Procurement & Tendering Flashcards
1
Q
1). What is procurement?
A
– The overall process of acquiring construction work or services
2
Q
2). What should be considered when selecting a procurement route?
A
– The specifics of the project – The key client objectives regarding: Cost, Time, Control, Quality, and Risk
3
Q
3). What are the main procurement methods?
A
– Traditional – Design & Build – Management Contracting – Construction Management
4
Q
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.
5
Q
4). How does traditional procurement work?
A
– The contractor takes on the 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 the design team performance.
6
Q
5). When might it be appropriate to consider a traditional route?
A
– If the employer has already had the design fully prepared. – If the design is substantially completed at time of contractor selection. – The client wishes to retain control over the design and specification – Cost certainty at start on site point is important to the client. – The shortest overall programme is not the client main priority.
7
Q
6). What contracts might be used for traditional procurement?
A
– JCT: Minor Works – JCT: Intermediate – JCT: Standard Building Contract with Bill of Quantities
8
Q
7). What are the advantages of traditional procurement?
A
– Quality Control; Design led so can ensure the design is up to the client’s expectations before tender. – Cost Certainty; as design already complete gives a much better position for cost certainty. – Well known procedure / most simplistic procurement route. – Suitable for clients with limited construction experience. – Offers a transparent process as all tenderers pricing the same design and spec. – Offers competitive fairness due to the transparent process (pricing same design information). – Changes are relatively easy to arrange and value (known starting point).
9
Q
8). What are the disadvantages of traditional procurement?
A
– Time; overall project duration may be longer than other routes – sequential process – Buildability; No input into design and planning by contractor – Strategy based on price competition – could lead to adversarial relations – Dual point of responsibility; client & design team for the design and contractor for the construction. – If design is not complete at time of tender then cost and time certainty is significantly reduced.
10
Q
9). What is design & build?
A
– This is where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.
11
Q
10). How does a design & build route work?
A
– The employer gives the tenderers the Employer’s Requirements, and the contractors respond with the Contractor’s Proposals, this will often include the price for the works.
12
Q
11). When might it be appropriate to consider a D&B route?
A
– Programme; when there is a need to start on site as soon as possible (overlap design & construction) – Risk; if the client wants to minimise their risk – transfer of design risk to the contractor. – Technically complex projects – will get the benefit of buildability advice from the contractor. – Where the client does not wish to retain control over the design development.
13
Q
12). What contracts might be suitable for a D&B route?
A
– JCT Design and Build 2011 – JCT Design & Build 2016
14
Q
13). What are the advantages of a D&B procurement route?
A
– Programme; allows earlier start on site as you can overlap design & construction. – Risk; Single point of responsibility, the contractor is responsible for the design and the construction. – Buildability; Benefit of early contractor engagement and advice around buildability, logistics, site management etc. – Cost Certainty; Single stage lump sum design and build can give early point of cost certainty (potentially after Stage 2).
15
Q
14). What are the disadvantages of a D&B route?
A
– Quality Control ; detailed design will be carried out by the main contractor not the client’s design team. – Client Brief Requires a sufficiently comprehensive brief to ensure the Employer’s Requirements match client expectations. – Client will have to commit to a concept design earlier in the process. – Change; Variations from the original brief are often hard to arrange and often expensive. – Harder to compare tenders – harder to normalise and determine if you’re getting value for money. – Ease of fabrication / construction may be prioritised over aesthetic quality. – Reduced competition as there are less companies capable of delivering under design & build.
16
Q
15). How much of the design input will the contractor have?
A
– This will depend on how much design information is available at the point of tender. – This can range from Stage 2 (concept design), Stage 3 (developed design / partially coordinated), Stage 4 (Technical Design, fully coordinated and specified). – Even if the design is well developed the contractor will still be taking on the risk and responsibility for the design.
17
Q
16). Who carries out the design for the contractor?
A
– This will be covered in the Employer’s Requirements or the Contractors Proposals. – The contractor will always retain responsibility of the design under D&B though. – This can be in the form of: > Outsourcing the design > Novating / the main contractor retaining the Client’s Design Team (transfer of rights and obligations) > Using in–house design team
18
Q
17). What is novation?
