Procurement & Tendering

Question 1

Can you please name the different forms of procurement?

Answer 1

1) Traditional
2) Design and build
3) Construction Management
4) Management Contracting

Question 2

Can you summarise what traditional procurement consists of?

Answer 2

The client appoints consultants to carry out the full design of the works and it is employed directly by the architect. On completion of the design, the employer appoint a main contractor to carry out the construction of the works.

Question 3

Can you summarise what D&B procurement consists of?

Answer 3

The client sets a list of Employers requirements (ER) and invites a series of main contractors to tender for the design and issue the Contractors Proposals (CP’s), the winning tenderer is appointed to carry out the design and construction. The selected Contractor then appoints design consultants to carry out the detailed design. In this route, the design and construction risk sits with the contractor.

Question 4

Can you summarise what construction management procurement consists of?

Answer 4

The Employer appoints a designer, Trade Contractors and a Construction Manager to manage the Trade Contractors. The Construction Manager has no contractual links with the Trade Contractors and is simply paid a fee by the Employer to coordinate the works. Through this route, the Employer bears both the design and construction risk.

Question 5

Can you summarise what management contracting procurement consists of?

Answer 5

The Employer employs design consultants and a management contractor to employ trade contractors. The management contractor is paid based on the construction costs + fee, so carries no risk.

Question 6

What are the advantages of construction management procurement?

Answer 6

1) Employer has means of redress through contractual relationships with trade contractors
2) Design and construction runs parallel which makes for an early start on site date and shorter programme
3) Employer maintains control with design
4) Employer has a direct contract with all parties
5) Direct contracts attract less fee on fee

Question 7

What are the disadvantages of construction management procurement?

Answer 7

1) Price certainty not achieved until final trade package is let
2) More responsibility for the employer so more work and risk

Question 8

What are the advantages of management contracting procurement?

Answer 8

1) Design and construction runs parallel which makes for an early start on site date and shorter programme
2) The management contractor will provide buildability input
3) Single point construction responsibility through management contractor

Question 9

What is partnering?

Answer 9

1) Broad term used to describe a collaborative management approach
2) Purpose of implementing it is to create openness and trust
3) This in turn forms good employer/contractor relationships
4) Ownership of risk is spread across the parties, less blaming and more proactive thinking
5) Brings lots of advantages to the table

Question 10

What are the advantages of partnering?

Answer 10

1) Less conflict
2) Improved communication & client care
3) More alignment gives better predictability of time and costs

Question 11

What is a framework agreement?

Answer 11

An overarching agreement for the procurement of goods, work or services that a a party enters into with one or more suppliers to establish governing terms. It usually ranges between 2-10 years but is determined by the buyer.

Question 12

What are the advantages of a framework agreement?

Answer 12

1) Builds stronger relationships
2) Speeds up the rate of procurement
3) Leads to repeat business
4) Rates are agreed upfront

Question 13

What are the disadvantages of a framework agreement?

Answer 13

1) Party members can become complacent
2) Can restrict new members which may be more innovative products

Question 14

Can you give an example of a time a framework agreement might be set up?

Answer 14

When a business is carrying out repeat work such as the commissioning of a building where they may wish to reduce procurement duration by calling materials off.

Question 15

What are the main three tendering options for a construction process?

Answer 15

1) Single stage tender
2) Two-stage tender
3) Negotiated tender

Question 16

What is a single stage tender?

Answer 16

When a number of contractors are invited to tender based on a set of identical tender documents issued at RIBA stage 4 (detailed design).

Question 17

What is a two stage tender?

Answer 17

Stage 1 - When the employer provides an outlined design in which contractors then compete to become preferred contractor status. The preferred tenderer then joins on a consultancy basis to assist with the early stage, thus entering into a PCSA (pre-construction services agreement).

Stage 2 - Once the design has developed, the contractor enters into a detailed negotiation with employer to agree the final contract price and conditions.

Question 18

What is a negotiated tender?

Answer 18

When the employer knows the Contractor they want to carry out the works from the outset, thus inviting only one contractor to negotiate the tender value.

