Procurement and tendering Flashcards
What is procurement?
Procurement is the process of acquiring goods, services, or works from an external source, often through a tendering or bidding process.
What is tendering?
Tendering is the process of inviting suppliers to bid for contracts, ensuring transparency and fairness in supplier selection.
What are the types of procurement methods?
Open tendering
Selective tendering
Negotiated tendering
What are key evaluation criteria in a tender process?
Price
Quality and technical capability
Delivery time
Compliance with legal and regulatory requirements
Supplier reputation and past performance
What is bid rigging, and how can it be prevented?
Bid rigging is a form of fraud where suppliers collude to manipulate bidding outcomes. It can be prevented by:
Conducting thorough due diligence
Using electronic tendering systems
Encouraging supplier diversity
What is a framework agreement in procurement?
A framework agreement is a long-term contract with pre-agreed terms and conditions but without fixed order quantities, allowing flexibility in purchasing over time.
What is e-procurement, and what are its advantages?
E-procurement is the use of digital platforms to manage procurement activities. Its advantages include:
Increased transparency
Cost reduction
Faster processing times
Better supplier management
How does public sector procurement differ from private sector procurement?
Public sector procurement follows strict regulations to ensure fairness and accountability.
Private sector procurement has more flexibility but focuses on cost savings and efficiency.
What are the risks associated with procurement, and how can they be mitigated?
Supplier failure (mitigated by diversification and contingency planning)
Price fluctuations (managed through long-term contracts)
Regulatory non-compliance (ensured by legal oversight and audits)
How can procurement contribute to sustainability?
Choosing eco-friendly suppliers
Implementing green procurement policies
Reducing waste in the supply chain
How did you manage tender queries?
Address contractor questions promptly and circulate clarifications to all bidders. (ensures fairness)
Issue addenda to tender documents if necessary.
Post-Tender Negotiations?
Conduct negotiations only with the preferred bidder to finalize terms.
Avoid practices that undermine the tender process (e.g., playing contractors against each other).
What is traditional procurement?
Client engages a design team and contractor separately. Contractor builds based on completed designs.
Advantages:
Clear roles and responsibilities.
Comprehensive design before construction starts.
Competitive tendering ensures cost certainty.
Disadvantages:
Longer programme due to sequential design and construction stages.
Potential for disputes if design errors occur.
What is D&B procurement
Contractor handles both design and construction, based on client requirements.
Advantages:
Single point of responsibility.
Faster delivery due to overlapping design and construction phases.
Cost savings from contractor input during design.
Disadvantages:
Less client control over detailed design.
Potential quality issues if contractor prioritizes cost over design.
What is Management Contracting?
Client appoints a management contractor who manages trade packages contractors (Client has not got contractual relationship with trade contractors)
Advantages:
Flexibility to start construction early before full design completion.
Suitable for complex projects needing specialist input.
Disadvantages:
Higher risk for the client due to direct trade contracts.
Cost uncertainty until all trade contracts are finalized.
What is Construction Management?
Construction Management
Description: Client appoints a construction manager to coordinate works. Trade contracts have contractual relationship with the client
Advantages:
High level of client control over design and construction.
Allows for early contractor involvement.
Disadvantages:
Client bears most of the risk.
Requires an experienced client team to manage trade contractors.
How do you handle errors within a tender submission?
In accordance to JCT tendering practice note it depends which option is outlined within the Invitation to tender
Option A - Allow tenderer to withdraw
Option B - Allow tenderer to correct
Option C - Discard the tender
What is two stage tendering?
Two-stage tendering is a procurement method where a contractor is appointed in two stages:
Stage 1: Early involvement based on preliminary design and budget. (OH&P and prelims are fixed)
Stage 2: Finalized contract after detailed design and cost agreement
What is open book and when is it used?
Open Book is a transparent costing approach where the contractor shares detailed cost breakdowns with the client, including:
Two-Stage Tendering: In the first stage, the contractor provides preliminary cost estimates on an open book basis.
Target Cost Contracts: The client and contractor share savings or overruns against a target cost based on open book accounting.
Cost-Reimbursable Contracts: Where the contractor is paid for actual costs plus an agreed fee or profit margin.
Complex Projects: Particularly where collaboration and flexibility are required to deal with uncertainties.
Key Headings of a Tender Recommendation Report
- Executive Summary - Overview of the tendering process
- Introduction - Purpose of the report / overview of tender process/procurement strategy
- Tender Process - Tendering method (open, selective, two stage)
- Tender Returns - List of tenderers who submitted bids / compliance / qualifications / key exclusions
- Evaluation Criteria ( weighting 60% Commercial 40% technical)
- Analysis of Submissions ( Comparison of tender prices)
- Normalisation and adjustments
- Risk Assessment - Key risks identified / contractor capability to manage risks
- Compliance with requirements -
- Recommend contractor
- Post tender clarifications and negotiations
