Procurement & Tendering Flashcards
What are single, two stage and negotiated tenders?
A single stage tender is when a client issues a tender for the whole of the project, with all the relevant information provided at the point of issue.
A two stage tender is where a contractor is appointed over two phases. There is an information phase first, allowing the contractor and client to collaborate, in which the contractor submits details under a pre-construction agreement and includes aspects regarding project preliminaries, method statements, design, overheads, and profit. The second phase is where the contractor will carry out the main works once the design has been sufficiently developed.
A negotiated tender is when a client invites one contractor to tender for the works, usually based upon an existing relationship, and they submit a price. Any queries are discussed and a figure is agreed upon.
What are 5 changes as a result of the public procurement act?
- Brought four regims (Public Contracts 2015, Utilities, Defence, Concession Regulations) under one act.
- In an aim to improve VfM, more information will need to be shared publicly about procurements in the form of KPI’s and supplier performance.
- Strict payment terms requiring any sum to be paid within 30 days enforced into contracts (with certain exceptions)
- Introduction of a new oversight body to identify any areas of systemic failure within public bodies and procurement procedures, giving them investigative powers and make recommendations following.
- A legal duty will now be placed on authorities to consider dividing large contracts into lots. This aims to increase competition and encourage greater involvement from SME organisations.
Why was the public procurement act introduced?
It was introduced to support a more competitive, flexible procedure, allowing for easier negotiation and partnership with public sector bodies, and increasing opportunities for small businesses and social enterprises.
Can you give me an example of a rule introduced by the public procurement rule?
- Payment terms of 30 days have been enforced into all contracts with limited exceptions.
What do the guidance notes - ‘Developing a procurement strategy’ and ‘E-tendering’ say?
The DaCP guidance note covers selecting the appropriate procurement route based on the particular project’s characteristics.
E-tendering covers all things related to tendering electronically.
What procurement routes are you aware of?
Traditional - the client completes the design before tendering the works as a whole to a contractor for a price.
Design and build - the contractor is responsible for at least some of / the whole design as well as the construction works.
Management Contracting - the client appoints a management contractor who is responsible for organising trade packages to complete the works.
Construction management - the client hires a construction manager who coordinates the trade packages, but client retains the contractual link to sub-contractors and thus the risk for their performance.
Partnering - A collaborative approach where the client, contractor and other stakeholders work together to achieve shared goals.
Benefits of traditional over D&B?
- Greater cost transparency due to fact design is finished and bids can be compared on a like for like basis.
- Greater control over design.
- Greater risk management as all design issues can be resolved before construction begins.
Benefits of management contracting over construction management?
- In MC, client transfers the risk of subcontractor performance to the management contractor.
- In MC, less contract admin to manage as just one contract between them and the MC.
What is electronic tendering and what are some of the pro’s and con’s?
E-tendering replaces traditional paper-based methods with digital platforms, making the process more efficient and reducing paperwork.
Pro’s:
- Efficiency - automates a lot of manual tasks, all in one place.
- Transparency - clear audit trail.
- Ease of use - the streamlined process makes it easier for bidders to access documents, submit bids, and track progress.
Con’s:
- Requires initial investment and employee training to manage software.
- System reliability - Dependence on technology means that system crashes or errors can delay the tendering process.
What measures would you take to ensure security in e-tendering?
E-tendering platforms often include security features such as encryption and e-signatures to protect sensitive information.
What is a fair and comprehensive tender?
A fair and comprehensive tender is one that ensures all potential suppliers or contractors have an equal opportunity to bid and that the selection process is transparent and objective.
Clear Requirements: The tender documents should clearly outline the project’s scope, requirements, and evaluation criteria to avoid any ambiguity.
Equal Opportunity: All potential bidders should have access to the same information and be given equal time to prepare and submit their bids.
Transparent Process: The evaluation process should be transparent, with clear criteria and weightings that are communicated to all bidders.
Where only 2 tenderers applied, how did you ensure value for money was achieved?
I compared the returns against benchmark data to ensure it was in line. Where I didn’t think it was an accurate representation of the market, I would ask the package to be re-tendered, and would offer additional suppliers to send the ITT where appropriate.
How do you ensure value for money in the tender process?
- Competitive tender process.
- Receiving enough bids.
- Compare against benchmark data.
What other prelims items did you pick up on when assessing the BQ’s against the drawings on the LRA?
- MEWP’s had been priced by both MC and sub-contractor.
- Scaffolding had been allowed for by both.
