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RICS APC > Procurement And Tendering > Flashcards

Procurement And Tendering Flashcards

1
Q

What is procurement? What is tendering?

A

Procurement is the overall act for obtaining goods and services

Tendering is the process by which those goods and services are procured

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2
Q

What procurement routes are you familiar with?

A
  • Traditional
  • Design and Build
  • Management Contracting
  • Construction Management
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3
Q

What are the main factors which typically inform what procurement route you would recommend?

A
  • Time
  • Cost
  • Quality
  • Risk allocation
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4
Q

When might you recommend a traditional procurement route?

A
  • If Client wishes to control design / quality
  • If Client requires cost certainty
  • If the Client does not have any reason to expedite programme
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5
Q

What are the advantages and disadvantages of Traditional Procurement route?

A

Advantages:
- Client retains design control
- Client getting what they want from the scheme
- All tenderers tender on the same basis
- Client can obtain cost certainty
- Should result in minimum risk premium

Disadvantages:
- programme may be longer
- No buildability input from contractor
- Client retains design risk

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6
Q

When might you recommend a Design and Build procurement route?

A
  • Where client requires an early start on site / shorter programme
  • Where Client wishes to minimise their risk profile
  • To benefit from contractor buildability
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7
Q

What are the advantages and disadvantages of a Design and Build procurement route?

A

Advantages:
- Single point of responsibility
- Client transfers design risk
- Provides buildability input from contractor
- Can provide cost certainty

Disadvantages:
- Client cannot control quality
- Can be difficult to compare tender returns
- Employer changes will be more expensive
- Tenderers will build in risk premium into prices

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8
Q

What is a construction management procurement route?

A
  • The Client directly employs the subcontractors to carry out the works
  • The construction manager would deal with programme & coordination of subcontractors to carry out works, but has no contractual link
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9
Q

When might you recommend a construction management procurement route?

A
  • When you have a more experienced client
  • Where the Client does not require cost certainty
  • Employer wants flexibility to make minor design changes
  • Wants to achieve an early start on site
  • When the project is more complex and requires specialist subcontractor design
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10
Q

What are the advantages and disadvantages of a construction management procurement route?

A

Advantages:
- Early start on site / programme benefits if construction & design overlapped
- Client has some flexibility with design
- Prices may be lower due to direct contracts

Disadvantages:
- Client has direct contractual link with subcontractors, and construction manager does not have the contractual relationship, barring them from professional negligence
- Cost certainty not obtained until last package is agreed

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11
Q

What is management contracting?

A
  • Essentially a main contractor
  • Client employs a “management contractor” to manage trade contractors, for a fee %
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12
Q

When might you recommend management contracting procurement route?

A
  • Cost certainty not a priority
  • Wants to achieve early start on site
  • Employer wants flexibility to make minor changes to design
  • Where buildability input is required
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13
Q

What are the advantages and disadvantages of management contracting?

A

Advantages:
- Single point of responsibility
- Management contractor can provide buildability input
- Programme benefits from overlapping design and construction
- Flexibility with design

Disadvantages:
- Price certainty not achieved until last package is tendered and agreed
- Requires an informed, experienced employer

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14
Q

Which is the least risky procurement route for Clients?

A
  • D&B
  • Transfers risk of design and construction to contractor
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15
Q

What is the riskiest procurement route for Clients?

A
  • Construction management
  • Clients takes out numerous contracts with trade contractors & construction manager carries no contractual link, therefore barring them from professional negligence
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16
Q

What is a framework?

A
  • A collation of contractors, subcontractors and suppliers that have agreed to use an established set of governing terms to be procured for schemes
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17
Q

When might you recommend a framework?

A
  • If client wishes to reduce time associated with procurement
  • Financial benefits, eg maximum OH&P
  • Efficiency benefits, eg procurement team on hand to advise
  • Public sector clients would generally use frameworks for procurement
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18
Q

Why do public sector clients use frameworks for procurement?

A
  • Compliance with UK Public Contracts Regulation 2015
  • Ensures public sector clients provide opportunity, equality and non discrimination
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19
Q

How long are frameworks typically in place?

A
  • Usually around 4 years
  • Can be between 2 and 10 years
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20
Q

What are the advantages and disadvantages of framework agreements?

