Tendering

Question 1

What is tendering?

Answer 1

Tendering is a method of obtaining a price and resource necessary to carry out the required work

Question 2

What is the difference between procurement and tendering?

Answer 2

• Procurement is the overall act of obtaining goods and services from external sources. It includes the strategy on how those goods are to be acquired by reviewing the client’s requirements relating to time, cost, quality and their attitude towards risk. It identifies how the team is selected and how they relate to each other, along with the nature of their role and extend of their responsibility
• Tendering is the bidding process to obtain a price

Question 3

What are the 3 types of tendering commonly used in construction?

Answer 3

• Single stage tender
• Two stage tender
• Negotiated tender

Question 4

What does “bona fide” mean?

Answer 4

• A bid submitted in good faith, complete and in prescribed form which meets the conditions of the bidding requirements and is properly signed by someone legally authorised to sign such bid
• Confirmation that they have not colluded with another party when compiling the tender

Question 5

What documents were included within your tender pack?

Answer 5

• Tender instructions
• Quality questions (such as experience and methodology)
• Preliminaries
• Pricing document
• Form of Tender
• Drawings & specifications / Employer requirements
• Survey information
• Pre-construction information (H&S documents)
• Contract documentation including and bespoke clauses
• Receipt of tender information

Question 6

What is a PQQ (Pre-Qualification Questionnaire)?

Answer 6

• 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
• The answers to these questions enable the client to produce a short list of suppliers that are likely to be most appropriate for their particular project. Short-listed suppliers may then be invited to tender for the contract

Question 7

What is the purpose of a PQQ?

Answer 7

The pre-qualification questionnaire has the effect of reducing the number of potential tenders to those that are genuinely appropriate for the project, thus saving a great deal of wasted time for potential tenderers who would not have any realistic chance of winning the contract

Question 8

What might the PQQ ask for?

Answer 8

• Company details (including legal status)
• Details of insurance cover
• Financial information (such as recent accounts)
• Relevant experience
• Information about technical and professional ability
• Information about capability and capacity
• Health and safety policy and records
• Quality assurance policy
• Environmental management policy
• Equal opportunities policy
• References

Question 9

A credit check is usually part of the PQQ process, where could you get a credit check from?

Answer 9

• Dun and Bradstreet report
• Credit agency such as Experian

Question 10

What is single stage tendering?

Answer 10

Single-stage competitive tender - obtaining a price for the whole of the construction works

Invitation to tender docs are issued to number of competing contractors who are all given chance to bid for the project based on identical tender docs. This usually done at RIBA stage 4 so that tendering contractors receive most detailed info to base their bid on. the employer enters into a building contract with contractor to deliver tendered works

Question 11

What are advantages of single stage tendering?

Answer 11

• Employer gets lump sum for whole works
• Competitive pricing

Question 12

What are disadvantages of single stage tender?

Answer 12

• No buildability input from contractor
• Price only good as design info
• Changes introduced by employer or design team will undermine the certainty achieved with a lump-sum tender
• Contractors may be unwilling to tender for single stage in a good economic climate (too much competition)

Question 13

If you had a £35mil new build on a D&B contract with single stage tender, how long would you allow for the tender period?

Answer 13

10-12 weeks as it will take some time to interpret the ERs

Question 14

What is two stage tendering?

Answer 14

Two-stage tendering is a procedure typically used to achieve an early appointment of a contractor. Objective is to appoint contractor on competitive basis in the first stage, the contractor is then taken forward to into the second stage where the contract sum is negotiated.

First stage competition is typically based on deliverables including a construction programme method statement, detailed prelims & oh&p. First stage may also include the competitive tendering of some work packages, together with lump sums for pre-construction services and design fees.

Second stage, which is typically managed as a negotiation between employer and preferred contractor relies upon competition between second tier contractors (subbies) for work packages. Second stage is concluded with the agreement of a lump-sum contract sum.

Question 15

What are the advantages of two stage tendering?

