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RICS APC QS > Procurement & Tendering > Flashcards

Procurement & Tendering Flashcards

1
Q
  1. What is procurement?
A
  • The overall process of acquiring construction work or services
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2
Q
  1. What should be considered when selecting a procurement route?
A
  • The specifics of the project

- The client objectives regarding cost, time, control, quality and risk

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3
Q
  1. What are the main procurement methods
A

a) Traditional / general contracting
b) Design and build
c) Management contracting
d) Construction management

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4
Q
  1. What is traditional procurement?
A
  • The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified
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5
Q

How does traditional procurement work?

A
  • The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team for the contract sum within the contract period
  • The client takes the responsibility and risk for the design and design team performance
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6
Q

When would you use Traditional Procurement?

A

a) If the employer has had the design prepared
b) If the design is substantially completed at time of contractor selection
c) The client wishes to retain control over the design and specification
d) Cost certainty at start on site is important
e) The shortest overall programme is not the client’s main priority

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7
Q

What contracts might be used for traditional?

A

Most JCT and NEC ECC forms are applicable

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8
Q
  1. What are the advantages of traditional procurement?
A

a) Competitive fairness and transparent process – increase value for money
b) Design led – can ensure quality
c) Price certainty before commencement
d) Well known procedures
e) Changes are reasonably easy to arrange and value

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9
Q
  1. What are the disadvantages of traditional procurement?
A

a) Overall project duration may be longer than others – sequential process
b) No input into design and planning by the contractor
c) Strategy based on price competition – could lead to adversarial relations
d) Dual point of responsibility – design team for design and contractor for construction
e) If design not complete at time of tender, cost and time certainty are reduced

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10
Q
  1. What is design and build?
A
  • Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements
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11
Q

How does design and build work?

A
  • The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works
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12
Q

When would you use design and build?

A

a) Where there is a need to make an early start on site – can overlap design and construction
b) Where the client wishes to minimise their risk – not got responsibility for design
c) For technically complex projects – benefit of contractor’s expertise
d) Where the employer does not want to retain control over the design development

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13
Q

What contracts can you use for design and build?

A

NEC ECC, JCT DB 16

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14
Q
  1. What are the advantages of design and build?
A

a) Single point of responsibility for design and construction
b) Earlier commencement on site
c) Early price certainty
d) Benefit of contractor’s experience harnessed during design

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15
Q

What are the disadvantages of design and build?

A

a) Client may find it hard to prepare a sufficiently comprehensive brief
b) Client has to commit to a concept design early
c) Variations from the original brief are difficult to arrange and often expensive
d) Harder to compare tenders – harder to determine if getting value for money
e) Ease of fabrication may be prioritised above aesthetic quality
f) May be less real competition due to fewer design and build firms

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16
Q

How much design input will the contractor have in Design and Build?

A
  • This depends on the amount of design work the employer has already had completed at time of tender
  • Can range from full design to production information and coordination only
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17
Q

Who carries out the design for the contractor in design and build?

A
  • 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
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18
Q
  1. What is novation?
A
  • A new contract that transfers the rights and obligations of one contractual party to a new third party i.e. design rights and obligations of architect transferred to contractor
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19
Q
  1. If the design team is novated, what should the client put in place?
A
  • A collateral warranty to the design team to give them remedies for breach of contract
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20
Q
  1. What is management contracting?
A
  • A management contractor is employed to contribute their expertise to the design and to manage construction and is paid a fee for doing so
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21
Q

How does Management Contracting work?

A
  • The management contractor has direct contractual links with all of the works contractors
  • They have the responsibility for the construction works without actually carrying them out
  • Not all of the design need be completed before the first works contractors start work
  • The MC selects the works contractors through competitive open book tenders
  • The client reimburses the cost of these packages to the MC plus their fee
  • The MC’s role is low risk – get prime cost plus a fee
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22
Q

When would you use management contracting?

A
  • Where the client does not want cost certainty before commencement
  • Where an early start on site is a priority
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23
Q

What contract might be used for management contracting?

A

NEC ECC and JCT both have management contracts.

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24
Q

What are the advantages of management contracting?

A

a) Overall project duration is shorter due to overlapping design and construction
b) There is contractor contribution to the design and planning process
c) Changes can be accommodated in packages not yet let if they have no further impact
d) The works are let competitively at current market prices on a firm price basis

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25
Q

What are the disadvantages of management contracting?

A

a) The price for the works is not received until the last package has been let
b) Changes to the design of later packages may affect packages already let - expensive
c) There is little incentive for the MC to reduce costs
d) May become a ‘post box’ system
e) In practice, the MC has little legal responsibility for the defaults of the works contractors

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26
Q

What is construction management?

A
  • The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction managers who acts as a consultant to coordinate the contracts
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27
Q

How does construction management work?