A

Advantages:
- Encourages long term collaboration between parties
- Saves time through procurement process
- Opportunity for repeat work
- Rates and prices usually agreed up front
- Capped OH&P

Disadvantages:
- Contractors can become complacent
- Bidders could invest time and money to get onto the framework, then not receive any work

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21
Q

What is a PQQ?

A
  • Pre Qualification Questionnaire
  • Sends out a set of questions to potential tenderers to understand their experience, financial standing and capacity
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22
Q

What is the aim of a PQQ?

A
  • Remove any tenderers that are not suitable to carry out the works
  • Reduces the number of tenderers down to a group that are genuinely fitted to the project
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23
Q

What might the PQQ ask for, from tenderers?

A
  • Financial information
  • Health and safety policies & records
  • Insurance details
  • Company details
  • Relevant experience
  • Technical & professional abilities
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24
Q

Usually you would carry out a credit check as part of the PQQ process. Where would you obtain a credit check from?

A
  • Procure a Dunn & Bradsheet report
  • Use a credit check agency, such as Experian
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25
Q

What would you look for on a Dunn & Bradsheet report?

A
  • Overall financial health of the company
  • Maximum recommended contract value
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26
Q

What is tendering?

A
  • Where Clients invite contractors to bid for works
  • Enables the Client to obtain a price for the works
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27
Q

What is single stage tendering?

A

Single stage tendering involves one stage where contractors are invited to provide a price for the works. It is utilised to secure a price for the works, from the offset.

Time period may be longer as tenderers will need to digest and analyse information. Perhaps 10-16 weeks for large projects, depending on level of information & procurement route.

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28
Q

What are the advantages and disadvantages of single stage tendering?

A

Advantages:
- Client gets lump sum for the works
- Gains the most competitive price (contractors put their best foot forward)

Disadvantages:
- May not be much appetite in good economic climate
- May lead to increased risk allowances / premium

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29
Q

What is two stage tendering?

A

Involves separating tender process into two stages

Usually, first stage involves submitting preliminaries, OH&P, sometimes a key package of works eg Steel / External Walls if requested to be priced. Also a technical submission, eg quality questions, programme, site plan, CV’s etc

Second stage usually involves a process whereby contract sum is built up, through open book tendering with subcontractors, and contract sum then negotiated & agreed

30
Q

What are the advantages and disadvantages of Two Stage Tendering?

A

Advantages:
- Allows early appointment of contractor
- Can benefit from contractor buildability input
- Improved opportunity to identify risk
- Increased opportunity for VE (and input from contractor)

Disadvantages:
- Potential parties will not agree contract sum
- Client may be reluctant to dismiss contractor
- Contractor has less incentive to price second stage competitively

31
Q

What is negotiated tendering?

A

Whereby a contractor is approached directly to tender for the works. Usually based on previous track record.

32
Q

What are the advantages and disadvantages of negotiated tendering?

A

Advantages:
- Speed of appointment
- No tender analysis required
- Process allows for early contractor involvement

Disadvantages:
- Contract negotiations could be lengthy and therefore cause delays
- Cost premium due to lack of competition
- Heavy reliance of trust between parties
- No competition with other contractors

33
Q

How can you encourage competition through a negotiated tender?

A
  • Ensure contractor submits 3 or more quotations during tender to provide competition
  • Ensure its on an open book basis so recommendation can be reviewed and interrogated
34
Q

What documents would you include within a tender pack?

A
  • ITT
  • Contract conditions & any amendments
  • Site information
  • Design information
  • Survey information
  • Pricing document (i.e preliminaries, CSA, Activity / Schedule, blank BOQ’s with / without quants)
  • Scott schedule
  • Forms of tender
  • Quality questions, eg H&S, Financial Info, CV’s etc
35
Q

Can you name some of the pricing documents we would use at Tender?

A
  • BOQ’s (with / without / with approx quants)
  • Activity schedule
  • Contract sum analysis
  • Schedule of preliminaries
  • Blank package of works, if applicable
36
Q

How would you know what to include in your preliminaries pricing document?

A
  • NRM1 guidance provides a list of preliminaries
37
Q

What is a bona fide tender?

A
  • Means the contractor has submitted in good faith with no collusion with other parties
38
Q

Do tenders still need to be disclosed in the OJEU?

A
  • No
  • Since we exited the EU, the UK provides its own FTS (Find a Tender Service) where tenders should be disclosed
39
Q

When would you need to disclose in the FTS?