What packages were included in the external envelope that had been tendered by the same contractor on the LRA?
- Brickwork and blockwork.
- Cladding systems.
- Steel framing systems.
What was the discount you negotiated with the contractor on the external packages?
- £175,000.
- Items such as waste management, site management, OHP etc were reduced.
Why do the risks increase from having one subcontractor carrying out several packages?
It increases the risk due to the fact that one sub-contractor is now responsible for several packages, a large portion of the value of the works and programme. If they were to go into administration it would have a greater effect than if they were just tendering for one package.
What does a comprehensive credit check look like? How was this carried out?
I asked the contractor to carry one out, this involved them using the company ‘CreditSafe’ to gain a comprehensive report. This checks the following:
- Adverse legal information
- Director details
- Up to five years of accounts
- Company identity
- Payment history
- Credit limits and ratings
- Holding and subsidiary companies
- Image documents
How would you analyse a tender?
- I would check for clear arithmetical errors.
- I would then check for any obvious errors in programme or onerous exclusions that would render the tender null and void (i.e. if it was a combined tender for the M&E works and they had excluded all mechanical works).
- Post tender queries if any ambiguity with a tender (ensuring that they are worded so tenderers aren’t giving the chance to enhance their bid).
- Normalisation process (stacking bids against each other, plugging in gaps) to show a comprehensive picture).
- Post tender interviews if necessary (to discuss queries such as construction methodology in depth).
What are the risks of too much normalisation of a tender?
The risks of normalising a tender too much is it risks:
- Not giving a fair reflection of the price.
- ## Potentially eliminating the competitive advantage of one tender over another.
What was the procurement process like for selecting a school, i.e. Wings Academy or LRA?
Both used the SCF.
How did you go about writing a tender report? What was included?
I used the standard Mace template.
This is split into the following headings:
Commentary - purpose of report.
Bid Timeline - iTT, Tender pack issue, time for return, receipt of returns, post tender queries, normalisation etc.
Summary of tenders, including pre and post normalisation amounts, review of exclusions/inclusions, programme, insurances/PCG/bonds.
Assessment according to the tender criteria.
What is a framework? What ones have you worked on? What are the benefits?
Benefits of frameworks include:
- Helps to develop strong relationships.
- Time saving.
- Rates are usually agreed upfront
You state with regards to a schools project that several packages relating to the external envelope was tendered by the same subcontractor, negotiating a discount on the prelims. Did you consider negotiating a discount on the works costs also?
I reviewed the rates and found to be in line with the benchmark figures, so i didn’t want to jeopardize the contractor’s margin or the relationship by pushing on fair and equitable market rates.
What are the benefits and risks of having the same contractor responsible for several packages?
Benefits - economies of scale, one point of responsibility.
Disadvantages - greater impact on project if they went into administration.
You state that with regards to Bank Project that you produced a tender report, can you please advise what was included in the tender report?
- Intro and scope of project.
- Timeline of tender - when was received, clarifications, exclusions and inclusions, pre-normalised and post normalised figures.
- Evaluation process - scoring criteria.
- Recommendations and residual risks/mitigation.
You state with regards to a Bank Project that one of the tenderers had not included an incumbent subcontractor’s costs. What are the pro’s and con’s of an incumbent on a project?
Pro’s - Usually good existing relationships, well known supply chain, lower design related risks.
Con’s - less competition on pricing, resistance to change as they may want to keep constructing in the same fashion, complacency in not needing to improve service or look to be innovative.
What are the 4 core objectives of the Procurement Act 2023?
- Value for money.
- Maximising public benefit.
- Transparency.
- Integrity.
How does risk govern procurement route selection?
- Allocation of risks on a contractual level, as client appetite is huge in determining route.
- Market conditions - huge levels of inflation might lead client to more risk averse route.
You state regarding a school project that you worked on that you ensured the client was receiving value for money - can you please advise what value is?
Value is subjective, but it is usually the ratio between benefit and the cost or effort required to achieve it.
On the same schools project you state that you undertook checks of drawings against the BoQ’s received from the Contractor. Were these spot checks or were they detailed checks?
They were spot checks to start with, if quants didn’t align then it would become a more detailed check.
When reviewing tender packages, do you review the MEP packages?
On this school project, I didn’t review MEP packages.
How would you explain the difference between procurement and tendering to a client?
- Procurement is a broad process which encompasses all activities that are involved in acquiring goods and services.
- Tendering is a specific method within procurement.
- Procurement is a strategy, tendering is a formal method.