A
– A new contract that transfers the rights and obligations of one contractual party to a new third party. – In this case it would be the design rights and obligations of the architect transferred to the contactor.
19
Q
18). If the design team is novated, what should the client put in place?
A
– A collateral warranty between the client and the design team to give them remedies for breach of contract. – This is because once rights and obligation shave been transferred under novation, the client no longer has a contractual relationship with designer. – This gives the employer (now a 3rd party to the Contractor & Designer contract) the right to enforce contract terms.
20
Q
19). What is management contracting?
A
– A management contractor is employed to contribute their expertise to the design and to manage the construction on site, and is paid a fee to do so.
21
Q
20). How does management contracting work?
A
– The management contractor has direct links with all the works contractors. – The have the responsibility for the construction of the works without actually carrying them out. – Not all the design needs to have been completed before the first works contractors start on site. – 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.
22
Q
21). When might it be appropriate?
A
– Time; when an early start on site is a priority – Cost Certainty; when cost certainty is not a top priority for the client. – Quality; when the client wants to retain control of the design. – Risk; if the client is not concerned with carrying design risk.
23
Q
22). What contract might be used?
A
– JCT Management Contract 2011, 2016
24
Q
23). What are the advantages of Management Contracting?
A
– Time; can reduce overall project duration as can overlap design and construction. – Buildability; Early contribution on design from the contractor around buildability, logistics, etc. – Changes; can be accommodated in packages not let yet (as long as they do not have an impact on other aspects). – Competition; The works packages are let competitively at current market prices on a firm basis.
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24). What are the disadvantages of Management Contracting?
– Cost Certainty; project cost certainty is not known until the last package has been let. – Changes to the design of later packages may impact earlier packages – and will therefore be expensive. – There is little incentive to for the Management Contractor to reduce costs. – My become a 'post box' system / not great value for money. – Risk; design risk remains with the client. – Defaults; MC has little legal responsibility for the defaults of the works contractors.
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25). What is Construction Management?
– The employer places a direct contracts with each trade contractor and utilises the expertise of construction managers who act as a consultant to coordinate the contracts.
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26). How does it work?
– The trade contractors / package contractors carry out the works. – The CM appointed to supervise the construction process and coordinate the design. – The CM has no contractual links with the trade contractors or members of the design team. – The role of the CM includes: \> Programme Preparation \> Determining Requirements for Site Facilities (Fixed & Time related Prelims) \> Breaking down the project into suitable works packages \> Obtaining and Evaluating Tenders \> Co–ordinating and supervising works. \> Usually role of Contract Administrator to ensure sub–contractors are carrying out works in accordance with the contract.
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27). When might it be appropriate to use a Construction Management route?
– On large complex projects were advantages of CM can be taken advantage of; buildability expertise, early programme advice, specialist input from works contractors. – Time; when early start on site is a priority. – When Flexibility in the design, procurement and construction strategy is important. (Refurb) – Where cost certainty is not a key priority. – Where the client is experienced in construction.
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28). What contracts might be used for Construction management?
– JCT Construction Management Agreement (CM/A) – Construction Management Trade Contract (CM/TC) – Bespoke Construction Management Contract
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29). What are the advantages of Construction Management?
– Time; overall duration of the project can be reduced as can overlap design and construction. – Buildability; Early engagement with Construction Manager / Contractor for buildability. – Risk Relationships; Roles, risks, and relationships between all parties are clear. – Change; variation in design can be accommodated without paying a premium (will depend on what has already been procured though). – Cost; Prices for works packages might be lower as direct contract with the employer. – Client has means of redress to trade contractors through direct contractual links.
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30). What are the disadvantages?
– Price Certainty; will not be achieved until last package is let. – Changes to later packages might adversely affect packaged already let – expensive – Client Experience; The client needs to have good experience, be proactive and informed. – Client has a lot of consultants and contractors contracted directly, so may incur additional fees. – Risk; Greater level of client risk as take responsibility for the design. Have to make sure contractual terms with package contractors are correct.
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31). What is the difference between management contracting and construction management?
– Under construction management the client is in a direct contractual relationship with the works contractors. – Under management contracting the main contractor is in contract with the works contractors.
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32). How do you identify the client requirements before recommending a procurement route?