Answer 15

• Allows early appointment of contractor to work in parallel with design team
• Ideal for achieving/improving buildability
• Increase opportunity to value engineer with the contractors input
• Improved opportunity to identify project risk

Question 16

What are the disadvantages of two stage tendering?

Answer 16

• Lack of completion in the second stage
• Premium paid for negotiations in the second stage
• Additional cost of the contractors pre-construction fees
• Potential for parties to not agree contract sum
• Once contractor is integrated, employer will become reluctant to dismiss them in the event of failure to perform or to negotiate on price / programme

Question 17

What do tenderers typically return as part of the first stage?

Answer 17

• Detailed build up pf prices for prelim items
• Percentage additions for profit and overheads
• Construction programme
• Price for any parts of design which are already complete

Question 18

Are there any precautions you should take before entering the 2nd stage process?

Answer 18

Define procedure for either party to withdraw should 2nd stage negotiations prove abortive (inc what payments become due)

Question 19

What is negotiated tendering?

Answer 19

Negotiated tendering occurs when single contractor is approached based on their track record or previous relationship, terms of contract then negotiated.

Negotiating with a single supplier may be appropriate for highly specialist contracts (where there may be limited number of potential suppliers), or for extending the scope of an existing contract. It can give employer the confidence of working with a supplier they already know and can reduce duration of tendering.

Question 20

What are the advantages of negotiated tendering?

Answer 20

• Simplicity, no tender analysis
• Speed, a negotiated process can have programme advantages if completed in good faith

Question 21

What are the disadvantages of negotiated tendering?

Answer 21

• Possibility of delay if contract negotiations are protracted
• Cost premium to be paid due to lack of competition
• Less cost certainty before commitment

Question 22

How could you justify to your client that they were getting value for money un ta negotiated contract?

Answer 22

You could insist on an open book approach when agreeing sub-contract packages and a minimum of 3 should be provided for each element for the works. This would need to be agreed upfront with the contractor

Question 23

What does OJEU stand for?

Answer 23

Official Journal of the European Union

Question 24

What is the OJEU process?

Answer 24

Sets out the EU’s legislation governing public procurement and lists all relevant tender notices and contract awards within the EU. OJEU is intended to provide suppliers across the EU with a fair and equal opportunity to bid for public spending in any member state. It included a set of procedures that aim to ensure transparency of the tendering process and best value for taxpayer money

All contracts from the public sector above a certain financial threshold have the be advertised across the EU (equal opportunity)

Question 25

What are the thresholds for compliance (OJEU)

Answer 25

As of 1st January 2020, the thresholds are as follows:

Supply, services and design contracts:
Central government - 140,000
Other contracting authorities - 215,000
Small lots - 80,000

Works contracts:
Central government - 5,382,000
Other contracting authorities - 5,382,000
Small lots - 1,000,000

Social and other specific services
Central government - 750,000
Other contracting authorities - 750,000
Small lots - n/a

Question 26

What are the different tender options (OJEU)

Answer 26

• Open procedure: There’s no pre qualification process or short listing. Anyone that responds to the OJEU notice is issued with full contract docs
• Restricted procedure: There is a pre-qualification process and only short listed candidates are invited to tender
• Competitive dialogue procedure: There’s a pre-qualification process. Short listed are invited to take part in a dialogue process during which the nature of the project may be discussed and possible solutions may be developed. When dialogue process is complete, final tenders are invited.
• Competitive negotiation procedure: There pre-qual process, short listed cand invited to take part in negotiation process. Process does not have to follow any particular rules and has no formal ending. This means negotiations can continue even after preferred bidder has been appointed.

Question 27

What is the OJEU standstill period (Alcatel period)

Answer 27

The standstill period provides for a short (at least 10 calendar day) pause between the point when the contract award decision is notified to bidders, and the final contract conclusion, during which time suppliers can challenge the decision.

Question 28

Are there any disadvantages of OJEU

Answer 28

• Open nature of the tender procedure can lead to compromised quality so PQQ stage is required
• The process is very ridged and doesn’t offer the same flexibility of a private sector tender
• Standstill period
• Drawn-out process can take much longer than non-OJEU tenders