Procurement & Tendering Flashcards
What is procurement?
The overall act of obtaining goods and services from external sources
What is tendering
Tendering is the bidding process to obtain a price; and how a contractor is actually appointed.
Name the types of Procurement routes?
Traditional
Design and Build
Management Contracting
Construction management
How would a procurement route be decided upon?
Formulate a procurement strategy to achieve optimum balance of risk, control and funding for a project. This would address:
a) The business case
b) Define objectives and measures for success
c) Determine procurement priorities
d) Identify main risks and who is best placed to manage them
e) Any EU rules
Differences between Procurement Strategy and Procurement Route
The procurement route sits within the overall procurement strategy.
The route delivers the project; selects and provides structure to the project team; allocates risk and responsibilities; and determines the form of contract.
The procurement strategy also addresses the Client’s business needs.
The strategy links the project to the Client’s business; balances client risk with control; and reflects client’s objectives and available resources.
What are the advantages of using Traditional Procurement?
- Competitive fairness - all tenders are based on exactly the same information, and there is no interpretation of information.
- Cost certainty - the total cost is largely known at the outset of the contract.
- Programme certainty - the time-frame is established at the outset of the contract.
- Established - this has been the most commonly used route, and is constantly refined.
- Minor changes and adaptations for a specific project are easy to implement, with an established method of valuation.
- The form is capable of conversion to a guaranteed maximum price (GMP).
- The client has a full design they approved
*Early cost certainty is possible - Fairly even split of financial risk
Explain Management Contracting?
The MC manages packages of works, this allows for works to start quickly but there is no lump sum cost provided at the offset. The contractual link sits between the main contractor and works packages.
A management contractor is appointed on the basis of a fixed management fee. The management contractor programmes, packages and obtains tenders for the works, which are each let on a competitive basis on lump-sum, firm-price contracts with the management contractor. The project is split into packages and the client enters into separate contracts with each works contractor
Explain Construction Management?
A fee earning construction manager is appointed to manage the trade packages, but the contract sits between the client and subcons.
What types of projects would a Traditional procurement route be suitable for?
Design led projects where the client is less open to having the contractors interpretation of their requirements.
How do you protect your client from copyright under a 2 stage tender?
Within the PCSA you ensure the inclusion of a copyright clause.
What would the course of action be in the instance of identifying an error in the commercial response of a tender return?
Within the ITT you would specify which alternative the contract will adopt in the instance of an error.
Alternative 1 – Standby their response or withdraw
Alternative 2 – Amend their response or withdraw
When would you advise the client to re-tender?
Consideration must be given to the number of tender responses and if it is still a competition
If you believe the tender procedures have been compromised.
If there has been drastic deviation from the design / VE exercise which significantly differs to the design tendered.
Explain traditional procurement
Client appoints a design team to complete the full design up to RIBA 4 along with the tender documents.
The project is tendered to a number of contractors and the highest scoring contractor after evaluation is appointed
A specialist works are usually tendered during construction
The contractor is responsible for the programme
Disadvantages to traditional procurement
Overall procurement time is slower
Domestic sub-cons are tendered individually so there is a lack of visibility
Contractors expertise is not incorporated into the design
The contractors relationship creates sides
Design must be fully complete before tendering
Key client risks under traditional procurement
- Overall project duration may be longer than others – sequential process
- No input into design and planning by the contractor
- Dual point of responsibility – design team for design and contractor for construction
- If design not complete at time of tender, cost and time certainty are reduced
- If the client continues to request changes to the brief there is risk of cost and programme overrun
Explain Design and build procurement
Design and build is a procurement route in which the main contractor is appointed to both design and then construct the works described in the contract.
- Client appoints a design team to develop the clients brief
- Client tenders to a number of D&B contractors
- Contractor is selected on overall tender including design programme and works
- Contractor build the building and completes it to the programme
- Emphasis in this form of procurement in time and cost. Design and construction are overlapped so the overall project duration is shorter
D&B procurement advantages
- Client has single point of responsibility
- The contractors expertise is used in the design
- Early cost certainty is possible
- Design and construction are overlapped
D&B Procurement client risks & mitigation
• Client may find it hard to prepare a sufficiently comprehensive brief
• Client has to commit to a concept design early
• Variations from the original brief are difficult to arrange and often expensive
• Harder to compare tenders – harder to determine if getting value for money
• Ease of fabrication may be prioritised above aesthetic quality
• May be less real competition due to fewer design and build firms
• End result may not be what the client wanted
When is management contracting suitable to be used?
