Two Stage Tendering

Question 1

What is two stage tendering?

Answer 1

• Involves dividing tender process into two distinct stages:

Stage 1: Employer provides outline project design and contractors compete for preferred contractor status. Usually selected based on quality of bid, preliminaries and OH&P. Preferred contractor then joins design team under a PCSA.

Stage 2: Once the design is sufficiently progressed, the contractor enters into a detailed contract negotiation with the employer to agree the final price, contract conditions and programme.

Question 2

What are the key advantages of two stage tenders?

Answer 2

• Early appointment of the contractor (early contractor involvement).
• Earlier start on site is possible.
• Increase opportunities to VE with contractors input.
• Improved opportunity to identify and mitigate project risk.

Question 3

What are the key disadvantages of two stage tendering?

Answer 3

• Less incentive for preferred contractor to price second stage competitively.
• Additional cost of contractors PCSA fees.
• Potential for negotiation stage to fail.