Question 19

What are the advantages of a single stage tender?

Answer 19

1) Employer benefits from a competitive tender process which leads to more competitive pricing
2) The Employer has more cost certainty as the winning tenderers costs is fixed based on the known design

Question 20

What are the advantages of a two stage tender?

Answer 20

1) Contractors buildability input
2) Contractor has more time to understand the scope
3) Forms an early relationship
4) Employer has involvement with subcontractor selection
5) Opportunities for value engineering and risk mitigation

Question 21

What are the advantages of a negotiated tender?

Answer 21

1) Simplicity & speed, removes need for tender process
2) Employer can choose based on their own experiences
3) Allows early contractor involvement

Question 22

What is a bona fide tender?

Answer 22

A bid which has been submitted in good faith in accordance with the conditions of bidding requirements and confirms that no collusion has taken place.

Question 23

What are the main considerations for an Employer when selecting the most appropriate procurement route?

Answer 23

1) Clients experience
2) Appetite for risk
3) Project priorities (time, cost, programme)
4) Complexity

Question 24

Which method of procurement did you use when tendering for the metal doors package on kings cross S5.

Answer 24

Single stage tender with both the curtain walling subcontractor and a preferred metal door subcontractor who had been used on a neighboring project who had given good feedback.

Question 25

Can you run me through the process of procuring metal doors through the metal door subcontractor?

Answer 25

1) Scope analysed and allocated to the appropriate parties based on works risk
2) Door which interfaced with curtain walling subcontractors works, were issued to them for pricing
3) Stand alone doors, were issued to the metal door subcontractor
4) I issued them with a marked up GA & elevation drawing, the specification, programme requirements, key project information, and a pricing document to fill in and return
5) The tender return was then analysed against our budget, and was checked to determine any omissions or issues
6) Once agreed, I drafted the contract and issued to the subcontractor for their review.
7) We then had a meeting to agree the terms and conditions

Question 26

How did you go about determining the scope of works for the procurement of a firestopping package?

Answer 26

The subcontract was tendered on a re-measurable basis as a single stage tender to 3 different companies. At the time only the ground floor and mezzanine builders work hole schedule was available. I therefore issued both schedules to the subcontractor for pricing a set of rates based on the different penetrations and sizes. The overall best value subcontractor including but not limited to the lowest rate was selected on a remeasurable basis and would be paid based on works complete at the agreed penetration rates.

Question 27

What is a re measurable contract and when might it be used?

Answer 27

When a subcontractor is appointed based on an agreed set of rates, and works are paid on works complete against the agreed rates. This is used when the scope can be described clearly, but the quantity cannot.

Question 28

Give two advantages of a remeasurable contact?

Answer 28

1) Enables early start on site date
2) Unit rates are pre-agreed

Question 29

Give two disadvantages of a remeasurable contact?

Answer 29

1) Final value is not known until all works are complete
2) More administration works as works are reassessed on a periodic basis

Question 30

Can you please take me through the gateway 1,2 and 3 and why does it exist?

Answer 30

The procurement gateway process which our London Underground permitted us to execute under the main contract. The purpose of it was to remain transparent throughout the procurement process and ensure they were involved with the tender process.

Gateway 1 - Shares the companies considered on the tender list, their DNBI scores and accreditations and package budget with the client. Also gives, the client an opportunity to put forward any other recommended sub-contractors

Gateway 2 - This is where the tender return prices are shared with the employer.

Gateway 3 – This is a recommendation report which is issued to the employer advising on our holistic view of which sub-contractor is best placed to carry out the works based on considerations including: cost, experience, quality procedures, h&s and interviews.

Question 31

What is compete for and why is it used?

Answer 31

It is a free service that allows businesses to compete for contract opportunities for major infrastructure projects. It was brought in to keep public procurement opportunities in one place, provide more opportunities for the supply chain and promote transparency.

Question 32

How do you ensure all tenders are fair?

Answer 32

1) Provide all tenderers with the same level of information
2) Give all tenderers the same amount of time
3) Issue any tender query responses to all tenderers

Question 33

You mention during gateway 1 you carried out some background checks, can you tell me what kind of checks you would carry out?

