Procurement and Tendering Flashcards
1
Q
What is procurement?
A
The act of obtaining goods or services from an external source
2
Q
What is tendering?
A
Tendering is an important phase in a procurement strategy.
It is:
- the bidding process, to obtain a price; and
- how a contractor is actually appointed
3
Q
What are the common procurement routes?
A
- Traditional
- Design and Build
- Management Contracting
- Construction Management
4
Q
What is the traditional procurement route?
A
- Project can be broken into sequential phases: Brief, Design, Tender then Construction
- Client appoints design team. Design is fully developed. Full design is tendered. Winning Contractor constructs design.
5
Q
What are the advantages and disadvantages of traditional procurement?
A
Advantages:
- Quality of product is generally higher
- Client maintains control of design
- Post-contract changes easy to manage
Disadvantages:
- Longer project duration due to sequential phasing, no overlaps
- Buildability can be poor due to no Contractor involvement
- Design open to abuse
6
Q
What is the design and build procurement route?
A
- Design and construction phases overlap. Project is tendered before design is complete, Contractor finishes design. Allows design and construction phases to occur concurrently.
- Good brief is important to avoid Contractor designing a building not fit for purpose.
- Contractor take on risk of the project
7
Q
What are the advantages and disadvantages of the D&B procurement route?
A
Advantages
- Low cost risk as client pays lump sum for Contract, absorbing design/construction risk. Contract Sum will be inclusive of a %age fee to cover design development/risk
- Low time risk: due to the ability to begin construction before design has been completed means this is a fast track procurement route.
- Cost certainty, if a lump sum contract, known early on in the project timeline.
- Early contractor involvement generally is good for buildability
- Single point of responsibility for the client
Disadvantages
- High design risk. Client loses control over design. Contractors will aim to meet ER’s whilst maximising their margins
- Post-contract changes difficult to manage and often are expensive
8
Q
What is management contracting?
A
- Management Contractor is appointed to manage the project
- Project is split into Works packages which are individually let through MC
- MC is paid on a fee basis and is brought into the project early on in the project timeline
9
Q
What are the advantages and disadvantages of management contracting?
A
Advantages
- Fast track procurement option as early packages can be let whilst later packages are still being designed
- Client maintains design control
- Late changes accommodated so long as that package hasn’t been let
- Good buildability with early appointment of MC
Disadvantages
- MC is paid on a fee basis and doesn’t take project cost risk, leaving the client exposed
- Although procurement is fast, cost certainty is poor until the final package is let
- Cost certainty is also poor until the final package is let.
10
Q
What is the construction management procurement route?
A
- Construction Manager is appointed as a consultant
- Client has many points of responsibility: Consultants (incl Cons Manager) and all trade contractors
- Project is split into trade packages and client is responsible for each sub-contractor
- Design and construction phases can overlap
11
Q
What are the advantages and disadvantages of the construction management route?
A
Advantages
- Fast track procurement route as design and construction can overlap
- Arguably a cheaper price is obtainable due to cutting out the main contractor’s OH&P costs.
- Accommodates late changes if the package has not been let
- Client maintains design control
- Good buildability with early involvement of Construction Manager
Disadvantages
- Client must be experienced as all parties report to them.
- Time certainty is not known until last package is let
- Construction Manager may not be motivated by cost as he is appointed on a fee basis, resulting in high project cost
12
Q
What is prime contracting?
A
- Prime contracting is a procurement route in which a Contractor is appointed by a Client to deliver one or more projects
- Contractors are appointed based on tender submissions of their Schedule of Rates
13
Q
What is serial tendering?
A
- Serial tendering is a tendering mechanism that can be used in a prime contracting procurement route
- Serial tendering involves submitting a schedule of rates for your tender bid, or pricing a hypothetical Bill of Quantities for a typical project
- The winner of the tender will be appointed as and when the client requires their services. Useful for a client that has repeat work or maintenance.
14
Q
What Contract would you use in a prime contracting procurement route?
A
- JCT MTC 2016
- Measured term contract.
- Defines works covered and over what term (2-3 years typically)
- Estimates likely value and size of individual orders
- Agreed on schedule of rates
15
Q
What is PPP/PFI?
A
- Public Private Partnership
- Public Finance Initiative
16
Q
What are PPP/PFIs?
A
- Joint ventures between the public and private sectors
- Generally, the public uses PPP/PFI to procure a service from the private sector, such as providing a hospital or train station
- In return for the asset, the public sector pays a regular fee to the private funder
- Generally these relationships last 25-30 years, and the end of which the asset is handed back to the public
- The private sector is responsible for the maintenance of that asset throughout it’s lifecycle
- There are many variations of PPP/PFI
- The advantage for the public sector client is that they can build needed infrastructure such as schools and hospital at no CAPEX cost
17
Q
What is the RIBA Plan of Works 2013?
A
- Comprises of 8 work stages
- establishes boundaries between stages and details tasks and outputs at each stage
18
Q
What is RIBA Stage 0?
A
Strategic Definition
- Identify client’s Business Case and Strategic Brief
- Establish project programme (will be reviewed at every stage going forward)
- Initial considerations made for assembling project team
19
Q
What is RIBA Stage 1?
A
Preparation and Brief
- Develop Project Objectives
- Develop Project Budget (Order of Cost Estimate)
- Develop Initial Brief
- Undertake Feasibility Studies
20
Q
What is RIBA Stage 2?
A
Concept Design
- Prepare Concept Design
- Develop Cost Information (Cost Plan)
- Consider strategies for sustainability M&O, handover, H&S and risk assessments
