Procurement & Tendering SoE Q's

Question 1

What is procurement?

Answer 1

The overall act of obtaining goods and services for a construction project.

Question 2

Can you please define tendering?

Answer 2

How a contractor is actually appointed, and as such obtaining a price for the works.

Question 3

What happens if the tender prices are higher than the pre-tender estimate?

Answer 3

Tenders should be reconciled against the PTE to identify where major differences are

The project team could value engineer the project if prices are over budget

Question 4

Can you name the four different procurement routes for me?

Answer 4

• Design & Build
• Traditional
• Construction Management
• Management Contracting

Question 5

When would you use Design & Build over Traditional?

Answer 5

You would use design and build in a situation where the client wishes for an earlier start on site. This would allow for the overlap of design and construction. With traditional, the design is typically complete prior to tendering.

An alternative reason may be that the client wishes to relinquish design risk. With design & build, the contractor accepts design and construction risk, whilst with traditional they only accept the construction risk, with the employer maintaining the design risk.

Question 6

What are the advantages and disadvantages of Design & Build?

Answer 6

Advantages of D&B are that there is a single point of responsibility, buildability input of the contractor, earlier commencement on site and the client relinquishes design risk.

Disadvantages of D&B are that the design is only as good as the ER’s, the client also needs to commit to a concept design early on. The contractor will factor in risk premiums and the client loses control over the design.

Question 7

What are the advantages and disadvantages of Traditional?

Answer 7

Advantages of traditional are that tender analysis is made easier, the client retains control over the design, there is reasonable cost certainty at contract award and there is limited built in contractor risk premium.

Disadvantages of traditional are that there is no buildability input of the contractor, the overall process is longer as there is no overlap of design and construction. Design risk is also retained by the client, and there is a dual point of responsibility.

Question 8

What is the difference between management contracting and construction management?

Answer 8

With construction management the employer has direct trade contracts with trade suppliers and employs a construction manager to oversee the works.

With management contracting the employer employs the management contractor to oversee the project and they have the direct contractual relationships with the trade contractors.

Question 9

What are the advantages and disadvantages of construction management?

Answer 9

Advantages of construction management are that there is potential for an earlier start on site, due to overlap of design and construction. There is also potential for buildability input of the construction manager and design changes can be made without paying a premium. There is also potential for lower costs due to direct trade contracts.

Disadvantages are that there is no single point of responsibility, there is no cost certainty until the last package is let and the employer must be experienced in construction.

Question 10

What are the advantages and disadvantages of management contracting?

Answer 10

Advantages of management contracting are that there is potential for an earlier start on site, due to overlap of design and construction. There is also potential for buildability input of the construction manager, there is a single point of responsibility and design changes can be made without paying a premium.

Disadvantages are that there is no cost certainty until the last package is let, the employer must be experienced in construction and there is no incentive for the MC to reduce costs.

Question 11

What is included within the guidance note on Tendering Strategies?

Answer 11

The guidance note provides information on single, two stage and negotiated tendering.

It also provides guidance on producing PTE’s, selecting the appropriate tendering strategy, the RIBA plan of Work, selection of contractors, tender period, tender documents, issuing of tenders, and tender queries.

There is detail on receiving tenders, and in particular opening, reviewing of tender documents, including checking for errors and normalisation. There is further advice on tender interviews and tender reporting.

Question 12

What is the difference between single and two stage tendering?

Answer 12

Single Stage Tendering is typically undertaken at RIBA Stage 4 and is based on detailed design information. All contractors return a price based on the identical tender information and provide a price for the construction of the works.

Two Stage Tendering is typically undertaken at RIBA Stage 2 or 3. Used where there is a time constraint, with first stage documentation submitted to contractors and them being assessed on the quality of their bid, quality of their team, prelims price, OH&P allowance and PCSA fee. The successful bidder is appointed under a PCSA to provide buildability and programme input, before submitting a cost for the works at RIBA Stage 4.

