Procurement and Tendering Flashcards
(101 cards)
1
Q
What does traditional procurement involve?
A
Client maintains contract responsibility of design
Contractor responsibility of works
2
Q
What does D&B procurement involve?
A
works on the basis that the main contractor is responsible for undertaking both the design and construction work on a project, for an agreed lump-sum price
3
Q
Why is a lump sum contract used?
A
The main purpose of a lump sum contract is to give the client certainty by fixing the price of the works
4
Q
Why is a remeasurement contract used?
A
Design information may be incomplete meaning works can’t be priced on lump sum
Nature of work maybe more suited to remeasurement if quantity cant be defined
5
Q
Why is a remeasurement contract used?
A
Design information may be incomplete meaning works can’t be priced on lump sum
Nature of work maybe more suited to remeasurement if quantity cant be defined
6
Q
What are the difference between single, two stage and negotiated tenders?
A
Single - Signle stage of tendering where works priced on design info
Two stage tender - First stage prelims and quality submission second stage desing reviewed with contractor and price of works formulated
Negotiated - Preferred contractor selected and sum is negotiated
7
Q
What are the fundamentals of e-tendering?
A
E-Tendering lets bidders submit required information in response to a formal request for proposal (RFP) by a deadline, generates and exchanges documents with e-signatures and messaging, and evaluates bidding suppliers for the procurement opportunity.
8
Q
How are subcontractors selected for tender?
A
Previous experience preferred contractor list
Rated on cost quality and time
9
Q
What is the process to ensure tenders are like for like?
A
Compared against CPs and ERs and inclusions to ensure cost is like for like
Put into a subcontractor comparison analysis
10
Q
What is discussed in the pre let interview?
A
- Particulars
- Compliance
- Basis of tender quotation
- Scope of works
- Attendances
- Programme
- Health and safety
- Quality
- Defect rectification
- Commercial
- Tax and insurance
- Data Protection
11
Q
How do you approach tender clarifications?
A
Review queries
- Formulate a response
- Relay to all tenderers
12
Q
How is your subcontractor recommendation put together?
A
- Tender budget
- Subcontractor comparison
- Quotation
- Payment terms
- Insurances
- Programme
- DLA
13
Q
What is procurement?
A
- The overall process of obtaining construction goods and services
14
Q
What are the main factors that would determine procurement route selection?
A
- Client objectives and key drivers, risk allocation
- Must consider and balance the client’s priorities, as you usually find that one procurement route won’t satisfy everything the client wants.
- Cost, time, control, quality, risk
- Higher risk usually means cost premium
15
Q
Which procurement route poses the least risk to the employer?
A
- D&B - the design risk is transferred to the contractor (single point responsibility)
16
Q
Which procurement route is the riskiest for the employer?
A
- Construction management - the employer places individual contracts direct with each trade contractor, construction manager has no risk (except professional negligence)
17
Q
How to identify client requirements before recommending procurement route?
A
- Detailed discussions with client and design team - identify priorities especially in time, quality, risk, control and experience
18
Q
What are clients’ key drivers when procuring a building project?
A
- Cost
- Time
- Quality
- Risk
19
Q
What is traditional procurement?
A
- Design and construction separate - employer appoints consultants for design then contractors submit tenders on fully developed scheme (apart from CDP - the consultants are retained by employer and will review and approve these).
Contractor is responsible for construction and client for the design (& design team performance)
20
Q
Advantages and disadvantages of traditional procurement?
A
:)
- (Excluding significant design changes) Reasonable certainty of construction costs before commencement if design is robust.
- Employer retains control of design, knows exactly what they’re getting and potential for higher quality
- Minimal risk priced in costs from contractor
- Design changes reasonably easy to arrange and value
:(
- Longer project duration (less overlap with design and construction)
- Limited contractor buildability input
- Employer retains design risk
- Dual point of responsibility - employer = design, contractor = construction
- Price competition requirements can lead to adversarial relations
21
Q
Where might traditional procurement be appropriate?
A
- Specific / detailed design requirements - client wishes to retain control of design and spec - design, cost and programme certainty
- Cost certainty before construction = priority compared to programme
- Quality - client retains control
- Competitive tender analysis more fair
- Established - most linear and commonly used method of construction
22
Q
What is design and build?
