Procurement And Tendering L3 Flashcards
What would you take into consideration when looking at Time?
- How much time is there to prepare a complete design
- When is the site available
- When is the work required to be completed
- What are the phasing or sectional requirements
- The financial effect of a delayed completion
What would you take into consideration when looking at Cost?
- Is a Lump Sum, Target Cost or Re-measurement option required when the contractor is appointed
- The impact of inflation over a lengthy contract period
- The time of fixing the price of the works and certainty of out-turn costs
- What level of risk is acceptable to the client
- What level of risk is acceptable to the contractor
What would you take into consideration when looking at Quality / Performance?
- Is retention of design control and important issue
- Will the nature of the works require stringent supervision
- Is the building listed or in a conservation area
What are the components of a tender report?
- Executive Summary and Recommendation
- Introduction
- Tender Procedure
- Tender Pricing
- Programme
- Qualifications
- Detailing of any errors found
- Remaining risks
- Other information Submitted
- Recommendation to the client
- Next Steps
What is Traditional Procurement?
The design is completed by the clients design team in detail before competitive tenders are invited to submit tenders based on a fully developed design.
Assuming no significant design changes, arise, construction costs can be determined with reasonable certainty before work begins.
The employer retains the design consultants during construction. Consultants, prepare any additional design information and review contractors design portions, prepared by the contractor
How does traditional procurement work?
- The contractor takes responsibility and financial risk for the construction of the works to the design produced by the clients design team for the contract sum within the contract period
- The client takes the responsibility and risk for the design and performance of the design team
- Speculative risks are balanced as between the parties, more in the client’s favour on a lump sum contract but less so with a measurement contract
What are the advantages of Traditional Procurement
Advantages
• High cost certainty at point of contract
• Full ability to control design and specification – can ensure quality
• Competitive fairness and transparent process – increases value for money (Value for money is not about achieving the lowest initial price: it is defined as the optimum combination of whole life costs and quality.)
• All tenders produce a submission, based on the same information brackets, therefore tender returns are much easier to compare).
• Minimal built-in contract to risk premium (unlike design and build).
What is Design and Build Procurement?
- Design and Build is more accurately a type of contract, however, it is commonly referred to as a procurement route and, therefore, needs to be considered here.
- Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employers requirements
- A single or two stage approach may be adopted. It is more common for the single stage method to be restricted to buildings of a reasonably simple nature where the risks to the contractor can be easily defined.
How does design and build work?
- In its simplest form the employer gives tenders the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractors Proposals’, which includes a price for the works
- A method where the contractor is responsible for undertaking both design and the construction of the work in return for a lump sum price. There are variants on this option depending on the degree to which initial design is included in the client’s requirements.
What are the advantages Design and Build Procurement?
Advantages
• Design and construction risk sits with the contractor (single point of responsibility).
• Inherent buildability input – contractor’s experienced harnessed during design
• High cost certainty at point of contract over Traditional contracts.
• More efficient / earlier commencement on site is possible – design/construction overlap
What is Novation?
• A new contract that transfers the rights and obligations of one contractual party to a new third party i.e. design rights and obligations of the architect transferred to the contractor
What is the difference between novation and assignment?
A novation agreement transfers both the benefits and the obligations of a contract to a third party. In contrast an assignment does not transfer the burden of a contract. This means the outgoing party remains liable for any past liabilities incurred before the assignment.
If the design team is novated, what should the client put in place?
A collateral warranty to the design team. Creates a contractual relationship between parties where there would otherwise not have been any.
What is Management Contracting?
The employer appoints a management contractor to manage the entire building process who in turn appoints trade contractors to carry out the construction works.
The management contractor is usually paid a fee percentage based on construction costs.
The management contractor has a direct contractual link with the trade contractors and is responsible for the overall construction works.
How does Management Contracting work?
- Appointment of the contractor is usually by negotiation or tender, and interview. He is paid a management fee. The work packages are let by competitive tender.
- The management contractor has direct contractual links with all of the works contractors
- The have the responsibility for the construction works without actually carrying them out
- Not all of the design need to be completed before the first works contractors start work
- The client retains overall design control through the professional team
- There is no certainty of over costs at the outset and work proceeds on the basis of the contract cost plan. Final costs will not be known until the last work package is let. However, the costs can be monitored by the clients QS
What are the three main types of tendering?
- Competitive single stage
- Competitive two stage
- Negotiated tender
What are the methods of selecting tenderers?
- Open tendering
- Selective tendering
- Single contractor selection
What are the advantages/disadvantages of negotiated tender on DandB?
