Tendering Flashcards
What is the difference between tendering and procurement?
Procurement is the overall act of obtaining goods and services from external sources (i.e. a building contractor) and includes deciding the strategy on how those goods are to be acquired by reviewing the client’s requirements (i.e. time, quality and cost) and their attitude to risk.
Tendering is an important phase in the procurement strategy but procurement involves much more than simply obtaining a price. Tendering is the bidding process used to obtain a price and how a contractor is actually appointed.
What are the three main tendering strategies?
Single-stage
Two-stage
Negotiated
What is single stage tendering?
The most common type of tendering strategy. Invitation to tender documents are issued to a number of competing contractors who are all given the chance to bid for the project based on identical tender documentation.
Usually at RIBA Stage 4.
Bidding contractors are given a pre-determined time limit to return tenders.
What is two stage tendering?
Rather than requesting a bid for the entire projects, the preferred contractor is chosen on the basis of the quality of their bid, the quality of their team and their preliminaries price and overhead and profit allowances.
Become more common in recent years and often used where time is constrained (as it enables design and tendering to overlap).
Also used if the design process would benefit from the technical input of a contractor in the later design stages. Allows early appointment of contractor.
First-stage tender usually at RIBA Stage 2 and 3
Contractor joins the design team on a consultancy basis using a pre-construction services agreement.
Contractor works with design team to RIBA Stage 4 prior to presenting a bid for the works.
What is a pre-construction services agreement? (PCSA)
Used to enable clients to employ contractors before the main construction contract commences.
Typically they are part of a two-stage tender process, used in the first stage to procure contractor involvement in the design process.
What is a negotiated tender?
Benefit of this route is the speed, however the competitive advantage of a formal bidding process is compromised.
Not allowed by many public bodies
Why is early contractor involvement used?
Early contractor involvement is typically enabled by a two-stage tender process, used in the first stage to procure contractor involvement in the design process, and in the second stage to procure construction of the works.
Contractor selection is similar to two-stage tendering as it is done not on a cost basis but rather on the quality of the team and bid.
Contractors tender for this role by identifying their preliminaries/site overheads, fees for their pre-contract role and profit margins. Once a contractor is selected, a pre-construction agreement is usually signed.
What standard form PCSA’s are there?
JCT Pre-Construction Services Agreement 2016.
Can be used in conjunction with one of the following contracts:
- Standard Building Contract
- Design and Build Contract
- Major Project Construction Contract
- Intermediate Building Contract (with or without contractor’s design)
What are the advantages and disadvantages of a single-stage tender?
Advantages
- Most competitive price
- Speed
Disadvantages
- contractor not fully understanding the project may lead to higher ‘risk allowance’
- Programme implication to include tender period
What are the advantages and disadvantages of a two-stage tender?
Advantages
- Increased contractor involvement in design
- some degree of competition
- Ability to overlap design and tendering
Disadvantages
- lack of competitiveness during second stage
- programme implication to include a tender period (although overlapped with design)
- no incentive for contractor to mitigate risk as a traditional contract will leave most of the risk on the client side.
What are the advantages and disadvantages of a negotiated tender?
Advantages
- Buildability: most contractor involvement in design process
- Speed: no programme implication for tendering
Disadvantages
- Lack of competition: may result in high contract offers.
- Not suitable for public sector procurement.
What are the three main types of contractor selection techniques?
Open tendering: this allows anyone to express an interest to tender. Public procurement is an example of this.
Selective tendering: this can be in the form of a short list drawn up by the project/client team
Single contractor selection: this works hand in hand with negotiation as a tender technique
What are pre-qualification questionnaires used for?
Questionnaire given to contractors prior to selection for tender, with the aim of ensuring that the proposed contractors have the relevant experience, financial standing (further checks may be necessary), and a suitable health and safety record.
What is the current public sector procurement process?
Following BREXIT procuring entities are required to publish notices on the new UK e-notification service called Find a Tender (FTS) instead of in the OJEU.
What are the typical tender documents?
Invitation to tender letter
Form of tender
Contract Conditions
Instructions to tenders
Project Information
Design information including specification and drawings
Pricing documents such as bills of quantities and specifications
Appendices, including:
- Health and Safety Information (pre-construction information)
- Key surveys (drainage, asbestos, electrical, ecological)
- Planning permission info
- Building control documentation
- Party wall agreements
