Procurement and Tendering Flashcards

1
Q

What is procurement?

A

The overall process of acquiring goods and services for a construction project.

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2
Q

What should be considered when selecting a procurement route?

A

Cost.
Time.
Control.
Quality.
Risk allocation.

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3
Q

What are the main procurement methods?

A

Traditional.
Design and Build.
Management Contracting.
Construction management.

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4
Q

What is traditional procurement?

A

The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified.
The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team for the contract sum within the contract period.
The client takes the responsibility and risk for the design and design team performance.

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5
Q

What are the advantages of traditional procurement?

A

Tender analysis made easier.
Minimal built in contractor risk premium.
Client retains control of design.
Reasonable cost certainty at project start.

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6
Q

What are the disadvantages of traditional procurement?

A

Longer programme due to tender process.
Client retains design risk.
Dual point of responsibility.
No buildability input of contractor.

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7
Q

What is design and build?

A

Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.
The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works.

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8
Q

When might D&B be appropriate?

A

Where there is a need to make an early start on site as there can be overlap between design and construction.
Where the client wishes to minimise their risk as they transfer design responsibility to the Main Contractor.

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9
Q

What are the advantages of design and build?

A

Single point of responsibility.
Earlier start on site due to overlap of design and construction.
Buildability input of contractor.
Client relinquishes design risk.

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10
Q

When might traditional be appropriate?

A

If the employer has had the design prepared.
The client wishes to retain control over the design and specification.
If cost certainty at start on site is important.

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11
Q

What are the disadvantages of design and build?

A

Client must commit to a concept design early.
Client loses control of the design.
Built in contractor risk premium.
Design only as good as ER’s.

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12
Q

What are employer’s requirements (ER’s)?

A

Used to describe the documents produced by the employer to set out its requirements in relation to the project.
This is what the design and construction will be based off.

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13
Q

What are contractors proposals (CP’s)?

A

Prepared by the contractor in response to the ER’s.
It will contain detailed design information which will require further development throughout the course of the project.

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14
Q

Why does the employer usually pay a premium for a D&B project at tender stage?

A

The contractor will factor in a risk allowance.

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15
Q

Who executes the design for the contractor under a D&B?

A

They may use in house designers, external consultants, or the employer’s design team could be novated.

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16
Q

What is construction management?

A

The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction manager who acts as a consultant to coordinate the contracts.
The trade contactors carry out the work.
The construction managers supervises the construction process and coordinates the design team.
The construction manager has no contractual links with the trade contractors or members of the design team.

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17
Q

When might construction management be appropriate?

A

Where an early start on site date is key.
Where buildability and programme input is required of the construction manager.
Where price certainty before commencement is not considered a key driver.
Where the client is experienced in construction.

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18
Q

What are the advantages of construction management?

A

Buildability input on Construction Manager.
Earlier commencement on site due to overlap of design and construction.
Potential for cheaper costs due to direct trade packages.
Design changes can be accommodated without paying a premium.

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19
Q

What are the disadvantages of construction management?

A

No single point of responsibility.
No cost certainty until last trade package is let.
Employer must be hands on and proactive.

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20
Q

What is the difference between management contracting and
construction management?

A

Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t.
Under management contracting, the Management Contractor is in direct contractual relationships with the trade contractors and the client is in contract with the Management Contractor only.

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21
Q

What is management contracting?

A

A management contractor is employed to contribute their expertise to the design and to manage construction with a management fee being paid to them for doing so.
The management contractor has direct contractual links with all of the works contractors.
They have the responsibility for the construction works without actually carrying them out.
The client reimburses the cost of the trade packages to the MC plus their management fee.

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22
Q

When might management contracting be appropriate?

A

Where an early start on site is a priority.
Buildability input from the management contractor is required.
Where cost certainty is not a priority.

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23
Q

What are the advantages of management contracting?

A

Single point of responsibility.
Design changes can be made without paying a premium.
Potential for earlier start on site due to overlap of design and construction.
Buildability input of Management Contractor.

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24
Q

What are the disadvantages of management contracting?

A

No cost certainty until last package has been let.
No incentive for Management Contractor to reduce costs.
Proactive and hands on employer required.

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25
Q

How do you identify the client requirements before recommending a
procurement route?