– Hold detailed discussions with the client and design team. – Make sure the client is clear when prioritising key objectives; Time, Cost Certainty, Quality, Risk, Control, and Experience . – Make sure the design team is aligned to these priorities.
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33). If the client wishes to start on site as soon as possible what route would you recommend?
– It would depend on other priorities as well, such as cost, quality, and risk. – If time was the overriding priority then CM or MC offer the fastest route to start on site date. – This is because the start on site date is not dependant upon a long tender period. Overlap design and construction. – But this will have consequential disadvantages in terms of cost certainty and risk.
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34). What if the client wanted an early start on site date but also cost certainty?
– Then Single Stage D&B (Lump Sum Contract) route might be more appropriate. – This would allow the design and construction to overlap rather than being sequential. – But would also offer greater cost certainty from the main contractor. – Tender based on the provision of all services so the client gets a lump sum price. (Depending on design, may include prov sums). – This route would also reduce risk, but also decrease control over quality, and expensive.
36
35). What is GMP?
– Guaranteed Maximum Price.
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36). What does it mean to you?
– This is a lump sum contract under which there is no adjustment of tender price unless the client alters the scope. – The contractor includes the additional risks involved in the design and construction processes in the tender.
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37). What are the advantages of this?
– Cost Certainty; contractor takes on risk of design development and unforeseen occurrences. – Greater control over spending; its in the contractor's interest to alert the design team to expensive items. – Quicker settlement of the final account.
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38). What are the disadvantages?
– Might not be as competitively priced. – Client may end up paying too much as the contractor will price in the risk. – Scope changes are likely to be very expensive and may not be possible. – Can be adversarial; trying to clarify if alterations are design development or scope change.
40
39). What is PFI?
– Private Finance Initiative. – A government programme bring private sector project management and expertise into the public sector. – This allows the private sector to be granted a concession to finance, design, build and operate a public project.
41
40). What are the types of PFI projects?
– 3 types – Financially Free Standing; undertaken with PFI and costs recovered by charging users; Toll Bridges. – Joint Venture; public and private contributions to funding with private maintaining overall control. Contributions, services and allocation of risk are clearly defined. – Services Sold; a project which is significantly funded by capital expenditure by the private sector and is then sold back to the public sector. The public sector requires clear demonstration that this options provides better value for money than FFS, and JV approaches.
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41). What are the benefits of PFI?
– Encourages the allocation of risks to those most capable of managing them. – Allows the delivery of assets which might be difficult to finance conventionally. – Encourages delivery to time and price; private sector is not paid until the asset has been delivered. – PFI are fixed priced contracts with financial consequences for late delivery. – Encourages a greater focus on whole life costing during the design phase. – Incentivises performance by specifying service levels and applying penalties if those are not met.
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42). What are the disadvantages of PFI?
– Higher cost of finance than other public procurement routes (Government Gilt rate approximately half PFI). – PFI does not always encourage a challenging approach to evaluating whether this route is value for money. – Reduced contract flexibility with long service contracts which may be difficult to alter. – Increased costs associated with the risk transfer.
44
43). What is the potential role of a QS in a PFI scheme?
– Would act for the contractor, providing advice normally given to the client. – Become part of the Special Purpose Vehicle, that acts as the end user representative.
45
44). What sort of projects might PFI be used for?
– Its use is recommended when it can be clearly demonstrated that it offers good value for money. – Considered more appropriate on larger complex projects. – Greater capital costs as well as associated ongoing maintenance requirements. – Projects that will clearly benefit from the expertise of the private sector.
46
45). What are some of the problems associated with PFI Schemes?
– High bidding costs and takes longer to procure than traditional projects. – Doesn't always offer good value for money. – Doesn't always lead to initiative design / challenging design process. – PFI client (government) tries to maintain close control over the project. – Difficult to agree on concessions.
47
46). What is Build Lease Transfer?
– An asset is financed, designed, and built by the private sector and then leased back to the public sector. – The lease period is predetermined and at a pre–agreed rental cost. – The asset is still owned by the private sector partner during the lease period. – At the end the government has the option to renew the lease, buy out the private sector partner, or walk away. – During the lease period the operation and maintenance is usually the governments responsibility. – This allows the government to finance large scale infrastructure on outgoing revenue rather than capital. – The primary disadvantage of this is that ownership remains with the private sector partner.