A
  • When contract value exceeds c.£140k
  • For public sector contracts only, private clients do not need to disclose in the FTS
40
Q

What is a form of tender?

A
  • Forms are included to demonstrate tenderers acceptance of T&C’s, that the tender is bona fide, and there was no collusion through the process
41
Q

What is typically included within a contractors tender return?

A
  • H&S information
  • Financial information
  • Populated pricing documents
  • Signed forms of tender
  • Programme of works
  • Proposed team & CV’s
  • Logistics plan
  • Social value
  • Methodology and approach to construction
  • Case studies of previous similar works
  • Signed by power of attorney who has authority to do it (on companies house as listed director)
42
Q

What would you do when you receive tenders back?

A
  • Check all tenders for arithmetic errors
  • Check for pricing errors
  • Ensure all items have been captured
  • Check forms of tender have been signed by an authorised person
43
Q

How would you know if the forms of tender have been signed by an authorised person?

A
  • Can check companies house to see if the person is an authorised director of the business
  • Confirm with the tenderer that the person who has signed the forms of tender is an authorised person within the business
44
Q

What happens if a tender is submitted late?

A
  • Would depend on the circumstances in which a late tender was submitted, eg - if it was the fault of the client, for example, if an electronic tendering system was faulty, it may be valid
  • I would consult the Client to see if they would like to accept the tender, but if not, it would be disqualified from the tendering process
45
Q

What would be your concerns with a low tender submission?

A
  • Tenderer may have missed some items from their pricing schedule
  • Tenderer may be trying to buy the job, so could be in a financial unstable position
  • Tenderer may have mispriced items
46
Q

How would you deal with errors in a tender submission?

A

Tenderers should be given the opportunity to confirm their offer or amend any areas that may be incorrect

47
Q

What would you do if you suspected the contractor, who provided the lowest tender, to be in financial difficulty?

A
  • Undertake a financial check, using either a credit check agency (such as experian), or undertake a Dunn & Bradsheet report
  • Consider requesting a PCG or a performance bond
  • Undertaking a rigorous PQQ process would likely disqualify any contractors that may not be able to meet the criteria
48
Q

Are you aware of any bonds that could be used when tendering to mitigate unsuitable tenderers?

A
  • A tender bond could be adopted to reduce idle tendering & ensure the client is covered in the event a tenderer does not enter into contract
49
Q

Why might you advise a client to retender a scheme?

A
  • If you believe you would get different results from tendering to a different lot of contractors
  • If there was not enough responses / lack of competition
  • If the design has substantially changed
  • If the tendering procedure is compromised, eg collusion
50
Q

How would you reduce the risk of contractors withdrawing from the tender process?

A
  • Ensure tender documentation is clear and not conflicting
  • Ensure there is a fair apportionment of risk
  • Ensure they have enough time to provide the necessary information
  • Ensure tendering contractors are suitable, ie by conducting a thorough PQQ process
51
Q

If the tender was received on time, but the works were delayed and not due to commence for a few more months, what would you need to check?

A
  • Check the tender validity period
  • If exceeds tender validity period, could request contractors resubmit programme & pricing schedule
52
Q

If a contractor marks an item as provisional in their tender return, what would you do?

A
  • Tenderer may not be compliant
  • Request tenderer resubmit with a firm cost or exclude, or request further information
  • Could disqualify them from the tender process
53
Q

Are you aware of any guidance associated with E Tendering?

A
  • Yes
  • RICS Professional Guidance on E Tendering
54
Q

What can you tell me about the RICS professional guidance on E Tendering?

A
  • Ways that tender documents can be shared, eg disk drive, CD, email, tender portal
  • Guidance for security when using electronic methods, eg sending and receiving data, eg having a secure network, keeping backups and records of information issued
  • Guidance on assessing and analysing tenders
55
Q

What are the benefits and drawbacks of using an E Portal for tendering?

A

Advantages:
- All information in one place
- Low running cost
- Efficient to distribute information to tenderers

Disadvantages:
- Data requires careful management and enhanced security, eg password protection / two factor authentication
- May be a high set up cost for tender portal
- May require user training
- Tenderers may not receive notifications from portal, which could lead to being ill-informed of addendums

56
Q

For your analysis of 71/72 The Kingsway, how did you agree the score criterion with the Client?