A
- Contractor responsible for completing design and executing construction phase, inc planning, organisation and work according to ERs.
- Under JCT - employer’s team produce employer’s requirements (ERs), then the contractor responds with contractor’s proposals (CPs) which include price.
- Design risk transferred to contractor when they’re appointed for a job- in some cases the original employer’s design team may be novated to contractor for continuity, or the contractor appoints their own design team (internal or separate design company)
23
Q
What is novation?
A
- Used in D&B to transfer benefits and obligations of contractual agreement from client to the contractor- terms and conditions the same except parties in agreement.
- Benefits and obligations transferred (i.e. responsibility of payment)
24
Q
Advantages and disadvantages of novation?
A
- Advantages - continuity, accountability, assurance on quality for client, reduces risk of post contract changes / disputes, less likely to price in design risk, contractor doesn’t commit as much time/resource to reviewing / validating design
- Disadvantages - Contractor unlikely to be familiar with architect- risk of non-beneficial working relationship, architect underperformance = contractor responsibility, inc prior to their involvement - could be unfair
25
Alternatives to novation?
- Option to assign design team, contractually retained by client (not as good for risk averse)
26
How much design input will the contractor have under D&B?
* Depends on design work already completed by the Contractor’s appointment
* Can range from full design to production info and coordination only
27
How does D&B establish cost certainty?
* Lump sum submitted for whole of works provides cost certainty in single stage tender
* Design development responsibility is contractor’s so risk transfer with it
28
Advantages and disadvantages of design and build procurement?
:)
- Single point of responsibility for design and construction (contractor) - they maintain risk
- Earlier commencement on site possible - faster programme if design and construction can be overlapped
- Buildability incorporated into design (contractor’s experience)
- More cost certainty overall than traditional procurement, early price certainty may be increased
:(
- Design is only as good as employer’s requirements - employer may not have a sufficiently comprehensive brief
- Client may have to commit to concept designs early
- More complex to compare tender returns
- Employer changes difficult to value, often more expensive
- Less employer control over aesthetics and quality
- Risk premiums cost in tender return
29
Where might D&B procurement route be appropriate?
* Earlier start on site required, quicker programme
* When employer wants to minimise risk profile
* Contractor’s buildability input may help with technically complex projects
* Where retaining control of design is not priority
* Contractor assumes risk and responsbility for design
* Cost certainty required
30
Other consideration for D&B routes?
* Additional insurances - Professional Indemnity Insurance (PII) might be needed as the contractor has design responsibility
* Employer usually pays a premium as contractor is taking on the design risk, so usually there is an allowance (sum of money) in exchange
31
Typically, what stage would contractor’s be taken on board?
Stage 3 - further design development to still get benefit from contractor
32
What’s in a novation agreement?
* Relinquishes consultant from client
* Contractor takes responsibility for all design done before their involvement
* Payment terms
* New parties
* Terms and conditions
33
What is construction management?
* Employer directly appoints multiple subcontractors (trade contractors) instead of single main contractor - individual contracts with separate specialist trade contractors
* Construction manager expertise to coordinate and supervise works for employer, but they have no contractual link to trade contractors - construction manager has no vested interest in financial outcome and carries no risk
34
What is the construction manager’s role?
* Preparation of programme
* Determine requirements for site facilities
* Breaking project up into suitable packages
* Obtaining and evaluating tenders
* Coordinating and supervising works
* Requires a lot of upfront buildability knowledge
35
Advantages and disadvantages of construction management procurement?
:)
- Speed (early start on site), overlap with design and construction
- Construction manager can contribute to design and project planning processes
- Easy to facilitate changes in design
- Prices may be lower due to direct contracts with trade contractors (not paying contractor’s premium)
- Employer has means of redress with trade contractors through direct contractual links
- Clear / direct roles, risks and relationships
:(
- No price certainty until last trade package is let
- Needs informed, experienced, proactive employer
- Lots of consultants and contractors for employer to manage
- Changes to packages could adversely affect already let packages
36
Where might construction management be appropriate
* Experienced employer with sufficient resource to manage project
* Employer wants early start on site
* Flexibility for minor changes in design / spec / construction strategy throughout, with minimal impact on time / finances
* Large, technically complex job needing specialist consultants and trade contractors
* Price certainty before commencement not a key driver
* Repetitive work where structure / works is quite similar
37
What is management contracting?
