Technical - Procurement and Tendering Flashcards
What is procurement?
Obtaining or buying goods and services. Or a construction project. There are many different options to procure the design team and contractor. My job is to find the method best suited to the project.
What needs to be considered when selecting a procurement route?
Time.
Cost.
Quality.
Risk allocation.
It’s unlikely that there’s a procurement option that will satisfy every one of the above, so need to prioritise the most important.
What procurement options am I familiar with?
Traditional.
Design and build.
Framework.
What is traditional procurement?
The design is the responsibility of the client and is separate from the contractor. The client first appoints a design team to design the project to RIBA 4 and then contractors are invited to tender for the works. The design team continue to work for the client throughout the construction period.
What are the advantages of traditional procurement?
The returned tenders are easy to compare.
The client retains control of the design and knows exactly what they are getting.
If the design and tender documents are robust enough then the tendered cost should be the price the client pays.
Variations should be easy to arrange and value.
What are the disadvantages of traditional procurement?
The process takes longer than other procurement methods.
There is no input from a contractor during the design stage, so less help with the buildability of the project.
Design risk is with the employer, so any changes or incorrect information will be a variation or compensation event.
When is traditional procurement appropriate?
If the employer has a specific design they want achieved.
If cost certainty from the outset is important.
If programme is not the main priority.
What is design and build?
The contractor is responsible for undertaking both the design and construction of the project for an agreed lump sum price. The employer tenders on a set of requirements and the contractors return their proposals and a fixed price for the works. The contractor assumes all the risk.
The design team is hired by the client just to complete the brief and the employer’s requirements. This team may be novated to the contractor, or the contractor can hire their own team.
What are the advantages of design and build?
One company is responsible for both the design and the construction.
Early commencement on site is possible. The design can be ongoing whilst earlier works start.
Cost certainty for the client.
Contractor contributing to the buildability of the design.
What are the disadvantages of design and build?
If the Employer’s Requirements are really comprehensive, they may end up with a design they don’t like.
The client may pay for early design work to include the ERs.
Harder to compare tender returns that with traditional procurement.
Client changes can be difficult to value and expensive.
Client has less control over aesthetics and quality.
The contractor will add a higher margin for risk to their contract sum.
When is design and build appropriate?
When the client wants to minimise their risk and obtain cost certainty.
If there needs to be an early start on site.
If the project is complex and could benefit from the contractor’s experience on buildability.
If the client does not want to be responsible for the design development.
What additional insurances are required on a design and build project?
The contractor will need to have professional indemnity insurance because they have design responsibility.
Is design and build suitable for refurbishment?
Yes because the risk of the condition of the existing building is passed to the contractor. But not for listed buildings – too many possibilities for improper materials and works.
What are the Employer’s Requirements (ERs)?
Sets out what the employer wants the contractor to design. Describes the function, size and quality of the building.
What are the Contractor’s Proposals (CPs)?
The contractor’s response to the employer’s requirements setting out how they intend to meet the brief.
Why do you pay a premium for design and build?
Because you are buying the risk in advance, because the contractor prices the unknowns into their contract sum analysis. With traditional procurement, the risk remains with the employer and they have to pay for anything that occurs.
What is the least risky procurement route for the client?
In terms of cost and design – design and build.
In terms of quality and getting precisely what you want – traditional.
What happens if you don’t specify a product in a design and build contract?
During tender the contractor’s will specify their own preferred product and it’s difficult to compare them in terms of quality and cost on an equal basis.
What is construction management?
The client hires a construction manager to manage the trades and sub-contractors. All the trades and sub-contractors are contracted directly to the client, not a main contractor.
What are the advantages of construction management?
Changes in design can be accommodated without costing a premium.
Prices might be lower due to directly contracting subbies to the client. No main contractor OH&P.
Direct contractual links from suppliers and sub-contractors to the client.
Can overlap design and construction.
What are the disadvantages of construction management?
Not able to get price certainty until near the end.
Changes in design might impact subcontracts that have already been awarded, leading to expensive variations.
The client needs a lot of involvement and to be decisive.
When is construction management appropriate?
Large complex projects that can benefit from the knowledge and experience of a construction manager.
Early start on site is a priority.
The design needs to be flexible.
Price certainty is not a priority.
When the client is experienced in construction.
What is the riskiest procurement option for a client?
Construction Management because the client controls all the trades and sub-contractors.
What is Management Contracting?
The Management Contractor is hired as a member of the design team. Various contractors are contracted to the main contractor who takes responsibility for the project but doesn’t carry out the works.
What are the advantages of Management Contracting?
Project duration can be shortened because design and construction can overlap.
Management Contractor contributes to design process and buildability advice.
Single point of responsibility and Management Contractor is liable for LADs.
Packages are competitively tendered.
What are the disadvantages of Management Contracting?
Cost is not known until the last package is awarded.
Less open book than construction management.
Changes in design might impact subcontracts that have already been awarded, leading to expensive variations.
When is Management Contracting appropriate?
Cost certainty is not a priority.
Early start on site is a priority.
Buildability input from the contractor is helpful.
Design flexibility is a priority.
What is the difference between management contracting and construction management?
Management Contracting = client is only in direct contract with the main contractor, who then procures the sub-contractors.
Construction Management = client is in direct contractual relationship with the sub-contractors.
What is a framework agreement?
The client runs a formal tendering process based on quality and, sometimes, agreed rates.
Successful tenderers are then added to a list of approved contractors for a set number of years.
Client can continuously commission works with shorter procurement times.
There should be a continuous level of improvement as client and contractor get to know each other and repeat similar projects.
What are the advantages of frameworks?
Good for clients with lots of repeat work.
Time saving.
Collaborative.
Preferential cost and rates for long term delivery.