A

Through detailed discussions with the client and design team to identify their priorities in terms of cost, time, quality, risk, control requirements and experience.

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26
Q

If the client wishes to start on site asap, what route would you
recommend?

A

My recommendation would need to take into account their other requirements such as cost and quality.
If time was their overriding priority, then Construction Management or Management Contracting may offer the best solution as they can offer the fastest start on site with overlap of the design and construction.

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27
Q

What would you recommend if the client wanted an early start but also
cost certainty?

A

Design and build procurement may offer the best solution.
Design and Construction overlap, and risk is transferred to the Main Contractor with their tender being based on a lump sum price to offer high levels of cost certainty.

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28
Q

What is GMP?

A

Guaranteed maximum price.

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29
Q

What does GMP mean to you?

A

GMP sets the limit that the employer will pay their contractor, regardless of actual costs incurred.
If the actual cost is higher, then the contractor has to bear the cost.
If the actual cost is lower, the contract will state which party will benefit from the savings. Usually split using a pre agreed %.
No adjustment of tender price unless design changes are requested by the client.

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30
Q

What is a framework agreement?

A

An umbrella agreement that a party enters with one or more suppliers.
Sets a strategic partnering relationship for the procurement of goods, works or services.

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31
Q

How long does a framework agreement last for?

A

Typically 4 years. They can range between 2-10 years.

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32
Q

What are the key advantages of framework agreements?

A

Help to develop strong relationships between the parties involved and encourage long term collaboration.
Time saving.
Rates are usually agreed upfront.

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33
Q

What are the key disadvantages of framework agreements?

A

Contractors, suppliers etc can become complacent.
Bidders may not receive any work through them.

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34
Q

Why might an employer choose a framework agreement to procure goods and services?

A

Employers who are continuously commissioning construction work may want to reduce procurement and other risks.

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35
Q

What is Partnering?

A

It involves two or more organisations working together to achieve specific mutual objectives and deliver continuous measurable improvements.
A collaborative management approach that encourages openness and trust.

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36
Q

What are the benefits of partnering?

A

The overall construction and design programme is shortened because there is a prior understanding of the Client and their requirements from previous projects.
The potential for conflict is reduced.
Communication is improved.
Improved client satisfaction is gained.
Recognition of protection of profit margin for contractors and suppliers.
Better predictability of time and cost.

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37
Q

What are the disadvantages of partnering?

A

Less opportunity to understand what other contractors can offer.
Difficult to find a strong partner with the same objectives, ethics etc.

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38
Q

What is PFI?

A

Private Finance Initiative.
A government programme launched in 1992 to bring private sector project management and expertise into the public sector.

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39
Q

What are the three types of PFI projects?

A

Financially free-standing - Projects costs are recovered by charging users for example toll roads and bridges.
Joint Venture - Public and private sector stakeholders both invest however the private sector has overall control. Contributions and allocation of risk are clearly defined.
Services Sold – The capital expenditure for the project is financed by the private sector and then sold back to the public sector.

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40
Q

What sort of projects might PFI be used on?

A

Its use is recommended where it offers clear value for money when compared against traditional public sector procurement.
It is generally considered more appropriate for larger projects of value greater than £20m and where there are significant ongoing maintenance requirements.

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41
Q

What might be some of the problems associated with PFI?

A

High bidding costs are associate with PFI projects and they can take longer to procure than traditional projects.
Value for money is hard to achieve as the cost of private borrowing is more expensive than public sector borrowing.

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42
Q

What is tendering?

A

The process by which the employer invites contractors to place a bid for work on a construction project.
To obtain a price for the works.
How the successful contractor is selected.

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43
Q

What are the main methods of choosing a contractor?

A

Selective tendering:- Single or Two Stage.
Negotiated tendering.
Serial tendering.

44
Q

What documents would you include in your tender pack?

A

Invitation to Tender (ITT)
Form of Tender
Contract conditions and schedule of amendments
Instructions to bidders
Tender scoring matrix
Employer’s requirements
Drawings
Specifications
Pricing document
Pre Construction Information (PCI)
Quality questions
Receipt of tender

45
Q

What is a bona fide tender?

A

A bid submitted in good faith.
Confirmation that the supplier has not colluded with any other party.

46
Q

What is OJEU?

