PROCUREMENT & TENDERING Flashcards
What are the advantages and disadvantages of single stage tendering?
Advantages:
- Maintains competition throughout the process.
- Can reduce the cost of the overall construction.
Disadvantages:
- Doesn’t enable early contractor involvement.
- Dependent on the market – contractors may be more keen on two stages.
What are the advantages and disadvantages of two stage tendering?
Advantages:
- Enables early contractor involvement.
- Encourages collaboration.
- Contractor can help identify and manage risks.
Disadvantages:
- Additional fees involved with the PCSA.
- Contractor gains leverage as they continue to second stage – reduced competitiveness.
- Potential that parties may not agree to contract sum – leads to additional costs to retender.
How do you evaluate tender returns and how do you then make your recommendation to the client?
- Tender Evaluation:
o Tender opening.
o Tender returns checked for compliance with the invitation to tender.
o Arithmetical checks carried out on cost components.
o Any non-compliant tenders treated in accordance with the conditions outlined in the
Invitation to Tender.
o All tenders aligned on a like for like basis and compared with each other and the pre-tender estimate.
o Analysis undertaken of resource levels committed by each contractor and on the merits of the team proposed.
o Post-tender interviews carried out with short listed tenderers.
o Tenders scored against the pre-determined selection criteria. - Tender Recommendation Report:
Prepared and presented to client, including:
o Tender history.
o Summary of tender returns.
o Aligned tenders.
o Scoring of tenders against technical and commercial criteria.
o Recommendation on what tender represents overall best value for money.
o Outline of future actions and contracting approach.
What is a letter of intent?
- Expression of intention to enter into a contract at a future date.
- Does not create a contractual relationship (it is not an agreement to agree).
What are the dangers of using an LOI?
- They do not cover all eventualities set out in a buildings contract (e.g. Ampleforth v T&T – Client not entitled to LDs and T&T found negligent for failing to warn them of the risks of not getting into contract).
- Allow the contractor a position of back negotiation from a position of strength.
- May act as a disincentive to execute the formal contract.
Benefits of Traditional Route?
- Control of design
- Cost certainty at point of tender
- Competitively Tendered
- Priced BoQ allows for easy assessment of interim valuations & variations
Disadvantages of Traditional Route?
- No Contractor engagement in Design
- Separation of Design team and Contractor can lead to adversarial atmosphere
- Client bares risk of design not being completed
- Client must finish the technical design before tender
Advantages of D&B?
- Contractor’s input on Design and Buildability
- Overlap of Design & Construction phase (Early mobilisation)
- Single point responsibility - risk allocation on the Contractor
Disadvantages of D&B?
- Client does not have control of Design
- Client’s ERs need to be defined earlier
- CPs must be reviewed and agreed (CPs have precedence over ERs
Cost implications of two stage tendering?
- Can be more expensive with the additional PCSA costs & Design fees
(Contractor’s buildability input can reduce likelihood of post-contract change)
Name a key risk on a D&B project?
CP’s take precedence to ER’s
How do you ensure quality on a D&B project?
- Detailed ER’s
- Novated Design team
- Take the level of design by Design team to adequate level before entering into D&B Contract
- Key Performance Indicators
What do the ER’s usually include?
- Site Details
- Project Info / Design Info
- Specifications
- Design Submission Requirements
- Prov sums
- Planning restraints
- Form of contract
- Method of presentation of CP’s
What are the different types of LOI?
- Comfort - Intention to act in a certain way (No contractual obligation)
- Consent to Spent - Works to proceed up to a certain value (Legally binding)
- Recognition of contract
What do you need in place for a Letter of Intent?
Parties Agreement
Contract form / amendments
Intended Contract sum
Limitation of Liability
Procedures (refer to Contract - Payment , dispute, termination)
Confirmation that LOI will terminate on execution of Main Contract
What are the risks of a LOI?
Less robust than a Contract
Less incentive for Contractor to enter contract
eg. Ampleforth Abbey vs T&T
- Series of LOI instead of Main Contract
- Kier not liable to pay LDs as no Contract
- T&T sues for not “exercising reasonable care”
- T&t Liable to pay damages
What is tendering?
Method of obtaining the resources required to carry out the required work.
When is single and two stage tendering appropriate?
Single - ER’s sufficiently defined
Two Stage - Complex projects where ER’s are not defined enough and require contractor input
Can you explain the Initial tender process?
- Compile tender list
- Issue PQQ (guages interest, experience, capacity and financial standing)
- Analysis of PQQ
- Issue the Tender Documents to the potential contractors
What tender documents are included?
ITT Form of tender Tender pricing documents ER's Specifications Drawings Pre-Construction Information
What would happen if there was a mistake in the tender information and it was highlighted by one of the tenderers?
Review of the info by the EA and Design team
Amend the issue
Issue an addendum to all tenderers
(There could be the potential of an extension if the missing/incorrect info is significant)
Once tenderers are received what process do you go about?
- Comp check their returns
- Tender Opening Sheet
- in depth assessment of tenderers
- Clarifications
- Post Tender Interviews
- tender recommendation
What would happen if a tenderer submitted late?
Public Sector - non-compliant therefore remove
Private Sector - Notify client, it is under their discretion to allow or remove.
What is the tender award process?
- Tender review period stated in the ITT
- All tenderers must be informed immediately of result
- Unsuccessful tenderers are given their tender score and score of successful tenderer