On unique specialist buildings or where time is critical. The client is normally very experienced in developments.
Explain management contracting.
The contractor manages packages of works, this allows for works to start quickly but there is no lump sum cost provided at the offset. The contractual link sits between the main contractor and works packages.
A management contractor is appointed on the basis of a fixed management fee. The management contractor programmes, packages and obtains tenders for the works, which are each let on a competitive basis on lump-sum, firm-price .
The management contractor programmes, packages and obtains tenders for the works, which are each let on a competitive basis on lump-sum, firm-price contracts with the management contractor. The relationship is between the managing contractor and subcon.
Management contracting advantages?
- Design and construction overlap for a quicker programme.
- Each sub-contract is tendered individually ensuring full competitiveness.
- Management contractor experience is used in the design, specialist subcon also used in the design.
- MC is responsible for delivering the project on programme.
Management contracting disadvantages
- Costs are not fixed at the outset
- There is potential for conflict between subcons ie over delays
- The client involvement is high
Management contracting key risks to the client
- Costs are not fixed at the outset
- Design is not complete at the outset
- The MC is sometimes not responsible for problems with the subcons - i.e the risk of cost increases bourne by the client
- There may be a lack of PI insurance on subcons
- The management contractor is not responsible for design defects due to subcons
Risk mitigation.
- An additional design contingency to the budget to cover any cost increases and carry out due diligence
- Amend the contract so the MC is responsible for programme disputes between subcons
- For PI advisors should insist on moving some subcons into MC’s responsibility
- Ensure that a system of PI with warranties is in place to the satisfaction of legal advisors
Explain the difference between managing contracting and construction management.
Construction management the client owns the contractual relationship with the subcons, management contracting the MC owns the relationship with the subcon.
When is construction management procurement used.
CM is used mainly by US companies, the emphasis in this form of procurement is time. Design and construction is overlapped making overall project duration shorter.
Advantages of Construction management
- Design and construction overlap making overall programme shorter.
- Specialist subcons experience used in the design
- Each subcontract is tendered separately so is competitive
Disadvantages of Construction management
- Costs are not fixed at the offset
- No single point of responsibility
- client assumes a high level of time cost and design
- client involvement is high
- high degree of interface and programming required between design and construction
Construction management key client risks
- Costs are not fixed at the outset
- Design is not complete at the outset
- The CM is not liable for any programme delays, risks of delay and cost increase is a risk bourne by the client
- Lack of PI cover on subcons
- CM not responsible for design defects due to subcons
Mitigation
- An additional design contingency to the budget to cover any increases and carry out due diligence
- Covert appointment to CM with the risk of programme overrun
- For PI advisors should insist on moving some subcons in the CM’s responsibility
- Ensure that a system of PI cover is in place to the satisfaction of legal advisors.
List the financial basis of different types of procurement
- lump sum / fixed price
- cost reimbursable contract
- Target cost contract
- Measurement contract
Explain Lump sum / fixed cost
A single ‘lump sum’ price for all the works is agreed before the works begin, it is the traditional means of procuring construction.
The contractors undertake the responsibility for executing the complete contract for the stated total sum of money.
When would a lump sum contract be most appropriate?
Generally appropriate where a project is well defined when tenders are sought and significant changes to requirements are unlikely. This means the contractor can accurately price the works they are being asked to carry out.
When is a lump sum contract not appropriate?
Lump sum may be less appropriate where speed is important or where the nature of the works is not well defined.
List the mechanisms for varying the contract sum on a lump sum contract
- variations
- relevant events
- provisional sums
- fluctuations
- payments to nominated subcons or suppliers
- statutory fees
- payments relating to the opening up works for inspection and testing
Explain the advantages of lump sum contracts
- client risk is minimal
- fewer variations
- the client can arrange capital according to the payment plan
- the contractors cash flow is predictable
- the tendering process is more transparent and impartial
Explain the disadvantages of lump sum contracts
- Contractors risk is high
- poor details and specs in the design can lead to project disputes & cost increases
- delays in the client financing can delay the project
- the design should be complete and available before the precontract process
- procurement times can be long
When would a measurement contract be appropriate to use?