A
  • The trade contractors carry out the work
  • The construction managers supervises the construction process and coordinates the design team
  • The CM has no contractual links with the trade contractors or members of the design team
  • Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works
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28
Q

When might you use construction management?

A
  • On large, complex projects were the advantages of CM can be put to use e.g. upfront buildability knowledge, programme advise, specialist input from trade contractors
  • Where early start on site is key
  • Flexibility in design, procurement, construction strategy
  • Where price certainty before commencement is not key
  • Where the client is experienced in construction
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29
Q

What contracts might be used for construction management?

A
  • JCT has a suite of construction management contracts
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30
Q

What are the advantages of Construction Management?

A

a) Overall project duration reduced by overlapping design and construction
b) Construction manager can contribute to the design and project planning processes
c) Roles, risks and relationships for all parties are clear
d) Changes in design can be accommodated without paying a premium
e) Prices may be lower due to direct contracts with trade contractors
f) Client has means of redress to trade contractors through direct contractual links

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31
Q

What are the disadvantages of Construction Management?

A

a) Price certainty not achieved until last trade package is let
b) Changes to later packages may adversely affect packages already let - expensive
c) Need an informed, pro active client
d) Client has a lot of consultants and contractors to deal with – not just one – more fees

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32
Q
  1. What is the difference between management contracting and construction management?
A
  • Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t
  • Under management contracting, the MC is in direct contractual relationships with the trade contractors and the client is in contract with the MC only
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33
Q
  1. How do you identify the client requirements before recommending a procurement route?
A
  • Through detailed discussions with the client and design team to identify their priorities in terms of cost, time, quality, risk, control requirements and experience
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34
Q
  1. If the client wishes to start on site asap what route would you recommend?
A
  • Depends on their other requirements – such as cost and quality
  • If time was their overriding priority then CM or MC as they offer the fastest start on site
  • This is because start on site is not dependent upon a long tender period
  • BUT has consequential disadvantages in terms of cost certainty
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35
Q
  1. What if the client wanted an early start but also cost certainty?
A
  • Then design and build might be the most appropriate
  • Allows design and construction to be overlapped rather than being sequential
  • Tenders are based on the provision of all services so the client gets a lump sum price
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36
Q
  1. What is GMP?
A
  • Guaranteed maximum price
  • A lump sum contract under which there is no adjustment of tender price unless the SCOPE required by the client changes
  • The contractor includes the additional risks involved in the design development process in his tender price
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37
Q
  1. What are the advantages of Guaranteed Maximum Price?
A
  • Greater price certainty – contractor takes risk of design development and unforeseen occurrences
  • Greater control of overspending – contractor’s interests to alert the team to expensive items of design development
  • Quicker settlement of final account
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38
Q

What are the disadvantages of Guaranteed Maximum Price?

