Tendering and Procurement Flashcards
what is procurement
the act of obtaining goods or services from an external source
what is tendering
Tendering is an important phase in a procurement strategy
- the bidding process, to obtain a price;
- how a contractor is actually appointed
what are the common procurement routes
- traditional
- design and build
- management contracting
- construction mangement
what is the traditional procurement route
- project can be broken into sequential phases:brief, design, tender and construction
- client appoints design teams. Design is fully developed. Full design is tendered. Winning contractor constructs design
what are the advantages/disadvantages of traditional procurement?
Advantages: -quality of product is generally higher -client maintains control of design -post contract changes easy to manage Disadvantages: -longer project duration due to sequential phasing, no overlaps -build-ability can be poor due to no contractor involvement -design open to abuse
what is design and build procurement route
- design and construction overlap. project is tendered before design is complete, contractor finishes design. Allows design and construction phases to occur concurrently
- good brief is important to avoid contractor designing a building not fit for purpose
- contractor take on risk of the project
what are the advantages/disadvantages of the design and build route?
Advantages:
-low cost risk as client pays lump sum for Contract, absorbing design/construction risk. Contract Sum will be inclusive of a percentage fee to design development/risk
-low time risk: due to the ability to begin construction before design has been completed means this is a fast track procurement route
-cost certainty, if a lump sum contract, known early on in the project timeline
-early contractor involvement generally is good for buildability
-single point of responsibility for the client
Disadvantages:
-high design risk.Client loses control over design. Contractors will aim to meet ER’s whilst maximising their margins
-Post contract changes difficult to manage and often are expensive
what is management contracting
- management contractor is appointed to manage the project
- project is split into works packages which are individually let through MC
- MC is paid on a fee basis and is brought into the project early on in the project timeline
what are the advantages/disadvantages of management contracting
Advantages:
-fast track procurement option as early packages can be let whilst later packages are still being designed
-client maintain design control
-late changes accommodates so long as that package hasn’t been let
-good buildability with early appointment of MC
Disadvantages:
-MC is paid on a fee basis and doesn’t take project cost risk, leaving the client exposed
-Although procurement is fast, time certainty is poor until the final package is let
-Cost certainty is also poor until the final package is let
what is construction management procurement route?
- Construction Manger is appointed as a consultant
- Client has many points of responsibility: Consultants (incl construction manager) and all trade contractors
- Projects is split into trade packages and client is responsible for each sub-contractor
- Design and construction phases can overlap
what are the advantages and disadvantages of the construction management
Advantages:
-Fast track procurement route as design and construction can overlap
-Arguably a cheaper price is obtainable due to cutting out the main contractor’s overhead and profit costs
-accomodates late changes if the package has not been let
-client maintains design control
Disadvantages:
-Client must be experienced as all parties report to them
-Time certainty is not known until last package is let
-construction manager may not be motivated by cost as he is appointed on a fee basis, resulting in high project cost
what is prime contracting
- Prime contracting is a procurement route in which a Contractor is appointed by a client to deliver one or more project
- Contractors are appointed based on tender submissions of their Schedule of Rates
what is serial tendering
- Serial tendering is a tendering mechanism that can be used in a prime contracting procurement route
- Serial tendering involves submitting a schedule of rates for your tender bid, or pricing a hypothetical Bill of Quantities for a typical project
- The winner of the tender will be appointed as and when the client requires their services. Useful for a client that has repeat work or maintenance
what contract would you use in a prime contracting procurement route
- JCT MTC 2016
- Measured term contract
- defines works covered and over what term (2-3 years typically)
- Estimates likely value and size of individual order
- Agreed on schedule of rates
what is PPP/PFI
- Public Private Partnership
- Public Finance Initiative
what are PPP/PFIs
- Joint ventures between the public and private sectors
- Generally, the public uses PPP/PFI to procure a service from the private sector, such as providing a hospital or train station
- In return for the asset, the public sector pays a regular fee to the private funder
- Generally these regulations last 25-30 years, and the end of which the asset is handed back to the public