Answer 33

1) Credit reports to understand financial stability
2) Recent performance feedback

Question 34

Could you please give me one method of carrying out financial checks with a subcontractor? How does this work?

Answer 34

Dunn & Bradsheet Report (DnB) - generates a credit score based on the size of the company and information provide on a company’s balance sheet.

Question 35

Would you ever appoint a subcontractor if they scored low on a a D&B report?

Answer 35

Typically no as it would pose a great financial and Programme risk, however there could be exceptional circumstances such as the subcontractor being highly experiences and well recommended from an operational perspective. If this was the case, i would negotiate the use of a performance bond or seek a PCG.

Question 36

What would you do if you noticed one of the tenderers had mispriced something or missed it completely?

Answer 36

The tenderer should be given the opportunity to correct the error or price the missing scope, should this extend the tender period all tenderers window should be extended.

Question 37

What was you checking for during the tender review in gateway 2?

Answer 37

1) Mathematical errors
2) Errors in pricing
3) Omission
4) Specification compliance
5) Check compliance of CP’s against ER’s
6) Resolve any qualifications

Question 38

What were your initial thoughts when reviewing the tenders? What did you advise the client?

Answer 38

We had some reservations over the quality and H&S standards of the lowest price tenderer which ultimately led to eliminating them. This left two companies at a similar price, both were interviewed by myself and the package manager. Both were good, but one had a streamlined process for QA checks and was well recommended. Since my project, the subcontractor has become a highly used subcontractor and has been recommended several times by the project manager.

Question 39

What would happen if the client had strong objections to selecting a specific subcontractor?

Answer 39

I would gently remind the employer that the subcontractor was not a named/nominated subcontractor and therefore they do no reserve the rights to select the tenderer. However, i would respect their opinion and justify my reasons for selection, i would then try to come to a reasonable compromise.

Question 40

What is a domestic subcontractor?

Answer 40

A subcontractor that is selected, procured and awarded at the discretion of the contractor.

Question 41

What is a nominated subcontractor?

Answer 41

This is when a particular subcontractor is pre-selected by the employer and then imposed by the contractor. Put in place when:

• Early input has already been provided by specialist supplier
• Materials are on a long lead time, early appointment prior to contractor selection (novation)

It is usually put in place when the employer has already worked with the subcontractor at the earlier stages of a project where the specialist subcontractor has provided input which has helped drive the project.

Question 42

What is a named subcontractor?

Answer 42

A term that replaced nominated subcontractors in JCT contracts, which gave the contractor the rights to reject the named contractor if they had reasonable grounds to do so.

Question 43

What is a purchase order and when would one be used?

Answer 43

A document issued by the buyer to seller which outlines their intentions to purchased certain products at an agreed price. Used in the procurement of materials for construction projects where the install is likely to be carried out separately through a subcontractor or direct labour.

Question 44

What is a universal clamp?

Answer 44

A product which is used to fix two peices if formwork together.

Question 45

What is formwork?

Answer 45

A temporary mold in which concrete is poured into so that it can set to the required shape.

Question 46

What is a buy-back clause?

Answer 46

When a seller of a product agrees to repurchase the product at a predermined price within a certain timeframe subject to the condition of the material.

Question 47

How would you respond if a particular works package was rapidly growing at a rate which exceeded your budget?

Answer 47

1) Explore the idea of retendering to obtain a more competitive price
2) If not possible, i would request substantiation for the increases to identify any unnecessary costs
3) Explore value engineering options, i.e similar performing products at cheaper rates.

Question 48

What costs would the there be during a PCSA stage?

Answer 48

PCSA stage is the appointment of a contractor on a consultancy basis to help develop the design, so costs would largely be design orientated such as:

• Design fees
• Survey costs
• Insurance costs

Question 49

What is a cover price in a tender submission.

Answer 49

When a contractor submits an inflated tender price knowing it will be unsuccessful in order to collude with competition and drive the overall price up.

