Procurement & Tendering

Question 1

When is single-stage selective tendering appropriate?

Answer 1

When the Employer’s requirements are sufficiently defined to enable the work to be priced so they can go straight to selected tenderers for a competitive price.

Question 2

When would you use Two-stage or competitive dialogue tendering processes?

Answer 2

When you have a complex project where the Employer’s requirements have not been sufficiently defined and contractor/specialist input is required.
Would also use Negotiated Tenders for this.
* Competitive dialogue tendering is a public sector route.

Question 3

What should be included in the criteria for the initial selection assessment?

Answer 3

Appropriate financial strength, technical capability & record and resources to carry out the project successfully.
(The criteria should be objective, fair, transparent and non-discriminatory).

Question 4

What is shortlisting?

Answer 4

This is the process of selecting the contractors who will then follow the tender process - can either be selected from a PQQ (Pre-Qualification Questionnaire) or by the clients framework.

Question 5

What would the public sector use?

Answer 5

PC Regulations and the OJEU (Official Journal European Union).
Competitive dialogue tendering
PC Regulations - tenders must be judged on ‘most economically advantageous basis rather than lowest price.

Question 6

What are the advantages of Two-stage tendering?

Answer 6

• Assists with complex projects where Employer’s requirements are not settled.
• Increases scope for value engineering through Early Contractor Involvement, team work and fixed (rather than estimated) sub-contractor pricing.
• Reduces scope for claims that result from inaccurate or inadequate designs or specifications.
• With the design and procurement processes happening at the same time, it may also offer time savings overall.

Question 7

What is included in the first stage of Two-stage tendering?

Answer 7

PQQ and then ITT if successful.
Competitive tenders are often restricted to:
- preliminaries
- overheads
- contractor’s profit
- elements of the design that are sufficiently advanced

Question 8

What should be included in the “Enquiry Letter”?

Answer 8

(Letter sent to potential contractors to establish which are best suited to the project and willing to bid)

• Letter (outlines timelines, contacts, tendering procedure etc.)
• Project Information Schedule (sets out relevant project info)
• Pre-Qualification Questionnaire

Question 9

What is included in the “Project Information Schedule”?

Answer 9

It must provide sufficient information to enable the contractor to decide whether to tender such as:

• the project and its estimated value
• the Employer, the professional team and contact point
• the tendering procedure to be used (single, two-stage, negotiated) and the medium (electronic or hard copy)
• the programme, including anticipated dates for pre-selection interviews, issue of tender douments and tender submission
• the requirements for Contractor’s design (intention of novation etc.)
• any applicable BIM requirements
• the Contract to be used
• completed Contract Particulars showing the requirements for Collateral Warranties or Third Party Rights, bonds and Contractors insurances such as PII with contractors design work
• any amendments or modifications of the Contract or its conditions

Question 10

What is procurement?

Answer 10

The process of purchasing goods and services. There are different routes of procurement in construction which would be selected depending on the objectives of the client.

Question 11

What are the main methods of procurement?

Answer 11

Traditional
Design & Build
Contract Management
Management Contracting
(PPP/PPI Public Sector)

Question 12

What determines the choice of procurement?

Answer 12

Time, Cost & Quality (Procurement Triangle)
\+ specific project constraints
\+ risk
\+ Asset Ownership
\+ Financing
\+ Contractual Relationships

Question 13

What is the Traditional procurement route?

Answer 13

A single staged, fully designed project where the design is developed in detail by the design team and then appointed under a lump sum construction contract which includes penalties for late completion.

Question 14

What is the D&B procurement route?

Answer 14

This is when a main contractor is appointed to design and construct the works. It can follow either a single or two staged tender.

Question 15

What is the Construction Management procurement route?

Answer 15

This is when the works are constructed by a number of different trade contractors. The trade contractors are contracted to the client by a Construction Manager. (Direct contract with each trade contractor as with AGC and we act as Construction Manager).

Question 16

What is the Management Contracting procurement route?

Answer 16

This is when the works are constructed by a number of different works contractors who are contracted to a Management Contractor. (E.g. Leicester Square & Blue Sky Building BSB)
They are usually appointed early in the design process to give advice etc.

Question 17

What is single stage tendering?

Answer 17

This is when there is a sufficient client brief and employers requirements. The tender can then go straight to selected tenderers who would have been determined from a PQQ for a competitive tender return.

Question 18

What is two stage tendering?

Answer 18

This allows the early appointment of a contractor prior to completion of all the information required to enable them to offer a fixed price.
1st stage - limited appointment agreed allowing the contractor to start work. (consultancy agreement or a PCSA).
2nd stage - a fixed price is negotiated for the contract.
* A clause makes it clear that there is no obligation to proceed to the second stage and in such circumstances the first stage fee would be full and final settlement of the contractors costs.

Question 19

What is a negotiated tender?

Answer 19

This is when the client approaches a single contractor based on their track record or previous working relationships and then the terms of the contract are negotiated.
(Such as 50FS appointing Mace for Main Contract through negotiated tender)
Can reduce duration and costs of tendering but also eliminates competition.

Question 20

What would be included in the PCSA? (Pre-contract Service Agreement)

Answer 20

• Helping the consultant team develop the design, or the contractor undertaking all design development themselves.
• Helping the consultant team develop the method of construction, or the contractor developing the method of construction themselves.
• Obtaining prices for work packages from sub-contractors or suppliers on an open book basis.