A
  • The client may pay too much – contractor’s risk allowance may be higher than in reality
  • Scope changes are likely to be very expensive
  • Can be adversarial – trying to decide whether changes are design development or scope changes
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39
Q
  1. What is PFI?
A
  • Private Finance Initiative;
  • A government programme launched in 1992 to bring private sector project management and expertise into the public sector;
  • The private sector is granted a concession to finance, design & build and operate major public projects such as schools and hospitals.
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40
Q
  1. What are the three types of PFI projects?
A
  • Financially free standing - Project undertaken and costs recovered by charging users e.g. toll roads and bridges;
  • Joint Venture - Public and private sectors contribute but the private sector has overall control. Contributions and allocation of risk are clearly defined; and
  • Services Sold - A significant part of the project is capital expenditure by the private sector and then sold back to the public sector. The public sector requires clear demonstration that this provides better value for money than option 1) and 2).
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41
Q
  1. What is the potential role of a cost consultant in a PFI Scheme?
A
  • Act for the contractor, providing advice normally given to a Client; and
  • Become part of a Special Purpose Vehicle (public sector group) that acts as the end user representative.
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42
Q
  1. What sort of projects might PFI be used on?
A
  • Its use is recommended where it offers clear value for money
  • It is generally considered to more appropriate for larger projects – greater than £20m and where there is significant ongoing maintenance requirements
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43
Q
  1. What might be some of the problems associated with PFI?
A
  1. High bidding costs and takes longer to procure than traditional projects
  2. Value for money
  3. Control of the Design
  4. Relationship between PFI client and contractor – gov often tries to maintain close control
  5. Concession agreements
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44
Q
  1. What is Build Lease Transfer (BLT)?
A
  • A facility is designed, financed and constructed by the private sector and then leased back to the gov for a predetermined period of time at a pre-agreed rental
  • The facility is owned by the private sector partner during the lease period, at the end the government can renew the lease, buy out the private sector partner or walk away from the deal
  • Operation and maintenance of the facility during the lease period is usually the government’s responsibility
  • This provides gov with a way of financing large-scale infrastructure out on ongoing revenue rather than capital expenditure
  • The primary disadvantage is that legal ownership remains with the private sector
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45
Q
  1. What is Build Operate Transfer (BOT)?
A
  • The facility is designed, financed, operated and maintained by a concession company, for the period of the concession
  • Ownership of the facility is vested in the host government from the time of construction completion
  • At the end of the period, the concessionaire’s involvement in the project ends and all operating rights and maintenance responsibilities revert to the host gov
  • The concessionaire retains all toll income etc during the agreed period
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46
Q
  1. What is Build Own Operate Transfer (BOOT)?
A
  • A variation on BOT where ownership stays with the concessionaries until the end of the concession period, when it is transferred free of charge to the host government
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47
Q
  1. What is Partnering?
A
  • Involves two or more organisations working together to achieve specific mutual objectives and deliver continuous measurable improvements
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48
Q
  1. What is project partnering?
A
  • 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 to delivering the solution and overcoming problems.
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49
Q
  1. What is Strategic Partnering?
A
  • A long-term relationship for a number of projects or works that will last over a long period. Framework agreements allow this and are then implemented on a project-by-project basis.
  • Framework Agreement – an agreement between contractors/ suppliers and the employer. It provides an agreement to fix the T’s & C’s for future purchases. Subject to inflation agreements.
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50
Q
  1. What are the key characteristics of partnering?
A
  • More trust is involved between parties
  • Extra incentives exist (regular work); impacts on prices, conflict/ disputes etc
  • Administrative burden is increased and therefore restricts it to larger projects
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51
Q
  1. What are the benefits of partnering?
A
  • The overall construction and design programme is shortened because there is a prior understanding of the Client and their requirements from previous projects (relationships are also built up between the project team);
  • Conflict is reduced;
  • Improved communication and mutual objectives;
  • Pooling of resources and ideas should result in innovative solutions.
  • Improved customer satisfaction
  • Better value for client
  • Recognition of protection of profit margin for contractors and suppliers
  • Environment that encourages innovation and technical development
  • Improved buildability – early involvement of contractors
  • Better predictability of time and cost
  • Stability and better confidence
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52
Q
  1. What are Key Performance Indicators?
A
  • Enable all those involved in the construction supply chain to establish how they are performing on a project
  • Allow organisations to benchmark their performance in those areas that are critical to the success of projects
  • There are nationally recognised KPIs that you can measure and compare yourself against
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53
Q
  1. What contracts can be used for partnering?
A
  • NEC 3 Option X12 – partnering contract BUT does not create a multi-party contract
  • JCT Framework Agreement – strategic partnering contract
  • NEC 3 Framework Contract – strategic partnering contract
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54
Q
  1. What is an Integrated Supply Chain?
A
  • Has the objective of understanding and working wholly in the interests of the project client, rather than their immediate client
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55
Q

What are the advantages of an integrated supply chain?

A

a) Reduced real costs, but maintained margins
b) Incentive to remove waste and inefficiencies
c) Greater certainty of outturn costs
d) Better underlying value delivered to the Client
e) More repeat business with key clients
f) Better confidence in longer term planning
- Therefore the project client gets a more responsive industry delivering facilities that better meet user needs, are delivered to time and cost and with minimum defects
- This creates higher customer satisfaction and an improved reputation for the industry

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56
Q

What is MEAT?

A

Most Economically Advantageous Tender. Alternative to simply the lowest priced Tender

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57
Q

What is a Framework Agreement?

A

Supplier agreement under which goods & services can be obtained on the basis of pre-agreed terms & conditions, price & quality levels.

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58
Q

When would you use a framework agreement?

A

Large portfolio of similar work

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59
Q

What are the advantages of a Framework?

A
  • Reduce tendering costs,
  • allow quick start on site,
  • contractor involved in buildability issues,
  • development of long term relationships & partnering philosophy,
  • integration of supply chain,
  • continuous improvement
  • best practice procedures,
  • savings through VE, repeat work & continuity between projects.
60
Q

What are the disadvantages of a Framework?

A

Reduced competition resulting in higher tenders, contractor must be suitable for all type of work involved & can lead to problems if not considered properly.
May act as a barrier to some smaller companies.
High costs to set up & tender

61
Q

How long does a Framework Agreement last for?

A

Will depend on the client or sector - The public sector are governed by EU procurement rules which limit the FA to 4 years.

62
Q

How would you choose contractors for a framework?

A

OJEU, or if not public procurement:
Suppliers are appointed on the basis of their capability & capacity to carry out the works.
I would first discuss the scope of work & size of packages likely to be involved throughout the FA would then draw up a list of potential capable contractors either from an internal list of approved contractors which the Client may have or from my own knowledge & experience & discussions with colleagues.
would invite the contractors to pre-qualify for the Framework, requesting information such as the financial standing, work load, number & quality of staff, previous experience in the potential projects under the FA, H&S & QA procedures in place.
Appointment would be assessed based on quality & capability rather than price.

63
Q

Is a Framework Agreement binding?