* Employer appoints management contractor to manage entire building process
* Management contractor appoints trade contractors with competitive open book tender to carry out construction works
* MC paid fee % / management fee based on construction costs
* MC has direct contractual link with trade contractors - responsible for overall construction works
38
Advantages and disadvantages of management contracting procurement?
:)
- Shorter programme (overlap design and construction)
- Management contractor (MC) provides buildability input
- MC single point of responsibility
- Trade packages let competitively and transparently
- Flexibility in design - changes made throughout construction process
- Contractor contribution to design and planning process
- Works are let competitively at current market prices on firm price basis
:(
- No price certainty until last package is let
- Informed, proactive employer required
- % fee can disincentivise management contractor to minimise costs
39
Where might management contracting be appropriate?
* Early start on site
* Flexibility in design
* Buildability input from management contractor
* Cost certainty not priority for employer
* Changes to design of latter packages may affect packages already let
* Little incentive to MC to reduce costs
* In practice, MC has little legal responsibility for defaults of trade contractors
40
Difference between management contracting and construction management?
CM - Employer directly appoints multiple trade contractors to execute works - direct contractual relationships with employer not CM
MC - Employer appoints management contractor who appoints trade contractors, direct contractual employer with employer and MC only
41
What are the reasons for a robust tendering strategy?
As per RICS tendering strategies:
- Accountability
- Auditability
- Ensure everything is allowed for
- Parity
- Reduce corruption claims
- Ensure correct price paid for proposed works
42
What are the main methods of choosing a contractor?
* Open tendering
* Selective tendering (single or two stage)
* Negotiated tendering
[- Serial tendering - not as essential]
43
What is a pre-qualification questionnaire?
- Sets out a series of questions for potential tenderers to answer regarding their level of experience, capacity and financial standing etc. before being invited to tender. Now superseded by selection questionnaire (SQ) but private projects may still use PQQ
44
What is a selection questionnaire?
- Questionnaire issued by contracting authorities to prospective bidders - series of questions regarding experience, capacity and financial standing before being invited to tender. SQs incorporate exclusion grounds in Public Contract Regulations 2015 (PCR 2015) and aligns with European Single Procurement Document (ESPD)
45
What’s the difference between PQQ and SQ?
* SQ now updated to incorporate the exclusion grounds in the PCR 2015 and ESPD. This correlates with exclusion concerning Modern Slavery Act 2015
* SQs tend to also have the difference that you can self-certify that you meet the requirements instead of having to gather and submit all the evidence. Instead you’ll be asked to provide this once invited to tender or when being awarded the contract.
* SQ’s typically for public sector procurement
46
What might the SQ ask for?
* Part 1 - Potential Supplier Information; Company details, inc any parent companies, contact details
* Part 2 - Exclusion Grounds; participation in criminal organisation, corruption, fraud, money laundering, terrorism, child labour -> if yes may need to demonstrate reliability of organisation despite ground for exclusion
* Discretionary exclusion - breach of environmental, social, labour law obligations, professional misconduct, bankruptcy, conflict of interest
* Part 3 - Selection questions; Economic and financial standing (cashflow, audited accounts, financial documents - profit and loss, balance sheet, statement of cash flow), PCG / guarantee from elsewhere (bank), technical and professional ability (relevant experience and contract examples), modern slavery act requirements - ensure compliance with section 54, Insurance (employer’s liability, public liability, professional indemnity, product liability), skills and apprentices (supporting commitment to development), steel (supply chain management systems, examples of management, breaches of H&S), suppliers past performance
47
What is open tendering?
Tenders submitted to open market, via adverts in papers, technical press. Little / no barriers for submitting a tender
48
Advantages and disadvantages of open tendering?
:)
- Opportunities for capable firms the clients may have not previously considered
- Secure maximum competition from open market
:(
- Danger of increased errors due to risk of inexperienced contractors with no prior understanding of client requirements
- No assurance the lowest tenderer is capable / financially stable
- More cost and time to review tenders
49
Advantages and disadvantages of open tendering?