A
  • Client was more focused on the cost of the building but still a large focus on quality
  • % was split 60% cost 40% quality
57
Q

For the Kingsway tender analysis, what was the 60% cost based on?

A
  • The most economically advantageous tenderer
  • Calculated by looking at divergence from mean, applying weighted % out of 100%, then applying the score to the split score (i.e what % of 60% cost)
58
Q

How would you advise a Client on the % split for scoring a tender?

A
  • Depends what their key drivers are
  • For the Kingsway, I asked the Client what their key indicator was for the project. They stated whilst they were very keen to deliver a good quality building, they were more focussed on the cost aspect of the scheme. I advised a 60/40% split towards cost to ensure this was the key driver, whilst also noting the importance of quality to tenderers
59
Q

For CiNER Glass, what did you include in your ITT?

A
  • Introduction
  • Project details and description
  • Quality questions
  • Tender validity period requested
  • Forms of Tender
  • Details around the tender evaluation process
  • Who the key points of contact are
60
Q

What were your considerations when issuing tender documents to tenderers through the tender portal, for CiNER Glass?

A
  • Access - Ensuring the correct representatives from each company could access the portal
  • Using - Ensuring they were provided with a user guide, and to contact myself if they had any issues with the portal
  • Security - ensuring documents were submitted via the portal on a secure network
  • Confirmations - When addendums were issued, ensuring I followed up with emails to confirm tenderers were aware of the addendum notification
  • Ensuring queries were collated and distributed to all tenderers so all tenderers had responses
61
Q

Why did tenderers provide their own design proposals during the first stage of tender for CiNER Glass? Was this requested?

A
  • No, was not requested
  • When asked, contractors stated they believed they could deliver a more economical, programme efficient solution which they wished to propose to the Client, in which they based their pricing schedules
  • I checked the tender documentation to see if this was requested anywhere, in which it was not
  • Due to the scheme being an echo of an operational factory in Turkey, the Client was specific about the quality of the design and using a concrete frame, which the design team advised a steel structure would provide programme and cost benefits
62
Q

What did you include within your Stage 1 tender evaluation report for CiNER Glass?

A
  • Executive summary
  • Procurement strategy adopted
  • Tender process, ie what was issued, how long tenderers were given
  • Initial tender returns and errors identified
  • Revised tender returns based on design information provided
  • Tender evaluation criteria and methodology
  • Tender scores
  • Recommendation & conclusion
63
Q

For the PAN project, did the framework allow for negotiated tendering?

A
  • The framework allows for direct awards for contractors, but in this case a selection of contractors were invited to tender, two responses were received, but one dropped out of the process due to other commitments, so the Client was trying to understand the benefits and drawbacks of negotiating with the one contractor
64
Q

What if the Client didn’t wish to negotiate with this contractor for the works? What could you have advised?

A
  • Use a different framework
  • Review the deliverables of the project and the risk apportionment
  • Review the contractors that were selected; are they suitable for the works?
65
Q

Can you tell me the differences between open tendering and selective tendering?

A
  • Open tendering = Tender available to the whole market (without use of PQQ)
  • Selective tendering = Tenderers pre-selected to undertake the works
66
Q

Can you tell me the advantages and disadvantages of open tendering?

A

Advantages:
- Provides opportunity for new companies to compete for works
- Price is likely competitive
- Can provide better value for money

Disadvantages:
- Need for a more robust analysis
- Tenderers may not be suitable to undertake the works

67
Q

Can you tell me the advantages and disadvantages of selective tendering?

A

Advantages:
- Risk reduced as selected tenderers would be based on their capability
- Tenderers would generally be pre-qualified
- Quicker process

Disadvantages:
- Can be difficult for new contractors to win work if unestablished
- May get a more competitive price with open tendering, but would likely still receive a competitive price too

68
Q

What would be your concerns with the contractor recommending a subcontractor who has provided the lowest price and quickest programme?

A
  • may not have captured all items
  • may be looking to buy the job / in a poor cash flow position
  • may be using an alternative material (cheaper) which was not specified
69
Q

Why might your PTE be higher than tender returns?

A
  • Design development
  • May be a competitive tender, therefore prices may be lower
  • Prices could be volatile
70
Q
A

RICS APC (19 decks)

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