Can be used in situations where the design can be described in reasonable detail but the contract sun cannot
Explain a measurement contract
The contract sum cannot be determined when the contract is entered into but is calculated on completion based on re-measurement of the actual work undertaken at the rates tendered
Explain a cost reimbursable contract
The contractor is reimbursed for the actual costs they incur in carrying out the works, plus an additional fee.
This is appropriate to use when the nature of the works is not fully defined at the outset and the risk associated with the works is high (i.e emergency works).
This option is high risk for the client as cost is not known when entering into contract.
Example is NEC option E
Explain a target cost contract
Target costs are generally associated with cost reimbursable contracts.
ITs a mechanism allowing the contractor and sometimes consultant to share in the benefits of cost savings but also bear some of the client cost if the project overruns.
Target cost is set early on in the project, then savings are shared based on an agreed formula.
Bonuses or penalty payments are often capped, target costs can be set for the overall project or certain elements of work.
Example NEC Options C & D
What types of projects would a Traditional procurement route be suitable for?
Design led projects where the client is less open to having the contractors interpretation of their requirements.
When would you advise the client to re-tender?
Consideration must be given to the number of tender responses and if it is still a competition
If you believe the tender procedures have been compromised.
If there has been drastic deviation from the design / VE exercise which significantly differs to the design tendered.
What is novation
Novation is a new contract which transfers the rights and obligations of one party onto a new third party, for example the design rights and obligations of the architect are transferred from the client to the contractor.
If the design team novates what should the client put in place
The client should have a collateral warranty with the design team to give them remedies for breach of contract.
If the client wishes to start on site asap, what route would you recommend?
This depends on a other requirements including cost and quality, but if time is the overriding priority then Management contracting or Construction management would be appropriate due to the ability of a fast start on site as the start on site is not dependant on a long tender period.
What procurement route would you recommend if the client wanted an early start on site and also cost certainty?
D&B would be the most appropriate as it allows design and construction to overlap, rather than being sequential like traditional. This route does however allow the client to attain a lump sum for cost certainty.
What is GMP? And what does it mean to you?
Guaranteed maximum price. It’s a lump sum contract where there is no adjustment to the tender price, unless required by the client changes. The contractor includes additional risks involved in the design development process in the tender price.
What are the advantages of GMP?
There’s a greater price certainty as the contractor takes a risk of design development and unforeseen occurrences, there’s greater control over spending, it is within the contractors interest to alert the team to expensive items of design development and there is a quicker settlement of the final account.
What are the disadvantages of GMP?
The client may pay too much, the contractors risk allowance may be higher than in reality, scope changes are likely to be very expensive and it can be adversarial when trying to decide whether they are design or scope changes
What is PFI / PPP?
Private Financial Initiative or Public Private Partnership
What are 3 types of PFI projects?
Financially freestanding / Project undertaken with costs recovered by charging users / Joint Venture public and private sector project
What kind of project would a Private Finance Initiative (PFI) be used on?
Commonly large projects such as schools or hospitals
What is partnering?
It is a different way of structuring a business relationship involving two or more organisations working together to achieve mutual objectives, and deliver continuous measurable improvement
What is project partnering?
Where all members of the team become involved in the partnering process at design stage including contractors. Ownership of risk is spread between the parties and a collaborative approach is encouraged to deliver the solution and overcome problems
What is strategic partnering?
Strategic partnering is a long-term relationship for a number of projects or work that will last over a long period.
What are the key characteristics of partnering?
With partnering there is more trust, extra incentives, administrative burden is increased and therefore restricts it use to larger projects.
What are the benefits of partnering?
- The overall construction and design programme is shortened because there is a prior understanding of the client and the requirements from previous projects,
- the team know each other and learn each other’s working patterns reducing conflict, improve communication and objectives,
- a pooling of resources and ideas which should result in innovative solutions improved customer satisfaction,
- better value for the client
- Recognition and protection of profit margin for contractors and suppliers
- Creates an environment which encourages innovation and technical development
- Improved buildability
- Stability of better confidence of the team
What contracts can be used for partnering?