Advantages
- Most contractor involvement in design process
- No programme implications of tendering
Disadvantage
- Lack of competitiveness
- May not be suitable for public procurement contracts
What are the advantages/disadvantages of negotiated tender on traditional?
Advantages
- Contractor involvement throughout process will enable more effective mitigation of risk throughout the design process by the contractor
-No tendering period required on programme
Disadvantages
- No competition may result in high contractor offers
- May not be suitable for public procurement contracts
What are the advantages/disadvantages of negotiated tender on MC/CM contracts?
Advantages
- No tendering required in programme
Disadvantages
- No competition at all on Prleims and OHP and programme
What are the advantages/disadvantages of single stage tender on DandB contracts?
Advantage
- Most competitive price
Disadvantage
- Contractor not fully understanding may lead to a ‘higher risk allowance’
- Programme implication to include tender period
What are the advantages/disadvantages of single stage tender on traditional contracts?
Advantages
- Most competitive price
- The most linear form of tendering
Disadvantage
- No contractor involvement
- May lead to high levels of provisional sums and risk items on the client side
- Programme implication to include tender period
What are the advantages/disadvantages of 2 stage tender on MC/CM contracts?
Advantages
- Increased contractor involvement in design
- Some degree of competition
- Ability to overlap design and tendering
Disadvantages
- Lack of competitiveness during 2nd stage
- Programme implication to include a tender period
What are the advantages/disadvantages of 2 stage tender on DandB contracts?
Advantages
- Contractor involvement may reduce outstanding design/ construction risk
- Ability to overlap tendering and design
What is procurement?
The process of purchasing goods or services for a construction project.
Many different routes by which design and construction of a building can be procured.
The selected route should follow a strategy which fits the long term objectives of the client’s business plan.
What is tendering?
The selection of the contractor that will construct the works. However, depending on the procurement route, this could be for a wider range of goods and services.
The overall objective is to achieve a price for the works
You state that you are fully aware of main procurement routes so what are the advantages and disadvantages of traditional procurement?
Advantages of traditional:
- Client has full control of design
- Competitive tender done single stage
-Cost certainty
- Less risk priced in by contractor as full design is complete
Disadvantages of traditional:
-Typically take longer as full design is needed before tender takes place
-May lead to higher level of prov sums and risk items
-No contractor involvement for design
How would you go about advising a client on the appropriate procurement route to follow?
I would organise a procurement workshop with the client. I first understood the client brief and built on from this at the meeting. This would involve asking key questions related to the clients drivers relating to time, cost, quality and risk and then looking at the level of priority of each. Other key considerations would be the project type (size of project, complex design with specialist input needed?), market condition, statutory regulations (OJEU).
You have read the RICS guidance note on tendering and understand the types of procedures, what is the difference between single and two stage tendering?
Single stage tendering is when the contractor bids for the works with a complete design and this would be for the full amount of the works and will achieve cost certainty. A 2 stage tender is when the 1st stage is under a pre-construction services agreement, whereby the contractor will take part in the design and selection of subcontractors. There is less cost certainty as the cost could go up/down for the main contract works.
Why would you advise a client to adopt one over the other?
I would advise a client to select a 2 stage where specialist design input is needed more than cost certainty. If the works is of a simpler nature then a single stage can achieve cost certainty.
When would you advise a client to follow a negotiated tender path?
- When the client has a pre-existing relationship with a contractor.
- When the works needs to go on site quicker with less time and resource gone into tendering
- When OJEU is not required
What are the advantages and disadvantages of construction management?
- Faster to complete as works are done in parallel with design
- Client retains control of design
- Contractor can still have design input
- No cost certainty until packages are let
When would you suggest this method of procurement be adopted (CM)?
-When projects need to have a quick completion date.
-When works are of complex nature and contractor will not take on liabilities
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How does CM differ from Management Contracting?
In MC the contractor will have contracts with subcontractos whereas in CM it is the client.
On UCLH you undertook a tender analysis and prepared a tender report, explain the process of the analysis and the contents of the report.
- Record on tender opening sheet (price and programme) at correct time and date
- Check for errors and conflicts
- Raise tender queries
- Equalisation/ Normalisation
- Agree cost with contractor
- Recommendation
- Notify tenderers of result
How would you deal with errors and omissions in a tender?
Firstly, I would advise to the client that the correcting of errors should always be at the discretion of the client. Then, following the JCT Tendering practice note I would advise:
Alternative 1- Give details of error and afford opportunity to confirm or withdraw. Where tenderer has accepted error, all rates and prices in the document should be reduced or increased at the same proportion as the corrected total of priced items.