48
47). What is Build Operate Transfer?
– An asset is financed, designed, built and operated by a concession company, for the period of the concession. – Ownership is vested in the Host Government from the time of construction until completion. – At the end of the concession period the ownership and operation rights return to the Host Government. – The concessions company retains all income during the concession period.
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48). What is Build Own Operate Transfer?
– A variation 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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49). What is partnering?
– A different way of structuring business partnerships. – Involves two or more organisations working together to achieve specific, mutual objectives. – As well as deliver continuous measurable improvements.
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50). What is project partnering?
– All members of the professional team & contractor become involved in the partnering process at the design stage. – Ownership of risk is spread between parties and a collaborative approach is encouraged. – The vested interests if all parties gets the team working together to deliver solutions and overcome problems.
52
52). What are the key characteristics of partnering?
– Greater levels of trust between parties – Extra incentives exist (regular work, standard contract, pain & gain) – Should reduce cost and conflict. – However, administrative burden is increased and therefore is restricted to larger more complex projects.
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53). What are the benefits of Partnering?
– Overall design & construction process is shortened as prior agreements are in place between parties. – Shared understanding of client's requirements from previous projects as well as existing relationships. – Conflict is reduced as it is a much more open and collaborative approach. – Improved communication and mutual objectives. – Pooling of resources leads to greater innovation from the design team. – Improved customer / client satisfaction. – Better Value for client. – Recognition of protection of profit margin for contractors and suppliers. – Environment that encourages innovation and technical development. – Improved buildability with early involvement of contractor. – Better predictability of cost and time – Stability and confidence
54
54). What contracts can be used for partnering?
– PPC 2000 – NEC3 Option X12 – JCT Framework Agreement – NEC3 Framework Contract
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55). What are key performance indicators (KPIs)?
– 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 the project. – There are nationally recognised KPIs that you can measure and compare yourself against.
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56). What is an integrated supply chain?
– Has the objective of understanding and working wholly in the interests of the project / client, rather than their immediate client. Usually employed by contractor and answer directly to them, but this enables a strategies approach across the trade packages.
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57). What advantages can they bring?
– Reduced real costs, but maintained margins – Incentive to reduce waste and inefficiencies – Greater certainty on outturn cost – Better underlying value delivered to the client – More repeat business with key clients – Better confidence in longer term planning – Therefore the project client gets a more responsive industry delivering facilities that better meet user needs, and delivered to time and cost with minimum defects. – This creates higher customer satisfaction and an improved reputation for industry
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1). What is tendering?
– This is the method of obtaining the resources necessary to carry out the required work.
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2). What would you tender in accordance with?
– I would tender in accordance with JCT Tendering practice Note 2017
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3). What are the main methods for choosing a contractor?
– Open tendering – Selective Tendering (Single or Two Stage) – Nomination / Negotiation – Serial / Framework – Joint Ventures / Partnering
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4). What is open tendering?
– Indiscriminate request for tenders – Advert placed in local / technical press inviting contractors to apply for tender docs. Such as OJEU. – Gives characteristics but not specifics of the works in the advert. – Deposit to be paid to recieve tender information usually required to discourage frivolous applications
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5). What are the advantages of open tendering?
– No charge of favouritism – Gives opportunities for capable firms you might not have put on a short list to apply – Should secure max benefit from competition (shows market conditions and competitiveness)
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6). What are the disadvantages?
– Danger that the lowest tender is inexperienced and / or has made errors. – No guarantee the lowest is capable or financially stable. – Total cost of tendering increased & Longer process to assess all tenders received
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6a). If procuring public works, what are the thresholds for using OJEU?
– For Public Contracts for Central Government Split into 3 main categories: – Services & Design £118,133 – Works Contracts: £4,551,413 – Specific Services: £615,278
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7). What is selective tendering?
– Restricts the number of tenderers by pre–selecting a limited number of contractors to tender for the work
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8). What are the two types of selective tendering?
– Single Stage – Two Stage
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9). What is single stage tendering?
– A structured process of receiving competitive tenders from a number of pre–selected capable contractors. Usually following a PQQ. – These contractors provide a lump sum offer to carry out the works set out in the Employer's Requiremnts. – Contractors pre–selected using guidance from JCT Tendering Guidance Note 2012 and use of a PQQ.