- The private sector is responsible for the maintenance of that asset throughout its lifecycle
- there are many variations of PPP/PFI
- the advantage for the public sector client is that they can build needed infrastructure such as schools and hospital at no CAPEX cost
what is the RIBA plan of Works 2013
- comprises of 8 work stages
- establishes boundaries between stages and details tasks and outputs at each stage
what is RIBA stage 0
0-Strategic Definition
- identify client’s business case and strategic brief
- establish project programme (will be reviewed at every stage going forward)
- initial considerations made for assembling project team
RIBA stage 1
1- Preparation and Brief
- develop project objectives
- develop project budget (order of cost estimate)
- develop initial brief
- undertake feasibility studies
RIBA stage 2
2-Conception design
- Prepare Concept Design
- Develop Const Information (Cost Plan)
- Consider strategies for sustainability handover, H&S,M&O, and risk assessments
RIBA stage 3
Developed Design:
- Prepare developed design including coordinate and updated proposals for structure and MEPH
- Develop Cost Information
- Review and update strategies for sustainability M&O, handover, H&D and risk assessments
RIBA stage 4
Technical Design
- Prepare technical design to include all architectural, structural, MEPH and specialist subcontractor design information
- Prepare and submit building regulations submission and any other third party submissions requring consent
- develop cost information (BOQ)
- Review and update strategies for sustainability M&O, handover, H&S, and risk assessments
RIBA 5
Construction
- Construction of project inclusive of offsite manufacturing
- Resolution of design queries
- Regular site inspections, for the PQS to value works complete and variations from the Contract
RIBA6
Handover and Close Out
- handover of building and construction of Building Contract
- Final Account settled
- Defects Liability Period, defects made good prior to Certificate of Making Good Defects certified and remaining retention released
- Carry out activities listed in handover strategy
RIBA 7
In use
- Concludes handover strtegy activities incl-post occupancy evaluation
- contractor may be back for maintenance if part of contract was to provide maintenance
why is it important to have a robust tendering strategy
- accountability
- auditing
- to ensure everything has been picked up
- parity
- reduce claims of corruption
- ensure correct price is paid for proposed works
what are the standard rules for tendering
-all tenderers must receive the same information
-in one submits a query, all must receive the query and response. The exception to this is if the response would reveal a particular suppliers commercial proposal/ programming advantage/methodolody
-after the deadline has closed, all tenders must be opened with a witness
-submissions must be compliant, and submitted prior to deadline
Read JCT Tendering Practice Note 2017
what is single stage tendering
obtaining a price for the whole construction works
when would use single stage tendering
- when ERs are sufficiently defined so it can be easily priced
- usually done at RIBA Stage 4 so tendering contractors receive most detailed information to base bid on.
what is two stage tendering
Tender process split into two stages:
1) tender enquiry documentation issued to the contractors at RIBA Stage 2 or 3. Rather than requesting a bid, contractor is chosen based on quality of bid, team, based on the ERs provided but carries less weight than in single stage.
2) Preferred contractor joins design team on a consultancy basis on a PCSA. During this time they develop the design. At the end of the PCSA period they submit their Contract Sum for the project, which will often be subject to negotiation with the client/PQS
when would you use two-stage tendering
- when time is a constraint as it allows an overlap between design and tendering
- when the design process would benefit from technical input of Contractor (buildability)
what is selective tendering
- contractors are only allowed to tender by invitation
- reduced tender period: less time-wasters and less tenders to process
- appropriate for specialist works
what is open tendering
- anyone can submit a price, open to the public
- can attract time wasters, takes longer to process tenders
- greatest competition so best for driving down price
- PQQ process can be used to filter time wasters
what is competitive tendering
- competition with multiple tenders bidding for the contract
- good for ensuring a competitive price for the works
- tender process is longer than negotiated tendering
what is negotiated tendering
- where a client approaches a single contractor, generally based on previous track-record or partnership. Contract sum is negotiated between two parties, as opposed to a bidding process in competition with other contractors
- benefits are a fast tendering process, disadvantage is without the competition is may be more expensive
- negotiated tendering is now allowed by many public bodies/government departments as it is difficult to prove Value for Money-RICS Tendering Strategies
