Procurement and Tendering Flashcards
(47 cards)
What is Procurement?
The act of purchasing goods or services
What are the factors which need to be considered when selecting a procurement route?
Time, cost, quality and risk allocation. All factors may not be satisfied, however client’s order of priority needs to be considered.
What are the main procurement routes you are aware of?
- Traditional
- Design and Build
- Management Contracting
- Construction Management
- Framework Agreements
What is the traditional procurement route?
The client appoints a designer to complete the design in it’s entirety. The client then tenders the design and awards a contractor to construct the design.
What are the advantages of traditional procurement?
- The client retains control of the design and achieves design certainty.
- Have the ability to have cost certainty as the scope of works/ design is fully designed and therefore allows robust cost plans to be produced.
- As the design is finalised and approved prior to entering into contract risks are reduced or minimised.
What are the disadvantages with traditional procurement?
- The project timeline is long as design must be fully completed prior to construction commencing.
- There is no buildability input into the tendered design/ scope as ECi or PCSA may not be involved prior to going out to tender.
- There could be the presence of design and construction coordination issues through the development of engineering designs.
- Design risk is held by the client. Any changes to the design would incur additional cost.
When is traditional procurement best suited?
When achieving cost certainty is more important to the client through having a fully defined design and time for completion is not a priority.
What is the reporting structure of traditional procurement?
What is Design and Build (D&B) procurement?
The contractor is responsible for undertaking or completing design and then delivers the construction works.
What are the advantages of D&B procurement?
- Design risk is held by the contractor
- Earlier onsite/ construction delivery as there are overlaps in construction activities
- Suitable route when design certainty is low
- Reduced project timeline compared to traditional procurement
- The contractor will maintain the single responsibility for design and construction
What are the disadvantages of D&B procurement?
- If the Employer’s requirements are not well defined then the design may not be as per their requirements.
- The price to deliver the works will be higher as the contractor will factor in design and construction risk.
When is D&B procurement best suited?
When the client wants a soon on site start date and does not want to manage the risk of design development.
What considerations in regards to insurances should a D&B contractor must consider?
The contractor must have adequate PII coverage as they will have design responsibility.
Under D&B contracts what to tenderers price against?
The Employer’s Requirements, and/or if there is a design which they will need to develop.
What is the structure in relation to D&B procurement?
What is Construction Management?
A procurement route in which the client is in contract with several works package contractors and the construction manager manages them. The Construction Manager and works package contractors are in contract with the client, with no contractual links to each other.
What are the advantages of Construction Management?
- Speed to Site
- Shorter delivery programme as design and construction activities are conducted in parallel.
- The Construction Manager can contribute to design and project planning.
What are the disadvantages of Construction Management?
- Price certainty is not achieved until the last works package is let
- If the client is inexperienced with package procurement, it will result in cost escalation
- The client will need to deal with many consultants and contractors
- Variations to contracts which have been let may be costly
When is construction management suitable?
When the client is very experienced in delivering construction works, where design and construction risks can be managed effectively. Furthermore, when an early start on site is required and cost certainty is less priority.
What is the risk allocation under Construction Management?
It is the riskiest form of procurement for the client as they control all works package contractors and hold design and build risk.
What is the structure of Construction Management procurement?
What is Management Contracting procurement?
Where various Works Package subcontractors are procured and are in contract with the Management Contractor. The client is only in contract with the Management Contractor.
What are the advantages of Management Contracting?
- The Management Contractor is responsible to manage the Works Package Subcontractors
- The sequencing of design and construction activities may lead to a shorter delivery timeframe
- There is a single point of responsibility
- Works Packages are let competitively in line with VfM
- The Management Contractor is responsible for time for completion.
What are the disadvantages of Management Contracting?
- Cost certainty is only achieved until the last Works Package is awarded
- There may be less incentive for the Management Contractor to reduce costs as they receive a fee on the cost incurred by Works Package subcontractors
- The client is responsible for the cost and design risk
- It requires an experienced Management Contractor to deliver the Works Packages
