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
what is competitive dialogue
- a number of tenders are shortlisted
- tenders talk with client/ consultant until acceptable solution is found for clients needs (practically and commercially)
- at least 3 tenders required for public procurement with Competitive Dialogue tendering
what is a PQQ
- a series of question for potential tenders regarding experience/capacity/financial standing
- must satisfy PQQ to be eligible to tender
- cuts down list of tenders, reduces time and cost of tendering process
what do the Tender Documents typically consist of
- ITT
- Form of Tender
- Prelims Document
- Form of Contract; Amendments
- Employers Information requirements for BIM
- Drawings
- Specification
- Pricing Schedule
- Tender Return Slip
what is an ITT
Gives overview of project outlines key dats, instruction to tenders, contract used, general conditions
what is Form of Tender
A document to be signed by the bidder stating they will carry out works should they win the Contract
Declaration there will be no bribery, they will abide to rules of tendering, etc.
what is prelims document
Describes the works as a whole, specifies the general conditions and requirements, including things such as sub-contracting, testing, completion, etc. The costs associated with prelims (general costs to deliver the project such as power, site huts, site staff etc) are submitted by the Contractor as part of their Contract Sum.
what is a tender return slip
Included in the tender submission, this slip stipulates the content is not to be opened before a set time/date,includes the title of the contract, retuen address and tender check list.
what is best value
refers to the most advantages combination of the whole cycle cost, quality (fitness for purpose) and sustainability (in terms of the economic, social and environmental benefits) available to meet client requirements.
CABE value handbook defines different types of value
Tender Analysis-what criteria would you assess the tenders against
- Price
- Quality (experience, understanding of requirements, past performance, technical skills, resource availability, methodology, management skills and systems)
- Compliance with ITT requirements
what would you include in a tender report
- scoring matrix (eg. 1-5 perfect answer)
- weighting of each category (e.g. methodology may be 10% of the total score)
- results (score in each category, multiplies by category weighting percentage, all added up to give total score)
- show tender queries and responses
- show prices submitted and prices after normalization
what is partnering
- a concept that can be applied to procurement
- co-operative relationship between business partners to improve performance in delivery
- collaborative, non-adversarial
- initiated through partnering charter, or two party contract aligned to partnering
- reduce disputes, win win culture, but can be abused
what are the requirements for public sector procurement
- Contractors above EU threshold must comply with the Public Contracts Regulations 2015
- Notice must be published on OJEU
what is public contracts regulations 2015
- Apply to public projects above a certain threshold (£4.5m for works contract)
- aggregation rules apply so project cannot be divided into smaller projects sub-threshold
- Private projects included if publicly subsidised
- Project must be advertised on OJEU. Tender period lasts over 30 days. can be reduced to 15 in some circumstances (PIN, prior information notice give)
what are the OJEU tender procedures
- Open procedure; anybody can bid, no PQQ or shortlisting. anyone interested send tender information
- Restricted procedure; PQQ to shortlist candidates. Only successful candidates invited to tender
- Competitive dialogue; begin with PQQ. shortlisted bidders enter into dialogue to discuss project, develop solutions. Following this, successful tenders are invited to bid
- Competitive negotiation procedure; begins with PQQ. Tenders are invited to negotiate, No formal rules or ending. Negotiating can continue on after preffered bidder is selected.
How long are projects generally advertised for in the private sector
- 14 to 21 days adequate for single stage tender
- longer if period coincides with a holiday
How long would you expect the tender period to be?
- Varies based on tender procedure
- 3-4 months where contractor’s design portion require e.g. design and build projects, two- stage tendering
what are the key methods used to pay contractors
- Lump sum
- re-measurement
- reimbursable
- target cost
- guaranteed maximum price
- period payment
- milestone payment
- staged payment
- activity schedule
what is the LDP2 (London Development Panel 2)
- A construction framework for residential-led development to support the mayor’s ambition to accelerate housing development
- 29 panel members pre-selected through a rigorous procurement process
- applicable to Greater London
what set of rules does public sector procurement adhere to?
Public Contracts Regulations 2015 (PC Regulations)
Why were Public Contract regulations implemented
EU Directive 2014/21/EU
When do PC regulations apply
when the employer is a ‘Contracting Authority’ and contract awarded a ‘public contract’
Name three tendering procedure
single stage
two stage
competitive dialogue
covered in JCT TPN 2017
Name four forms of tendering
Open
Selective
Negotiated
Different types of work may require serial tendering or framework tendering
why may post contract changes cost more in a design and build project?
higher mark up.
