Procurement and Tendering Flashcards
What does a letter of intent do?
Method of instructing a contractor to proceed with work before a contract is formally entered into
Why would you choose Alternative 1?
OJEU tendering to narrow down from 100s of bids, ensures people stick to bids
What is partial possession?
When an area achieves practical completion, it can be occupied by the client
Half the retention must be released
Defect liability period begins
Insurance passes to the client
Contractor is not obliged to allow partial possession but cannot reasonably withhold permission
What is the difference between Management Contracting and Construction Management?
Management Contracting – client employs main contractor who employs sub-contractors
Construction Management – Client directly employs sub-contractors (direct contract)
How would you equalise tender returns?
Mean of the other tenders
Highest of the tenderers
Cost plan rate
What is an RFI?
Request For Information
A way for the tenderer to clarify queries with the design team
Do you know of an e-tendering service?
The RICS has one
What procurement route would you advice to a client who wanted the lowest cost achieved?
Open Tendering or construction management
What factors effect choice of procurement route?
Nature of project Scope of works Experience of the client Accountability Cost certainty requirement Start / completion date requirements Level of post contract change expected
What is a PQQ
Pre-Qualification Questionnaire
What are the advantages of 2 Stage Tendering?
Cost certainty
Buildability advice
Programme certainty
What are the positives of D&B?
Places the risk on the contractor Single point of responsibility Cost certainty Increased buildability Can be faster as early packages can be started before the design is finalised
What external factors should be considered when selecting a procurement route?
Changes to costs / availability of finance Interest rates Inflation changes Upcoming legislation Availability / demand of specialists
What does the JCT tendering practise note include?
2017
Public and private sector procurement is clearly split
Time for response is now the same as the OJEU notice periods
PQQ now 30 days
Tender period for public procurement now 35 days
What are the 4 routes of procurement?
Traditional Design and Build Construction Management Management Contracting Design Build Finance Operate (PFI and PPI)
What is Hybrid Procurement?
Non-Conventional procurement method
Soho Place – Large quantity of packages procured at first stage rather than just OH&P
Façade contractor novated across to the contractor
What is construction management?
Employer places a direct contract with each trade contractor and utilises the experience of a construction manager (main contractor) to act as a consultant and coordinate the works
Appropriate on large complex projects
What are the negatives of D&B?
Lack of competitiveness in second stages
Longer tender period
Lose control of the design
Quality control carried out by contractor
What would you do if a tenderer submits a qualified tender?
Give them the opportunity to amend the tender without amending the price making the bid compliant. If they refuse, then the bid will be deemed non-compliant and rejected
What is the difference between Management Contractor and Traditional?
MC – cost + fee / % (prime cost)
Traditional – fixed cost
What are the benefits of a framework agreement?
They allow a client to reduce timescales, learning curves and risks when continually commissioning construction
What would you include in a Tender report?
Executive summary Introduction List of tenders received Tender period Qualification identified Post tender adjustments Programme Revised tender sum Issues to be resolved Tender returns vs PTE / budget Recommendation
What are the OJEU thresholds for public procurement?
c.£181k for services
c£4.5m for works
What is the purpose of a PQQ?
Establish the suitability of prospective tenderers based on their record and technical capability
What is included within a Tender pack?
Invitation to Tender Instruction to Tenderers Certificate of Bona Fide Tender Scope of Works Tender Drawings and Specification / Employers Requirements Programme requirements As-Built information if fitout Environmental Considerations
What makes up a letter of intent
Acceptance of contractors offer and description of works
Value / contract sum
Duration and completion dates
Description of the form of contract and warranties / performance bond
Date of contract signing
Copyright
What are the positives of traditional?
Most competitive
Most linear form of tendering
Fixed price before contract signing
What are the risks of including provisional sums?
Is a sum on money set aside for works which may not be carried out, scope of work is not known so can’t give a firm price
Too many provisional sums reduce cost certainty
What are the positives of Management Contracting?
v. quick
changes accommodated easily
Disaster relief – work first cost later
What should be included in a PCSA?
JCT publishes 2 forms of PCSA – general contractors and specialists
Design liability
What happens to design liability if the contractor is not appointed for the 2nd stage
Method of payment
Appendix of all tender items to be included in the construction contract
Disadvantages of 2 stage tendering?
Lack of competition at second stage
Can lose control of design
Risk of contractor not honouring PCSA / pre-agreed costs at contract signing
What is procurement?
How the services of a contractor are purchased
The act of obtaining goods and services from an external service
When would you choose Alternative 2?
JCT practise note recommends for D&B but most times when limited numbers of contractors
What is the tender process for single stage competitive tendering?
Compose longlist of contractors PQQ Shortlist of contractors Invitation to Tender & Tender Submission Recommendation Award contract
What is tendering?
How a successful contractor is selected / appointed (obtaining a price)
What would you include in an Invitation to tender?
Time and date for the tender return List of documents included in pack JCT Pricing Alternative selected Basis of award Site Visits
What is an Approximate Quantity?
When the quantity of the work is unclear but the work will definitely be required
Fixed rate only
What are the disadvantages of CM?
No cost certainty until last package is let
Potentially expensive to change design once packages are let
Need an informed pro-active client
Lots of consultants, more professional fees
What would you include in an Invitation to Tender?
