Procurement and tendering Flashcards
Core
1
Q
What is Procurement?
A
Procurement is the process of purchasing goods or services.
2
Q
What is Centralised procurement?
A
Centralised procurement is a purchase of all required goods and services by a single department for all the branches of the entire company.
3
Q
What is Decentralised procurement or Project specific procurement?
A
Decentralized procurement allows individual stakeholders to make purchases for their departments.
4
Q
What is hybrid procurement?
A
Hybrid procurement operating structures, which combine a central procurement base with distributed teams of buyers.
5
Q
What is Procurement route?
A
The strategy that sets out the process for tendering and entering into a Building Contract with the contractor.
6
Q
What should be considered when selecting a procurement route?
A
Considerations are likely to include:
* Time
* Cost
* Quality
* Function
* Risks
* Asset Ownership
* Financing
7
Q
What are the types of Procurement routes?
A
Types include:
* Traditional
* Design and Build
* EPC / Turnkey
* Construction Management
* Management Contracting
* Design and Manage
* Public Private Partnerships (PPP)
8
Q
Describe Traditional procurement.
A
Design is completed before competitive tenders are invited, allowing for reasonable certainty over final costs.
9
Q
What are the advantages of Traditional procurement?
A
Advantages include:
* Lowest tender sum possible
* Cost control at design stage
* Client involvement in design
* Easy evaluation of client changes
* Accurate programming of works
* Familiarity of roles
10
Q
What are the disadvantages of Traditional procurement?
A
Disadvantages include:
* Time-consuming
* No contractor innovations
* Divided responsibility for defects
11
Q
When would you recommend Design and Build procurement?
A
Recommended when:
* Price certainty is sought
* Overall duration is critical
* Design quality is not a driving factor
* Client does not want design risk
12
Q
What are the advantages of Design and Build procurement?
A
Advantages include:
* Single point responsibility
* Easy cost control
* Contractor innovations possible
* Less time required for overall project
13
Q
What are the disadvantages of Design and Build procurement?
A
Disadvantages include:
* Client changes will cost more
* Increased tendering workload
* Quality of materials may be compromised
14
Q
When would you elect Construction Management?
A
Recommended when:
* Price certainty is not important
* Time is of the essence
* Client retains full control over design
* Client bears all risks
15
Q
What are the advantages of Management Contracting?
A
Advantages include:
* Early start of works
* Early involvement can lead to economy
16
Q
What are the disadvantages of Management Contracting?
A
Disadvantages include:
* Requires close control of design
* Difficult cost control
* Not all projects can be divided into packages
17
Q
When would you recommend Public Private Partnerships (PPP)?
A
Recommended when:
* Eliminating financial burden on government
* Long contracts are acceptable
* Complete risk transfer to private sector is desired
18
Q
What is the objective of PPP?
A
Public facilities and utilities are designed, built, maintained, and operated by the private sector.
19
Q
What is a Private Finance Initiative (PFI)?
A
A long-term contractual arrangement where the private sector finances, builds, and operates an infrastructure project.
20
Q
What is a partnering contract?
A
A cooperative relationship between business partners to improve project delivery performance.
21
Q
What are the benefits of partnering for Employers?
A
Benefits include:
* Better communication
* Less bureaucracy
* Fewer claims
* Greater certainty of satisfaction
22
Q
What are the benefits of partnering for Contractors?
A
Benefits include:
* More involvement in decision-making
* Increased profit potential
* Greater certainty of workload
23
Q
What is an Escalation Matrix?
A
A document identifying project team members, decision makers, and problem resolution types.
24
Q
What is a Partnering Charter?
A
A document formulating commitment and specifying dispute resolution procedures.
25
What is Prime Contracting?
A procurement form where the client has a single contractor providing a supply chain for project delivery.
26
What is a Prime Contractor?
A contractor responsible for managing and delivering the contract on time and budget.
27
What are the four stages of the procurement process in Prime Contracting?
Stages include:
* Invitations for expressions of interest
* Pre-qualification questionnaire
* Invitations to tender
* Preferred bidder and contract award
28
What is a Guaranteed Maximum Price (GMP) contract?
An agreement that sets a maximum contract sum, with the contractor bearing costs exceeding it.
29
What is a Target Price / Target Cost contract?
A contract enabling cost savings sharing between the contractor and client, associated with collaborative work.
30
What are the types of payment compensation?
Types include:
* Lump sum contracts
* Re-Measurement contracts
* Cost reimbursable contracts
31
When would you recommend a fixed price lump sum contract?
Recommended when the project is well defined and significant changes are unlikely.
32
When would you recommend a re-measurement contract?
Recommended when the design can be described, but the amount cannot be determined at the outset.
33
When do you recommend a cost reimbursable contract?