A

The Official Journal of the European Union.
An online portal that houses public sector contracts that are over a stated procurement threshold.

47
Q

What happens to OJEU now the UK has left the EU?

A

From Jan 2021, the UK is not subject to EU procurement regulations.
Tenders will now be published on a new E-Tendering portal, called Find a Tender Service (FTS).

48
Q

What is a PQQ?

A

Pre Qualification Questionnaire.
Sets out a series of questions for potential tenderers to answer regarding their experience capacity and financial standing prior to being invite to tender.

49
Q

What is the purpose of a PQQ?

A

Reduces the number of potential tenderers to those that are genuinely appropriate for the project.

50
Q

What might a PQQ ask for?

A

Company details
Details of insurance cover
Financial information i.e. company accounts
Relevant experience
Information on technical and professional ability
Health and safety policy and records
Quality assurance policy
Environmental management policy
Equal opportunities policy
References

51
Q

What is single stage tendering?

A

A structured process of receiving competitive tenders from a number of pre-selected capable
contractors.
The contractors are given the chance to bid based on identical tender information.
Usually done at RIBA Stage 4.

52
Q

What are the advantages of single stage tendering?

A

The employer benefits from a competitive tendering process, leading to competitive pricing.
The employer can benefit from a fixed price.

53
Q

What are the disadvantages of single stage tendering?

A

The price is only as good as the design information.
As contractors look to provide a competitive price, this may lead to them looking for ways to cut costs. This could possibly be at the expense of quality.
Longer programme due to tender period.

54
Q

What is two stage tendering?

A

Stage 1:-
Two stage tendering is where the Client seeks to appoint the Contractor based on an outline scope of work that is not fully defined. The contractors compete and the appointment is made on the quality of their bid, quality of their team, preliminaries, OH&P, fees and a construction cost.
The preferred contractor will enter into a PCSA with the client.
Stage 2:-
The client then works with the appointed contractor to develop the scope of work and reaches an agreed price and programme.

55
Q

What are the advantages of two stage tendering?

A

Early involvement of the contractor.
Potential to engage with sub contractors earlier.
Potential for an earlier start on site.
Improved opportunity to identify and manage risk.

56
Q

What are the disadvantages of two stage tendering?

A

Additional pre-construction fees are incurred for the main contractor.
Client loses negotiating power.
There is the potential for parties to not agree the contract sum with a risk of retendering.
Potential for contractor to increase costs following first stage.

57
Q

What is negotiated tendering?

A

Effectively a single stage tender where the client has an existing preference for appointing a particular firm and only negotiates with one contractor.

58
Q

When might a negotiated tender be used?

A

When the contractor has carried out work successfully for the client previously where they have an existing relationship.
When an earlier start on site is required.

59
Q

What are the advantages of negotiated tendering?

A

Time and cost savings associated with no tender process.
Flexibility in choosing a contractor
Can allow early contractor involvement and earlier start on site.
Buildability input of contractor.

60
Q

What are the disadvantages of negotiated tendering?

A

Potential cost premium due to lack of competition.
Heavy reliance on trust between the parties.
It can be seen as anti competitive and exclusive.

61
Q

How could you justify value for money in a negotiated tender?

A

Insist on an open book approach when agreeing contract packages and a minimum of 3 quotes to be provided for each element of the works.

62
Q

What is serial tendering?

A

Contractors are asked to bid for a project on the basis that if they complete the initial project
satisfactorily, other projects of a similar type will follow and the same bill rates will be applied.

63
Q

What could selecting the wrong contractor lead to?

A

A bad client & contractor relationship.
A dissatisfied client.
An insolvent contractor.

64
Q

What is the form of tender?

A

A pre-printed formal statement in which the tenderer fills in the blank spaces.
The tenderer provides their name, address, the sum of money and programme for which they offer to carry out the works.
An acceptance of terms and conditions.

65
Q

Once tender have been submitted, what should be examined for compliance with he ITT and tender instructions?

A

Arithmetical errors
Pricing errors
Pricing methods (front loading)
Compare the CP’s against the ER’s - for compliance
Check form of tender is complete and signed
Resolve any qualifications

66
Q

How would you determine the duration of the tender period?