The act of cover pricing is illegal in accordance with the competition act 1998 and guilty party’s can be fined up to 10% of their annual turnover.

Question 50

Is there any documents which can be included within a tender pack to deter the act of collusion?

Answer 50

Anti collusion statements - A declaration to from a subcontractor or contractor stating that they have not breached the competition act 1998

Question 51

Can you please explain the relationship between choices of procurement routes and tender prices?

Answer 51

Traditional - More cost certainty and lower premium due to no design risk allowances

D&B - Less price certainty as design changes will result in price increases, contractor will also charge a premium to cover design risks.

Construction management - No cost certainty, as costs are not known until last trade package is let. Although no design premium as employer appoints an architect

Management contracting - No cost certainty, as costs are paid on actual costs + fee.

Question 52

Can a form of subcontract differ from the main contract and why?

Answer 52

Yes, the contractor may opt to use a bespoke form of contract, to accommodate favorable terms such as risk allocation and payment. A bespoke contract is more favorable by the party proposing it.

Question 53

Are you aware of any tendering guidelines?

Answer 53

1) RICS professional guideline
2) Tendering Strategies

Question 54

Who bares the quantity risk on a bill of quantities when issued to a subcontractor for pricing?

Answer 54

The employer, the subcontractor only bares the risk on the rate provided which is fixed unless the scope changes.

Question 55

If a tenderer issued qualifications with their tender what would you do?

Answer 55

1) Review each qualification to check if it aligns with the Employers requirements
2) If the tenderer had any queries or clarifications, I would ensure that information was shared with all tenderers to ensure fairness
3) I would check that the products and processes align with the specification and LOR’s minimum requirements.

Question 56

Have you ever given advise on a procurement route on your project?

Answer 56

Yes, as evidenced in my case study i advised that we split the supply and install for the intumescent paint of structural steelwork with two separate subcontractors. In doing this, we were able to reduce material delivery times and avoid paying a premium on the install element due to risk.

Question 57

What is the ECI process?

Answer 57

Early Contractor Involvement process, the process of appointing a Contractor at an early design stage to act as a consultant.

Question 58

What advise would you give to a client who was considering a two stage tender?

Answer 58

1) Programme - Allows the contractor to provide an early idea of the construction programme
2) Contractors buildability input
3) Early prices of works packages
4) Employers buy-in to subcontract packages
5) Potential to novate
6) Provides opportunity to drive out cost and increase value

Question 59

In relation to the procurement of the builders clean package on NLE, how did you ensure the advice you were giving to the client was accurate and based on a fair tender process?

Answer 59

1) I ensured the financial checks were accurate by using dun and Bradsheet reports
2) I ensured that I used and followed the RICS guidance note ‘Tender strategies, 1st edition’
2) I ensured all tenders were comparable by giving the same pricing document and using normalisation where anything had been missed.
3) I gave all tenders the same amount of time and information
4) I interviewed each of them to fully understand if their processes and proposals were accurate

Question 60

What factors did you consider when providing the recommendation to the client?

Answer 60

1) Best value
2) Recommendations from others
3) Sign of systems for quality and valuation
4) Financial scorings

Question 61

What work did you carry out to produce the hire vs purchase analysis?

Answer 61

1) Understood the length of time we would need the formwork
2) Understood the quantum we would need
3) Contacted the supplier to understand the rate we would receive based on our quantum
4) Multiplied the rate by the quantity
5) Multiplied the hire rate by the quantity by the hire rate by the duration
6) Compared the total figures
7) It was cheaper to purchase over hire even without the buyback option

Question 62

Can you give me some examples of risks on the project you work on?

Answer 62

NTT

1) Risk of louvre blades not aligning properly with phase 1 which was built by others, Contractors CDP which we failed to transfer to specialist subcontractor
2) Underestimation of spools

Question 63

Outside of your write ups, please can you provide another example of when you have demonstrated good procurement practices?

Answer 63

1) NTT Builders clean
2) Experience in procuring previous builders clean package
3) This one was much lower specification
4) Advised it may be better value to conduct in house
5) Cot exercise proved this
6) Works were agreed to be carried out in-house