What are the main procurement routes?
Traditional & General Contracting.
Design and Build.
Management Contracting.
Construction management
What is a procurement strategy?
- Links the project back to the business.
- Outlines strategic goals – identifies best way of achieving objectives for best Value for Money
- Considers constraints, risks, funding into account.
- Is delivered by the selected procurement route.
What is typically included in a tender?
- In accordance with JCT practice note 2017 I would include:-
- ITT (Invitation to tender letter)
- Instruction to tenderers with:-
- The date and time for return, to whom, site visits, programme, errors procedures, scoring matrix.
- Conditions of proposed contract.
- Pricing documentation.
- Specifications.
- Drawings.
- Employers requirements.
- Pre-construction H&S information.
- Form of tender.
What is the form of tender?
A preprinted formal statement in which the tenderer fills in the blank spaces.
The tenderer provides their name, address and the sum of money for which they offer to carry out the works.
What are the employer’s requirements?
- They set out the client’s requirements including the function, size, accommodation and quality requirements of the project.
- Their level of detail depends on how much design development has been carried out prior to tender.
- They normally includes the current state of planning permission.
- It should also detail the level of design, structure and specification information to be provided by the tenderers.
How do you analyse a tender return?
Tender Evaluation:
* Tender returns checked for compliance with the invitation to tender.
* Arithmetical checks carried out on cost components.
* Any non-compliant tenders treated in accordance with the conditions outlined in the Invitation to Tender.
* All tenders aligned on a like for like basis and compared with each other and the pre-tender estimate.
* Analysis undertaken of resource levels committed by each contractor and on the merits of the team proposed.
Interview/scoring
* Post-tender interviews carried out with short listed tenderers.
* Tenders scored against the pre-determined selection criteria.
Tender Recommendation Report prepared and presented to client, including:
* Tender history.
* Summary of tender returns.
* Aligned tenders.
* Scoring of tenders against technical and commercial criteria
* Recommendation on what tender represents overall best value for money.
* Outline of future actions and contracting approach.
What Contract types / procurement routes are you aware of?
** Traditional**
* Design & Construction completed separately
* Appropriate for complex, bespoke projects – high quality guarantee
* Client has high input into desig
* Can be done with / without quantities
* Completed design = cost certainty
* Design risk lies with client; Construction risk lies with Contractor
* Cons: slow start on site, can lead to adverse relationship
Design & Build
* Design & Construction completed by Contractor (Contractor’s Proposals produced in response to the Employer’s Requirements)
* Overlap in Design & Construction = quicker start on site
* Risk almost entirely with Contractor.
* Appropriate for simple, repetitive nature projects
* Lump sum contract = cost certainty
* Buildability input from the Contractor
* Cons: Low quality guarantee as contractor favours buildability & cost savings rather than aesthetics.
Client doesn’t have control over design & changes to ERs can be costly
**Managing Contracting **
* Management Contractor advisory & co-ordination role – breakdown of work packages, sequencing etc
* Management Contractor doesn’t complete any works; only co-ordinates
* MC contractually linked to sub-cons
* Fast programme as work packages can happen concurrently; individual packages can start as soon as design is signed off.
* Low cost certainty as final cost not known until last package is let
Construction Management
* Client contractually linked to sub-contractors.
* Fast programme; individual packages let as soon as signed off.
* Must be experienced client who is aware of their role and associated risks.
* Client control over time & quality; low cost certainty
How did you decide on the appropriate tender period programme?
- It depends on the procurement process and size of the project.
- If a traditional procurement route with a BoQ is being adopted then I would usually allow around a month in order for the MC to obtain pricing information from their sub-contractors.
- For large complex schemes the tender period would need to be longer.
- If the tender is the first stage of a two stage tender then the tender period may be a shorter duration of 2-3 weeks.
- It is better to ensure there is sufficient time so contractors can price the project correctly rather than rush and encourage contractors to price a high risk element into the tender.
How did you conduct tender analysis?
- Tender Evaluation:
- Tender returns checked for compliance with the invitation to tender.
- Arithmetical checks carried out on cost components.
- Any non-compliant tenders treated in accordance with the conditions outlined in the Invitation to Tender.
- All tenders aligned on a like for like basis and compared with each other and the pre-tender estimate
- Analysis undertaken of resource levels committed by each contractor and on the merits of the team proposed.