NEC 3 and Option x12
JCT Framework agreement
NEC framework agreement
What is a Key Performance Indicator?
A measurable value that demonstrates how effectively a company is achieving objectives and performing on a project used to evaluate their progress and success at reaching targets and allows organisations to benchmark performance for areas critical to the project’s success.
What is an integrated supply chain?
An integrated supply chain has the objective of understanding and working wholly in the interest of the project client rather than the immediate client.
What advantages can an integrated supply chain bring?
It can reduce costs and maintain margins, it’s an incentive to remove waste and efficiency gives greater certainty of costs and better underlying value to the client and gives the opportunity of a repeat business with key clients.
What are the main methods of choosing a contractor?
Open tendering
Selective tendering (Single / two stage)
Nomination
Negotiation
Serial Tendering
Joint ventures
What is open tendering?
Where you advertise a tender on an open portal which allows anyone to submit a tender return for the works.
What is the advantages to open tendering?
There is no favouritism, you’re going to an open market, gives opportunity to people you may not know exist, give opportunity
What is the disadvantages to open tendering?
There is a risk the lowest tenderer does not have the experience, is capable, financially stable, and the cost of tendering can increase
What is selective tendering?
Selective tendering restricts the number of tenderers through pre-selecting a limited number of contractors to tender for the work
What are the two types of selective tendering?
Single stage & 2 stage
What is a single stage tender?
A structured process of receiving competitive tenders for a number of pre-selected capable contractors to provide a lump sum for the works. Contractors are pre-selected based on recent experience, necessary skills, good management & organisational structure, capacity and financial standing.
Usually done at RIBA Stage 4.
Bidding contractors are given a predetermined amount of time to submit their tenders. These are then analysed, in terms of cost and quality, before a single contractor is declared the preferred contractor.
What are the advantages of a single stage tender?
- Ensures only capable and approved contractors can tender
- Time is low in the tendering process
What is two stage tendering?
It separates the process involved with selecting a contractor from determining price of the works. It is used when its desired to obtain the benefits of competition and have the advantage of bringing the contractor into the project early on.
What is the purpose of the first stage in two stage tendering?
To select a suitable contractors by means of a competition
What is the purpose of the second stage in two stage tendering?
The negotiation process of the selected contractor on the basis of the first stage.
What do tenderers return in the first stage of a Two stage tender?
A detailed build up of prices for the prelims
A % as additions to profits and overheads
Construction programme
proposed subletting of the works
What are the advantages of two stage tendering?
- collaborative working
- Early involvement of the contractor
- Potential earlier start date
- Greater client involvement in selecting the supply chain
- Contractor and help identify & manage risk
What are the disadvantages of two stage tendering?
- Cost certainty may not be achieved before construction commences
- Additional pre-construction fees for the contractor
- Potential for parties to not agree on the contract sum
- possible need to re tender
*Increased administrative burden
When should you use two stage tendering?
You should use 2 stage if the building’s complex
If the magnitude of work is unknown at the time of contractor selection
If early completion is required
If the design team wish to use the contractors expertise on buildability issues
What is negotiation / nomination and when is it used?
Where there is preference for a particular firm and wants a direct negotiation or nomination.
May be used when a contractor has undertaken satisfactory work In the past
How does negotiation / nomination work?
There is no competition, the contract sum is arrived at through negotiation, one party prices the scheduled rates in a bill which is used as the basis.
What is serial tendering?
Contractors are asked to bid for a project on the basis of if the build is going satisfactorily other opportunities of the same nature will follow and the same bill of rates will be used.
What is a joint venture?
Usually used on large complex projects where two or more companies take on a joint and shared liability for design and execution of the project.
What information should the instruction to tender contain?
- Date for return
- The address to return it to
- Programme length
- Confirmation of receipt of document
- Instruction on how the tender should be submitted
What is a form of tender?
The form of tender is a pre-printed formal statement in which a tenderer fills in the blank spaces, including name, address and the sum of money offered to carry out the works
What are Employers requirements?
