Procurement & Tendering

Question 1

What is the difference between procurement and tendering?

Answer 1

• Procurement is the overall act of obtaining goods
  and services from external sources (i.e. a building
  contractor) and includes deciding the strategy on
  how those goods are to be acquired by reviewing
  the client’s requirements.
• Tendering is is an important phase in the procurement strategy and includes the bidding process to obtain a price and how a contractor is actually appointed.

Question 2

What are the main tendering procedures and provide a brief explanation of each?

Answer 2

1. Single Stage - The 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.
2. Two Stage - The process involves first-stage tender enquiry documentation being issued to bidding contractors at RIBA Stage 2 or 3. Rather than requesting a bid for constructing the entire project, the preferred contractor is
   chosen on the basis of the quality of their bid, preliminaries price and overhead and profits allowances. The preferred contractor then joins the design team on a consultancy
   basis using a pre-construction services agreement.
3. Negotiated - 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.

Question 3

What are three main types of contractor selection techniques and briefly explain each?

Answer 3

1. Selective - Suitable contractors are selected by the design team.
2. Open Tendering - this allows anyone to express an
   interest to tender. The proposed tender opportunity
   is usually advertised in journals or on websites.
3. Single Contractor Selection - A
   contractor is selected and then the negotiation
   process begins.

Question 4

What are common procurement routes and briefly explain each?

Answer 4

1. Traditional (lump sum) - The traditional procurement route involves separating design from construction. Once the full design is complete, the tender including drawn designs and a specification of workmanship and materials are included for a contractor to provide a lump sum cost.
2. Design and build - Under a ‘design and build’ route, a single contractor assumes the risk and responsibility for designing and building the project. Because this approach includes the integration of design, construction can start before all the detailed design is completed and the overall project duration is thus reduced.
3. Construction management - The client employs the design team, with a construction manager engaged as a fee-earning professional to manage, programme and co-ordinate the
   design and construction activities and to facilitate collaboration. Construction work is carried out by individual ‘trade’ contractors, often specialists, through direct contracts with the client for distinct trade or work packages.