Tendering Flashcards
What is the difference between procurement and tendering?
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 the bidding process, to obtain a price; and how a contractor is actually appointed.
Define and explain the purpose of tendering.
Definition of Tendering: is the bidding process, to obtain a price; and how a contractor is actually appointed.
Purpose: There are two purposes in tendering:
To select a suitable contractor at a suitable time
The offer of a price is required from the contractor at an appropriate time. This offer will be the basis for the ensuing contract.
What is the Tender process?
A tender is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services.
Name the main tendering methods used in the construction industry and give a brief explanation of each? (There are 5)
Open Tendering: allows anyone to submit a tender to supply the goods or services. An advert will be placed giving notice that the contract is being tendered, and offering an equal opportunity to any organisation to submit a tender.
Selective Tendering: only allows suppliers to submit tenders by invitation. A pre-selected list of possible suppliers is prepared that are known by their track record to be suitable for a contract of the size, nature and complexity required.
Negotiating Tendering: occurs when the client approaches a single supplier based on their track-record or a previous relationship and the terms of the contract are then negotiated.
Single Stage Tendering: is used when all the information necessary to calculate a realistic price is available when tendering commences. An invitation to tender is issued to prospective suppliers, tenders are prepared and returned, a preferred tenderer is selected and following negotiations they may be appointed.
Two Stage Tendering: is used to allow the early appointment of a contractor, prior to the completion of all the information required to enable them to offer a fixed price. In the first stage, a limited appointment is agreed allowing the contractor to begin work and in the second stage a fixed price is negotiated for the contract.
What are the advantages and disadvantages of each one?
Open Tendering:
Advantages: open tendering offers the greatest competition and has the advantage of allowing new or emerging suppliers to try to secure work.
Disadvantages: has been criticised for attracting tenders / expressions of interest from large numbers of suppliers,who might be unsuitable for the contract and as a result it can waste a great deal of time, effort and money.
Selective Tendering:
Advantages: appropriate for specialist or complex contracts, or contracts where there are only a few suitable firms.
-Selective tendering will tend to be faster than open tendering
-only suppliers that are known to be appropriate for the proposed contract are invited to prepare tenders.(saving time and money)
-It can also give clients greater confidence that their requirements will be satisfied.
Disadvantages: it can exclude smaller suppliers or those trying to establish themselves in a new market,
- it can reduce the potential for innovation,
- it can be seen to introduce bias into tendering as firms may be excluded from approved lists for unknown reasons, because of a lack of awareness, or because of personal preferences.
Negotiated Tendering:
Advantages: Suitable for complex projects where only a few suppliers are capable of works
- give the client the confidence of working with a supplier they already know
-can reduce the duration and costs of tendering and can allow early supplier involvement.
Disadvantages: anti-competitive and exclusive, with the potential for ‘cosy’ relationships to develop between the client and the supplier.
-hard to negotiate without competition to compare to and reach a fair outcome
What is two-stage tendering and can you advise when it should be used?
Two stage tendering is: is used to allow the early appointment of a contractor, prior to the completion of all the information required to enable them to offer a fixed price. In the first stage, a limited appointment is agreed allowing the contractor to begin work and in the second stage a fixed price is negotiated for the contract.
When it can be used:
- in design and build procurement route when wanting the contractor to assist with design and provide advice on build-ability and cost feasibility
- when needing to appoint mc early
- appointment of specialist contractor i.e cladding for first stage of works or design.
- enables the client to transfer design risk to the contractor (if using design + build)
What would you check before selecting a suitable contractor to be included on a tender list?
- They are suitable and capable of doing the works
- Financial records
- Selection should not be made purely on the basis of the lowest price
- Assess current workload
- Assess understanding of the works
- relevant experience
- Pre-qualification can be used:The pre-qualification questionnaire
What is meant by the term “cover pricing” and how can you reduce the risk of it occurring?
a form of bid rigging in which: one or more bidders in a tender process obtains an artificially high price from a competitor. Such cover bids are priced so as not to win the contract but are submitted as genuine bids, which gives a misleading impression to clients as to the real extent of competition.“cover pricing” refers to a practice that occurs where a company wishes, or believes it is necessary, to be seen to tender for a particular project but either does not wish to win the tender; or does not have the time or resources to prepare a carefully priced tender for that project.
Prevention: training staff in spotting cover pricing in procurement.
- expand list of potential bidders, to get an overall feel of suitable bid
- keep an eye on the same list of subcontractors and suppliers are bidding all the time and their bids seem unusually high or low, or involve certain exclusions or conditions that would purposely exclude them from participating in the job, be wary.
- Train your procurement team to watch for winning bids that appear too high based on similar type work and market conditions
What are Tender Rules? Give some examples of what it may include.
How the process is managed: OJEU if public body must use the rules (however no longer applicable due to article 50) Points to consider - What if? -Details of the documents which form part of the tender package -Guidance on how to complete - Instructions on information to be returned - Return details - Key dates (JCT practice note on how to tender) Examples of what is included: Conditions of Contract -Bills of Quantities -Specifications -Schedule of Works -Drawings -Employer's Requirements - Contractor's Proposals -Scoring Matrix -Form of Tender - Return Envelope
Advise which tendering method you would use if you wanted to secure a specialist contractor to carry out the work?
selective tendering process as allows for the client to pin point suitable firms that have the necessary experience within the the specialist field
What are the disadvantages of selecting the lowest bid when using Open Tendering?
- Might not be entirely suitable or capable of doing works
- lower quality of work/spec in some instances
- taking shortcuts on health and safety or making cuts where quality might be needed
- if not priced properly can result in many variations through out the project
What does parity of tendering mean?
that the tendering process remains equal and fair to all tenders who have taken an interest
How do you deal with queries during the tender period?
It is important that any tender queries raised are
answered back to all tendering contractors and not just
those that asked the question. This is to ensure that
parity is maintained and that no one is given an unfair
advantage.
The name of the tenderer raising the query
should not be mentioned. A collated response
including the answers to a number of queries should
be issued so that it is clear to tenderers that everyone
is being fed the same important information, raised
through tender queries.
What is the preliminary enquiry? What information does it contain?
In order that the contractors may be able to decide whether they will tender and to anticipate the demands on their tendering staff, each firm should be sent and should reply to a preliminary enquiry for invitation to tender:
Include details of:-
- Employer and consultants
- Project description
- Description of the works and location
- Proposed form of contract
- Proposed dates
- Nr of tenders invited
- Basis of tender evaluation
- H&S details
- Other significant information
What is a PQQ? What sections / headings are included? What are the advantages of using one?
a pre-qualification questionnaire
(PQQ) depending on the size and complexity of
the project. The aim is to ensure that the proposed
contractors have the relevant experience, the relevant
financial standing (further financial checks may be
necessary) and a suitable health and safety record