Usually used in D&B it sets out the clients requirements, i.e size, quality. The level of detail contained depends upon the design developed prior.
What are contractors’ proposals?
They are the contractor’s response to the Employer’s requirements.
What is electronic tendering?
All forms, documents and drawings are uploaded onto a server, tenderers are provided with all necessary information to access and download the documents. There is a clear system in place to notify tenderers of any changes to the documents.
What is the advantage to electronic tendering?
- There may be a reduced tender period due to the rapid transmittal of documents
- Reduced copying and mailing costs
- Quicker response to email queries
- Software can be used to quickly analyse the bids
- Maintains an audit trail of communication
How did you decide on the number of tenderers on your project?
Contractors are preselected and allocated to certain LOT’s across the framework, all available contractors were engaged with through an EOI and RFI and only two expressed an interest in submitting a tender.
Explain the benefits of a framework?
- Agreed T&C’s
- No need for contract negotiation
- Helps to establish a long term relationship, for example use of KPI’s and promise of future work encourages collaborative behaviour.
- You can pre-determine contractors
- Knowledge carry over about the client due to the continual work
- Public sector clients, use of frameworks can satisfy OJEU requirements
What information should the instruction to tender contain?
- Date for return
- The address to return it to
- Programme length
- Confirmation of receipt of document
- Instruction on how the tender should be submitted
What is a form of tender?
The form of tender is a pre-printed formal statement in which a tenderer fills in the blank spaces, including name, address and the sum of money offered to carry out the works
What are Employers requirements?
Usually used in D&B it sets out the clients requirements, i.e size, quality. The level of detail contained depends upon the design developed prior.
What are contractors’ proposals?
They are the contractor’s response to the Employer’s requirements.
What documents would you find contained within an ITT pack?
- Form of Tender including non-collusion statement
- Instruction of tender
- Drawings
- PCI
- Covering letter indicating return date
- Conditions of Contract
- Amendments to the contract conditions (by legal advisors)
- Warranties/Bonds (may not be standard form)
- Preliminaries
- Nomination information (Avoid naming a single source Sub-Contractor)
- Preambles
- Pricing Document (various options, with or without quantities)
What would you do with a late tender?
You would advise of the risk in allowing that contractor to have more time, as there is a possibility of collusion between contractors. A late tender would not be evaluated and you would advise the client a late reply deems the response non compliant.
What would you do if two tender returns were received and one received after the deadline, but the client needs three responses?
You would advise the client of the risk and
the fact they haven’t complied with the tender process therefore being non compliant.
Within public sector it is at the clients discretion, however the client is to be advised Arcadis is a RICS accredited firm and assessing this tender is a possible ethics issue; should the client still desire us to evaluate their tender return they would need to send a letter stating what is required of Arcadis.
Within public sector, opening of that tender is not allowed and you would advise the client to re-tender.
What are the thresholds for public procurement?
£110,000 – If over this amount you must use open tendering
£4mil construction cost – Must be Open tender, or OJEU compliant frameworks be used.
What is the Construction Playbook?
The Construction Playbook is a government guidance document about sourcing and contracting public works projects and was launched by Cabinet Office in December 2020. It aims to encourage collaboration and better strategic relationships between the public and private sectors and to drive improvement and innovation within the construction industry.
The Playbook captures commercial best practices and specific sector reforms outlining the government’s expectations of how contracting authorities and suppliers, including the supply chain, should engage with each other. And how to get the right from the start.
These are set out in 14 key policies for how the government should assess, procure and deliver public works projects and programmes that all central government departments and their arms length bodies are expected to follow on a ‘comply or explain’ basis recognising that there isn’t a one-size-fits-all approach.
Have you used a PQQ on one of your projects and what was contained within?
I have not used a PQQ on my projects but have an understanding that a PQQ is a pre-qualifying Questionnaire is issued to contractors as part of shortlisting and determining their relevant, experience and financial standing to ensure they are appropriate to tender for the project. Included within the PQQ would be questions around; their H&S record / policies, insurance details, quality assurance policies and processes and performance information.
How would you go about evaluating a tender?