Alternative 2 - The tenderer should be given an opportunity of confirming his offer or of amending it to correct genuine errors. If the tenderer does amend his tender figure, and possibly certain of the rates in his documents, he should either be allowed access to his original tender to insert and initial the correct details or be required to confirm all the alterations in a letter.
What documents do you include in the tender pack? 
Invitation to tender (ITT), including cover letter with tender return information.
Form of tender.
Contract conditions and employer’s amendments.
Instructions to bidders including how errors will be dealt with.
Tender scoring matrix.
Project information, drawings, specifications, surveys, planning conditions etc.
Pricing document.
PCI (Pre-construction information).
Quality questions (such as experience and methodology).
Receipt of tender.
How were tender queries dealt with?
I assembled a query sheet which i sent to each contractor. I then compiled all of the queries and answered them which was sent back to all contractors.
How did the scoring matrix you suggested to your client work? Was it just based on cost?
The scoring matrix was 80% cost and this was recommended because the works was of such a simple nature. The qualitative scoring element was split into 3 parts, with programme, engagement with neighbours and health and safety/previous experience forming the other part.
Now that it has been decided to leave the EU what impact, if any, will this have on tendering procedures?
This year is the transition period, so there will be no change, however EU processes like OJEU still remain uncertain and depend on the UKs deal with the EU.
What do you understand by OJEU?What are the regulations and do what do they apply?
Official journal of the European Union.
Public projects must comply with the regulations if the value of contracts is above specified thresholds. Aggregation rules apply to projects tendered in parts to prevent clients from avoiding the requirements of the regulations by simply dividing projects up into contracts that are below the threshold.
If a tenderer is late in submitting his bid, what would you advise the tenderer?
That the tender being accepted would be at the client’s discretion, however it is likely they would not be accepted to avoid fraud, collusion or bid-rigging.
What advice would you give your client if a tenderer is late in submitting?
Safest Option is not to consider- (Fraud, Collusion, Bid-rigging)
If private client it is at their discretion (Advise of dangers though)
Public client: Late cannot be accepted, few minutes late…judgement call needed, to accept need authorization in writing from council/ LA
Advise accepting late tenders sets standard, contractors may in future also not keep to deadline
Would your advice be different if the tender was the lowest?
My advice would be impartial regardless of the tender amounts.
What is a prequalification questionnaire? PQQ
A pre-qualification questionnaire (PQQ) sets out a series of questions for potential tenderers to answer regarding their level of experience, capacity and financial standing.
prior to being invited to tender.
Why did you recommend a 2 stage tender on Tolworth?
There were multiple complicated design elements where the project could have benefited from a contractor’s input. This included:
- Bathroom pods
- Facade
- MEPH
Why would having enabling works as a separate package de-risk the site for Tolworth?
This was because the main contractor may price an element of risk into the enabling works. Going directly in a separate contract with an enabling works contractor meant that this risk was evaded before the main construction works would begin.
How did you score the 20% quality aspect for Tolworth?
This was scored based on the quality of the submission; criteria included their approach, programme, co-operation with neighbours, health and safety and resource.
What was discussed at the procurement workshop for Tolworth?
At the procurement workshop, I discussed with the client what their key drivers were. The main three were time, cost and quality. The design team also recommended that some elements such as facade and MEPH would benefit from a subcontractor specialist input. The client also wanted to transfer risk to the contractor and wanted an early start date. As a result, I recommended the 2 stage design and build approach.
How can you you explain all the main procurement routes to your client?
I presented a matrix whereby I input a set of criteria with scores 1-10 and the matrix pointed towards the design and build route. I then explained the benefits of all 3 with pros and cons listed on my presentation. Furthermore, I created a procurement recommendation report.
What did you ask in the post tender interviews for UCLH?
This post tender interview, was effectively a tender settlement interview with the preferred contractor where I was able to clarify on the prices they submitted which seemed ambiguous. Questions I asked included: will you agree to the cost of the FFE item which is priced as per the pre-tender estimate?
What did you advise on the scoring matrix for Tolworth?
I advised that due to the nature of the works, which was of a simple nature, and the client wanting to keep a tight budget, a competitive tender with 80% scoring would be best. The companies chosen for an expression of interest were known to the client and consultant team that were capable of producing works.
What did the client brief contain on Tolworth?
The client brief
What are the different types of partnering contracts?
Partnering agreements include the project partnering contract PPC2000, the term partnering contract TPC2005, the NEC partnering agreement and the ICE Partnering Addendum. There is also JCT Constructing excellence.