Recommended when the scope of work cannot be properly defined at the outset.
34
What is EPC (Engineering, Procurement, and Construction)?
A contract type where a single contract covers design and construction, with the contractor taking design risk.
35
What is EPC (Engineering, procurement, and construction)?
A single contract for the design and construction of a project where the client prepares a performance specification, and the contractor takes all design risk.
36
What is the main risk for clients in EPC contracts?
The definition of the specification.
37
What is the difference between D&B and EPC?
In EPC contracts, the client has less say over the design, and the contractor takes more risk compared to D&B contracts.
38
What is a Framework Agreement?
An agreement between organizations to establish the terms governing contracts to be awarded during a period.
39
What is a Call-off contract?
A purchase order allowing bulk orders over time, often used in construction.
40
When would you use a Term contract?
For maintenance works, minor works, or for clients with a continued supply of minor works based on a schedule of rates.
41
What is Serial tendering?
A hybrid tendering method combining competitive tendering with negotiation for multiple phases of similar work.
42
What is best-value procurement?
A procurement system that considers factors other than price, such as quality and expertise.
43
What are weighted selection criteria in procurement?
A two-part type of best value procurement where bidding firms submit technical and commercial proposals, scored separately.
44
What is the purpose of separating technical and financial offers in tendering?
To ensure neutrality and objectivity in the tender-award decision.
45
What is Tendering?
A submission made by a prospective supplier in response to an invitation to tender, making an offer for goods or services.
46
What are the objectives of Tendering?
To select a suitable contractor at a suitable time and to obtain a price offer from the contractor.
47
What is Open Tendering?
A process allowing anyone to express interest to tender, typically advertised in journals or websites.
48
What is Selective Tendering?
A tendering form where a shortlist of contractors is drawn up by the project team.
49
What is Single Contractor Selection (Nomination)?
A tender technique where a contractor is selected first, followed by negotiation.
50
What is Single-stage tendering?
The most common type where invitation to tender documents are issued to multiple contractors for identical bidding.
51
What is Two-stage tendering?
A method allowing design and tendering to overlap, used to obtain early contractor involvement.
52
What are the advantages of two-stage tendering?
* Early contractor involvement in design
* Greater transfer of design risks to contractor
* Reduction of construction risks
* Encourages collaborative working
* Enables early start
53
What are the disadvantages of two-stage tendering?
* Lack of competitiveness during second stage
* Potential cost increases due to contractor advantage
* Longer procurement time
* Risk of failure to agree rates
54
When is Negotiated tendering appropriate?
For highly specialist contracts or extending the scope of an existing contract.
55
What is Tender Optimization?
Using cost/price optimization models and benchmarking to improve the efficiency of the tender process.
56
What is Cover pricing?
Submitting prices high enough to avoid winning the contract while keeping visibility for future projects.
57
What is Forced Sale Pricing?
Pushing down the tender sum during negotiation to meet the client's budget.
58
What is Suicide bidding?
Bidding unusually low to obtain work, risking breaking even or losing money.
59
What is Lead time?
The time between placing an order and its delivery to site.
60
What is Tactical Pricing / Unbalanced Bidding?
Manipulating prices by inflating some rates and deflating others for financial advantage.
61
What is Bid rigging?
An illegal practice where competing parties collude to determine the winner of a bidding process.
62
What is Bid rotation?
Colluding tenderers to rotate the title of 'winner' among themselves.
63
What is a Fast-track project?
A project where construction starts before the design is completed.
64
What is a counteroffer (qualified acceptance)?
A counteroffer that includes variations to the sum, mode, or place of payment.
65
What is Best and Final Offer (BAFO)?
A term indicating that no further negotiation on amount or terms is possible.
66
What is the purpose of Tender bond?
To secure obligations from a supplier and prevent withdrawal, failure to sign, or non-compliance with conditions.
67
How is the value of a Tender bond fixed?
As a percentage of the Tender sum, usually between 5% to 10%.
68
What is the validity of the Tender bond?
A specific number of days after the date for submission of tenders.
69
What is a battle of forms?
A situation where two parties negotiate terms based on their own terms, with the last one to present terms often winning.
70
What is an entire agreement clause in a contract?
A clause stating that the document and specified documents constitute the whole agreement.
71
What is the purpose of having Tender table documents?
To keep a reference copy of tender documents for the Employer.
72
What factors determine time for tender preparation and submission?
Complexity of the project, size of the project, time of year, and market conditions.
73
What is a Base bid or Compliant bid?
A tender that meets the requirements stipulated by the client in the ITT.
74
What is an alternative offer?
A non-compliant proposal submitted if believed to offer better value or a more innovative solution.
75
Under what circumstance would an alternative offer not be considered?
If they have not been requested or explicitly permitted by the client.