The tender would be evaluated against the determined evaluation criteria for technical elements by a set of evaluators. The scores are then moderated and a final score agreed upon, the commercial scoring typically the lowest tender price received full marks. Both commercial and technical scores are combined through their determined weighting and a final score produced for each tender return. These scores are ranked with the highest scoring tenderer being recommended to the client in the tender report to be appointed.
Explain to me when how you have responded to TQ’s and the process on one of your projects?
On CAMUS TQ’s were raised on the E-tendering portal, these were issued to the clients commercial team who issued them to me, upon receiving I would issue to the relevant TSP members to co-ordinate the response. Once finalised I inputted the response into the tracker and issued to the client for input onto the E-tendering portal where the response is provided to all tenderers.
How is the cost of a tender return evaluated?
The commercial team evaluate the commercial return and undertake an initial task of normalising the returns. This allows for the cost from each tenderer to be evaluated on a like for like basis. The tenderer with the lowest price is given 100% of the marks, the rest are scored on the relevant weighting against their return.
Explain to me the procurement route advised on one of your projects and why?
On CAMUS a two-stage design and build procurement route was advised upon. The client’s key drivers on the CAMUS project was quality and programme in meeting a specified in-service-date, so a two stage design and build procurement route was advised.
If quality and programme were important factors in the CAMUS procurement, why did you not advise a traditional route?
The specialist nature of the design meant the project would benefit from contractor design input which D&B allows for, additionally the ISD needs to be met and D&B allows for a quicker programme to meet the specified date through overlap of design and construction, whereas a traditional procurement route is often lengthy reducing our possibility of meeting the ISD.
In what instance would you advise using a negotiated tender?
- In the second stage of a 2 stage tender
- When the works are very specialist and there is only one contractor available
- The contractor may have undertaken other works in the programme of works and utilising them would allow for a single point of responsibility and allows for a quicker start if there are time limitations.
Tell me about a time you have used selective tendering and how the contractors invited to tender were decided upon?
I have not used selective tendering however have an understanding that contractors invited to tender would be determined through a review with the design team and client where the team can put forward contractors, often suggested due to previous work and known experience and are then down selected and a shortlisted group of tenderers are then invited to tender.
Can you provide me of an example where you have tendered in a framework and what entails?
In CAMUS the CCS framework was used, the framework was utilised over SCAPE for a negotiated tender due to the size and complexity of the project requiring a competition and proof of VFM to be exemplified to meet GSL and GWR requirements.
Can you list some typical headings contained within a tender report?
- Background – Tender process, contractors involved, project information, evaluation criteria & scores available.
- Technical (Quality) Evaluation
- Financial (Price) Evaluation
- Commercial evaluation
- Tender Clarifications
- Recommendation / Conclusion
What is a tender addendum?
A tender addendum is a way of issuing updates to the tender documents, this could be the result of incorrect information, completion of a survey.
Types of tendering
Single stage tendering
Two stage tendering
Negotiated tender
Two stage tendering
Often used where time is constrained.
Used if the design process would benefit from the technical input of a contractor in the later design stages.
Two-stage tender – The first stage tender documentation is usually issued at RIBA stage 2, but can be earlier. The contractor at stage 1 is assessed on the quality of their bid, the quality of their team, their preliminaries price and their overhead and profit allowances. The preferred contractor then joins the design team under a pre-construction services agreement. At the end of stage 4, the contractors then bid for the main contract on the basis of a fully developed design. A two-stage tender has two key benefits: 1) it is used when time is constrained as design and tendering can overlap, and 2) it allows early engagement and specialist input from the contractor.
Reliance on one contractor
Negotiated tendering
A negotiated tender is effectively a single-stage tender with a single contractor who returns with an initial price. This is then negotiated with the client’s professional team. The benefit of this route is the speed with which a price can be obtained for the works. However, the competitive advantage of a formal bidding process is compromised.
Explain the process of opening a tender?
Often tenderers are now on an e-tendering platform where there is an ‘opening ceremony’ by which the tender responses are opened and downloaded at the same time. At this point, were any tender responses late and provided after the specified time, I would advise the client not to open and assess that tender but to disqualify them from the process.
How is the cost of a tender return evaluated?