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10). What would you need to consider when using a selective single stage tendering process?
– Establish the skill of the contractor – Integrity of the contractor – Responsibility – Proven Competence and Experience – Size of work being tendered – No more than 6 on list – Recent experience, necessary skills, good management, good organisational structure, capacity, good financial standing.
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11). How would you narow down your selection?
– I would use a PQQ (Pre–Qualification Questionnaire) including the following requests: – Organisational structure – Financial Capability / Standing – Technical Capability – References from previous clients – Previous relevant experience – Management and on site organisational structure – Health & safety record – Quality systems and environmental policy – Confirmation of Capacity – Ability to provide Parent Company Guarantee (PCG) / Performance Bonds – Professional Indemnity Insurance Certificate (PI if D&B)
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12). How is a PQQ scored?
– Different questions / responses will have different weighting in terms of importance – Key stakeholders will score returns from contractors separately. – These will build up the overall score using averages. – If the contractors fail to provide relevant information or fail to answer then they not be compliant. List of Qualified contractors produced.
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13). What are the advantages of restricted single stage tendering?
– Ensures only capable and approved firms submit tenders – Tends to reduce the aggregate cost of tendering (less analysis required, less time consuming) – Clients get a lump sum for the whole works, so provides cost certainty earlier.
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14). What is two stage tendering?
– This method separates the process of selecting the main contractor and the process of determining the cost of the works. – In the 1st stage the main contractor is selected, – in the 2nd stage the design evolved and works are tendered to the trades. – This increases the competition of the overall tendering process as both stages are competitive (if open book). – Benefit of the contractor involved earlier for buildability.
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15). What is the purpose of the 1st Stage?
– To select an appropriate contractor on the basis of the competitive 1st Stage
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16). What is the purpose of the 2nd stage?
– To negotiate / tender the works with the main contractor on the basis of the 1st stage
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17). Who evaluates the tenders?
– The evaluation of tender returns is undertaken by an evaluation panel. – This will comprise of representative from the employer and the appointed design team . – The representative should remain consistent and review all submissions to ensure consistency and fairness is maintained.
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18). What is the process of evaluating tender returns?
– Receipt & Opening of Tender; with client / representatives. – Compliance Check; ensure that compliant bids have been returned that meet requirements of tender docs – Commercial Assessment; review of returned costs, normalisation and comparison – Technical Assessment; programme, experience, team, proposed design team, to assess – Appraisal assessment; does the market meet the requirements of the client. carried out by the client – Tender Interviews: following appraisals contractors may be invited to post tender interviews – Evaluation & Recommendation Report: following full assessment and scoring of contractors QS provide report which recommends. – Approval & Notification: once approval has been received, all tenders should be notified. – Contract Award: assuming there is no issue with preferred contractor then contract is awarded.
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19). What is a tendering scoring matrix?
– This is a schedule to compare the contractors. – Each category has a particular weighting. (Split of Qualitative and Commercial weightings 60/40). – Each category is marked by each member of the design team and the client. – This will then generate an overall score for the contractors, – The best score will show the best value for money tender submission.
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20). What is the tender report and recommendation?
– This is a report usually written by the QS. – It sets out the findings from the tendering process. – This will be an overview of the advantages and disadvantages of each of the tender returns, as well as the a summary of the process. – This will then be concluded with an overall recommendation of the preferred contractor based on the evidence of the tender process. – This is submitted to the client to review and decide on the final award of the contract.
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21). What should be included in the tender docs?
– Guidance on how the documents are to be completed – Instructions to the tenderer – Instructions on the information to be returned – Instructions on the process of returning the submission; Key timings, dates, locations, formats – Relevant Design information / Employer's Requirements (If D&B / CDP). – Preliminaries – Relevant planning documentation – Pricing documents / pricing schedules – Proposed form of contract and any schedule of amendments – Certificate of non–collusion – Pre–construction information – Existing Buildings infomration, site information, surveys. – Request for Financial Documents, PI certificate, PCG etc.
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22). What does a tenderer normally return as part of the 1st stage?
