Case Study - Two Stage Tender

Question 1

Why consider appointing a contractor to manage VE/Scope Reduction?

Answer 1

Leverage contractor’s market knowledge and supply chain for realistic cost-saving opportunities.

More efficient compared to managing it internally.

Question 2

What is the impact on competitive pricing when switching from single to two-stage tendering?

Answer 2

Reduced competitiveness due to contractor engagement; shifts from competitive tendering to negotiation.

Single stage involves competitive tendering upon design completion.

Question 3

How would you manage the cost plan/benchmarking with the contractor under the PCSA?

Answer 3

An open-book collaboration is encouraged and I would advise the client to share the cost plan and benchmarking data so the contractor can provide a more detailed reflective response.

If the client didn’t want this I would withold key information but share enough.

Sensitive figures may be summarized if the client is not favorable.

Question 4

Is the two-stage approach generally viable for reducing costs?

Answer 4

Yes, it can unlock savings through de-risking, VE, and early site starts.

Also potentially reduces preliminaries.

Question 5

What is the contractor’s role under the PCSA?

Answer 5

De-risking, cost savings through VE, and supporting programme development.

Identify long lead items, potential procurement of Enabling Works.

Involves logistics, surveys, and site reviews.

Question 6

What is the contractor’s role under the 2nd stage?

Answer 6

• Finalise pricing,
• Agree on contract sum
• Mobilise for construction.

Question 7

How could you demonstrate cost-saving ability for the two-stage approach?

Answer 7

By advising it as an ‘investment’ that yields savings through VE, leveraging market knowledge and de-risking.

My company also has an internal benchmark that outlines projects completed single vs two stage.

Generally found that two-stage results in fewer disputes and more predictable final accounts and Practical Completion.

Helps relieve post-contract costs.

Question 8

How could time be saved under the two-stage approach?

Answer 8

Overlapping design and procurement, ordering long lead items, and engaging the contractor sooner.

Initiates an earlier start on site.

Question 9

What sort of cost build-up would you expect for the PCSA?

Answer 9

Includes:
* PCSA Fee
* Price for Preliminaries
* OH+P Cost
* Programme
* Approach to VE/Risk Management.

Question 10

How would a negotiated approach to appointing a contractor work?

Answer 10

Collaborate with the contractor, benchmark fees, preliminaries, and share information for robust proposals.

Question 11

What other forms of contract/procurement could be appropriate?

Answer 11

• CM (Construction Management) – Employer manages multiple trade packages (does fast track) but does not provide cost certainty and client knowledge.
• MC (Management Contracting) – Contractor manages multiple trade packages (does fast track) but does not provide cost certainty.
• D&B (Design & Build) – Single point of responsibility for design and construction. Design was key to the client, and they wanted control.

Each has different impacts on cost certainty and client control.

Question 12

Why was this option ultimately rejected?

Answer 12

Client’s priority was cost certainty; two-stage introduced uncertainty until Stage 2.

Question 13

What is the difference between a single stage strategy vs two stage?

Answer 13

• Single Stage involves full design priced upfront
• Two Stage involves early contractor involvement for scope development.

Question 14

How could seeking competitiveness at the 2nd stage add to the programme?

Answer 14

By inviting multiple contractors to price the works. It involves alot more to the process:

• Issuing Tender Docs
• Allow time for Pricing
• Evaluation

I would introduce competitiveness by:

Utilizing open-book tendering to provide visibility of rates and packages.

Advising three tenders for each package.

Question 15

At what stages would you typically tender on single vs two-stage tendering?

Answer 15

• Single Stage at design completion
• Two Stage after Stage 2 Design (contractor to complete).

Question 16

Given this approach didnt go forward, how were benefits of having a contractor still accounted for?

Answer 16

• Through VE/Scope Reduction
• Robust tender approach which was already considered (Mid Tender Interviews/Post Tender Interviews/Site Visits/Clear Documentation/Guidance)

Question 17

Could you provide a rough estimate for the PCSA?

Answer 17

Typically 0.5-1.5% of contract value, ranging from £75k to £225k.

Question 18

How long did you expect the PCSA to last?

Answer 18

Around 8-12 weeks.

Question 19

How was management occurring between you and the contractor in terms of cost reductions?

Answer 19

Collaborative approach with contractor proposing solutions, and QS validates savings and ensures alignment with client objectives