A

It is binding in the sense that once a supplier has been appointed to carry out work he must comply with the terms & conditions set out in the FA. However, there is no binding commitment to purchase or place a contract with any one supplier

64
Q

What are the key objectives for a Framework Agreement?

A

1) Collaborative working (long term relationships)
2) Performance improvement (KPIs)
3) Supply chain integration (specialist knowledge)
4) Strong relationships (secure resources)
5) Best practice
6) Savings (efficiency & innovation)
7) Maintain Project Team

65
Q

What factors will determine the success or failure of a Framework Agreement?

A

1) Clients ability to deliver continuous workload
2) Appropriate contractual arrangements (equitable risk)
3) Partnering approach
4) Commitment to performance improvement
5) Willing to invest in training / research
6) Open book approach

66
Q

How would ensure Framework prices remained competitive?

A

1) Carry out random audits & benchmark with the industry data
2) Bid some of the work competitively outside the framework & invite framework contractors to tender.

67
Q

What is Ojeu?

A

Official Journal of the European Union

  • Public sector tendering
  • All contracts from the public sector above a certain financial threshold have to be advertised across the EU
  • Also contracts that are say 49% private funded and 51% public must be published.
  • Use Open, Restricted and Negotiated, (Open, Selective and Nomination)
68
Q

What are the OJEU Thresholds?

A

Works - £4,733,252

Services - £122,976 or £189,330 depending on gov body

69
Q

What are the types of OJEU Procurement?

A

1) Open - any contractor allowed to tender for the work
2) Restricted - carried out in 2 stages 1st stage - open, 2nd stage - only contractors are invited that meet specific criteria
3) Competitive Negotiation - There is a pre-qualification process. Short-listed candidates are invited to take part in a negotiation process. This process does not have to follow any particular rules, and has no formal ending. This means that negotiations can continue even after the preferred bidder has been appointed.
4) Competitive Dialogue - Provides alternative to Open and Restricted Procedures under OJEU. Similar to Early Contractor Involvement process except that all contractors are involved

70
Q

What information would you request under the restricted OJEU method?

A

Stage 1 - Expression of interest only from contents of notice.
Stage 2 - Disregard non-compliant expressions. Pre-established criteria due to nature of works and other client specifics, EG experience in specific area

71
Q

Why was OJEU (Formally OJEC) introduced?

A

EU directive to -

  • Remove trade barriers to increase public sector value for money
  • Remove National Bias in procurement
  • Promote Openness & transparency
72
Q

How do you become aware of OJEU notices?

A

Online or industry press

73
Q

What are the various notices under OJEU?

A

Three types of notice a contracting authority must place under OJEU:

1) Prior information notice: as soon as a decision is made approving the planning of any contracts, or as soon as possible after the beginning of the budgetary year for any supply or services contracts. In effect an advance warning of works.
2) Contract notice: The information required will depend on whether ‘open’, ‘restricted’ or ‘negotiated’ contract procedures are to be used, and whether the contract is for works, supply or services, and if it is to be a framework agreement. More detailed than Prior Information notice.
3) Contract Award Notice: sets out details of the award, including information on price and the successful contractor. Must be sent within 48 days of the award, or conclusion of the framework agreement.

74
Q

What is the 10 Day standstill period?

A

A 10 calendar day standstill period between the notification of the award decision and the date of contract conclusion for all procurements to permit unsuccessful tenderers to seek further information about an award decision, and enable them to take action in the courts where they have sufficient grounds.
This stems from the Alcatel case.

75
Q

Can you explain the Competitive Dialogue process?

A

Complex projects are unique so no set format.

Phase 1 - Pre Dialogue

Stage 1 - Planning/Preparation (pre OJEU notice)
Stage 2 - OJEU contract notice - PQQ for shortlisting bidders
Stage 3 - Selection of bidders

Phase 2 - Dialogue

Stage 4 - The Dialogue, develop solutions

Phase 3 - Post Dialogue

Stage 5 - Final Tenders and Bid Evaluation
Stage 6 - Bid Clarification
Stage 7 - Preffered bidder to contract close

76
Q
  1. What is tendering?
A
  • Tendering is a method of obtaining the resources necessary to carry out the required work
77
Q
  1. What are the main methods of choosing a contractor?
A

a) Open tendering
b) Selective tendering – single or two stage
c) Nomination / negotiation
d) Serial
e) Joint ventures

78
Q
  1. What is open tendering?
A
  • Indiscriminate request for tenders
  • Advert placed in local paper/technical press inviting contractors to apply for tender docs
  • Gives characteristics of the work
  • Deposit usually required to discourage frivolous applications
79
Q
  1. What are the advantages of open tendering?
A

a) No charge of favouritism
b) Gives opportunities for capable firms you might not have put on a list
c) Should secure max benefit from competition

80
Q

What are the disadvantages of open tendering?