:)
- Opportunities for capable firms the clients may have not previously considered
- Secure maximum competition from open market
:(
- Danger of increased errors due to risk of inexperienced contractors with no prior understanding of client requirements
- No assurance the lowest tenderer is capable / financially stable
- More cost and time to review tenders
50
What is selective tendering
* Restricting numbers of tenderers by pre-selecting limited no. of contractors to tender for the work
* Can be single or 2 stage
51
If you have a £25m new build project under D&B procurement (single stage tender) how long would you allow for the tender period?
Depends on complexity of project
- 10-12 weeks might be reasonable as it would take time to interpret employer’s requirements
52
What is single stage tendering?
* Receiving competitive tenders from no. of pre-selected capable contractors, based on their financial standing, qualifications and certification, prev track record, references, organisational structure, capacity and resources, size of work prev done.
* Bid based on identical tender info, usually done at RIBA Stage 4 to get relevant detailed info.
53
Advantages and disadvantages of single stage tendering?
:)
- Ensures only capable and approved firms submit tenders
- Reduce aggregate cost of tendering
- Reduces risk of receiving from unsuitable contractors
- Competitive tendering process - potential competitive pricing
- Fixed price as a result
- Most straightforward
- Shorter overall tendering process
:(
- No buildability input from contractor at point of tender
- Price is only as reliable as design info
- Contractors may be unwilling to tender in good economic climate (too much competition)
- Risks of unknowns may dissuade some contractors - risk of prov sums
54
What is two stage tendering?
* Client appoints contractor based on outliine scope of work not fully defined
* Client works with appointed contractor to develop scope of work and reach agreed price
* Useful to obtain contractor’s buildability expertise on project, gain earlier contractor involvement
Stage 1
* Outline project design, contractors compete for preferred contractor status. Chosen based on quality of bid, team, prelim & OH&P allowance, schedule of rates. Preferred contractor joins design team on consultancy basis using pre-construction services agreement (PCSA).
Stage 2
* Once design sufficiently progressed, contractor enters detailed negotiation to agree final price, contract conditions and programme
55
Purpose of the first stage?
Get a contractor to help client develop and finalise design using buildability expertise
56
What do tenderers return as part of the first stage?
* Detailed build up of prices for preliminaries items
* OH&P %
* Programme
* Proposed sub-letting of works
57
Purpose of the second stage?
- Agree final price, contract conditions, programme
58
Advantages and disadvantages of two stage tendering?
:)
- Early contractor involvement
- Encourage collaborative working
- Potential earlier start on site
- More client involvement selecting supply chain / subcontractor
- Improved opportunity for contractor to identify and manage project risk
- Less resource intense 1st stage more attractive for contractors
- Walk away clause retained by employer
:(
- Low cost certainty before construction starts
- Additional PCSA fees for contractor
- Negotiated 2nd stage has less incentive to price competitively
- Potential for negotiation stage to fail, risk of re-tendering
- Potential prolonged tender phase
59
What stage would you bring the contractor on board?
* Generally Stage 2 for further design development
* Can be other stages but it’s important to factor in whether you lose buildability benefits and earlier means higher fees
60
How can you gain input from specialist subcontractor other than 2-stage tendering?
- Separate contract and assign benefits to main contract
61
What is a negotiated tender?
* Client has existing preference for appointing a particular firm, so will only submit tender and negotiate pricing with one contractor
* Rates or prices from previous project could be used as basis of agreeing price
* Generally not allowed in public sector projects
62
Advantages and disadvantages of a negotiated tender?
:)
- Simplicity
- Negotiated process could have programme benefits if done in good faith
- Employer has flexibility choosing preferred contractor
- Time and cost savings to multiple tender submission analysis
- Early contractor involvement
- Good relationship with employer and contractor
:(
- Possibility of delay if negotiations protracted
- Potential cost premium (lack of competition)
- Heavy reliance on trust between parties
- Can be seen as anti-competitive and exclusive
- Not suitable for public clients
63
How do you justify value for money in negotiated tender?
- Insist on open book approach- min of 3 quotes provided for each element of works (needs to be agreed up front with contractor)
64
What are the inherent risks of negotiated tendering?
