Procurement & Tendering (based on Summary of Experience)

Question 1

What is traditional procurement? Pros and Cons

Answer 1

• Fully developing the design prior to tendering to a main contractor.
• Client retains design team as well as the risk of the design.
  Ads:
  •Retains control of the design/quality
  •Most economical at tender stage (contractor is provided with full outline of client requirements)
  •Quicker than D&B for tender review as scope of work is clear and can easily be compared.
  Dis:
  •Long program duration (long pre-contract period)
  •No engagement with contractor on the design (design and construction are separate)
  •Dual point of contact for the client; contractor and design team
  •Client retain risk for the design (cost certainty depends on design adequacy)
  Contracts:
  JCT minor building contract
  Intermediate BC
  Standard BC with / without Quantities

Question 2

What is D&B? Pros and Cons? Novation

Answer 2

• Client Develops Design typically to Stage 3
• Employer’s Requirements details how remaining aspects of design should be developed.
• The Contractor takes over the design (remaining) and build it with their own (or novated) design team.
  Ads:
  •Cost certainty – design risk is passed to the Contractor
  •Single point responsibility for design and construction
  •Quicker start on site than traditional (design doesn’t have to be fully developed for tender)
  Dis:
  •Slower tender analysis compared to traditional
  •Harder to compare tender’s dependent on the degree to which the design has been developed
  •Contractor is prone to look at ways to reduce costs for the ER proposals – issues with quality dependent on design and ER’s
  •Less competition at tender so higher pricing (compared to traditional where the design is fully developed). (Typical number of contractors at tender -Traditional; 5/6, D&B 3/4)

Novation?
A contract which transfers the rights and obligations of one contractual party to a new third party
i.e. design rights and obligations of architect transferred from the client to the contractor.

Question 3

What is Construction Management? Pros and Cons? What does the CM do?

Answer 3

• Similar to MC but key difference is the Client will enter into Contracts with trade Contractors directly
• Client coordinates trades with their own in-house team - e.g. House builders undertaking similar type of works (i.e. repetitive with low risk designs)
  Ads
• Economic (existing trade contract relationships)
• Control program
  Dis:
  Risk of trade performance
  Hold programme risk

CM Does:

• Similar to MC but key difference is the Client will enter into Contracts with trade Contractors directly
• Client coordinates trades with their own in-house team - e.g. House builders undertaking similar type of works (i.e. repetitive with low risk designs)

Question 4

What is Management Contracting? Pros and Cons

Answer 4

• Management Contractor appointed on a fixed management fee (usually a percentage based of the prime cost of the project)
• Early to advise on design, programming & buildability.
• Programme, package and obtain tenders for the works.
• Trade Contractors are in Contract with the Management Contractor.
• Typically associated with complex (untested design) and/or high value projects that may be perceived as too risky for a sole main contractor

Ads:
•Quick program as design and construction overlaps
•MC technical input alongside design
•Flexibility in making changes to the design before trade packages are let (unlike a lump sum contract)

Dis:
•High level of cost uncertainty until all the packages are let
•Little incentive for MC to reduce costs

Contracts:
JCT Management Contract
JCT Trade Contract agreements

How is MC appointed?

• Client appoints MC
• MC develops programme
• MC directs design
• MC selects the trade contractors through competitive tender (direct contractual relationship).

Question 5

What is single stage tendering? Pros and Cons

Answer 5

Single:

Cost is agreed prior to entering into contract

Question 6

What is two stage tendering? Pros and Cons

Answer 6

Two Stage:
No cost certainty and increased pre contract costs
Separates process of selecting a contractor and determining a price for works.

First stage; quality of team, prelims price, OHP.

Second stage; PCSA to complete design as consultant. Trade contractors make up contract price

Question 7

What is important to do prior to entering into a two stage tender with a contractor?

Answer 7

Define the process for either party withdrawing should negotiations lead to abortment.

It should be agreed what payments should become due

Question 8

What is a negotiated tender route? Pros and Cons? Key downside?

Answer 8

a. Negotiation is where a suitable contractor is identified, and the contract sum is negotiated directly
a. If client has previously engaged with a contractor and believes they are suited to the project, subject to price. For example, they may have recently completed on a very similar project with the client and a good relationship has been established.
b. Client trusts contractor (no competition once selected) also trusts that QS can provide assessment on costs with no other contractors to review against.