76
What to do if the lowest bidder has not submitted the priced BoQ?
Issue a PTC requesting them to price the BoQ to avoid disqualification.
77
When should the tenderer offer be opened?
Before the end of the offers’ validity period and within a reasonable time for clarifications.
78
How to deal with errors in tender returns?
Amend errors to a new tender sum and inform the contractor for confirmation, amendments, or withdrawal.
79
What to do if all tenderers exceed the Employer’s budget?
Check for issues with the pre-tender estimate and provide explanations for the client.
80
What is prequalification?
A process analyzing a contractor's capability before tendering.
81
What does a pre-qualification questionnaire include?
Questions regarding experience, capacity, and financial standing of potential tenderers.
82
What is meant by prequalification?
A process conducted by the employer prior to tendering to analyze a contractor’s capability and relevant aspects to determine if they can execute the works.
83
What does a pre-qualification questionnaire include?
A series of questions regarding:
* Level of experience
* Capacity
* Financial standing
84
What should be considered in a prequalification?
The information requested should include:
* Company details
* Insurance cover
* Financial information
* Relevant experience
* Technical and professional ability
* Capability and capacity
* Health and safety policy
* Quality assurance policy
* Environmental management policy
* Equal opportunities policy
* Relevant references
* BIM assessment
85
What is tender evaluation?
A careful process of assessment undertaken to identify the preferred tenderer after tenders have been received.
86
What are the criteria used in tender evaluation?
The criteria include:
* Compliance with the invitation to tender
* Arithmetical checks on cost components
* Non-compliant tender considerations
* Like-for-like comparison of tenders
* Analysis of resource levels
* Post-tender clarifications
* Scoring against pre-determined selection criteria
87
What is MEAT?
Most Economically Advantageous Tender, which identifies the tender that best meets the client’s needs and offers the best value for money.
88
What items are considered in MEAT?
Considerations include:
* Price
* Relevant experience
* Understanding of requirements
* Past performance
* Technical skills
* Resource availability
* Management skills and systems
* Proposed methodology
89
What is a mid-tender interview?
An interview offered to tenderers after they have been invited to tender, allowing for clarification before submission.
90
What is the purpose of an Invitation to Negotiation?
To agree or clarify matters regarding pricing, quality, and conditions of contract with the preferred tenderer.
91
What is a tender report?
A brief history of the tendering process and analysis of submissions, concluding with a recommendation for the best value offer.
92
What is the purpose of a Bill of Quantities (BOQ)?
A document providing project-specific measured quantities for items of work to assist tenderers in calculating construction costs.
93
What are the advantages of a briefing process?
It describes project requirements for design solutions and includes stages like Strategic Brief and Project Brief.
94
What are the advantages of debriefing?
Helps unsuccessful tenderers prepare for future exercises through honest feedback.
95
What is meant by Contractor Design Portions (CDP)?
An agreement for the contractor to design specific parts of the works under JCT construction contracts.
96
What is the need for issuing hard copies of tender documents?
Clients often request hard copies for opening purposes, even when online tendering is used.
97
What does Terms of Reference (TOR) include?
Objectives, scope of work, activities, tasks, responsibilities, and expected results of the assignment.
98
What is Sole source procurement?
Procurement when there is no competitive marketplace, and the required product or service is available only from one source.
99
What is the appropriate number of tenderers?
Only the most suitable tenderers should be identified and invited to tender.
100
What are some disadvantages of having many tenderers?
Disadvantages include:
* Reduced eagerness to bid
* Increased overhead costs
* Waste of time and resources
101
What is project management?
The overall planning, control, and coordination of a project from inception to completion to meet client requirements.
102
What is meant by ‘Novated design & build’?
A process where the design team initially appointed by a client is novated to work for the contractor after appointment.
103
What are factors affecting the procurement system?
Factors include:
* Time
* Cost
* Price certainty
* Project function
* Flexibility for changes
* Risk allocation
104
What is an Expression of Interest?
A request for respondents to register interest in a specific contract and submit credentials for potential tender invitation.
105
What is OJEU?
Official Journal of the European Union, where public sector tenders above a financial threshold must be published.
106
What is the purpose of ISO 10845?
To provide standard processes and methods for a fair, equitable, transparent, competitive, and cost-effective procurement system.
107
What are problems of a Joint Venture (JV)?
Problems include:
* Divided loyalty
* Interference
* Changes in parent organization policy
* Lack of trust
* Cultural issues
108
What is the difference between a Joint Venture and a Consortium?
A Joint Venture is a commercial alliance creating a new business, while a Consortium retains separate legal statuses without joint interest.
109
What types of contracts are considered non-adversarial?
Examples include:
* Partnering contracts
* Target costs
* Cost reimbursable contracts
110
Is management contracting adversarial?