A

a) Danger lowest tender is inexperienced or has made lots of errors
b) No guarantee the lowest is capable or financially stable
c) Total cost of tendering is increased

81
Q
  1. What is selective tendering?
A
  • Restricts the number of tenderers by pre-selecting a limited number of contractors to tender for the work
82
Q
  1. What are the two types of selective tendering?
A
  • Single stage

- Two stage

83
Q
  1. What is single stage tendering?
A
  • A structured process of receiving competitive tenders from a number of pre selected capable contractors, who provide a lump sum for the works
  • Contractors pre-selected on say NJCC basis:
    1. Established skill
    2. Integrity
    3. Responsibility
    4. Proven competence and character
    5. Size of work
  • No more than 6 on list. If pre-selection is done beforehand then tenders can be selected on price alone.
  • Good contractors have the following: Recent experience, necessary skills, good management and organisational structure, spare capacity, good financial standing.
84
Q
  1. What are the advantages of single stage tendering?
A
  • Ensures only capable and approved firms submit tenders
  • Tends to reduce the aggregate cost of tendering
  • Client gets a lump sum for the whole works
85
Q
  1. What is two stage tendering?
A
  • Separates the processes involved with selecting a contractor from the processes for determining the price for the works
  • Used when it is desired to obtain the benefits of competition and have the advantage of bringing a contractor into the planning of the project and gain an earlier commencement
86
Q
  1. What is the purpose of the first stage of two stage tendering?
A
  • To select a suitable contractor by means of limited competition
87
Q
  1. What is the purpose of the second stage of two stage tendering?
A
  • A negotiation process with the selected contractor on the basis of the first stage
88
Q
  1. What do tenderers return as part of the first stage of a two stage tender?
A

a) Detailed build up of prices for the preliminaries items
b) Percentage additions for profit and overheads
c) A construction programme
d) Proposed sub letting of the works

89
Q
  1. Are there any precautions you should take before entering the 2nd stage process of a two stage tender?
A
  • Define procedure for either party to withdraw should 2nd stage negotiations prove abortive, what payments become due.
90
Q
  1. What are the advantages of two stage tendering?
A

a) Early involvement of the contractor
b) Encourages collaborative working
c) Potential for earlier start on site
d) Greater client involvement in selecting the supply chain
e) Contractor can help identify and manage risk

91
Q
  1. What are the disadvantages of two stage tendering?
A

a) Cost certainty may not be achieved before construction starts
b) Additional pre-construction fees for the contractor
c) Contractor could take advantage of second stage negotiation – increase costs
d) Potential for parties to not agree contract sum – risk – cost of retendering

92
Q
  1. Why should you use 2 stage tendering?
A
  • Building is complex
  • Magnitude of work is unknown at time of contractor selection
  • Early completion is required
  • Design team would like to make use of contractors expertise on buildability issues.
93
Q
  1. What is negotiation / nomination?
A
  • Where the client has a preference for a particular firm

- used when the contractor has done satisfactory work for him before

94
Q

How does negotiation/nomination work?

A
  • There is no competition – likely to lead to a higher price
  • BUT client may think it is worth it for a quicker or better quality job
  • The contract sum is arrived at by a process of negotiation
  • One party usually prices a schedule of rates / bill which is used as a basis
95
Q
  1. What is serial tendering
A
  • Effectively strategic partnering
  • Contractors are asked to bid for a project on the basis that if they build this one satisfactorily, others of a similar type will follow and the same bill rates will be used
96
Q
  1. What is a joint venture?
A
  • Used on large complex projects when 2 or more companies take on a joint liability for design and execution of the project.
  • Would normally be backed up with PCG, Performance Bonds.
97
Q
  1. What could selecting the wrong contractor lead to?
A

a) A bad client / contractor relationship
b) A dissatisfied client
c) An insolvent contractor

98
Q
  1. How would you put together a set of tender documents?
A
  1. ITT (Invitation to tender letter)
  2. Instruction to tenderers:
  3. Conditions of proposed contract
  4. Prelims, Pricing doc (SOR, BOQ)
  5. Specification
  6. Drawings
  7. Works Information
  8. Pre-construction H&S information
  9. Form of tender
  10. Submission of bona fide tender
  11. Return envelope
99
Q
  1. What information would the instructions to tenders contain?
A

a) Date for return
b) Address to return to
c) Site visit details
d) Programme length
e) Confirmation of receipt of documents
f) How tender should be submitted