Question 9

What is serial tendering? Pros and Cons

Answer 9

a. Similar work that is required on an ongoing basis such as re-surfacing road or large estates (e.g. universities) that require ongoing maintenance and repairs

Question 10

What is a tender analysis?

Answer 10

Checking for errors - not included items or including as provisional when should be firm

Raising tender queries

Equalisation/normalisation

Question 11

Why is it important to analyse tenders impartially? (e.g. Local Authority)

Answer 11

As projects are publicly funded special consideration should be given to ensure tender awards can not be accused of allowing collusion
Ultimately the process should seek to achieve best value and this should be able to be clearly demonstrated

Question 12

When should OJEU be adopted and what is it’s purpose?

Answer 12

Official Journal of the European Union.
In essence it is a website which promotes public contracts that have to be tendered through the OJEU process
£4.7m+ work contracts

Question 13

What are the two ways in dealing with tender errors as outlined in the JCT Practice note? Pros and cons.

Answer 13

This was stipulated in the tender instructions.
For JCT alternative 1 allows the contractor either to confirm the error or withdraw their tender.
Alternative 2 allows the contractor to confirm, amend or withdraw.

Alternative 1 does not allow the contractor to amend their submission which could be considered to be inflexible.
An alternative perspective could be that given the formality of the process, an error should not be made given that a significant amount of time should be put into the process including internal reviews of the submission.

Question 14

Why was a traditional procurement route appropriate on the UPS distribution centre?

Answer 14

The Client was an owner occupier who was undertaking a new approach within their business in the way the parcels were organised over the space.

UPS had design input from variou departments which internally created a confused decision making process.

The client held the design control and was able to discuss changes directly with the design team

Question 15

What was important to UPS in terms of cost, quality and time?

Answer 15

Quality - This was the most important as the client wished to hold control of the design team
Cost - This was secondary to quality
Programme - There was a deadline but again, time was secondary to achieving the exact design

Question 16

What sort of changes was the client making?

Answer 16

1. Extension to existing unit

2. Additional office space

Question 17

What is the benefit of traditional vs D&B in terms of implementing post contract design changes?

Answer 17

Traditional - the design team is employed directly by the client and with D&B the contractor employs them.

Question 18

Why was the CM route adopted on the housing scheme? (Heyford?)

Answer 18

Quick start
Design flexibility
Client control of quality and programme

Although there is little cost certainty the client benefits from cost saving from procuring the trade packages directly

Question 19

Why wasn’t say D&B adopted?

Answer 19

Re-tendering over phases would have been inefficient i.e.
Client loses client control over construction and design
e.g. Material procurement issues meant that the client could be more flexible without having to make instructions via a Main Contractor

Question 20

Why wasn’t say traditional adopted? Meole Brace

Answer 20

Design would have to be fully developed prior to tendering (slow)

Question 21

Why wasn’t say MC adopted?

Answer 21

As a housebuilding company the client had “in house” expertise i.e. site managers, Commercial managers so Construction Managment enabled them to get directly into contract with trade contractors.

Appointing an MC would have been unnecessary as they did not require external expertise and the appointment process would have been slower

Question 22

Why did the client type suit the CM approach?

Answer 22

The client was a housebuilder

• In house expertise
• Direct control of trade packages

Question 23

What would you of recommended if the client was inexperienced or only an occasional developer?

Answer 23

MC - Benefit from expertise and flexibility in design change and quick start
Slower than CM and MC not incentives to reduce costs

Question 24

Why did the extent and repetitive design of the scheme impact on the procurement route?

Answer 24

The client being experienced was the primary driver for using a CM route and as the design was repetitive as opposed to being complex the client was comfortable with taking on the design risk.

Question 25

Why did you use a single stage tendering rather than two stage on the demolition project?

Answer 25

The client wanted cost certainty prior to entering into contract. Two stage could have quickened the programme but there would not be cost certainty.

Loss of competition would make it difficult to establish that value for money was being achieved.

Question 26

Why did you use an open tender? How was it implemented?

Answer 26

Whilst the tender was not subject to OJEU (less than £5.3m) it was still a requirement to adopt an open tender.