Contractor takes on more risk as they own design
what would be included in a procurement report
- Executive summary giving over view
- introduction
- review of client/project objectives and constraints, critical factors
- review of procurement options
- recommendation based on above
what tender documents would be sent out for a design and build project
- ITT
- Form of Tender
- Declaration of non collusion
- ER
- draft contract
- Prelims and general conditions
- pre contract health and safety pack
- working practice; contractors working guide
- provisional programme
what would the difference be between the tender documents for design and build and a traditionally procured project
Instead of employers requirements, you would have architects drawings, MEP drawings etc.
what documents should be sent out in PQQ
-Equity letter
-Project Information
-Schedule
-Pre qualification questionnaire
JCT PN17 gives model forms of the above
what is the minimum period response to public project PQS
30 days from OJEU notice (Official Journal of the European Union)
15 days in urgent cases
what should a project information schedule include
-project estimated value
-employer, professional team, point of contract
-tender procedure to be used
-programme
-contractors design requirements
-BIM requirements if applicable
-contract used and any amendments
contract particulars including requirements for collateral warranties, third party rights, bonds, insurances
what are the four categories of a questionnaire in a PQQ
- the basic factual particulars
- questions relating to financial matters and good standing
- regulatory and compliance matters
- technical capacity (capabilities, skills, past performance)
how many tenderers should be shortlisted in a DB scheme
No more than 4
generally how many tenders should be shortlisted through a PQQ process or otherwise, excluding DB schemes
3-6
how long do you expect the tender period for a single stage tender to last, private and public
Minimum 28 days for private
Minimum 35 days for projects subject to PC regulations
For design and build projects, this may be extended to 3-4 months, but this entirely depends on the complexity and development of the design
what is the best value criteria
quality price technical merit -functional and environmental characteristics -cost effectiveness -lifecycle costs -period required for completion -the criteria and respective weighting's relative to price must be set out,identified and confirmed in the ITT
how are tender submissions assessed
Commercially Best Value (public should be based on best value, price may be an aspect of best value)
what would happen if the employer does not stick to the scoring criteria set in the tender docs
results open to challenge by unsuccessful tenderers
once the tender valuation is complete, what is the difference in notification between public and private projects
in case where PC regulations apply, there is a 10 day standstill period for any challenges following notification of intended award.
when would you use a framework contract and why
for a client that is continuously commissioning works, because:
- it reduces procurement timescales
- reduces learning curves/risks
what should framework contract documents define
-scope of works
-possible location of works
-service likely to be required
-contract conditions used for pre-construction services
-contract conditions used when works are executed
the supplier may propose pricing mechanism for different types of contract used.
what are the different types of planning apps
- Outline planning app-to understand whether a development is likely to be approved before significant cost commitment
- Detailed planning app-full set of info submitted to LA
who applies for planning
Lead designer/client/PM
what’s the procedure for securing planning permission
- contract local planning authority to understand procedure
- generally- planning meetings, submit drawings, issue notices, public consultations, published on planning portal, pay fee
what is a party wall award
Party Wall Agreement
it’s document produced by the two party wall surveyors (or the agreed surveyor) which resolves the dispute that was triggered when the party wall notice was not consented to
what are party wall notices
Notifying a party tenant/neighbour of works to be carried out to an adjacent property
what’s the difference between an invitation to Tender and Instruction to Tenderers
- Invitation to tender: a formal invitation to make an offer for the supply of goods or services. Includes Letter of Invitation to Tender+tender docs
- Instruction to tenderers: instructions regarding tender procedures
JCT IC-what’a an interim certificate
Certificate what the CA is telling the client they should pay the contractor
what provisions for dispute resolutions are there in JCT IC/DB?
Adjudication Arbitration legal proceedings (litigation)
what is procurement
The act of obtaining goods or services from an external source
how long would you expect a PQQ to be out for on a private project
14-21 days, longer if there are holidays or substantially detailed questions
In the construction phase of a Design and Build contract, who is responsible for ERs, CPs
- Ers;client, unless contract is amended
- Cps-contractor
are there provisions for a QS in JCT DB 16
No
what happens to the final date for payment in JCT IC if a payment certificate is not issued, but a payment notice is issued 3 days later
the final date for payment is pushed back 3 days (the nr of days between the final date for payment and issue of the payment notice)