100
Q
  1. What is the form of tender?
A
  • A pre printed formal statement in which the tenderer fills in the blank spaces
  • He provides his name, address and the sum of money for which he offers to carry out the works
101
Q
  1. What are the employer’s requirements?
A
  • Sets out the client’s requirements e.g. function, size, accommodation, quality
  • Level of detail depends on how much design has been done prior to tender
  • Normally includes current state of planning permission
  • Should detail the level of design, structure and spec info to be provided by the tenderers
102
Q
  1. What are the contractor’s proposals?
A
  • The contractor’s response to the ERs
  • They are the key document for the client to consider at the tender review
  • Often includes plans, elevations, sections and typical details
  • Layout drawings and specification for materials and workmanship
103
Q
  1. How did you decide which contractors to go out to?
A
  • Preliminary inquiries based on design team recommendations.
  • Issue a pre-qualification questionnaire to interested and suitable contractors.
  • Based on responses, a decision can be made to go out to a reasonable number of tenderers, taking into account financial situation, relevant experience, health and safety records.
104
Q
  1. What is a preliminary enquiry letter and what would you include?
A
  • 1 month before tendering, send out tender enquiry letter to ascertain whether firms are willing to submit a bona fida tender. (avoids contractor submitting cover price)
  • Sufficient info given to contractor should allow them to make a decision.
  • Inform of any other requirements: CWs, Bonds, PCG.
105
Q
  1. What would you include in the pre-qualification questionnaire?
A

a) Details of contract
b) Turnover
c) Previous relevant experience and references
d) Company accounts
e) Personnel
f) Management and organizational structure
g) Health and safety records
h) Quality systems and environmental policy
i) Provision of bonds / warranties / PCG
- This is done through questionnaire and interview process with scoring matrix.

106
Q
  1. What is electronic tendering?
A
  • All the forms, documents and drawings are uploaded onto a server
  • Tenderers are provided with all the info necessary to access and download
  • Safeguards have to be built in to prevent unauthorised amendment of the data
  • There must be a clear system of notifying parties of changes
107
Q
  1. What are the advantages of e-tendering?
A
  • May be possible to reduce the tender period – rapid transmittal of docs
  • Reduced copying and mailing costs
  • Can respond faster to email queries
  • More efficient estimating process – easier to break down and transmit to SCs
  • Software can be used to quickly analyse the bids
  • Maintains an audit trail of all communication
108
Q
  1. What is on line bidding?
A
  • Tenderers can view and download the tender info online
  • The bidding process commences at a specific time
  • The client sets on opening price and tenderers compete by underbidding
  • Tenderers can submit as many bids as they like until the closing time
  • It is common that if a new bid is submitted within 30 mins of the closing time it is extended to allow other tenderers to respond
  • If the tender is awarded on price alone the lowest tenderer will get immediate feedback
109
Q
  1. How many contractors would you include on a tender list?
A
  • Refer to the Code of Procedure
  • Depends on the size of the project
  • BUT as the cost of tendering is high it is common to limit the lists to 4-6
  • This provides cover if one drops out
  • It provides better relationships with contractors and improves the likelihood of competitive tenders – know they stand a reasonable chance of getting the job from the outset
110
Q
  1. How would you determine the duration of the tender period?
A
  • Depends on the procurement process and size of the project
  • If traditional with a BQ usually about a month to obtain info from sub contractors
  • BUT large complex schemes would be longer
  • If first stage of a two stage may be a short as 2-3 weeks as only prelims
  • If D&B likely to be 6-8 weeks due to the amount of design work needed
  • Better to give enough time to ensure contractors can price it correctly rather than rush it and encourage contractors to price a high risk element into the tender
111
Q
  1. When seeking tenders for construction work, in addition to the actual fee bid, what information would clients typically expect to be submitted?
A

a) Track record of previous experience
b) Proposed team
c) CVs or team profiles
d) Methodology or approach
e) References
f) Programme