A

It depends on the procurement process and size of the project.
If a traditional procurement route with a BoQ is being adopted then I would usually allow around a couple of months in order for the MC to obtain pricing information from their sub-contractors.
If the tender is the first stage of a two stage tender then the tender period may be a shorter duration of a month.

67
Q

What happens if a tender is submitted late?

A

Public Sector Project - The documents should be rejected.
Private Sector Project - Discuss with the client, safest option is not to consider due to potential fraud/collusion

68
Q

What is the danger of accepting a very low tender submission?

A

It could indicate the contractor is in a poor financial position.
Areas of the project may not be priced correctly.

69
Q

How do you deal with qualifications in a tender?

A

The client and contractor should look to resolve them prior to entering into contract.

70
Q

How would you deal with errors in a tender submission?

A

Alternative 1:-
The tenderer should be given the details of the errors and afforded the opportunity to confirm or withdraw.
Alternative 2:-
The tenderer should be given the details of the errors and offered the chance to confirm or amend.

71
Q

What would you do if you considered a contractor submitting the lowest tender to be in financial difficulty?

A

As part of the evaluation process the financial stability of the contractor would be checked (if not already at PQQ stage).
You could consider a performance bond or parent company guarantee.

72
Q

On what grounds would you advise the client to re tender?

A

Not enough tenders returned.
The tendering process is compromised.
If tenders were not at the cost level required.

73
Q

How would you deal with a front loaded tender?

A

Front loading is where costs that are applied disproportionately to elements of the work that take place early on during a project or part of a project.
Request a contractor removes front loading, if they refuse they could be disqualified.

74
Q

How could you reduce the risk of contractors pulling out during the tender process?

A

Ensuring the tender information is as accurate as possible.
Ensure the tender period is long enough.
Go through the PQQ to ensure the correct tenderers are selected.
Check the contractor has the capacity.

75
Q

What information is typically included within a tender analysis report?

A

List of tenders received.
Initial tender return totals.
Any qualifications identified.
Post tender adjustments.
Revised tender sum.
Issues to be resolved.
Comparison of tender returns.
Comparison with pre tender estimate.
Recommendation.

76
Q

If the tender was on time, but the works were delayed and did not commence until a few months later, what would you need to check?

A

Check how long the price was valid for on the form of tender.

77
Q

If you think the programme is tight, what comfort could you give the contractor to avoid them pricing LD’s into the price?

A

Could offer no damages for a period or a reduced figure.

78
Q

What is the purpose of a pre-tender estimate?

A

A pre tender estimate is the last cost check prior to it being issued to tender.
The design should be sufficiently developed so the PTE should be a fair reflection of the works.
Estimate can be used to compare against tender submissions.

79
Q

What happens if the tender prices are higher than the pre tender estimate?

A

This could be down to market conditions or other external factors such as COVID or Brexit.
The employer’s team should compare the PTE against the tenders to see where the biggest differences are.
The team should look to value engineer the project.

80
Q

What are the advantages of e-tendering?

A

May be possible to reduce tender period
Reduced printing and mailing costs
Maintains an audited trail of communication
Centralised location for queries

81
Q

What is e-tendering?

A

The process of tendering using online technology.

82
Q

What are the disadvantages of e-tendering?

A

Mobilisation costs may be significant for some participants.
Potential overhead due to monthly subscription cost.
Requirement for increased technology capability, such as internet connection bandwidths, upgrades of browser software, etc.

83
Q

L1 - How do you develop an effective procurement strategy?

A

You would speak with the client and understand what their main drivers are in terms of time, cost, quality and risk allocation.

84
Q

L1 - Are there other options beyond traditional and D&B?

A

Yes, management contracting and construction management.

85
Q

L1 - When would you use one procurement strategy over another?

A

You would use D&B over traditional when you wanted an earlier start on site, allowing design and construction to overlap.

86
Q

L1 - When would you advise the use of two-stage tendering?

A

Where the design information is not developed enough for a contractor to calculate a realistic price. It may also be the fact that the client wants the buildability input of the contractor throughout the design stage.

87
Q

L1 - What are the Benefits of two-stage tendering?

A

Early involvement of the contractor.
Encouragement of collaborative working.

88
Q

L1 - How do you identify a client’s approach to time, cost and quality?

A

Set up a briefing meeting to understand what their main drivers are.

89
Q

L1 - How does management contracting differ from construction management?