- Post-tender interviews carried out with short listed tenderers.
- Tenders scored against the pre-determined selection criteria.
- Tender Recommendation Report prepared and presented to client, including:
Tender history. - Summary of tender returns.
- Aligned tenders.
- Scoring of tenders against technical and commercial criteria.
- Recommendation on what tender represents overall best value for money.
- Outline of future actions and contracting approach.
What would you do if a tender was returned late?
- Private clients should be advised which tenders were late and if they wish them to still be considered then they must provide explicit instruction to do so.
- In Public procurement the tender would not be considered
How did you have tenders returned?
- The method for submitting and receiving tenders should be clearly set out in the instruction to tenderers documentation. This should include a time, date and location for tenders to be sent. It should also name the person that the tender returns should be addressed to. It is common for clients to request hard copies of tender returns, even when using online tendering, for opening purposes.
- A tender opening form should be used and typically includes.
- The tender price (perhaps split into preliminaries,
- Overheads and profit and prime cost)
- The proposed programme
- Any key comments/exclusions
- Any alternative tender offers; and
- A confirmation that all documents have been submitted or not
How did you ensure tenders were fair?
If an extension is granted then this extension must be given to all contractors
Any tender queries raised are answered back to all tendering contractors and not just
those that asked the question.
What if further information is obtained after the tender has been released?
A tender addendum would be issued (e.g. if a tenderer asks for the release of a particular survey that is mentioned but is not included in the contract information). If a tender addendum is required then it should be issued as a soon as possible. As much information as possible should be included in a single addendum rather than issuing too many
What is the advantage of tender interviews?
- The benefits of mid-tender interviews are:
- It is an opportunity to meet the people working on the tender
tenderers can raise queries in a face-to-face environment - It is often carried out on site, therefore can be combined with site visits
- It is an opportunity for the client team to assess the progress of each of the tenderers to date; and
- It is an opportunity to reaffirm commitment to the tender from both parties.
- The post-tender interviews are a chance to properly understand the tenderer’s proposals and raise any indepth queries that could not be practically answered by correspondence. This might include discussing construction detailing, programme logic, method statements, understanding of costs and so on. It is also a chance to properly meet the proposed team for the project. For example, on a design and build contract you may expect to meet the proposed designers.
What is traditional procurement?
The design is completed by the client’s design team before competitive tenders are invited and a main contractor is employed to build what the designers have specified.
How does it work?
(traditional procurement)
The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team for the contract sum within the contract period.
The client takes the responsibility and risk for the design and design team performance.
When might a traditonal route be appropriate?
- If the employer has had the design prepared.
- If the design is substantially completed at time of contractor selection.
- The client wishes to retain control over the design and specification.
- If cost certainty at start on site is important.
- The shortest overall programme is not the client’s main priority
What are the advantages of traditional procurement?
- Retaining control over the design can lead to higher quality.
- It offers increased levels of cost certainty before commencement
- Design changes are reasonably easy to arrange and value.
What are the disadvantages? (of traditional procurement)
- The overall project duration may be longer than others due to lack of overlap between design and construction.
- There is no input into design and planning by the contractor.
- A strategy based on price competition can lead to adversarial relations.
There is a dual point of responsibility with the design team controlling the design and the contractor retaining responsibility for the construction.
What is design and build?
Where the contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements.
How does it work? (design and build)
The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors responds with the ‘Contractor’s Proposals’, which include the price for the works.
When might it be appropriate? (design and build)
- Where there is a need to make an early start on site as there can be overlap between design and construction.
- Where the client wishes to minimise their risk as they transfer design responsibility to the Main Contractor.
- For technically complex projects requiring the contractor’s expertise.
- Where the employer does not want to retain control over design development.
What are the advantages of design and build?
- There is a single point of responsibility for the design and construction.
- There is earlier commencement on site.
- Early price certainty is increased.
- The client can benefit from the contractor’s experience harnessed during the design.
- The contractor can take on risk that they are better placed to manage
What are the disadvantages? (of design and build)
- Clients may find it hard to prepare sufficiently comprehensive ER’s.
- The Client has to commit to a concept design early.
- Variations from the original brief are difficult to arrange and are often expensive.
It is harder to compare tenders and harder to determine whether value for money is being achieved. - Quality may be compromised as the client relinquishes control to the design and build
contractor