* Higher costs
* Not usually suitable for public clients - can be seen as exclusive
* Possibility of delay if negotiations protracted
* Heavy reliance on trust between parties
65
Why would you use negotiated tendering?
- Complex works, small pool of contractors
66
What might selecting wrong contractor lead to?
* Bad client & contractor relationship
* Dissatisfied client
* Insolvent contractor
67
What initial advice would you give to an inexperienced client / request from them in respect of commencing a new project?
- Appoint professionals with prior experience
68
What is the method of tendering for for public bodies since leaving the EU?
- Find a tender service
69
OJEU vs FTS?
* No changes in procurement laws, so processes still based on same legislation (Public Contracts Regulations 2015)
* FTS - now procuring entities need to submit notices to UK e-Notification Service (formal name for FTS) - doesn’t apply to live procurements / awards under existing framework
70
Can you talk me through the tender process?
Produce tender enquiry
- Choose suitable tender strategy and period
- Reach out to contractors
- Compile tender docs
- Manage tender process (queries, withdrawals, addendums)
- Tender analysis (review, equalise, tender queries)
- Post tender interviews
- Subcontractor recommendation
- VE proposals
71
What is included within tender documentation?
> Invitation to tender letter
Form of tender
Contract conditions
Instructions to tender docs
Works information/prelims/ERs - sets contract particulars, level of design responsibility
Design info
Pricing document
Typical appendices (H&S, surveys, planning, building control docs, warranty, risk register
72
Design and build vs traditional procurement?
DB
- Earlier start on site
- More contractor buildability input
- Least risk to contractor
- Single point of responsibility
Trad
- Retain control of design
- Design changes easy to determine and value
73
What would you include in a tender report?
- Tender process and period
- Tender examination
> arithmetical check
> qualifications
> provisional sums and daywork
> post tender adjustments
> preliminaries
> OH&P
- Comparison of tender with budget
- Recommendation
- Next steps
- Exclusions
- Appendices (form of tenders, tender comparison, tender queries)
74
How many tenderers would you invite for a competitive process?
JCT tender practice note
- generally between 3-6
- D&B requires a lot more contractor input so no more than 4
- Public procurement - 3 for processes inc negotiation, 5 for restricted procedures
- Varies with frameworks and nature
75
What is an ITT?
Invitation to tender
- Give indication of documents, date and time for return, contact point, basis of award, arrangements and procedure, any required info from contractor
76
What does an ITT include?
- Tender form inc description and location of works
- Name and address of employer
- Relevant documents
- Arrangements, dates/timescales
- Mention whether there’s interviews
77
How do you ensure compliance with your tender submissions?
As per JCT practice note
- Ensure submissions are based on identical documents
- Consider extending period depending on circumstances to minimise qualified tenders
- Give tenderers opportunities to withdraw qualifications to produce compliant tender or reject if refuses to withdraw
- Put in a tender acceptance period
78
What’s examined for compliance with invitation to tender and instructions?
* Maths errors
* Pricing errors (items not priced)
* Pricing methods (front loading)
* Compare CPs against ERs (D&B)
* Completed Form of Tender
* Resolve qualifications
79
What is the risk of evaluating a quality submission?
* Employer must abide by established criteria, otherwise unsuccessful tenderers open to challenge
* As a QS my knowledge of commercial submission could impact my views on quality
80
What are the alternatives when a contractor makes an error in a tender?
* Alternative 1 - don’t permit correction of overall tender price (confirm / withdraw - not apt for 2-stage)
* Alternative 2 - permit correction (confirm / amend - open to abuse if not properly supervised)
81
What is the standstill period?
* Where Public Contracts (PC) regulations apply, contract is not entered into before end of 10-day ‘standstill period’ for any challenge to award (or 15 days if not online / by email)
82
What is the contractor responsible for in traditional contracts?
Temporary works elements, i.e. facilitating / enabling works / propping
83
What do you include in a 1st stage tender package?
* Prelim document
* Initial drawing and spec
* Pricing doc
* Requirements for bond warranties
* Contract and proposed amendments
84
What is a form of tender?
