T4. PROCUREMENT & TENDERING Flashcards
What are the four main procurement methods?
- Traditional
- D&B
- Construction Management
- Management Contracting
What are the key characteristics of Traditional procurement?
- The client appoints a design team to develop the design.
- The design is completed to a developed stage and then tendered to contractors.
- The contractor is appointed to construct the works based on the completed design.
- The client remains liable for any design errors, as the design is developed and approved by the client’s appointed design team.
What are the key characteristics of D&B procurement?
- The contractor is responsible for both the design and construction of the project.
- The client (Employer) issues an Employer’s Requirements (ERs), which outline the project’s scope and performance criteria.
- The contractor submits a proposal (CPs) in response to the ERs, detailing how they will meet the requirements.
What are the key characteristics of Construction Management procurement?
- The client appoints a CM to manage the project.
- The client has direct contractual relationships with the works contractors.
- The CM is paid a fee for managing the project on behalf of the client.
- Facilitates ECI and overall programme is reduced, as construction can begin before the design is fully complete.
What are the key characteristics of Management Contracting procurement?
- The client appoints a MC who engages works contractors to complete the project.
- The MC has direct contractual relationships with the works contractors.
- The MC is paid a fee to manage the project on behalf of the client.
What are the advantages of Traditional procurement?
- Client retains control of the design.
- Clear separation between design and construction.
- Cost certainty.
What are the advantages of D&B procurement?
- Single point of responsibility (simplifies management).
- Faster programme, as construction starts before design is complete.
- Cost certainty at the outset.
- Early Contractor Involvement (ECI) enhances buildability.
What are the advantages of Construction Management procurement?
- CM manages the works, ensuring coordination.
- Faster programme, as construction starts before design is complete.
- Early Contractor Involvement (ECI) enhances buildability.
What are the advantages of Management Contracting procurement?
- MC manages the works, ensuring coordination.
- Faster programme, as construction starts before design is complete.
- Early Contractor Involvement (ECI) enhances buildability.
What are the disadvantages of Traditional procurement?
- Extended programme (design must be complete before construction).
- Client bears risk for design errors.
- Does not facilitate Early Contractor Involvement (ECI).
What are the disadvantages of D&B procurement?
- Client loses control over design.
- Client pays a cost premium as the contractor assumes more risk.
- Employer’s Requirements (ERs) must be robust to ensure quality.
What are the disadvantages of Construction Management procurement?
- Cost certainty is not achieved until final trade packages are let.
- Increased client risk due to multiple contractual relationships with works contractors.
- No incentive for CM to deliver works at a competitive price.
- Requires an experienced client.
What are the disadvantages of Management Contracting procurement?
- Cost certainty is not achieved until final trade packages are let.
- No incentive for MC to deliver works at a competitive price.
- Requires an experienced client.
How do different procurement routes apportion risk?
- Traditional: Client assumes design risk and any cost overruns due to errors or changes in the design. Contractors carry risk for construction-related issues.
- D&B: Contractor assumes design and construction risk.
- CM: Client assumes cost risk, as they have direct contracts with the works contractors. CM manages process but does not take on direct risk for cost overruns or delays.
- MC: Client assumes most of the risk, similar to CM, but the Management Contractor (MC) is responsible for managing the contractors. There’s no fixed price until all trade packages are let.
What is two-stage tendering?
- A process where the client appoints a contractor early (based on preliminaries and overheads). The contractor acts as a consultant under a Pre-Construction Services Agreement (PCSA) to develop the design and submits a second negotiated tender once the design is finalised.
What is single-stage tendering?
- A tendering process where contractors submit bids based on a complete set of tender documents, with the contract awarded to the lowest or most suitable bid.
What is tendering?
- The formal process whereby potential suppliers submit bids for contracts to provide goods or services
What is negotiated tendering?
- The employer engages directly with a single contractor to negotiate a tender sum for the works.
What are the advantages of single-stage tendering?
- Fixed-cost lump sum for defined works.
- Competitive bidding encourages value for money.
What are the advantages of two-stage tendering?
- Initial competition with price transparency.
- Early Contractor Involvement (ECI) improves design and buildability.
- Work can start earlier.
What are the advantages of negotiated tendering?
- Employer selects the preferred contractor.
- Collaborative approach enhances buildability.
What are the disadvantages of single-stage tendering?
- May not get the preferred contractor.
- Potential for claims due to cost underestimation.
What are the disadvantages of two-stage tendering?
- Lack of competition in the second stage.
- Risk of being locked into a contractor.
What are the disadvantages of negotiated tendering?
- Non-competitive, leading to higher costs.
- Limited transparency and potential bias.
What documents typically comprise a tender pack?
