Tendering Flashcards
Define and explain the purpose of tendering
- To select the most suitable contractor
- Time appropriate to the circumstances
- Obtain acceptable, competitive offer for the contract
- Not necessarily always cheapest price
What is the tender process?
- Design Project
- Decide Tender Option
- Invitation to Tender
- Issue the tender itself
- Evaluate bids
- Issue Tender Report
- Reject non successful and client picks their contractor
Name the main tendering methods used in the construction industry and give a brief explanation of each
- Open Tendering
- Single Stage
- Serial
- Negotiated
- Two Stage
When should two stage tendering be used?
High quality complex projects when quality is more important than time and cost
What is a PQQ? What sections / headings are included? What are the advantages of using one?
PQQ - list of questions relating to the important criteria that a contractor must meet when applying for a contract, essentially assessing suitability
Headings - Financial (credit score, turnover year on year) / Previous Experiences & References / Structure of organisation & professional ability/ Health and safety policy/Quality assurance
Advantages:
- Proving capability before being invited to submit a tender
- Reduces amount of evaluation work and speeds up tendering process
- Helps SME’s not waste lots of time and money on a full tender
What are Tender Rules? Give some examples of what it may include.
- Essentially they explain how the process is managed and handled to enable fair competition and transparency throughout
- Example: How errors are dealt with, how queries are dealt with, how evaluation will happen, key dates in the process, return information, guidance on how to complete the forms etc
What would you check before selecting a suitable contractor to be included on a tender list?
Experience, financial status/stability, references, appropriate contractor size/location/availability, legal status, insurance cover
What are the disadvantages of selecting the lowest bid when using Open Tendering?
- May not be fully experienced (does not understand complex areas well, could lead to variations and cost increases down the line)
- Poorly prepared/equipped – poor quality – may go bust?
- Lower value for money
What does parity of tendering mean?
Making sure all tenders are based on the same information so all tender documents should be identical and same tender period so it is essentially a level playing field, no favouritism, or advantages.
Example: If anyone has a query answered, everyone is given the answer
What factors would you consider when assessing a suitable tender period?
- Procurement route/Tender method
- Complexity of project
- Time of year (Construction industry shuts down over xmas as no work will get done)
- Location
- Do not want it too long or too short period as could end up with inaccuracies in prices, likely to overestimate using price books if not got enough time to get a cost from a sub-contractor etc
Why should the Clients representative examine a tender in detail?
- Part of representative scope of works to examine in detail as they are being paid for it
- To check it is a compliant tender/offer as once it is accepted, we accept everything in the offer.
- An arithmetical error in the tender rates/items, could lead to costly variations down the line so need to make sure everything is priced.
- Check for front loading.
What is meant by the term front loading? What should you do if the contractor has front-loaded his rates in a tender?
- Front loading is assigning exaggerated values to the preliminary elements to offset any negative cash flow early on, usually contractors with cash flow issues.
- Ask to re do rates but they don’t have to oblige
- If not, evaluate next lowest tender and compare and write a comparison report to see how bad the front loading is
What is meant by the term “a qualified tender” and give an example?
- Tenders which change what you require them to do to their financial advantage (way they carry out the works)
- Contractor said to use internal lift to transport materials to top of building instead of external hoist which was initially stated. Would be cheaper for them.
What is the difference between arithmetical errors and pricing errors? Give examples?
Arithmetical errors is an error with the maths within the project e.g. adding up items incorrectly, brought forward/carried forward etc.
Pricing error is mispricing an item e.g., not putting a price next to an item/in accurate rates causes issues for variations
Under a single stage tender there are ways of dealing with errors – what are they? Give reasons why you may recommend each option to a Client.
Standby Withdraw – contractor submits BQ tender £2m, found arithmetical errors to £50,000, ask contractor to either standby £2m or withdraw offer. If he standby, need to adjust all other rates on what % it is.
- Client gets cheapest price, and it is true competition
Standby Alter – contractor submits BQ tender £2m cheapest, found arithmetical errors to £50,000. Offer to include amendments he wants to include. Now has a new price and isn’t lowest tender and assessment on new lowest tender is done.
- A lot of money and time spent on tendering so should allow changes as always chance of having errors, not holding contractor to ransom.
