responses of the contractors on a scale of 1 -5. From this I could conclude who had submitted the best return.
41
Q

What would you include in the tender documentation?

A
  • Instruction to tenderers:
    o Time, date and method of return.
    o Person to be sent to.
    o Method for dealing with queries.
    o Site visit contact details.
    o Which alternatives for dealing with errors will apply.
  • Confirmation of receipt of tender.
  • Conditions of contract.
  • Schedule of contract particulars and amendments.
  • Preliminaries.
  • Drawings.
  • Specifications.
  • Employers’ requirements if CDP applies / D&B.
  • Pre-construction information.
  • Form of tender
    o A pre-printed formal statement with blank spaces for the contractor to enter his details and the sum for which he is offering to carry out the works.
42
Q

How do you manage tender queries?

A
  • Create one master tender query tracker and one tracker for each contractor.
  • Issue all queries to the design team or relevant persons for answering.
  • Input the answer into the contractor query tracker.
  • Input into the master version and make sure I issue these to all contractors, so they all have the same information.
43
Q

How many contractors would you go to for tendering?

A
  • D&B, up to 4 contractors.
  • Traditional between 3-5 contractors.
44
Q

What is the purpose of undertaking a mid-tender interview?

A

Allows the design team to get a feel for the contractor.

Agenda includes:
- The proposed management structure.
- Outline methodology.
- Programme indication.
- Confirmation that a compliant bid will be submitted.

45
Q

How do you stop collusion within the tender period?

A
  • Do not tell the contractors who the other tendering contractors are.
  • A certificate of bona fide tender could be including within the tender documentation for the contractors to sign noting that no collusion has taken place.
46
Q

Why do you have post tender interviews?

A
  • To run through any final queries on the tender returns.
  • Meet the proposed site/managment team.
  • Assess client/consultant/contractor compatability.
47
Q

Talk me through what you would do once you have received the tenders?

A
  • Complete a tender opening form and check that all the correct documentation had been received.
  • Start examining the tender and arithmetically check and rationalise them.
  • Issue any queries to a contractor.
  • Once costs were finalised, I would use this to inform my tender report.
48
Q

What do you include in a tender report?

A
  • Executive Summary.
  • List of tenderers and their price at tender opening.
  • Comparison of tenders with each other and budget / PTE.
  • Adjusted tender sums if applicable.
  • Details of qualifications.
  • Comments on tender returns and interviews.
  • Recommendation.
49
Q

How would you rationalise a tender?

A
  • If something has been excluded and not included within a tender return by a certain contractor, I would request that the contractor provides a price for it.
  • However, if this is not possible, I would use either a cost plan rate or the average of the other contractor’s returns if this seems sensible.
50
Q

What are the alternative approaches to errors in contractors’ tenders?

A
  • Alternative 1. Contractor cannot change their error.
  • Alternative 2. Contractor invited to revise their tender and therefore contract sum.
  • Alternative 2 is usually preferred as it provides a collaborative approach.
51
Q

Can you measure a tender return by something other than just cost?

A
  • Quality of submission
  • Understanding the brief
  • Understanding the risks specific to the project
  • Suitability to the project
  • Construction team capability
52
Q

Are you able to select the highest tender?

A

For a private client yes.

53
Q

Is the lowest tender always the correct one to choose?

A

It depends on the quality of the return and the attitude of the contractor, as there is more to a tender and the carrying out of a successful project than it being delivered as cheap as possible.

54
Q

What do you mean by value?

A
  • A measure of worth/usefulness in relation to cost paid specific to the party paying for/receiving a benefit.
55
Q

What if all the tender returns are well over your cost plan, what do you do next?

A
  • Initially I’d undertake a review of the rates and see if anything seemed overpriced or out of place.
  • May be due to market fluctuations within the tender period that had not been allowed for in the cost plan.
  • I would discuss any findings with the client and inform them that even though the tender returns are over budget, we can proceed to carry out value engineering or in extreme cases scope reduction in order to complete the project on budget.
56
Q

What are some of the dangers accepting a low tender?

A

Contractor may not be able to deliver the project for that price, leading to poor workmanship, adversarial relations as the contractor attempts to recoup costs through claims and variations.

But a low tender may not always be a bad thing, as potentially benefitted from innovative approaches, streamlined methodology or a different supply chain making the bid the most competitive.

57
Q

Why would a contractor inflate their rates?

A
  • They are hopeful this item to be subject to variations in the future and therefore will be entitled to use contract rates.
  • Price in risk associated with a fixed cost contract over a long duration.
58
Q

Do the RICS provide guidance on procurement or tendering?

A

RICS provides a guidance note on:

Tendering strategies
- Details the tendering strategies available, how to advise on their suitability and how to score tenders (among others).

Developing a construction procurement strategy and selecting an appropriate route
- Details different procurement routes, how to identify client objectives and what should be considered when advising on a suitable procurement route.
- Contains a procurement strategy selection checklist which could be adapted and sent to clients in order for a suitable route to be selected.

59
Q

What do you think the market attitudes are towards single and two stage tendering?

A

Varied, in my expereince contractors prefer a two stage tendering process as this provides less cost risk for them over the duration of a project and allows them to help develop a design that is practicle.

Clients are less predictable and a preference for one or the other will largely depend on their individual circumstance in conjuction with the details of their project.

60
Q

What is E-tendering?

A
  • Process of tendering electronically, through web-based systems such as file transfer protocol.
  • Simplifies the process and increases speed of information transfer.
61
Q

What is open tendering?

A

A process by where a project is advestised on an ‘Open Basis’ meaning anyone can submit a tender return

Can be done on either a single stage or two stage process

62
Q

What are the different types of pricing document available?

A

BoQ
BoQ with approximate quants
CSA
Schedule of Rates
Schedule of Work
Priced Activity Schedule

63
Q

What other factors should you consider which affect longer programme durations?

A
  • Higher costs associated with fees/prelims
  • Risk premiums
  • Financial stability of contractor
64
Q

What is serial tendering?

A

The rates submitted by contractors are also used to value similar projects over a set period of time

MC Competency Questions (6 decks)

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