Procurement and tendering Flashcards
What are the different types of procurement routes and techniques?
- Traditional
- Design and Build
- Management Contracting
- Construction Management
- Guaranteed maximum price
- Single Stage
- Two – Stage
- Negotiated
- Lump Sum
- Re-measurement
What is traditional procurement?
Traditional
• (JCT Standard, Intermediate, Minor works)
• Design-bid-build
• Contractor doesn’t take responsibility for design
• Design team (consultants) design the project
What is D&B procurement?
Design and Build
• (JCT Design and Build)
• Main contractor appointed to design and construct
• Contractor takes responsibility for design
What is management contracting procurement?
Management Contractor
• Number of works contractors, contracted to a management contractor
• Appointed by a client early in the process
• Management contractor = principle.
• One contract
What is Construction Management procurement?
Construction Management • Several trades directly employed by client • Managed by a construction manager • Acting as an agent for the client • Like a consultant and management role.
what is Guaranteed Maximum price?
Guaranteed Maximum Price
• Agreement with contractor that contract sum will not exceed an specified maximum
• No EOT claims
• Contractor is likely to tender high
• If the client makes any material changes, then this could still have cost implications.
• Used typically on D&B
what is single stage procurement?
Single stage
• When enough information is required for the tendering party to submit a price against a design.
• The contractor is then appointed to carry out the project works.
What is two stage procurement?
Two stage
• Allows for early appointment of a contractor
• Based on overheads, profit, schedule of rates, proposed team, programme, contract conditions e.g. insurance
• Uses a PCSA until stage two, where contract is negotiated.
• Contractor tenders works packages whilst designing.
What is included in a tender pack?
• The form of contract and any amendments
• Outline programme
• Employers requirements
• Tender pricing doc (or contract sum analysis on D&B)
• Outline design
• ER’s/specs
- A letter of invitation to tender
- The form of tender
- Prelims (PCI, Site waste management plan)
- Tender return slip.
what is included in the ERs?
- Occupational requirements
- Architectural performance criteria
- Services performance specifications
- Branding guidelines
- Conceptual design package
- Test fits
How do you score tenders?
- Tenders are scored against a weighted criterion
* This could include cost, proposed team, design, gut feel
What is the pre-qualification process? What questions are asked/
- Process prior to the competitive tender
- Larger selection of contractors
- Enables employer to create shortlist of contractors for tender
- Details include insurance, financial information, heatlh and safety policy, ISO accreditation, experience on similar jobs.
What information do you provide when giving feedback to contractors?
- Feedback on team, presentation, approach
* Cannot disclose financial information.
What is the difference between a negotiated and competitive tender?
- Negotiated – client negotiates with a single contractor
* Competitive tender – client issues tender to a set of contractors to competitively submit a response.
What was the process when utilising a negotiated tender?
- Negotiated – client negotiates with a single contractor
* Competitive tender – client issues tender to a set of contractors to competitively submit a response.
How can you ensure the client is still getting competitive pricing from negotiated tender?
• Costs can be benchmarked against competitive rates
What is included in a benchmarking report?
- Comparison of schedules and rates
* Comparisons of OHP and Prelims
How is the contractor engaged on a negotiated form of tender?
• A PCSA of a LOI
What is the difference between procurement and tendering?
- Procurement is the purchasing of goods and/or services
* Tendering is the process involved in procuring e.g. competitive bidding.
What guidance is there on procurement and tendering?
• RICS tendering strategies
What is alternative A or B?
If any errors found in submission
• Alternative A = cannot make any changes. Contractor has to submit or withdraw
• Alternative B = can make changes
What is the guidance on number of tenderers?
• Should be between 3 and 6
What is the different between procurement and tendering?
- Procurement is the act of obtaining goods and services based on a Clients requirement of time, cost, quality, design risk.
- Tendering is part of that process and involves obtaining a price for the works from the Contractor, the bid process and appointing the Contractor.
What tendering strategies are you aware of?
Single Stage tender and two stage tender.
How do you decide upon the procurement route and tendering strategy?
Understand the clients key drivers i.e. programme, risk, budget as well as understanding market environment.
What are the differences between traditional and D&B procurement?
Traditional: Quality, full design Design flexibility through variations and instructions Design control CDP items – some design risk transfer Cost – may be lump sum cost benefits Requires full detailed pack pre tender Incomplete drawings lead to delay.
D&B Time – fast track, overlap of design and construction. Cost – lump sum Single point of responsibility Good price certainty Novation can benefit quality Low risk for client Cheapest route to meet contract spec can lead to low quality RFC will have cost/ time implications Contractor carries risk for construction
What is the process to appoint a main contractor and get into contract?
- Long list
- Short list
- PQQ
- Invitation to tender
- Mid tender interviews
- Tender queries
- Post tender interviews
- Contractor selector
- Appointment.