Question 13

Do you know any further tendering methods?

Answer 13

• Serial Tendering
• Negotiated Tendering
• Open Tendering

Question 14

What are the advantages and disadvantages of a single stage tender?

Answer 14

Advantages of single stage tendering are that it is the most competitive process and therefore likely to receive the most competitive price. Employer can benefit from a fixed price.

Disadvantages are that the price is only as good as the design information. As contractors aim to provide a competitive price, this may be at the cost of quality. Longer process due to tender period.

Question 15

What are the advantages and disadvantages of a two stage tender?

Answer 15

Advantages of two stage tendering are that it allows for overlap of design and construction, and therefore possibility of an earlier start on site. It also allows for buildability input from the contractor. There is increased possibility of identifying project risk and engaging with subcontractors earlier.

Disadvantages are that employer loses negotiating power, as well as the fact that the second stage negotiation may fail. The contractor may try to increase their costs following the first stage. There is an additional cost associated with the PCSA fee.

Question 16

What are the advantages and disadvantages of a negotiated tender?

Answer 16

Advantages are that it may allow for an earlier start on site, and it will allow buildability input of the contractor. There are time and cost savings relating to the tender process, as well as flexibility in choice of contractor.

Disadvantages are that there is potential for a cost premium due to lack of competition. There is heavy reliance on trust between the parties and it can be seen as anti-competitive and exclusive.

Question 17

What is a negotiated tender?

Answer 17

Effectively a single stage tender, but it is negotiated with one particular contractor.

Question 18

When carrying out the tender analysis what are your options if you discover an error in the tender?

Answer 18

• Alternative 1 – Confirm or withdraw
• Alternative 2 – Confirm or amend

Question 19

How did you ensure that the tenders were compared fairly?

Answer 19

Through a process of normalisation.

Any costs that were out of place, extremely high or low were normalised.

This is done in one of three ways: taking an average of the costs, using the highest price or using the cost plan allowance for that item.

Question 20

What is a framework agreement?

Answer 20

An umbrella agreement with a series of suppliers for the procurement of goods, works and services.

Question 21

What framework agreements have you worked under?

Answer 21

ProCure22 (P22) is a Construction Procurement Framework administrated by NHS England and NHS Improvement for the development and delivery of NHS and Social Care capital schemes in England.

Question 22

What are the advantages and disadvantages of framework agreements?

Answer 22

Advantages are that it helps to develop strong relationships and encourage collaboration. In addition it leads to time saving as rates are usually agreed up front.

Disadvantages are that contractors may become complacent as limited competition. Some contractors also may not receive work through the framework.

Question 23

You talk about going out to tender with a list of potential contractors. If you weren’t on a framework, how would you go about compiling a tender shortlist?

Answer 23

Reputation, known to employer or project team, previous experience working with contractors, colleague feedback, PQQ

Question 24

How did you analyse tenders?

Answer 24

Completed a side-by-side comparison of the contractors documents

Scored tender bids for quality (60/40 split price/quality)

Quality – experience / proposed methodology / sustainability / resource planning / site visit pass/fail

Highlighted any anomalies, arithmetical errors or front loading issues

Question 25

Normalisation techniques – what are these and why are they used?

Answer 25

Adjustments to the submitted tender so that comparisons can be made between tenders and ensure the right price is being paid for the works.

Any potential issues should be highlighted to the bidding contractor.

Three options available 1) use average of submitted costs, 2) use highest cost, 3) use cost plan allowance for that element.

Question 26

What is in a tender report?

Answer 26

• List of tenders received
• Initial tender return totals
• Any qualifications identified
• Post tender adjustments
• Revised tender sum
• Issues to be resolved
• Comparison of tender returns
• Comparison with PTE
• Recommendations

Question 27

Why was the design and build procurement route best suited to the client’s needs on Alberton House?

Answer 27

The design and build procurement route was best suited on Alberton House as the scheme was complex in nature and it was deemed that the project would benefit from the contractors buildability input.