Open tendering removes selection bias, allowing any contractor to be considered.

The client posted the tender opportunity on the OJEU website inviting contractors to take the PQQ for consideration.

Question 27

Why did you use an NEC short form contract?

Answer 27

The NEC short form contract is designed for on projects which do not require sophisticated management techniques, comprise straightforward work and impose only low risks on both the employer and the Contractor. Typically used on lower value contracts sub £1m.

The project was relatively low value and the de-construction programme was only around 6 months so using the NEC short form was aimed at reducing the administrative requirements that can be associated with the full NEC 4 contract.

What is NEC?
New Engineering Contract intended to promote partnering and collaboration between the contractor and the client/consultants

What are key characteristics?
Good, pro-active management
Clear and simple communication

Question 28

What is the scope?

Answer 28

The scope of works outlines the work that the is required of the contractor.

Question 29

What is the site information?

Answer 29

Site investigation such as ground build up, existing services, existing building layouts and structures, contaminated material inc asbestos

Question 30

What is the preliminaries?

Answer 30

L2 - Demolition example
The preliminaries are components of the work that are required in order to facilitate the construction of the actual building. They typically include identify location factors such as; accessibility & storage, the type of project; new build, renovation or tower, size of the project; single unit or 100’s, temporary works, security, limitations on methods (proximity of local occupiers may determine limited noise), working hours, service availability (diversions, facilitating works, upgrading), degree of contractor design portion

Question 31

How did you prepare the activity schedule?

Answer 31

-L2 Demolition example
The Quantity Surveyor usually produces the pricing document for the contractor to fill out but under the NEC the contractor is deemed as the expert in pricing the work and as such they set out and price the entire document.
- Should a BoQ be used as the pricing document the method in which the BoQ is compiled can be stipulated by the QS. For example, NRM 2 can be stipulated as the method the contractor uses to compile the document. This increases the QS’ ability to compare all of the contractor tender submissions.

Question 32

What did the drawings and specifications detail given it was a demolition?

Answer 32

• Structural layout of the building
• M&E
• Pre Construction Information

Question 33

What is the contract data?

Answer 33

The contract data is the headline information that details the particulars of the project. Part one identifies the Client’s information and Part two is for the Contractor to fill out so is not applicable at tender stage.

Question 34

What is the consolidated list of tender documents?

Answer 34

The consolidated list of tender documents outlines all of the drawings and documents that have been provided as part of the tender pack.

Question 35

Why did the tender have to be open?

WHat are the pros and cons of this?

Answer 35

Whilst the tender was not subject to OJEU (less than £4.7m) it was still a requirement to adopt an open tender.

Open tendering removes selection bias, allowing any contractor to be considered.

The client posted the tender opportunity on the OJEU website inviting contractors to take the PQQ for consideration.

Question 36

What was included in the PQQ and how was it scored?

Answer 36

Standard OJEU compliant PQQ:

• Company details e.g. Address, contact
• Mandatory exclusion e.g. criminal, corruption, bribery, fraud
• Economic standing e.g. Accounts, P&L, Cash flow forecast
• Technical and professional ability e.g. 3 relevant projects

DCC reviewed PQQ’s internally with all successful tenderers allowed to tender

Question 37

What is the pros and cons of open tendering?

Answer 37

Ads
No bias as contractors apply and are not selected for invitation by the QS or any other consultant party to the works
Can encourage parties who may be very capable but might not have been considered otherwise

Dis
Likely to receive applications that are simply unsuitable
Time and cost of tendering process is very high
The “open” nature may discourage contractors from seriously engaging in the process due to high number of applications

Question 38

How did the tendering portal work? Why did the LA do this and not you?

Answer 38

Following the PQQ process the tender documents were provided to DCC who uploaded the information to the portal. The administrative aspects for the tender to comply with the Local AUthoruty regulation were undertaken by DCC

Question 39

If you were to use a selective tendering approach how would you identify suitable contractors?
What are the pros and cons

Answer 39

Primarily relevant experience e.g. sector and size
Ideally from a contractor the client and / or design team has worked with previously were there is an established relationship
The competitive element of the process i.e. 3-6 contractors competing for the business should ensure value is driven

Cons - Not suitable for public tendering as inherently bias due to pre-selecting contractors

Question 40

How would you issue tender documents and what would you do once issued?