– Response to the Invitation to Tender and relevant documents requested. – This will typically include: Detailed build up of preliminaries / prelims book Fixed Percentage for Overheads & Profit Contract Sum Analysis CSA / Priced Schedule of Works / (Maybe BoQ) Contractors Programme for the works Proposed sub–letting of the works / packages Organisation Chart Technical response Program Commentary / Main Contractor's proposed program Cost Plan Commentary / Main Contractor's budget proposal (Cost Plan) Certificate of non–collusion Company Accounts, Credit Check, Financial Documents, PI certificate, PCG etc. List of proposed sub–contractors
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23). Are there any precautions you should take before entering into the second stage?
– Define a clear procedure for either party to withdraw from the process. – This is necessary should the 2nd stage negotiations prove abortive. – This sets out what payments are due / If any. – Sets out where design liability / ownership lies.
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24). What is the advantage of two stage tendering?
– Buildability; Early involvement of the main contractor – Collaboration / Team Building; Encourages collaborative working – Time; Potential for earlier start on site date – Quality Control; Greater client involvement in selecting supply chain – Risk management; Contractor can help identify and manage risk – Should be Competitive; Arguably the most competitive tendering route, as competitively let at each level
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25). What are the disadvantages of 2 stage tendering?
– Cost certainty may not be achieved before construction starts if all packages have not been bought – PCSA Costs; Additional pre–construction fees for the contractor – Contractor could take advantage of the 2nd stage and increase costs – Risk to Contract Sum Agreement; Potential risk for parties to not agree contract sum – may end up re–tendering
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26). Why should you use 2 stage tendering?
– Building is complex and so contractor advice for buildability is invaluable – Early completion / Early start on site date is required – Design team requires input on buildability, construction methodologies, logistics, complex site set up. – The magnitude of the works is not fully known at the time of main contractor selection. Not a fully defined scope at tender stage.
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27). What is negotiation / nomination?
– This is a non competitive process – This is a result of preference of the client for a particular contractor / sub–contractor.
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28). When might negotiation / nomination be used?
– Usually when the contactor has done satisfactory work for the client previously and the client is happy to use them again.
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29). When is it most appropriate to use a negotiated tendering approach?
– There is limited competition in the market (likely to get higher costs back) – The Client believes it to be worth it for a faster appointment and known level of quality – Stanmore / WHR enabling works – The contract sum is arrived at via negotiation, more open and less likely to create disputes – more clarity / less disputes – One party will usually price a schedule of rates, which will be used as a basis for additional / unknown work
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30). What is serial tendering?
– Basically Strategic Partnering – The contractor is notified that should the work be satisfactory, then other contracts will be made available to them. – These contracts will be for similar pieces of work and will usually be based on the same rates.
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31). What is a framework agreement?
– This is a list of contractors selected by the client after a formal tendering process to work with over a longer period of time. – This allows the client to tender works quickly after the 1st stage / following establishment of framework. – The additional works will be based on similar rates (usually with an allowance for inflation). – This allows the client to know the product and be comfortable with the level of quality. – Can also be beneficial as contractors may offer discount rates for repeat (bulk) works. – This may be structured as a 1st refusal for all works, or a competitive tender process against others on the framework (limited competition).
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32). What is joint venture?
– Used on large / complex projects – Involves 2 (or more) companies taking on a joint and several liability for the design and execution of the project. – Would normally be backed up with PCG or Performance bonds. – Allows smaller companies to fund and manage larger projects for a share of the profits / returns.
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33). How would you put together a set of tender documents?
– In accordance with the JCT 2017 Tendering Practice Note and would include: \> ITT / Instructions to tenderer \> Conditions of proposed contract / Form of contract & SoA \> Prelims, \> Pricing Documents (CSA, SoW, BoQ) Specification \> Drawings \> Employer's Requirements \> Contractor's Proposals \> Pre–construction H&S information \> Form of Tender \> Submission of Bona Fide tender \> Return process / envelope
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34). What information would the instructions to tenderer include?
– Date for return – Address to return – Site visit details – Program Length – Confirmation of receipt of documents – How tenders should be submitted
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35). What are the employer's requirements?
– Used on Design & Build contracts / CDP where the contractor has design obligations. – These set out the client's requirements; function, size, quality, – Level of detail will depend on how much design has been completed – Normally included current state of planning permission – Should detail the level of design; architectural, structural, services, specification information to be provided by the tenderers.