Question 28

How did you ensure that the tender analysis was carried out in a fair manner?

Answer 28

I ensured that the tender analysis was completed in a fair manner by normalising any abnormal costs that were high or low.

This was done by taking an average of the returned costs and using this across all tender submissions.

Question 29

What was included in the tender documents for Alberton House?

Answer 29

• Invitation to Tender
• Form of Tender
• Quality Questions
• Scoring Matrix
• Pricing Document
• Contract Particulars
• Schedule of Amendments
• ER’s
• Drawings
• Specs
• PCI
• Receipt of Tender

Question 30

Following the first stage on Alberton House, how was the selected contractor appointed?

Answer 30

The first stage tender documents were scored on a basis of quality and price. The quality section was 60%, whilst the price was 40%.

The contractor was selected following a detailed analysis of both elements, with the lowest scoring contractor entering into contract under a PCSA.

Question 31

How did the tender documents change between Alberton House and St Wilfrid’s?

Answer 31

The design on St Wilfrid’s was further progressed and therefore more detailed design information was provided.

A measured bill of quantities was also provided, as opposed to a schedule of works on Alberton House.

Question 32

How did you manage the query process on St Wilfrid’s?

Answer 32

When a query was received from one of the contractors this was sent to the relevant member of the design team to formulate a response.

Once the response had been provided, the query was distributed to all contractors for parity. The name of the querying contractor was excluded.

Question 33

Apart from cost, did you review the tender for St Wilfrid’s in any other way?

Answer 33

The tender for St Wilfrid’s was also analysed in terms of quality as well.

Question 34

How do you assess a tender for quality?

Answer 34

A tender is analysed for quality by reviewing the contractor’s response to the quality questions. The questions have differing weightings and they are scored dependent on their response to the points noted within the submission.

Question 35

What was the recommendation within the tender report on St Wilfrid’s?

Answer 35

The recommendation was to proceed with the lowest priced tender as all tenders were over budget. The client did not have much contingency on the project and therefore this was the only feasible option.

Question 36

Why was two-stage tender used in Alberton House?

Answer 36

A two stage tender was used due to the complexity of the project. It was deemed that the project would benefit from the buildability input of the contractors.

Question 37

What are ‘preliminaries’?

Answer 37

The purpose of preliminaries is to provide a description of the works as a whole, and to specify general conditions and requirements for their execution. Along with work sections, they describe what is required to complete the works required by the contract.

Question 38

What should be included in a tender analysis?

Answer 38

Included within a tender analysis should be both a cost and quality assessment.

The tenderers will be assessed on quality based on a series of quality questions that were included within the tender pack. The tender scoring matrix will be used to assess the quality of their answers. On Alberton House, this looked at:

• Delivery of Pre Construction Services
• Delivery of Main Works
• Health & Safety
• Organisational Structure & Staff
• Programme
• Risk Management
• Sustainability

The price will be analysed on a side by side basis, identifying any anomalies that there may be in relation to cost, any arithmetical errors or issues such as front loading.

Question 39

How would you assess ‘preliminaries’?

Answer 39

The preliminaries were assessed by completing a side by side analysis of the costs and comparing the tenderers against each other.

Any abnormally high or low costs were normalised and the resultant totals were presented and given a score based on their deviation from the lowest figure.

Question 40

Why was a single-stage tender used in St. Wilfrid’s?

Answer 40

This is due to the fact that the design was already developed to Stage 4 and the market was volatile at the time due to Covid-19. The client wanted to obtain a competitive fixed price for the works.

Question 41

Can you give some examples of ‘anomalies’?

Answer 41

Anomalies may be extremely high or low costs. These figures would be normalised during the tender analysis.

Front loading may be classed as an anomaly and the contractor may be afforded the opportunity to amend their submission.

Question 42

Tell me about different pricing documents available under different contract types.