Answer 40

The tender documents were collated in one folder and sent to DCC. DCC uploaded the folder onto their portal. The tenderers were provided with access. DCC were notified as parties accessed the information.

Traditionally a confirmation of receipt was important to determine if the information has been received but this is now an automatic feature of e-tendering.

Question 41

What are the benefits of e-tendering?

Answer 41

1. No post
2. No printing
3. Reliable and instant - same info is provided to all oarties instantly
4. Confirm receipt of information

Question 42

What did you advise the retail project client and why?

Answer 42

I recommended that D&B was utilized as the overall program would be quicker than traditional and the client would pass design risk to the contractor.

(The project was commercially motivated and that that it was being built to a base build specification that the client did not need to retain control of the design)

Question 43

What was the retail project clients requirements in terms of cost, time, quality and risk?

Answer 43

Cost certainty - as the development was based on securing costs to tenants upfront

Time – Certainty (align with tenant move in dates)

Quality – It was important that the design was developed to achieve the base build specifications. The client didn’t need to retain design control once the design was suitably developed.

Question 44

Were there any risks held by the client with the procurement route you recommended? (Meole Brace)

Answer 44

Risk – The client had made agreements with tenants to let/purchase at a fixed cost and therefore did not want to take on risk to impact his margin.

Traditional procurement may have resulted in a lower price but the client did not wish to retain the risk for the design and preferred to take the cost certainty that D&B offers.

Question 45

Were there any alternative routes you could have suggested? Traditional, MC, CM?

Answer 45

Traditional - Slower to implement and the client was only developing to base build so creating a detailed design was not necessary

MC - The client wanted to pass programme risk to the contractor and an early start was not required. The design or programme was not technical / unique so additional pre contract input was not required

CM - Whilst the client was a professional developer they did not hold specific construction expertise and therefore D&B was the preferred route.

Question 46

Why did you recommend a single stage and selective approach?
Why not two stage?
Why not open?
Why not negotiated?

Answer 46

Single stage - Cost certainty
Selective - Suitably experienced contractor could be selected and would also benefit from competition

Why not other options?
Two stage - no cost certainty & additional pre contract cost
Open - Increased administration and can discourage serious engagement (little chance of winning)
Negotiated - No competition so less likely to achieve value and do not have other tenders to compare against for best value

Question 47

How did you analyse the Derby Demolition tender?

Answer 47

a. Compliance with instructions (all sections complete and as requested i.e. 1 A4 page)
b. Pricing errors, duplication, contradictions and omissions
c. Exclusions and assumptions (as well as basis particularly if design has changed – has the contractor priced a design that is now superseded?)

Question 48

Were there many tender queries, how did you deal with these?

Answer 48

Tenders should be reviewed in thorough detail by the entire client and design team and a list of post-tender queries sent to each of the tenderers. This is to ensure that prices are reviewed on a like-for-like basis.

• From a qualitative perspective all team members should raise queries where additional clarification is required, where there is a conflict between information within the tender return or where key information seems to be excluded.
• Take care to ensure tenderers are not being given an opportunity to resubmit their tender. The queries must therefore be worded in such a way that the tenderers are restricted in their response.

Question 49

How did you review the tender submissions?

Answer 49

• Identify clarifications (free water)
• If items have been left blank, included or excluded they should be questioned? Missing information needs to be included so price required.
• Provisional sums not requested should be asked to go firm cost.
• Produce clarifications register and send to Contractor
• Is the tender submission inclusive of all tender addenda

Question 50

How did you identify errors?

Answer 50

All tender returns should be checked for errors before any detailed analysis is undertaken.

• Arithmetical check for the pricing of the tender return
• Clear errors in programme dates
• Qualifications that render the tender null and void

JCT Option 1 or 2
Options are either to:
- Allow the contractors to correct their error
- Allow the contractors to stand by their price

Question 51

How did you identify exclusions & omissions?

Answer 51

e.g. Contractor stating “-“ confirm if included

Inclusion of provisional sum when not requested

Question 52

Why is it important to review exclusions and omissions?