Document register Time and date for tender return Contact point for communications Basis of award Mid tender interviews of any Site visits Documents required in the tender Which JCT Pricing Alternative is selected
What are the advantages of e-tendering?
Can reduce tender period possibly
Reduced printing / mailing costs – environmentally friendly
Maintains clear audit trail of communication
How would you decide on the length of tender period?
JCT Tendering Practise note 2017 Complexity Size Time of year Market conditions
How long would you allow for the tender period?
Dependent on;
Complexity of the scheme / if the contractor is required to complete design
If single stage with no CD then 4 weeks max
If unsure I would consult the contractors to see how long they would need to complete an accurate return
What are the benefits of single stage tendering?
most competitive
best price
less costly for the design
less consultancy fees - only reviewing a few tenders
What are the negatives of single stage tendering?
less buildability
longer as must have the design completed first
may not get as much interest from the market for single stage
What determines if work can be included in a stage 1 package?
JCT tendering note – is it of sufficient detail?
What is a PCSA?
Pre-Construction Services Agreement
A way for the client to employ a contractor before the construction contract commences, often as part of stage 1 of a 2 stage tender.
How would you deal with errors within a tender?
JCT Practise note 6;
Alternative 1 – Confirm and Withdraw
Alternative 2 – Confirm and Amend
What is the tender process for two stage competitive tendering?
Compose longlist of contractors PQQ Shortlist of contractors Invitation to Tender & stage 1 tender Recommendation of preferred bidder Pre-Construction Phase and PCSA Stage 2 negotiation Award contract
What services should be included under a PCSA agreement?
Design Buildability advice Cost planning Programming Advice on packaging of works
What are the negatives of traditional?
No contractor involvement in the design
Potentially higher number of risk items / PS
How would you carry out a Tender analysis?
Arithmetic check for errors
Compare against PTE and current budget
Check for missing scope, exclusions and provisional sums
Deal with errors with the JCT Practise Note 6 Alternative 1 or 2 (depending on selected option
Are you aware of the acronym MEAT and when would you use it to evaluate Tender Returns?
Most Economically Advantageous Tender
What is the procurement route of PFI or PPP?
Design, Build, Finance, Operate
What are the negatives of a negotiated tender?
Lack of competitiveness
High cost / longer programme
Not suitable with public contracts
Your client has seen a site he wants to build on and is keen for you to start preparing tender documents; how do you go about this?
I would convene a meeting with the client & the design team to discuss the following
1) Project programme/Anticipated schedule of Key Dates
2) Procurement & contract strategy
3) Agree a schedule of dates for issue of design information
4) Determine what pricing document
5) Establish tender list / PQQ
6) Risk register & how this will be dealt with under contract
7) Tender issue date.
Once agreed I could begin to collate the information available & start pulling the information for the tender document together
What is a Prime Cost?
Used for when a specified sub-contractor is listed, applies only OH&P to a set price
How will the chosen procurement strategy affect the project?
Clients exposure to financial uncertainty Clients level of control over the design Extent of design required for tender Contractor involvement in design Project risk profile
What is open tendering?
Open to the public so anyone can express an interest in the project – required for public sector work - OJEU
What is sectional competition?
Refers to sections pre-stated in the contract
Allows the client to take passion of completed areas
What are the negatives of Management Contractor?
Cost / cost certainty
Requires careful management
Why do you carry out a tender analysis?
To ensure the bids are compliant and can be compared equally
What are the drawbacks of a negotiated tender?
No competition so no guarantee of a fair market price
What are the positives of a negotiated tender?
Faster – no tender period
Most contractor involvement
What are the benefits of CM?
Programme – can overlap design and construction
Clear roles and relationships between all parties
Can accommodate design changes if the package has not been let yet
Potentially better price as direct contracts with trades
What information is required in a PQQ?
Contract particulars details
Key staff, management and organisational structure
Relevant experience
Financial and commercial standing – turnover, company accounts
Commercial policies – H&S, CSR, Sustainability
What is the difference between Partial possession and sectional completion
Section competition is pre-planned and defined in the contract documents, partial possession is not and is a more open ended option
What is selective tendering?
A shortlist decided by the design team and client
What is an alternative to a PCSA
LOLA - Letter Of Limited Authority
What types of letters of intents are there?
1) Comfort letters; A comfort letter is a letter expressing a party’s intention to act in a particular way at some point in the future, or at the time of issuing the letter.
2) Instructions to proceed with consent to spend; A letter with instructions to proceed and consent to spend is sometimes referred as an “if’” contract. This type of letter allows work to proceed up to a certain value while the contract itself is being finalised.
3) Letters recognising the existence of a binding contract(s); This type of letter is also referred to as a letter of acceptance and is used by some forms of contract (such as FIDIC) to formally execute the contract itself. Generally such a letter will be issued only once the contract has been substantially agreed and usually marks the completion of negotiations between the parties.
What types of tender interviews are there?
1) PQQ Interview
2) Mid-tender interview, better understand the project.
3) Post-tender question, after tender submission.
What is procurement?
The process of the purchasing of goods of services.
What is Alternative 1 & 2?
Alternative 1: Correction of the tender price is not permitted
Alternative 2: Correction of the tender price is permitted.
