Tendering Methods

Question 1

What is tendering

Answer 1

the process of inviting bids from interested contractors to complete packages of work

Question 2

What should a tender be…

Answer 2

-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

Question 3

Key Criteria for judging a tender

Answer 3

-Cost
-Quality
-Time
-Environment- Carbon, noise
-Social Value- Societal Impacts

Question 4

Define Tender

Answer 4

Offer by a contractor to undertake a specified piece of work or programme for a quoted sum

Question 5

What’s the difference between a Type 1 and Type 2 tender

Answer 5

Type 1= Standing Offer, the acceptance of which doesn’t create a binding contract

Type 2= If accepted creates a legally binding contract

Question 6

Methods of Tendering

Answer 6

-Open (Traditional)
-Single Stage Selective
-Two Stage Selective
-Negotiation
-Competitive Dialogue

Question 7

Characteristics of Open Tendering

Answer 7

-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

Question 8

Advantages of open tendering

Answer 8

 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

Question 9

Disadvantages of open tendering

Answer 9

 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

Question 10

Characteristics of Single Stage Selective

Answer 10

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

Question 11

Advantages of single-stage

Answer 11

 Reduces tendering costs and time
 Can select a reliable experienced contractor

Question 12

Disadvantages of single-stage

Answer 12

 Tendering prices not as competitive as there is less competition
 Difficult for new firms to obtain work
 Can be biased

Question 13

Characteristics of Two-Stage Selective

Answer 13

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

Question 14

Characteristics of Negotiation (nomination)

Answer 14

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

Question 15

Advantages of negotiation

Answer 15

 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

Question 16

Disadvantages of Negotiation

Answer 16

 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

Question 17

Characteristics of competitive dialogue

Answer 17

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

Question 18

What does the public contracts regulations 2015 state about public sector tendering

Answer 18

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

Question 19

What does the Social Value Act 2012 state

Answer 19

Contract awarded on the ‘best value tender’

Question 20

Define Standstill Period

Answer 20

Period of time between the notice of the contract award decision and the award of the contract

Question 21

What is the min standstill period for a public sector tender and why is this

Answer 21

-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

Question 22

What is a framework agreement

Answer 22

• 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

Question 23

What is a joint venture

Answer 23

-Bring together multiple parties to work together smoothly
-Used on very complex projects
-Manages risk-if one contractor goes into administration
-Share knowledge

Question 24

2 types of joint venture

Answer 24

Integrated- Joint company

Unincorporated- Contractual agreement