Answer 52

This is an integral part of the equalization process

4 tenders may have been returned at £1m each. However if only one has included everything that has been asked for and ther others have excluded various elements of work then the £1m return if not fully reflective of their position.

Question 53

Why was a firm cost required when a provisional sum was included by the contractor?

Answer 53

There was only one provisional sum which was for the underground petrol tanks as there was no information on the tanks and investigation was required as part of the works.

All other works were required to include for firm costs with the contractor’s to include for any associated risk.

Question 54

Did you include any provisional sums?

Answer 54

An undefined provisional sum was included for underground petrol tanks that were known to have been present on the site however it wasn’t clear if they had been removed.

Question 55

How did you equalize the tenders?

Answer 55

• Tender clarifications - e.g. conflicts
• Errors & omissions
• Clarify all components were included

Question 56

What was the planning issue that arose?

Answer 56

The client had not submitted the Section 80 notice which meant the project had to be put back by a month.

I tender addendum was issued to alter the commencement date.

Question 57

How did you issue the tender addenda?

Answer 57

1. Amended reference to old dates -

Question 58

Why did all contractors need to acknowledge the tender addenda?

Answer 58

Date had changed by a month so required to confirm this would work for them

Question 59

Why might not issuing the tender addenda been so detrimental to the project?

Answer 59

Contract could have been awarded on basis on old start date and then defferment of possesion would have to be instructed.

Relevent Matter = Loss and Expense

Question 60

How was the scoring matrix set ?

Why did you need to use one?

Answer 60

Lowest price = 30 points
Other returns would receive lower points relative to their % difference in price. 
e.g. 20 points if a  third higher
15 if 50% higher
10 if two thirds higher

Points required as used in conjunction with quality scoring system which was 70% quality 30% price

Question 61

How did you present the tender report?

Answer 61

o Introduction – What is being tendered and for whom.
o Scope of report – what the report is based on, for example, tenders dispatched and received. Also, detail what the report will do, for example, detail returns, analysis and clarifications.
o Procurement route and basis of tender – Detail route and tender information as well as tender addenda
o Tender information received – What was submitted, prices, alternative tenders.
o Evaluation and scoring - detail clarification process and scoring (using a scoring matrix), in line with weightings
o Reconciliation against PTE – Explanation of cost difference. Helps to highlight if Contractors are frontloading their submission.
o Recommendation and conclusion

Question 62

What was included in your tender report?

Answer 62

Intro - Works and approach to tendering
Confirmation of tender returns
Prices (Post adjustment)
Evaluation / Scoring
Recommendation

Question 63

How did you justify your choice of tenderer?

Answer 63

AR Demolition won on both price and quality

70% quality 30% price

Question 64

What is a framework agreement / partnering?

Answer 64

Partnering is a general term covering practices that are designed to promote greater co-operation between all project team participants.
- Collaborative relationships to minimize conflict and promote open communication
-That contract could be between the main contractor and employer, or it could be a multiparty contract embracing the design team and key members of the supply chain.
JCT Constructing Excellence; all parties to encourage collaborative working; risk registers, risk allocation and KPIs
_________________
Select group of contractors/consultants must qualify through initial process. Used by clients such as local council/government who need ongoing work but typically don’t benefit from in-house development teams so don’t want constantly re-tender for work. E.g. Perfect Circle; AECOM, Gleeds, - Nuneaton
Benefits of serial tendering and competition and avoid repeat of OJEU admin

Question 65

Why would you use a framework agreement?

Answer 65

E.g. Council who need to undertake development works but who do not benefit from in-house teams.

Various consulting parties are qualified to submit a bid which reduces repetition of tendering processes and also facilitates competition e.g. multiple parties can bid which will likely result in overall value to the client

Question 66

What were the timescales for the tender process? PQQ - Tender returns - Tender evaluation - Tender award

Answer 66

PQQ - 1 week (review 1 week)
Tender period - 4 weeks 
- Site visit
- Clarifications within 2 weeks of above
- Clarification response and circulation - 1 week after
- Tender deadline - 4 weeks

Tender evaluation - 2 weeks

Tender award notificaiton
Standstill period - 10 days

Question 67

How did you present the procurement report?

Answer 67

Intro - Outline and scope
Overview of options – D&B, Traditional
Comparison and Risk allocation
Conclusion