Answer 42

• Bill of quantities – JCT Standard / Intermediate / NEC Options B & D
• Schedule of Works – JCT Intermediate / Minor Works
• Activity Schedule – NEC Options A & C, JCT Design and Build
• Contract Sum Analysis – JCT Design & Build

Question 43

Talk me through the tender process on GMMH and the advice you gave throughout the process?

Answer 43

The client was planning on entering a negotiated approach with the contractor undertaking the theatre extension project. I advised that due to them being preoccupied this would lead to a delay and they should consider alternative tendering options.

I advised that we should explore the option of selective tendering with a series of 4 contractors that members of the design team had worked with on prior projects.

This option was adopted, and this ultimately provided the client with a project that was delivered in a timely manner and at a cheaper cost than original budget.

Question 44

What is a negotiated tender process and why was this option dismissed?

Answer 44

A negotiated tendering approach is effectively a single stage tender where the employer decides to negotiate with one contractor.

This option was dismissed as the employer wanted to ensure that they were receiving a competitive price and it was thought that a single stage selective tendering approach would provide them with the best chance of achieving this.

Question 45

What do you mean by an open market approach?

Answer 45

By open market approach I mean going to the open market. This was ultimately a selective tendering approach whereby 4 contractors were proposed to the client.

Question 46

You mentioned an open market approach to tendering at the GMMH in lieu of negotiating. Why was this? And what drawbacks did you identify by using this approach?

Answer 46

The open market/selective tendering approach was adopted as it was believed that the single stage approach would provide the employer with a competitive fixed price.

The drawbacks with using this method were that the prices returned may not have been in line with the client’s budget.

Question 47

What were the client’s requirements on the GMMH project, and in turn what did you recommend?

Answer 47

The client’s main driver was cost, but they also wanted to ensure there was a focus on programme. This led to me recommending a design and build procurement route. This would allow the client to relinquish design risk, whilst also aiming to achieve early price certainty.

It was also advised that a design and build route would allow for the overlap of design and construction and ultimately lead to an earlier start on site.

Question 48

Why would a negotiated tender allow for early mobilisation?

Answer 48

A negotiated approach would allow for early mobilisation as there would be no requirement for a complete tender process.

Question 49

How was Project Zeta procured and what mechanisms allowed for early mobilisation?

Answer 49

Project Zeta was procured under a design and build procurement route, and a negotiated tendering approach allowed for early mobilisation. This was due to the overlap of design and construction.

Question 50

On Project Zeta, how did the early stage estimate differ from the agreed price with the contractor?

Answer 50

The early stage budget that I produced was around £3.0m, therefore the agreed price around £300k above the budget estimate.

During the time, the market was experiencing volatility and increase in material costs.

Question 51

How did you ensure that the figure on St Wilfrid’s was a reasonable figure in the current market?

Answer 51

This was benchmarked against similar projects that had been returned within a similar period. Any relevant uplifts in terms of time and location were applied when reviewing rates. The cost data was taken from our in house cost database, Pulse.

Question 52

If the contractor was unable to provide three quotes for one of the work packages, what would you advise?

Answer 52

I would have reviewed the particular work item and taken it back to QS first principles by pricing the element of work myself.

I would have also considered going to market myself and obtaining a price for the works.

Question 53

What items were omitted from the Project Zeta workbook?

Answer 53

The contractor had included costs for whiterock to the walls within the welfare facility. This was not required and therefore omitted, resulting in a saving of circa £6k.

Further to this, I reviewed the cladding measures and queried these with the contractor. The contractor was happy to agree to my measures and therefore a further omission of circa £30k.

Question 54

For Wythenshawe Hospital Theatre, I believe the client prefers negotiated tender. Personally, do you have any opinion on using negotiated tender?

Answer 54

• Depends on the client’s main drivers.

Question 55

Would you recommend a cost reimbursement contract in Project Zeta? Why or why not?

Answer 55

No, I would not have recommended a cost reimbursement contract as this pricing options does not present cost certainty until the end of the project.

D&B presented early cost certainty and that was favoured by the employer.