The commercial team evaluate the commercial return and undertake an initial task of normalising the returns. This allows for the cost from each tenderer to be evaluated on a like for like basis. The tenderer with the lowest price is given 100% of the marks, the rest are scored on the relevant weighting against their return.
How do you provide proof of VFM under a negotiated tender?
Request for each works package a certain amount of quote, advisable to be over three to allow comparison against the received quotations that the contractors response is in line with current market conditions and prices.
When using a D&B 2 stage procurement route, at which point can you bring the contractor onboard?
The contractor can be bought on board from RIBA 2 once the option to take forward has been identified and signed off, however I would advise my client that RIBA 3 or 4 is a more suitable time to get the contractor onboard.
How many contractors does the JCT procurement and tendering guidance note advise you go out to tender to?
D&B – 4 contractors
Traditional 4-6 contractors
Construction playbook
The Construction Playbook published in 2020 sets out key policies and guidance for how public works projects and programmes are assessed, procured and delivered.
What is term contracting?
Term contract of service provide usually for repairs where they are called out as and when needed for a fee.
How would you decide upon a tender period?
Factors such as project constraints, design complexity are to be considered, and under public procurement specified timescales are set out within the 2015 Public Contracts Regulations. For an Open Procedure
Normally 35 calendar days. This can be reduced to 30 days if tender responses are submitted electronically.
What information would you obtain each stage of a two stage Design and Build tender?
The first-stage competition is typically based on deliverables including a construction programme and method statement, detailed preliminaries pricing, and overheads and profit.
The second stage, which is typically managed as a negotiation between the employer and the preferred contractor relies upon competition between second tier contractors for work packages. The second stage is concluded with the agreement of a lump-sum contract sum, typically based upon the competitive tender of between 70 and 80% of the value of work packages.
Reasons for opting for a 2 stage tender approach?
- Achieving early appointment of the main contractor ahead of the completion of design, and potentially a quicker start on site.
- Securing the involvement of a contractor for pre-contract services on a competitive basis, to obtain input on buildability, sequencing and subcontractor selection.
- Retaining greater client involvement in the pre-selection and appointment of subcontractors.
- Motivating the design and construction team to drive out cost and to drive in value.
- Transferring a greater degree of design and other construction risk to the contractor
Reasons for a contractors appeal to 2 stage tenders?
- resource requirements and costs of abortive tendering are reduced.
- The successful second-stage tenderer also has the opportunity to ensure that their costs and profitability are secured through both competitively tendered first-stage deliverables and through risk allowances negotiated during the second stage.
- In the current market, and for clients in certain business sectors, two-stage tendering is increasingly the only option to secure serious contractor interest and well-resourced project teams.
- Clients, must take specific steps to strengthen their commercial position in the second stage negotiations. These include securing a portion of the measured work in the competitively tendered first stage and always retaining a get-out route with some leverage on the preferred contractor.
What types of client and project teams does two-stage tendering broadly suit?
- Clients that are not driven by the objective of securing an absolute least-cost bid.
- Clients that have a genuine need to follow a two-stage route, either because of programme constraints or a specific requirement to actively involve the contractor in the design and procurement process.
- Projects that are sufficiently well defined at first-stage tender to enable a programme and firm preliminaries to be prepared, together with a client and design team who have the discipline to complete the design to an appropriate level of detail in the second stage.
- Clients and design teams that have the capability and resources to actively engage in negotiations with the preferred contractor during the second stage.
- What is a framework agreement?
A framework agreement is a type of contract that is commonly used as a multi supplier agreement, establishing a long term relationship to deliver works as an approved supplier for the buyer.
- Explain Design and Build procurement?
Design and build is a procurement route in which the main contractor is appointed to both design and then construct the works described in the contract. Contractor can be appointed from the end of RIBA 1, but it is often advised to wait until end of RIBA 3.
What are the advantages of Design and Build?
- Increased buildability
- Contractors involvement in developing design
- Risk allocation
- Single point of responsibility
- Earlier commencement on site
- Early price certainty
How would you decide upon the tender route?
- Key objectives around Time, cost & quality
- The complexity of the project
- Desired risk allocation
- Scope
- Client experience
- How well defined the project is & level of post contract change
- Why did you advise on a 2-stage tender for CAMUS
- Market conditions – Contractors were aware a single stage tendering process would be expensive and the risk (and costs involved) on a single stage is higher than 2 stages. Therefore Contractors are loosing their appetite for a single stage tender / project versus two stage.
