Procurement & Tendering Flashcards
What is procurement?
- The overall process of acquiring construction work or services
What should be considered when selecting a procurement route?
- The specifics of the project and the client objectives regarding cost, time, control, quality, and risk
What are the main procurement methods?
- Traditional
- Design & Build
- Management Contracting
- Construction Management
What is traditional procurement?
- The design is completed by the client design team before competitive tender are invited
- A main contractor is then employed to build what the designers have specified
How does traditional procurement work?
- The contractor takes responsibility and financial risk for the construction of the works.
- The client takes the responsibility and risk for the design and design team performance.
What are the advantages of traditional procurement?
- Retaining control over the design can lead to higher quality.
- It offers increased levels of cost certainty before commencement
- Design changes are reasonably easy to arrange and value.
What are the disadvantages of traditional procurement?
- The overall project duration may be longer with no overlap between design and construction.
- There is no input into design and planning by the contractor.
What is design and build?
- Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.
How does design and build work?
- The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors responds with the ‘Contractor’s Proposals’, which include the price for the works.
What are the advantages of design and build?
- There is a single point of responsibility for the design and construction.
- There is earlier commencement on site.
- Contractor’s experience harnessed during the design phase.
What are the disadvantages of design and build?
- Quality
- The Client has to commit to a concept design early.
- Clients may find it hard to prepare a sufficiently comprehensive brief.
- Variations from the original brief can often be expensive.
How much design input will the contractor have in a design and build?
- This depends on the amount of design work the employer has already completed at the time of tender.
- This can range from a full design to production information and coordination only.
Who carries out the design for the contractor in a design and build?
- It may be outsourced to a separate design company (contractor retains responsibility).
- They may have in-house design capabilities or the client’s team may be novated.
What is the difference between management contracting and construction management?
- Under management contracting, the Main Contractor is in direct contractual relationships with the trade contractors and the client is in contract with the Main Contractor only.
- Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t.
How do you identify the client requirements before
recommending a procurement route?
- Through detailed discussions with the client and design team to identify their priorities in terms of cost, time, quality, and risk.
If the client wishes to start on site asap, what route
would you recommend?
- My recommendation would need to take into account their other requirements such as cost and quality.
- If time was their overriding priority, then a Design & Build procurement option may offer the best solution
- This can offer the fastest start on site with overlap of the design and construction.
What is GMP?
- Guaranteed maximum price.
What does a GMP mean to you?
- A lump sum contract under which there is no adjustment of tender price unless design changes are requested by the client.
What is Partnering?
- A long term approach of structuring business relationships.
- It involves two or more organisations working together to achieve specific mutual objectives.
What is project partnering?
- All members of the professional team become involved in the partnering process at the design stage including contractors.
- Ownership of risk is spread between the parties and a collaborative approach is encouraged
What is Strategic Partnering?
- A long-term relationship that is established with a view to undertaking a number of projects over a long period.
What are the benefits of partnering?
- The potential for conflict is reduced.
- Improved client satisfaction is gained.
- Improved buildability with early involvement of contractors.
- Better predictability of time and cost.
What is tendering?
- A structured procedure for generating quotations from suppliers or contractors in order to award construction work
What are the main methods of choosing a contractor?
- Open tendering.
- Selective tendering:- Single or Two Stage.
- Negotiated tendering.
- Serial tendering.
What is open tendering?
- Open tendering allows anyone to submit a tender for the works or services that are required.
- There are little or no barriers to entry needed to submit a tender.
What are the advantages of open tendering?
- It provides opportunities for capable firms which the clients may have not previously considered.
- It should secure maximum competition from the open market.
What are the disadvantages of open tendering?
- There is no assurance that the lowest tenderer is capable or financially stable.
- The total cost and time needed to review the tenders is increased.
What is selective tendering?
- This restricts the number of tenderers by pre-selecting a limited number of contractors to tender for the work.
What are the two types of selective tendering?
- Single stage and two stage.
What is single stage tendering?
- A structured process of receiving competitive tenders from a number of pre-selected capable contractors.
- This can be based on financial standing, previous track record, capacity and resources available.
What are the advantages of single stage tendering?
- It tends to reduce the aggregate cost of tendering.
- It reduces the risk of receiving tenders from unsuitable contractors.
What is two stage tendering?
- Two stage tendering is where the Client seeks to appoint the Contractor based on an outline scope of work that is not fully defined.
- The client then works with the appointed contractor to develop the scope of work and reaches an agreed price.
What is the purpose of the first stage in two stage tendering?
- This initial phase allows the tenderers to submit details under a pre-construction agreement.
- It includes aspects regarding project preliminaries, method statements, design, overheads, and profit.
What is the purpose of the second stage in two stage tendering?
- Following development of the design, a formal negotiation process is undertaken during stage 2
- This is to agree the final price, contract conditions and programme.