Document the contractor usually signs and returns with proposed tender submission. Formal acknowledgement that tenderer understands and accepts T’s & C’s.
85
What additional info might be requested from contractors?
* Prev exp
* Proposed team
* Methodology / logistics
* References
* Programme
* H&S info
* VE proposals
* Social value strategy
* D&I policy
86
What pricing mechanisms are available? Which procurement route do they relate to?
* Traditional: lump sum, re-measurable, target cost, guaranteed maximum price
* Design and build: lump sum, guaranteed maximum price
* Construction management: cost reimbursable
* Management contracting: prime cost
87
What pricing documents are available and which procurement route do they relate to?
* Traditional: BoQ, SoW
* Design and Build: CSA
* Construction management: cost plan
* Management contracting: schedule of rates
88
How could you reduce risk of contractors pulling out during tender process?
* Accurate tender info
* Long enough period (extend if required)
* PQQ to ensure apt contractors selected
* Check in advance / during they have capacity to complete
89
How do you respond to contractor clarifications during the tender period?
Collate all queries and clarifications, circulate anonymised answers and information to all tendering contractors. Ensures transparency and fairness
90
If the delivery programme is tight, how can you give comfort regarding liquidated damages?
* Amend contract to include liquidated damage-free period / levied at say 50% for a period
* This could avoid excessively pricing tender sum
91
How to deal with front-loaded tender?
- Front loading generally not a pricing error. Request to remove front loading, could be grounds for disqualification with refusal
92
Public vs private sector?
* Processes - public has more regulations, more easily scrutinised (more vested interest)
* Funding
* Transparency (more in public)
* Motivations (i.e. public more service and social value driven than profit driven)
93
On what grounds would you advise your client to re-tender the project?
* Not enough tenders returned
* Compromised tender process (fraud, collusion, bid-rigging)
* Significant design, VE, methodology / programme changes after issuing tender docs
* Tenders not at cost level required
94
What are typical next steps following your tender report?
* Notify successful/unsuccessful tenderers
* Cooldown period- close outstanding clarifications
* Pre-start meeting
* Raise/issue F10
* Delegate/appoint CDM
95
What happens if tender prices higher than PTE?
* Could be down to market conditions / external factor (COVID/Brexit)
* Reconcile tenders with PTE, identify where major differences are
* VE project if prices over budget
96
Why would you advise an alternative offer?
* Significant design change putting budget at risk, risking contractors bidding for other schemes
* Allows for buildability options
* Pricing original spec and design still demonstrates value
* Must be decided prior to tendering (JCT practice note)
97
What other options to alternative offer are available? Why might they not be feasible?
* Addendum - not option if scope completely changed
* Delay scheme, re-design, re-tender - expensive professional fees, lose interest from contractors, tighter programme constraints
* Switch to D&B route - Client already designed to Stage 4, maintain control of quality
98
Can you explain what this the JCT practice note is and how you used it?
Guidance and tools for employers, contractors and professional advisors involved in public and private sector procurement for letting construction contracts (in UK)
* I used it in Ashbrow scheme for
1. preliminary enquiry; timescales for responses, info schedule, questionnaire and determining number of tenders
2. Invitation to tender and process; documents, bribery and corruption considerations, tender period, quality criteria, documents to be supplied, tender compliance
3. Assessment and award; assessment criteria, examination of priced docs and errors, alternative provisions, post tender queries and discussions, recommendation, award and notification
99
With your EQL project you state that none of the contractors provided compliant bids, why were revised tenders accepted?
* Below OJEU / FTS threshold (£5.3m)
* Selected tender not open tender
* Otherwise the change in programme was not possible
100
What due diligence was done when selecting the list for tender on your project?
* Speaking to contractors in advance to ensure they understood nature of project
* Research on potential contractors for similar work (websites)
* Unfortunate circumstances - in Wales there was a large public sector job for the same nature ongoing at the same time so most of the suitable contractors were unavailable at the time
101
What legislation applies to public sector clients?
Public contracts regulations 2015
- Overriding policy requirement that all public procurement must be based on value for money
- Public sector procurement subject to legal framework encouraging free and open competition and value for money
- Enables procurements to be faster with less red tape
- Greater focus on getting the best supplier and tender