Management contracting is generally considered non-adversarial.
111
What is meant by e-Tendering?
The electronic issuing and receipt of tender documentation as part of the procurement process.
112
What is the tenderer deemed to have included for in respect of a defined Provisional Sum?
Programme and preliminaries allowances.
113
How would you establish a contractor’s credit rating?
By requesting financial statements, checking financial ratios, and consulting stakeholders on payment history.
114
Why is a contractor’s credit-worthiness important?
It indicates their ability to pay bills on time, deliver projects on schedule, and avoid cash-flow problems.
115
What is the difference between procurement and contract?
Procurement is the selection process, while a contract is a binding agreement.
116
How do you evaluate Health and Safety terms in a bid?
Request HSE Policy, HSE Procedures, CV of HSE staff, and HSE Records.
117
What is the mechanism for TPI calculation?
TPI measures price movement agreed between clients and contractors at the time of tender acceptance.
118
What are the three types of inflation indices calculated by BCIS?
The types are:
* Tender Price Indices (TPI)
* Output Price Indices (OPI)
* Resource Cost Indices (RCI)
119
What is a Performance Specified Road Maintenance Contract?
A contract where the contractor is paid based on output rather than a schedule of unit prices.
120
What are the General Building Cost Index and General Civil Engineering Cost Index?
Indices used to measure and compare construction costs over time
## Footnote
These indices help in adjusting project costs based on inflation and market trends.
121
What is a Performance Specified Road Maintenance Contract?
A contract where the contractor is paid based on maintaining the road at a specified service standard rather than on input measures
## Footnote
This contrasts with traditional contracts that pay for each specific input, such as repairing potholes.
122
What differentiates performance specified works from traditional methods?
Performance specified works focus on output and service standards, while traditional methods focus on input measurements and unit prices.
123
What are the benefits of output-based maintenance contracts?
* Clear financial incentives for contractors to meet performance standards
* Encourages efficiency and waste minimization
* Payments based on service delivery rather than inputs
124
Who are the different parties involved in a development?
* Landowner
* Developer
* Property development companies
* Institutional investors / banks
* Contractors
* Consultants
* Planning authorities
* Insurance companies
* End users (tenants)
125
What is a development appraisal?
A process involving research into constraints and opportunities of potential sites, including location, legal, and planning aspects.
126
What role does a Quantity Surveyor (QS) play in a development appraisal?
The QS assists in evaluating costs and providing insights into financial feasibility and project viability.
127
What should be included in a first stage tender?
* Pre-construction and construction programme
* Method statements
* Detailed preliminaries
* Agreed overheads and profit
* Schedule of rates
* Agreed fees for design services
* CVs for proposed staff
* Tendering of packages
* Agreed contract conditions
128
What additional documents are needed to evaluate tenders?
* Technical proposals
* Method statements
* Preliminary programme
* Organisation chart
* Key personnel CVs
* Evidence of relevant experience
* Insurance details
* Design consultant details
* List of subcontractors
* HSE policy
* QA/QC manuals
* Trade licence
* Completed site visit form
* JV details
129
What are essential items required on a Form of Tender?
* Latest return date
* Date, name, and address
* Tender reference number
* Price for works and adjustments
* Validity date of the price
* Allocated time for works
* Acceptance of terms
* Governing law confirmation
* References to documents
* Qualifications
* Cost responsibility
* Alternative proposals
* Confirmation of genuineness
* Signature and details
130
What are Employer's Requirements (ER)?
Documents describing the client's needs, including specifications, scope of services, and risk allocation for design and build projects.
131
What does 'Mutatis Mutandis' mean?
Making necessary alterations while not affecting the main point at issue.
132
What sources of information are used when pricing a job?
* In-house historical price data
* Subcontractor/supplier quotes
* First principles analysis
* Cost indices (e.g., BCIS)
* Price books (e.g., Spon’s Price book)
133
What does a Contract Sum Analysis consist of?
A breakdown of the contractor's price allowing for analysis and comparison with other tenders, necessary for payment calculations.
134
What is tender settlement?
The conversion of a cost estimate into a tender, considering the contractor's commercial interests.
135
Does a tender always represent actual cost?
No, a bid generally includes a cost plus markup, which includes risk premiums.
136
How should exceptionally low tender offers be handled?
Identify reasons for low offers, verify pricing completeness, and allow the tenderer to explain discrepancies.
137
What is a decision tree in procurement?
A policy outlining the choice of procurement routes and the rationale behind those choices.
138
What is tender rate analysis?
The methodical review and analysis of submitted tenders to ensure parity and thorough evaluation.
139
What factors affect project (tender) selection by contractors?
* Client reputation
* Type of work
* Project value and profitability
* Current workload
* Resource availability
* Project location
* Form of contract
* Time available to tender