112
Q
  1. How does a contractor price day works in their tenders?
A
  • The QS will have included a lump sum for the particular daywork item
  • The contractor adds a % uplift and gives a total for the section
  • Competition is therefore based on the % uplift
113
Q
  1. Why should you as a surveyor examine tenders?
A
  • Check tenderer has included everything, if not to ascertain whether they are still the lowest.
  • Component parts of tender will be used subsequently e.g. valuing variations
  • Errors in SOR, BOQ need to be identified and dealt with.
114
Q
  1. What should be examined, looked for in a tender?
A
  • Arithmetical errors (comp checking)
  • Pricing errors (Items not priced, or same item but different prices in diff sections)
  • Pricing methods (front, back loading)
  • Qualifications
115
Q
  1. What is the procedure after the submission date and time has passed for tender returns?
A
  • Formal procedure: eliminate suspicion of irregularities
  • No tender opened before submission deadline.
  • Tenders are supplied with return envelope to prevent accidental opening.
  • Tenders should be opened relatively soon after deadline has passed.
  • Other parties present: PM/ architect/ client esp with public bodies.
116
Q
  1. What happens if a tender is late?
A
  • Safest Option is not to consider- (Fraud, Collusion, Bid-rigging)
  • If private client it is at their discretion (Advise of dangers though)
  • Public client: Late cannot be accepted, few minutes late…judgement call needed, to accept need authorisation in writing from council/ LA
  • Advise accepting late tenders sets standard, contractors may in future also not keep to deadlines.
117
Q
  1. How do you evaluate the Contractor’s proposal for D&B?
A
  • Not solely on price!
  • Programme, design, contractor’s proposals, materials, and method statements, employees all have to be assessed.
  • Checking for discrepancies from the ERs
  • Easier if the design has already been progressed by the client prior to tender
118
Q
  1. What criteria should be considered if not on price alone on D&B?
A
  • Approach (method statement and programme)
  • Customer care (liaison with employer)
  • Environmental (noise/ nuisance reduction proposals)
  • Management (H&S)
  • Resources
  • Supply chain
  • Technical
  • D&D (aesthetics, LCC, flexibility in use)
119
Q
  1. What would you do if the lowest tender also has the lowest quality spec?
A
  • The implications should be spelled out to the client e.g. higher maintenance costs
  • It is the client’s decision ultimately
120
Q
  1. What is the danger of accepting a very low tender?
A
  • They may have missed some of the works
  • The quality may be lower than some of the other tenders had allowed
  • Once on site they may try and recover their costs by a large no of variations / claims for EOTs and loss and expense
  • This could lead to adversarial relationships
121
Q
  1. What happens if tenders are returned and are higher than cost plan, pre-tender estimate?
A
  • Could be market problems, need to reconcile to identify major differences, VE process could take place on those elements.
122
Q
  1. How would you deal with errors in tender returns?
A
  • Depends on which alternative chosen on instructions to tenders
  • Alternative 1 – the QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to either confirm or withdraw
  • Alternative 2 - QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to confirm, amend or withdraw.
123
Q
  1. What would you do in a traditional procurement route, if the tenderer returned an alternative tender with a different method of construction?
A
  • Assuming you had asked them to supply an alternative tender you would assess it along with other returns and liaise with client.
  • If not asked, ask for compliant tender
124
Q
  1. How do you deal with qualifications within the tender?
A
  • Procedure should be outlined when you go out to tender – in the instructions
  • If they are unauthorised it might invalidate the tender – leading to disqualification
  • Possible to be authorised – if the tenderer raised a query with the QS – in which case all other tenderers should have been notified and instructions on what to do issued
125
Q
  1. What would you do if the lowest tenderer had submitting no pricing of the preliminaries, would you recommend he was accepted?
A
  • Depends on the form that the tender was sent out in and instructions to tenderers
  • Usual to have prelims split into method and time related items
  • If they did not break them down as required then it is officially a non-compliant tender
  • BUT in practice the contractor is usually provided the opportunities to provide a full breakdown within a couple of days and this would be regarded as valid
  • They are not allowed to change the figures – not allowed to gain an advantage
  • The fact that this was done should be noted in the tender report
126
Q
  1. What would you do if you considered a contractor submitting the lowest tender to be in financial difficulty?
A
  • As part of the evaluation of tenders you would look at the company accounts (if not at PQ)
  • Also request references from previous employers for work recently done
  • See if you can find out if subcontractors were paid on time
  • Ensure the contractor can provide a bond and that it is in place before commencing
127
Q
  1. On what grounds would you advise the client to re-tender?
A

a) Not enough tenderers returned tenders
b) The tendering procedure is believed to have been compromised for some reason
c) If tenders were not at the cost level required and it was believed that re-tendering to different tenderers would provide a different result
d) Design changes or VE has been carried out that has significantly changed the design that was originally tendered on

128
Q
  1. How would you deal with a front loaded BQ?
A
  • This is not a pricing error – removing the front loading would not reduce tender price
  • You can ask the contractor to adjust his pricing to remove it during the analysis
  • QS should ensure that all items are consistently priced throughout the document
  • It has implications on valuing variations later and may be a sign that the contractor has financial difficulties
129
Q
  1. How do you carry out a tender evaluation?
A
  • Need a breakdown of the tenders, check them to ensure they have been priced in accordance, that there are no errors, qualifications or exclusions
  • Follow NJCC procedure if errors are found
  • Compare against the pre-tender estimate to check rates are not unusually high/low
  • Ensure all amendments made during the tender period have been incorporated
  • Prepare the tender report giving a summary of the actions, costs and recommendation
130
Q
  1. What is included within a tender report?
A

a) List of tenders received
b) Initial tender return totals
c) Any qualifications identified
d) Post-tender adjustments
e) Revised tender sum
f) Issues to be resolved
g) Comparison of tender returns
h) Comparison with pre-tender estimate
i) Recommendation