A

Under management contracting, the management contractor has direct trade contracts with sub contractors. Whereas with construction management, the client has the direct trade contracts with sub contractors and the construction manager simply manages the work for them.

90
Q

L1 - In what situation would construction management be appropriate?

A

Where cost is not the clients main priority, they also want an early start on site and the client wants buildability/programme input of the construction manager.

91
Q

L1 - What is your understanding of PFI as a form of procurement?

A

Private Finance Initiative.
A government programme launched in 1992 to bring private sector project management and expertise into the public sector.

92
Q

L1 - What current challenges is Covid and/or Brexit bringing to Procurement & Tendering?

A

Availability of contractors to tender.
Prices being returned at tender have inflated.

93
Q

L2 - Alberton House – on what basis was it decided that a two stage tender should be used?

A

The project had a value of around £100m and the client felt like they could use the buildability input of a contractor who had worked on schemes of this nature previously.

94
Q

L2 - How did you review the fees on Alberton House?

A

I reviewed the fees of each contractor against each other to give me an understanding of value for money.

95
Q

L2 - St Wilfrid’s - how exactly did you manage the tender query process?

A

Query tracker which was distributed to all parties

96
Q

L2 - St Wilfrid’s - When you made the recommendation to the client what did you include in that recommendation and draw their attention to?

A

I advised the client to proceed with the lowest priced tender. Although their price exceeded the clients budget, I advised them that varying market conditions could only inflate the price further.

97
Q

L2 - What do you understand by two stage tendering and when may it be appropriate?

A

Two Stage tendering is where the contractors compete and the appointment is made on the quality of their bid, quality of their team, preliminaries, OH&P, fees and a construction cost.
The preferred contractor will enter into a PCSA with the client.
This would be appropriate when the client wishes to obtain buildability input of the contractor.

98
Q

L2 - How would you set up a tender scoring mechanism and how would you score the elements?

A

A tender scoring mechanism would include for a side by side comparison of all tender returns which would be scored on both the quality of the submissions, but the commercial aspect as well.
The quality questions would be readily prepared and submitted with the tender documents, with each element typically being scored from 1-5.
The commercial aspect will be scored on whether the tender is arithmetically correct, how much they deviate from the lowest price, as well as the ability to provide a breakdown of costs in the required format. Details of PII may be requested or details of a performance bond/PCG.

99
Q

L2 - What H&S documentation and requirements would you be looking to include in a tender pack?

A

Pre Construction Information and risk register.
I would also look to include a quality question around Methodology and Working in a Live Environment and how they would deal with:
Noise, dust & vibration mitigation measures
Services isolations procedure
Proposed delivery route and site compound location
Provide a summary of your Health and Safety objectives

100
Q

L2 - When you review contracts prior to signing what exactly would you be reviewing?

A

I would be reviewing that the information within the contract is correct and that there are no ambiguities.
All amendments have been signed and agreed to.

101
Q

L3 - GMMH – why did you advise the client that the way he was continuing and discussing the detail with the contractor may not achieve the target programme and costs?

A

The contractor was pre occupied with the theatre extension project and therefore the design for the GMMH was not progressing. The contractor had also provided an early stage estimate which exceeded the clients budget by around £80,000.

102
Q

L3 - Explain how you analyse a tender for quality?

A

A tender is analysed for quality based on the quality questions that are included within the tender. The contractor responses are reviewed and scored which would give them a resultant total.

103
Q

L3 - Project Zeta - it’s not clear what advice you actually gave, however were you involved in the negotiations that took place?

A

Yes, I provided my input on what I felt was a realistic contract sum. This was based on my estimates that I had produced. I proceeded to review work packages and negotiate the cost of those packages with the contractors QS.

104
Q

L3 - What would you include in procurement and tendering reports?

A

I produced a tender report for St Wilfrid’s, this included:
List of tenders received.
Initial tender return totals.
Any qualifications identified.
Post tender adjustments.
Revised tender sum.
Issues to be resolved.
Comparison of tender returns.
Comparison with pre tender estimate.
Recommendation.

105
Q

What is normalisation?

A

Normalisation is the process where extremely high or low rates are highlighted and the same rate is used across all tenders. This would be done by:
1. Taking an average of all costs
2. Using the highest tendered rate
3. Using the cost plan rate