Tendering Methods Flashcards
What is tendering
the process of inviting bids from interested contractors to complete packages of work
What should a tender be…
-Fair- all bidders have the same info at the same time
-Clear- clear scope
-Simple- transparent on prerequisites for success
-Accountable- ability to understand why decisions are made
Key Criteria for judging a tender
-Cost
-Quality
-Time
-Environment- Carbon, noise
-Social Value- Societal Impacts
Define Tender
Offer by a contractor to undertake a specified piece of work or programme for a quoted sum
What’s the difference between a Type 1 and Type 2 tender
Type 1= Standing Offer, the acceptance of which doesn’t create a binding contract
Type 2= If accepted creates a legally binding contract
Methods of Tendering
-Open (Traditional)
-Single Stage Selective
-Two Stage Selective
-Negotiation
-Competitive Dialogue
Characteristics of Open Tendering
-Advertisement in the technical press inviting interested parties to apply for tender documents
-Everyone has equal opportunities to tender and everyone has the same info
-Employer is not bound to accept the lowest or any tender
Advantages of open tendering
Results in very competitive tendering prices
Creates opportunities to a larger number of contractors
Better competition
Traditional method, so familiar to everyone in the industry
Disadvantages of open tendering
Can result in a contractor who has little experience being chosen (no reliability about the quality of the work)
The tender process takes a long time- expensive
Unreliable competition
Characteristics of Single Stage Selective
o A short-list of suitably qualified contractors are invited to tender for the proposed works- these names may be pre-approved or drawn up through a pre-qualification process
o Useful as simple
o Most popular tending form for large contracts
Advantages of single-stage
Reduces tendering costs and time
Can select a reliable experienced contractor
Disadvantages of single-stage
Tendering prices not as competitive as there is less competition
Difficult for new firms to obtain work
Can be biased
Characteristics of Two-Stage Selective
Stage 1: Selection of contractor through competitive tendering, and the establishment of a pricing basis for future negotiation
Stage 2: Selected contractor provides required paperwork and submits price bid
o Contractors don’t like this route as much
o Contractor selected on the basis of an approximate bill of quantities, the contractor then works closely with the design team and a final tender is submitted based on bill prices previously outline in the successful competitive tender
o Used where the selection of the right contractor is of paramount importance due to an early start being required or the need for technical contribution from the contractor
o More convoluted
Characteristics of Negotiation (nomination)
o Special case of selective, but the shortlist contains only one name
o Contractor may be selected by direct negotiation
o Challenge the contractors quoted price- can work with them
o Used with specialist contractors, a single firm is asked to submit a tender which is negotiated between the quantity surveyor and contractor
o Price tends to be higher than open competition and leads to problems for new firms
Advantages of negotiation
Time consumption low
Can select a reliable, experienced contractor at a reasonable price
Contractor can contribute their expertise during design stage
Can lead to early commencement of work on site
Disadvantages of Negotiation
Tends to result in a higher tender figure, than if there was open competition
Difficult for new firms to get work
Can be risky at the negotiation stage
Characteristics of competitive dialogue
o Start dialogue with multiple contractors in order to determine optimum solution. Following which the contractors compete on the basis of the identified solution
o Dialogue Stage= confidential bilateral dialogue with each contractor to identify and define acceptable solution
o Final Stage= final tenders are invited on the basis of their identified solutions
o Contractors don’t like this as they can do lots of preparation with no guaranteed work at the end
What does the public contracts regulations 2015 state about public sector tendering
o Open and Selective Tendering Procedures as the normal tendering methods
o Got to be available to as many people as want to tender
o Mandatory debriefing of tenders
What does the Social Value Act 2012 state
Contract awarded on the ‘best value tender’
Define Standstill Period
Period of time between the notice of the contract award decision and the award of the contract
What is the min standstill period for a public sector tender and why is this
-Min 10 days
-To allow for unsuccessful tenderers to consider their feedback, and gives them an opportunity to ask for further info or call for a review
What is a framework agreement
- Long-term agreement between a client and one or more works/service providers that enables the client to place contracts as and when they needed on terms pre-agreed by the parties
o Must include a minimum of 3 members
o Work must be awarded on the basis of fair criteria in the framework
o Must not last longer than 4 years
o Standstill period applies to the award of framework, not to individual call-offs
- A pain-gain share fund is created which is split between parties in proportion to their individual contributions to the overall achievement of the stated performance indicators
What is a joint venture
-Bring together multiple parties to work together smoothly
-Used on very complex projects
-Manages risk-if one contractor goes into administration
-Share knowledge
2 types of joint venture
Integrated- Joint company
Unincorporated- Contractual agreement