On your case study project, why did you do two stage tender?
At the time it was based on the market conditions, we didn’t think there was appetite for single stage as that is intensive and requires a lot of time and effort and we didn’t think we would get the interest.
How do you analyse tender returns and what is your recommendation based on?
- Assessment to identify tender that best meets the client’s needs and offers the best value for money can be beneficial in the long run.
- Pre-agreed analysis Matrix. Criteria may include Price, relevant experience, requirements, past performance, technical skills, resource availability, proposed methods, compliance.
- Criteria is weighted to reflect how important they are to the client. Weightings will be known to the tenderers in the ITT.
- Recommendation is then made based on best value tender.
Why did you recommend that a verification engineer was procured?
A verification engineer is a consultant that works alongside other engineering specialists to expertly verify and witness projects. This includes on-site and off-side tests to ensure the most stringent compliance with specifications and building/ project performance.
Benefits:
- Compliance of the contractor’s scope of work with the ERs
- Compliance of the contractor’s design with the applicable contractual standards and regulations
- Correctness and completeness of the design deliverables produced by the contractor
- Compliance with the applicable construction techniques and procedures, as specified by the contract and the applicable regulations.
- Allows time to resolve technical issues and prevent mistakes and errors potentially leading to disputes.
- Can help in design phase.
- Gives client confidence in the systems.
The client was risk adverse and was going to be occupying this building and wanted absolute certainty.
Why did you procure the AV contractor and catering contractor client direct?
To be answered
What does the guidance note on tendering strategies say?
To be answered.
How did you prepare your recommendation to the client?
I tabled my analysis based on the criteria and then wrote up a recommendation report to the client following advice from the consultant.
What set criteria did you analysis the AV and catering contractors against?
to be answered.
Why did you reduce the scope of the verification engineer? Were all the services not needed?
to be answered.
what is procurement?
Process to acquire goods and services.
Includes – prep of procurement strategy, prep of contracts, selection of suppliers.
What is a procurement strategy?
Describes the mechanics of how the project will go about procuring and subsequently managing services and goods.
It identifies the client’s goal,project drivers, assessment of potential procurement routes suitable.
What is a single stage tender?
- Single stage – more traditional.
- Used when all necessary information is available to calculate a realistic price.
- Where tenders are issued to Contractors to competitively price for the whole of the works following the completion of a Design pack (Stage 2, 3 or 4).
- Stage 4 pack means the Contractor has more information to base their bid on and can reflect in more accurate contract sums as opposed to provisional sums or pricing risk.
What are the pros and cons of single stage tender?
Pros -
- one price given for construction works as opposed to being split into two stages
- speeds up procurement process as doesn’t need to be negotiated with contractor
- the discipline of a single stage tender should prevent construction proceeding without a complete design-clear statement of risk allocation
Cons
- no early contractor involvement
- client has limited opportunity to influence supplier list
- no work can commence until contract sum agreed
- firm price depends on design packages detail
What is two stage tendering?
Two stage – Used for early appointment of a contractor.
- First stage is a limited appointment is agreed allowing the contractor to begin work.
- Second stage is fixing the price through negotiation. - Two stage tender used when time is restricted as it allows design and construction to overlap.
- In the first stage, a design pack is issued at either RIBA Stage 2 or 3 and the Contractor returns with qualitative assessment, and prelims, profit + cost.
- They are appointed to input into the design on build-ability, materials usually under a PCSA.
- They then develop the designs with the design team and in the second stage produce a contract sum for the whole of the works based on that information.
What are the pros and cons of two stage tendering?
Pros
- Allows design and tendering to be overlapped
- Construction packages can be let out at the same time - Earlier start on site can be achieved
- Can promote collaboration
- Contractor can help to identify early risks
- Early contractor involvement to input on design and buildability
- Potential for early Client involvement when selecting supply chain
- as contractor involved early, reduces likelihood of disputes
Cons
- Won’t get price certainty until the second stage of two-stage tender
- Risk that Contractor becomes embedded in the design team and may negotiate higher than market rates
- Unless all packages are firmed up, the Client will not achieve procurement cost certainty at the end of the second stage and may commence construction with prov sums to be firmed up-
- costs can occur if contractors design release requirements are not adhered to by the design team
- Contractor also has to be appointed at the right time in order to add valuable input into the first stage of the tender
- risk that negotiations fail and have to re-tender-extended negotiations can occur
- unclear statement of risk allocation
What is a pre-tender estimate?
- To ensure the Client has enough funds to finance the project, ensure it is in line with their budget
- Used to benchmark tender returns by the professional team
What is BS11000-1
- British Standard for public partnering. Partnering selecting in PPP projects.
Why is it important to have robust tendering?
- Ensure accountability
- Ensure transparency
- That the correct price has been provided for the works
- Reduce any claim of corruption
- ensure everything has been picked up
- Ensure parity