131
Q
  1. What is a pre-construction services agreement?
A
  • Documents the services that the contractor is to perform before entering into the building contract and identifies the terms and conditions under which these services are to be performed
132
Q
  1. When are PCSA’s usually used?
A
  • In a two stage approach to facilitate early contractor involvement
  • They are signed after the first stage and cover the period until the completion of the second stage
133
Q
  1. What happens in Stage One of a PCSA?
A
  • The employer issues outline information to potential contractors
  • This information should include a scope of services that the contractor is to perform at stage 2 (generally included in the preliminaries)
134
Q
  1. What do the contractors include in their tender returns for a PCSA?
A
  • Profit, overheads, preliminaries, proposals on how they intend to execute the project
  • They should also include their fee for the second stage services
135
Q
  1. What tasks might the Contractor be asked to perform in the second stage of a PCSA?
A
  • Assisting the project team to finalise the design
  • Advise on the methods of construction
  • Obtain prices for packages of work from sub contractors (open book basis)
  • Evaluate their tender returns and agreed the selection with the employer
  • This enables a lump sum price to be determined and the main contract entered into
136
Q
  1. What are the advantages of this two stage approach to a PCSA?
A
  • Contractor provides valuable advice to the employer
  • Their early input should reduce the disputes and problems arising during construction
  • Finalisation of design and tendering of the packages is overlapped – quicker
  • The contractor also benefits from getting paid earlier and becoming part of the DT
137
Q

What are the disadvantages of the PCSA?

A
  • The contractor is no longer in competition – costs may rise during pre-construction
  • The longer the contractor is involved without the main contract being signed the weaker the contractor’s bargaining position becomes
  • Once the contractor is integrated the employer will become reluctant to dismiss them in the event of failure to perform or to negotiate on price / programme
  • The sub contractors chosen will be different from those that would have been selected under a single stage approach – generally bigger and more prominent = more expensive
  • It is usual that the price is not fully fixed at contract execution – generally around 80-85% - this means some of the work may be covered by provisional sums – less price certainty than under single stage
138
Q
  1. What is the purpose of the pre-construction services agreement?
A
  • To document the services the contractor is to perform before entering into the building contract
139
Q
  1. What should be taken into account in the wording of a PCSA?
A
  • Ensure that the arrangement does NOT commit the employer to enter into the building contract
  • Ensure that they are ONLY obliged to pay for the documented services and nothing else
  • State the employer may decide at his own discretion whether to appoint the contractor at the end of the second stage or whether they are even to proceed with the project at all
  • State that if they do not appoint the contractor, the employer will not have any liability for any loss of project, contract or other opportunity
140
Q

What are the pitfalls of a PCSA?

A
  • It is not uncommon for the pre-construction services to include enabling works and surveys etc
  • It is not advisable to go beyond this stage
  • The more work the contractor carries out before the building contract with its robust terms and conditions is executed and the contract sum and programme are agreed, the weaker the employer’s negotiating position becomes
  • If the contractor is not selected to go further, any new contractor will be reluctant to adopt responsibility for the previous contractor’s work – split liabilities
141
Q

Why would you not use a PCSA on a two stage tender?

A
  • The pre-construction period was short (less than a month) and only included procurement
  • The employer agreed to pay the contractor a lump sum for preconstruction services at the end of that agreed period – as stated in their tender return
142
Q

Would you recommend the use of a pre-construction services agreement?

A
  • Yes, very important if the pre-construction period covers a long period
  • Yes if the contractor needs to integrate into the design team and provide advice etc
  • Need an agreement as to exactly what services they are to provide and how they will get paid etc
  • The more involvement the contractor has, the more necessary it is to protect the employer in the event that they do not want to proceed with that contractor into construction
  • Important to have a document that sets out the procedures to cover this etc
  • BUT have to be careful that it does not encourage a lot of work to commence before the building contract is signed – dis-incentivise the parties
143
Q
  1. What other forms of procurement could be used that may safeguard the employer better than a PCSA?
A
  • If the employer wants construction work to start before the design is finalised the employer may want to consider construction management rather than trying to shoehorn a traditional or D&B contract into a programme where it does not fit
144
Q
  1. Is there a standard form PCSA that you might recommend the use of?
A
  • Traditionally, most UK standard form contracts do not provide for any contractor involvement ahead of commencement of site works and contract execution
  • Therefore most PCSAs are bespoke documents – drafted by lawyers for the Employer
  • There is a JCT standard form
145
Q

What is a Procurement Strategy?

A

Identifies the best way of achieving the objectives of the project and value for money
Taking account of the risks and constraints, leading to decisions about the funding mechanism and asset ownership for the project.
The aim of a procurement strategy is to achieve the optimum balance of risk, control and funding for a particular project.

146
Q

What is a Procurement Route?

A
  • Delivers the procurement strategy.
  • It includes the contract strategy that will best meet the client’s needs.
  • An integrated procurement route ensures that design, construction, operation and maintenance are considered as a whole;
  • It also ensures that the delivery team work together as an integrated project team.
147
Q

What is a Contract Strategy?

A
  • Determines the level of integration of design, construction and ongoing maintenance for a given project
  • Supports the main project objectives in terms of risk allocation, delivery, incentivisation and so on.

RICS APC QS (15 decks)

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