- Market feedback (both rounds) indicated a high level of interest would be received
- Contractor and help identify & manage risk – beneficial due to the complex nature of the project and locations
What is OJEU / what do you know about it?
Official Journal of the European union has been replaced following the end of the transition period replaced by the new UK e-notification service where notices for new procurements are required to be published.
Disadvantages of a single stage tender?
- Less competition
- Can be biased
- Less collaborative than a 2 stage, doesn’t account for early contractor engagement
- Scope has to be really clear or can result in adjustments one in contract
Considerations when deciding on a form of contract?
- Procurement route
- Size and complexity of the project
- Nature of the works
- Utilisation of a framework and any limitations this imposes
- Clients experience
- Country the project operates in
What are the advantages of a single stage tender?
- Price certainty & receipt of the most competitive price
Disadvantages of a single stage tender?
- Less competition
- Can be biased
- Less collaborative than a 2 stage, doesn’t account for early contractor engagement
- Scope has to be really clear or can result in adjustments one in contract
What are the advantages of two stage tendering?
- collaborative working
- Early involvement of the contractor
- Potential earlier start date
- Greater client involvement in selecting the supply chain
- Contractor and help identify & manage risk
What are the disadvantages of two stage tendering?
- Cost certainty may not be achieved before construction commences
- Additional pre-construction fees for the contractor
- Potential for parties to not agree on the contract sum
- If you had a highly technical and complex project where you had adopted a traditional procurement route, how would you ensure the contractor really understood the design and project requirements before submitting their tender return?
- Early engagement with the contractor
- A clear set of Employers requirements
- Bidders day / workshop to allow the contractor to walk site and ask questions at the start of the ITT or before the ITT is released
- Mid tender interview
- What are the advantages of using Traditional Procurement?
- Competitive fairness - all tenders are based on exactly the same information, and there is no interpretation of information.
- Cost certainty - the total cost is largely known at the outset of the contract.
- Programme certainty - the time-frame is established at the outset of the contract.
- Established - this has been the most commonly used route, and is constantly refined.
- Minor changes and adaptations for a specific project are easy to implement, with an established method of valuation.
- The form is capable of conversion to a guaranteed maximum price (GMP).
- Clear Accountability
- If your client wanted to maintain control of the design, whilst having a quick start on site and money wasn’t an issue what option of procurement would you advise?
MC or CM – Allows the client to maintain control over design with contractor input, allows for quick start on site due to overlap of design and construction, however can be a costly method and doesn’t give cost certainty at the outset.
- What are the benefits to novation?
Used on D&B where input from the contractor and their expertise is beneficial to the project, but the novation allows for continuity on the project, sometimes cost efficiency, improved co-ordination through seamless integration, and enhances collaborative problem solving.
- How do you ensure the spec is delivered by the contractor to the required level?
- Robust ER’s
- Quality spec will be higher the later in the RIBA stages you tender so if quality is to be high then consider tender later
- Include a performance spec per discipline
- Include images within the design report to show desired outcome / precedent to base the design on
- Include any Pre-app feedback
- Early engagement
- Site visits
- Mid tender interviews
- What is a bona-fide tender?
An honest and true tender return.
- What NEC option is most similar to a JCT D&B?
NEC option A
- How are subcontractors tendered?
- Nominated - Nominated subcontractors: In this process, the main contractor is responsible for identifying and selecting the subcontractors that will be used on the project.
- Named – The main contractor is required to use specific subcontractors that have been specified within the contract.
- Domestic – Selected,
- Pre-insolvency actions?
- Check for parent company guarantee / bonds
- Undertake a credit check
- Keep document of materials on site
- Investigate verbal evidence off insolvency within market
- Relax payment terms
- Re-let packages of work
- Termination of contract.
- What are the requirements for PC?
- Building control sign off
- C&T compliance letters
- H&S file
- Transfer of insurance
- List of snags
- Training delivered to end user
- There must be no apparent defects
what is value for money
Value for money is the concept of obtaining the best possible benefit relative to the cost incurred