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36). What are the contractor's proposals?
– These are the contractor's responses to the ERs – They are the key document for the client to consider at the tender review – They set out how the contractor proposes to complete the works in accordance with the ERs. – Will often include construction plans, methodologies, site plans, elevations, layouts, specifications, materials and workmanship.
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37). How do you decide on how to go out to tender?
– Public or Private funding? If public and above specified thresholds then will have to go through OJEU. – If private, client can choose how and who to go out to. Open, Negotiated, Selective, Framework. – If Selective this will be based on preliminary inquiries based on design team recommendations – These contractors will be issued pre–qualification questionnaire to interested and suitable contractors – Based on responses a decision by the client and design team will be made on the number of contractors to go out to.
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38). How do you ascertain whether contractors may be interested in submitting a tender?
– Can send out a Preliminary Enquiry Letter – Gives enough information of the project to allow the contractor to make a decision on it. To Tender or Not. – Allows contractor to get a feel for the project, resource requirements. Used on Complex projects / limited competition. – Responses allow the client to act / change procurement or tendering approach to increase appetite. – For example, when limited competition or complex project with high amount of unknowns, market may not support Single Stage D&B.
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39). What other criteria should be considered when assessing a tender return?
– Simplistically Qualitative & Commercial Response – Approach / Method statement – Customer Care – Environmental – Management Structures – Resources – Supply Chain – Technical Response – Design & Development capabilities
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40). What should you do if the lowest price tender is also the lowest quality?
– The implications of selecting the lowest bid must be made clear to the client. – Likely to be higher amount of risk, as will likely to be under resourced to ensure the contractor still meets profit margin – Likely to be of reduced quality, so higher maintenance costs – More likely to be lead to disputes over costs and inclusions / exclusions later on in the project.
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41). What is the risk with selecting the lowest price?
– Likely to have missed areas of works – The quality may be of a lower standard than other tenders – More likely to lead to claims once on site; large variations, EoT's, loss and expense – More likely to create an adversarial relationship with limited trust between parties
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42). What happens if the tenderers returned are higher than the cost plan?
– This will require further analysis by the QS. – Could be an indication of market issues; lack of competition, high levels of inflation, – Major differences should be identified, and VE process should take place to resolve budget issues.
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43). How do you deal with errors (arithmetic and technical) in tenders?
– Depends on which alternative is included in the instructions to tenderers / prelims. Under JCT the following alternatives are allowed: – Alternative 1; QS notifies contractor of errors, contractor cannot amend contract sum contractor can either accept or withdraw. – Alternative 2; QS notifies contractor of errors, contractor can either accept and keep contract sum the same, amend contract sum, or withdraw.
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44). In a traditional procurement what do you do with an Alternative Tender submission?
– If asked for one in the Tender documents then assess alongside other tenders (If allowed). – Make sure the client is aware of the implications of the alternative tender; different methodology, programme, prelims, quality etc. – If not asked for, then request the tenderer submit a / ensure there is a compliant bid (If not allowed).
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45). What do you do if the lowest bid submitted does not have a breakdown of the prelims costs, would you recommend the bid?
– Would depend on the tender documents and instructions issued to tenderers. – Normally prelims costs would be split into method / fixed and time related costs. – If these have not been broken down as required in the instructions then the bid is officially non–compliant. – BUT in practice the contractor is provided the opportunity to provide a full breakdown. – They cannot alter the overall cost, this should not afford the contractor the ability to re–assess, should be noted in the tender report.
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46). What should you do if you consider a contractor has submitted a price which would be a financial difficulty for them?
– Ensure you have up to date financial records and company accounts for the contractor. – Request references from previous employers. – If possible contact sub–contractors used previously to see if they were paid on time. – Ask if the contractor can provide a bond or PCG, and that it is in place before commencing.
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47). On what grounds would you advise the client to re–tender?
– If not enough tenders were returned; lack of competitiveness – If the tender returns were not at the cost level required and re–tendering would provide different results – If design / VE changes had occurred during the tender process which had drastically altered the project.
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48). How do you deal with a front loaded BoQ?
