Procurement & Tendering Flashcards
What is the traditional procurement route?
What is the advantages of traditional procurement?
What is the disadvantages of traditional procurement?
What is the design and build procurement route?
What is the advantages of design and build procurement?
What is the disadvantages of design and build procurement?
What is the management contract procurement route?
What is the advantages of management contract procurement?
What is the disadvantages of management contract procurement?
What is the construction management procurement route?
What is the advantages of construction management procurement?
What is the disadvantages of construction management procurement?
What factors may effect the choice of procurement route?
Most used procurement route?
What is a negotiated tender?
What is partnering in terms of procurement?
Advantages of partnering?
Disadvantages of partnering?
What is a two staged tender?
Advantages of two stages?
Disadvantages of two stages?
Name pricing documents at tender stage?
-BoQs
- SoRs
-CSAs
- Activity Schedule
Name pricing options?
- Lump Sum
- Cost Plus
-Remeasure - Target Cost
- Guaranteed max price
What is a lump sum contract/
- Fixed priced for a set amount
- Determined by the contractors estimating their cost + OH&P
Two stage tender?
Advantages of Two stage tender?
Disadvantages of Two stage tender?
Advantages of lump sum?
- contractor takes on risk and benefits from increased profits
-Employer cost certainty
Disadvantages of lump sum?
- High risk to contractor
-Increased Tender price
What is a cost plus contract?
Cost reimbursable contract where the employer pays for the cost incurred + pre-agreed OH&P amount
Advantages of cost plus?
- Flexible
-Inaccuracies in initial bid aren’t as detrimental as lump sums contracts
-Fluid design changes
Disadvantages of cost plus?
- Uncertain final value
- Contractor may deliberately incur cost for higher profit
When are cost plus usually used?
- Unclear nature of scope
-Suits emergency works such as infrastructure repair
Remeasurement contract?
- Cost agreed on pre-agreed unit rates
-Works measured and priced on agreed rate
Advantages of remeasure contracts?
- Competitive tendered rates used
Disadvantages of remeasure contracts?
- Less cost certainty until project is complete
- Risk to employer higher than lump sum
Target price contract?
- Set early in the project cycle
- Cost savings and overruns are shared between the contractor and employer based on agreed terms ( pain & gain)
Advantages of target price contract?
- Contractor is incentivised to reduce cost
- Risk is shared
Disadvantages of target price contract?
- Pain and gain mechanisms usually expose the employer to more risk than the contractor
- Pain and gain can be hard to understand