- Invitation to Tender (ITT)
- Instructions to Tenderers
- Preliminaries
- Contract Documents (including details of amendments)
- Specifications and Drawings
- Pricing Document
Appendices
* Form of Tender
* Non-Collusion Declaration
* Preconstruction Information
* Details of named contractors
* Forms of Warranties, Bonds, etc.
What is the JCT Tendering Practice Note (2017)?
- It provides guidance to employers, contractors, and consultants on procurement processes for private and public sector construction contracts in the UK.
How would you deal with errors identified within a bid?
There are two ways to deal with errors:
Alternative 1: Confirm or withdraw
Alternative 2: Confirm or amend
How do you ensure that the client adopts the most suitable procurement route?
The client’s objectives—time, quality, cost, and risk appetite—must be defined to determine the most appropriate procurement route.
What is open tendering?
- Allows anyone to submit a tender.
- Offers equal opportunity.
- Can be slow and costly.
- Risk of unsuitable contractors.
- Suitable contractors may choose not to submit a tender if small chance of success.
What is selective tendering?
- Suppliers submit tenders by invitation only.
- Ensures suitable contractors.
- Faster and less wasteful than open tendering.
What is an expression of interest?
- A submission by a potential tenderer in response to a tender advert, expressing interest in participating.
What is a prequalification questionnaire?
- A set of questions to assess the experience, capacity, and financial standing of potential tenderers.
- Determines the suitability of contractors to tender.
How do you carry out a tender analysis?
- Review all tender submissions against the client’s requirements.
- Prepare tender analysis to compare cost, quality, and compliance with specifications.
- Check for errors, omissions, and apply equalisation/normalisation where necessary.
- Review and address clarifications and exclusions.
- Prepare post-tender clarification schedules to resolve queries before tender award
How do you go about drafting a preliminaries document?
- Identify the project-specific requirements and contractual obligations etc.
- I would then use NBS Chorus or Trusts preferred format to complete the document.
How do you deal with omissions, exclusions and abnormal costs?
- Review all tender submissions against the client’s requirements.
- Compare cost, quality, and compliance with specifications.
- Identify discrepancies, unusual pricing, and any exclusions.
- Address clarifications and raise post-tender clarification schedules to resolve queries before award.
What is the purpose of post tender clarifications?
- To resolve ambiguities, confirm any aspects of the tender, and ensure the tender reflects the client’s requirements accurately.
On Project Staff Wellbeing Hub, you advised a D&B contract, were there any disadvantages of this that you advised your client of?
- I advised the client that the Employer’s Requirements (ERs) must be clearly and thoroughly defined to ensure that the contractor meets their expectations and requirements for the project.
How did you advise the client on the most appropriate procurement strategy on Project Staff Wellbeing Hub?
- The client’s objectives—time, quality, cost, and risk appetite—must be defined to determine the most appropriate procurement route.
Were any other procurement routes considered for Project Staff Wellbeing Hub?
- No. D&B was best suited as the client wanted cost certainty and to accelerate the overall construction programme.
On Project London Eye Centre, why was the tender negotiated?
- As works were being procured via a two-stage process.
On Project London Eye Centre, why was a two stage tendering route selected?
- The client selected a two-stage tendering route to benefit from the contractor’s expertise during the design development phase and to accelerate the overall programme by including enabling works within the Pre-Construction Services Agreement (PCSA).
On Project London Eye Centre, how did you prepare for the second stage negotiations?
- I reviewed the tender documentation to ensure a clear understanding of the client’s requirements.
- I prepared a pre-tender estimate using historical cost data, adjusted for location and inflation.
- I utilised the Pre-Tender Estimate (PTE) to assess the contractor’s tender submission, identifying any abnormals, and ensuring alignment with the budget and project objectives.
- During negotiations, I focussed on dealing with items with the biggest variance.
On Project London Eye Centre, why did you advise the client to consider retendering the project?
- We were relatively far apart in our assessment (£1m v £1.3m), in part due to delayed tender submission.
- Retendering the project would provide reassurance that a market tested, competitive tender sum had been received.
On Project London Eye Centre, if they had re-tendered on Stage 4, would the client have owned the design?
- Yes. Ownership of the design would only have passed onto the contractor once the second stage tender had been agreed.
What were the wider implications of retendering on Project London Eye Centre?
- Project delay for retendering process.
- No guarantee that tender returns would be lower
On Project London Eye Centre, did the VE exercises result in meaningful savings?
- Some savings were made in the finishes, notably more cost effective floor tiling but the tender sum could not be brought to within an affordable figure.
What was the outcome of the London Eye Centre tender process?
- Discussions are still ongoing but the intention is for a large amount of the lower ground floor scope to be omitted and constructed once the Client has the budget.