– This is not a pricing error, adjusting the tender will not reduce the overall price – Can ask contractor to adjust their submission – QS should ensure that all items are priced consistently throughout – Has implications on valuing variations later on. – Could be a sign the contractor is in financial difficulties
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49). How do you carry out a tender evaluation?
– Need a breakdown of the tenders; check to ensure they are priced in accordance to Instructions, have no errors, qualifications or exclusions – Normalisation to esnure like for like comparison. – Follow JCT Procedure if errors are found – Compare returns against pre–tender estimate to make sure rates are not unusually high or low – Ensure all amendments made during the tender period have been incorporated – Prepare the report giving a summary of the actions, costs and recommendation
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50). What should be included in a Tender Report?
– List of tenders received – Initial tender return totals – Any qualifications identified – Post tender normalisation / adjustments made – Revised tender sums – Issues to be resolved – Comparison of tender returns (Scoring matrix commentary) – Comparison with pre–tender estimate – Recommendation
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58). What if there are errors in the tender submission?
– Under JCT 2012 Practice Note it sets out 2 main options to resolve arithmetical errors in tender return. – Alternative 1; correction of the overall tender price is NOT permitted (must accept error or withdraw from tender process). – Alternative 2; correction of the overall tender price IS permitted (contractor is notified of error and allowed to correct it).
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59). What types of pricing document are there?
– 3 main types: – Bill of Quantities; fully itemised works schedule with quants, contractor to price. – Schedule of Works; fully itemised works schedule without quants, contractor to provide quantities and price. – Specification and Drawings / CSA; no works schedule or quants, contractor to provide both.
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60). What are the advantages and disadvantages of these?
– BoQ; competitive, quick analysis, low risk to contractor, BUT higher risk to client (risk on correct quants), slow pre–tender, no early cost certainty. – SoW; intermediate pre–tender speed, fairly easy toa ssess upfront, BUT contractor price risk, client risk on items, harder to analyse returns. – CSA; fastest pre–tender, issue information, early cost certainty, low risk to client BUT contractor price in risk, hardest to analyse, slowest to analyse.
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61). What types of contract sum are there?
– Lump Sum; fixed price inclusive of all items. (Fixed unless change to scope. – Remeasureable; not enough information to quantify, so approx quants used, and open to remeasure once scope fully defined. – Cost Reimbursable; where works are ned imideiately and nto enough time to design and quantify (repairs/maintenance), works reimbursed at cost.
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62). What is a tender bond?
– Also known as a Bid bond – Provided by a contractor during the bidding process to prvide a guarantee they will undertake the contract. – Under the terms and conditions and information provided during the tender period for the offer they made to do so. – Bond is payable if the contractor is offered the contract but does not undertake the works. – This is typically an on demand bond and can be called at any time anytime by the client if the contractor has not kept to their tender offer. – The amount is typically 10% of the proposed tender sum.
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63). What is a non collusion tender process?
– Where tenderers are refrained from colluding when submitting bids – Tenderers are required to issue certificate of non collusion and confirm issue of a bona fide tender.
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64). Why is it important to stop collusion from occuring during the tender process?
– Client's rely upon a competitive bidding process to achieve better value for money. – The competitive process can achieve lower prices or better quality and innovation only when companies genuinely compete – i.e., set their terms and conditions honestly and independently.
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65). What forms of collusion are there?
– Cover Bidding: where tenderers submit complementary or courtesy bids which they know to be higher, too high, or contain unacceptable terms. – Bid Suppression: where tenderers agree to withdraw from the proces or not submit, to artificially reduce the competition. – Bid Rotation: conspiritors take it in turn to win jobs by agreeing when each will submit the lowest tender. – Market Allocation: firms conspire to allocate certain size, value, locations or types of project between themselves to get a fair share of the market.
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66). How can you reduce the probability of bid rigging?
– Avoid unnecessary restrictions that may reduce the number of qualified bidders. – Reduce constraints on foreign participation in procurement whenever possible. – Qualify bidders during the procurement process in order to avoid collusive practices among a pre–qualified group. – Increase the amount of uncertainty among firms as to the number and identity of bidders. –Reduce the preparation costs of the bid. – Define Requirements clearly and avoid predictability. – Allow alternative bids and allow specification of equal or approved. – Focus on how the tenderers will be scored, not purely commercial.
