Procurement & Tendering Flashcards
What is the difference between procurement and tendering?
- 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.
What are the main tendering procedures and provide a brief explanation of each?
- 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.
- 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. - 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.
What are three main types of contractor selection techniques and briefly explain each?
- Selective - Suitable contractors are selected by the design team.
- Open Tendering - this allows anyone to express an
interest to tender. The proposed tender opportunity
is usually advertised in journals or on websites. - Single Contractor Selection - A
contractor is selected and then the negotiation
process begins.
What are common procurement routes and briefly explain each?
- 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. - 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. - 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.
- The most important aspect of selecting the management contractor is the quality and cost of the project management team they put forward.
In what circumstances would you query a contractors cost against a tendered item and what options to you have in responding?
- The JCT Tendering Practice Note outlines these requirements.
- Priced documents should be examined before a tender is recommended or accepted but a contractor’s tendered prices should not be altered without justification.
- JCT recommends use of one of the two procedures:
Alternative 1:
- The tenderer should be given details of the errors and afforded an opportunity of confirming or withdrawing their tender.
- If the tender is withdrawn, the priced documents of the next lowest or next best value tenderer should be examined.
- Where the tenderer confirms their tender, an endorsement should be added to the priced documents prior to acceptance, indicating that all rates or prices in those documents are to be considered as reduced or increased in the same proportion. The endorsement should be signed by both parties.
Alternative 2:
- The tenderer should be given an opportunity of confirming his offer or of amending it to correct genuine errors.
- Should he elect to amend his offer with the result that the revised tender is no longer the lowest or best value tender, the offer that becomes the lowest or best value should be examined.
- If the tenderer elects not to amend his offer, an endorsement will be required as in Alternative 1.
- If the tender does amend his tender figure, and possibly certain of the rates in his documents, he should either be allowed access to his original tender to insert and initial the correct details or be required to confirm all the alterations in a letter.
- If in the latter case his revised tender is then recommended for acceptance, a copy of the letter should be attached to the tender acceptance letter or form before that acceptance is sent or communicated in any way to the tenderer; the acceptance letter or form itself should record clearly that the amended tender figure and rates in the tenderer’s letter are substituted for those in the original tender.
When can a successful tender be submitted to the client for acceptance in the private sector?
After completion of the evaluation, where the lowest or best value tender is found to be free of error or if (in a
private sector procurement after an Alternative 1 or Alternative 2 procedure) the tender remains the lowest or best value, it should be recommended to the Employer for acceptance.
It is important that all tenderers should be informed immediately of the result, since that may be of great importance for their strategic planning.
What is generally included within a tender package?
- Invitation to Tender
- Form of Tender
- Drawings and bills of quantities,
- Specification or work,
- Employer’s Requirements
What is the difference between an invitation to tender and a form of tender?
The Invitation to Tender includes:
* the documents included within the tender package.
* the latest time and date for the return of tenders, together with the relevant address or transmission instructions.
* the contact point for communications, queries, document inspection and site visits.
* the basis of awarding contract.
* the arrangements and procedure selected for priced documents.
* the documents to be supplied by the tendering contractor (where necessary) (e.g. Contractor’s Proposals, designs, drawings, specifications, etc).]
The Form of Tender includes:
* the description and location of the works
* the name and address of the Employer
* the name and address of the tendering contractor
* relevant adjustments to the list of documents supplied by the Employer
* documents to be supplied by the tendering contractor
* particulars of the parent company guarantor (where required)
* the arrangements and procedure for priced documents
* the dates or periods for the commencement and (where set) completion of the works.
How must a contractor comply with a tender/ tender documents?
To ensure fair competitive tendering, it is essential that the tenders submitted are based on identical documents and are compliant with them, with no attempt to vary that basis through qualifications in the tenders.
A tenderer who submits a qualified tender should be given an opportunity to withdraw the qualifications so as to produce a compliant tender, but without amending the price. If the tenderer refuses to withdraw the qualifications, the tender may need to be rejected.
If an error in the tender documents is identified, what is the process in informing contractors and amending errors?
If it is decided to amend or provide clarification of any of the documents, the Employer or his designated consultant should notify all tenderers at the same time and, if necessary, extend the period for tendering.
I prefer to redistribute all tender documents with ammendments made as necessary.
What procedures are recommended under the JCT Tendering Practice note for unsuccessful contractors?
It is important that all tenderers should be informed immediately of the result, since that may be of great importance for their strategic planning. In private sector cases, that notification should follow the contract award or selection of the preferred bidder.
Contractors also need to know how they have performed against the various individual criteria, so each should on
request also be supplied both with his own individual scores and the range of scores for each of the criteria.
Under which basis can a Contractor’s tender be evaluated and what is the difference between each?
‘Best Value’ tender assessment is designed to establish the long term value of a contractors tender response. This is carried out by scoring:
- Price.
- Relevant experience.
- Understanding of the requirements.
- Past performance.
- Technical skills.
- Resource availability.
- Management skills and systems.
- Proposed methodology (this might include mobilisation plans, design proposals, and non-compliant proposals if these have been allowed).
- Compliance with the requirements set out in the invitation to tender.
Lowest cost is where a tender is assessed on a cost basis only provided it is free of any cost errors or qualifications which alter the tender documents.