What do tenderers return as part of the first stage?
- Detailed build up of prices for the preliminaries items.
- Percentage additions for profit and overheads.
- A construction programme.
What are the advantages of two stage tendering?
- Early involvement of the contractor.
- Encouragement of collaborative working.
- Potential for an earlier start on site.
What are the disadvantages of two stage tendering?
- Cost certainty may not be achieved before construction starts.
- The contractor could take advantage of second stage negotiation and increase costs.
Why should you use 2 stage tendering?
- With a complex building and if early completion is required.
- Where the design team would like to make use of contractors expertise on buildability issues.
What is negotiated tendering?
- Where the client has an existing preference for appointing a particular firm and only negotiates with one contractor.
When might negotiated tendering be used?
- When the contractor has carried out work successfully for the client previously where they have an existing relationship
What is serial tendering?
- Contractors are asked to bid for a project on the basis that if they complete the initial project well, other projects of a similar type will follow and the same bill rates will be applied.
What could selecting the wrong contractor lead to?
- A bad client & contractor relationship.
- A dissatisfied client.
- An insolvent contractor.
What would you include in a set of tender
documents?
In accordance with JCT practice note 2017 I would include:
- ITT (Invitation to tender letter)
- Form of tender
- Pre-construction H&S information.
- Pricing documentation
- Drawings and specification
- Conditions of proposed contract.
What is the form of tender?
- A pre-printed formal statement in which the tenderer fills in the blank spaces.
- The tenderer provides their name, address and price for the works
What are the employer’s requirements?
- They set out the client’s requirements including the function, size, and quality of the project.
What are the contractor’s proposals?
- The contractor’s response to the Employers Requirements.
- They are the key documentation for the client to consider at the tender review.
What information would you request in the pre-qualification
questionnaire?
- Management structure.
- relevant experience.
- Company accounts.
- Health and safety records.
- Provision of bonds, & warranties.
How would you determine the duration of the tender period?
- It depends on the procurement process and size of the project.
- It is better to ensure there is sufficient time so contractors can price the project correctly
- rather than rush and encourage contractors to price a high risk element into the tender.
What is a PQQ?
- Sets out a series of questions for potential tenderers to answer in order to reduce the number of tenders to those that are genuinely appropriate.
What does the ITT document set out?
The ITT document sets out:
- State the recipient, time, date and location of submission.
- Explain the method for dealing with queries.
- Give site visit contact details.
- Require a confirmation of receipt of tender.
What does the preliminaries document set out?
- Provides a description of the project that allows the contractor to assess costs which cannot be allocated to a specific element of works
- This will include a general summary, method statements, pre-construction information, planning conditions and section/phasing of the work.
What are the advantages & disadvantages of management contracting?
Where the works are carried out by a number of trades that report to and are contracted by a management contractor.
Advantages
- Potential for fast tracking.
- Changes in design can be accommodated without paying a significant premium.
- Design, procurement and construction activities are flexible.
Disadvantages
- Little incentive for management contractor to reduce costs.
- No price certainty until final works contract let.
What are the advantages & disadvantages of construction management?
Works are carried out by a number of different trades managed by a construction manager. The contractual links are between the client and the trades.
Advantages
- A competent person to help you through the decision
making process - Greater control over the outcome of your project
- A collaborative, non adversarial delivery team
Disadvantages
An ineffective CM may lead to
- Failing to programme the project in the most effective
way
- Failing to sufficiently manage the quality of the project
- Failing to deliver the project on time or on budget
How would you deal with Arithmetical Errors in Tendering?
Alternative 1 - The tenderer cannot correct the tender price. The QS should amend computing errors and inform the contractor, who can choose to confirm or withdraw.
Alternative 2 - The tenderer can correct the tender price. The QS should amend computing errors and inform the contractor, who can choose to confirm or amend.
What would you include in a tender report?
- Introduction
- Tender return dates
- Tender Opening Record
- Amount of normalisation / rationalisation
- Rationalised totals
- Comparison against PTE / budget.
- Analysis of normalisation / rationalisation
- Recommendation
Can you select the highest tender?
- For a private client, yes. Cost is not always the most important factor for the client - Risk, capability, quality.
- However for public, no.
What are the purpose of post tender interviews?
Run through queries
Meet proposed site team
Assess client and contractor compatibility
How is CDP managed?
- CDP items and ER’s stipulated by design team
- Contractor’s Proposals submitted with tender
- CPs are reviewed and approval given
- Incorporation in to the works / contract
What are some typical qualifications included in a tender?
Allowance for samples
Assumed finishes
Access to site
Why is the development of a PTE important?
- A pre-tender estimate (PTE) ensures the client can afford the project and provides a basis for comparing tenders.
- While not part of the formal tender process, the PTE is essential for smooth tender analysis.
