Procurement & Tendering

Question 1

Can you explain the key differences between Design & Build and Traditional procurement routes, including how risk allocation differs between them?

Answer 1

Design and Build can be tendered earlier compared to a traditional approach, typically at stage 3.

This will request the Contractor to input into certain design elements, so commonly connection details in either MEP or structural elements.

This puts the risk onto the contractor as they take hold of the Employers Requirements and become liable for an discrepancies within these.

Traditional is tendered with a full design and the risk is retained by the client.

Question 2

What are the main considerations when deciding between single-stage and two-stage tendering processes?

Answer 2

A single stage tender period will typically take longer as you’re asking the contractor to fully price the works and be fixed to them.

This will provide the most competitive tender as contractors are competing against each other in all elements of work.

A two stage can allow for an earlier start on site through the implication of a PCSA, however may reduce competitiveness due to the lack of competitiveness in the second stage works packages.

Question 3

How would you explain Construction Management and Management Contracting procurement routes, and in what circumstances might they be appropriate?

Answer 3

Construction management is when the client appoints a construction manager to manager the sub-contract packages on their behalf.

In construction management, the client has a direct contract with the sub-contractors.

Construction management is best suited for complex projects where an early start on site is important and the client requires more control.

Management contracting is when the client appoints a management contractor to manage the sub-contract packages.

In management contracting, the client has a direct contract with the management contractor.

Management contracting is best suited for projects where programme is a key driver as works can be undertaken as the design is being complete elsewhere.

Question 4

What are the core components that should be included in a comprehensive set of tender documents?

Answer 4

ITT
Employers Requirements
Bona Fide Tender
Preliminaries
Pricing document
Design information
Misc items

Question 5

What is a BoQ?

Answer 5

This is a Bill of Quantities which is a detailed breakdown of works items including descriptions, quantities and units.

Question 6

What is a Pricing Schedule?

Answer 6

Acts similar to a Bill of Quantities, however they typically do not include quantities.

Question 7

What is procurement?

Answer 7

The overall process of acquiring construction work or services.

Question 8

What should be considered when selecting a procurement route?

Answer 8

The specifics of the project.

The clients key objectives regarding
- Time
- Cost
- Quality
- Risk

Question 9

What are the main procurement methods?

Answer 9

Traditional
Design & Build
Management Contracting
Construction Management

Question 10

How does traditional procurement work?

Answer 10

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.

Question 10

What is traditional procurement?

Answer 10

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.

Question 11

When might traditional procurement be appropriate?

Answer 11

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

Question 12

What are the advantages of traditional procurement?

Answer 12

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.

Question 13

What are the disadvantages of traditional procurement?

Answer 13

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

Question 14

When might Design and Build be appropriate?

Answer 14

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

Question 15

What are the advantages of Design and Build?

Answer 15

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

Question 16

What are the disadvantages of Design and Build?

Answer 16

Clients may find it hard to prepare a sufficiently comprehensive brief.

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

Question 17

How much design input will the contractor have in a Design and Build procurement route?

Answer 17

This depends on the amount of design work the employer has already had completed at time of tender.

This can range from full design to production information and coordination only.

Question 18

Who carries out the design for the contractor in Design and Build?

Answer 18

It may be outsourced to a separate design company (contractor retains responsibility).

They may have in-house design capabilities or the client’s team may be novated.

Question 19

How do you identify the client requirements before recommending a
procurement route?

Answer 19

Through detailed discussions with the client and design team to identify their priorities in terms of cost, time, quality, risk, control requirements and experience.

Question 20

What are the main methods of choosing a contractor?

Answer 20

Open tendering.

Selective tendering (Single or Two Stage)

Negotiated tendering.

Serial tendering

Question 21

For the Vista Tower project, you mentioned issuing tender addendums. What type of queries did you receive, and how did you ensure all contractors had equal access to information?

Answer 21

An example I received on this project was if the contractor could appoint a third party as their BRPD.

I provided my response by collating my firms tender addendum template.

This captures the contractors query and the project teams response and includes the relevant date the query was raised.

No confidential information is included in the tender addendum template.

Question 22

On the Taper Building project, what criteria did you use to evaluate the contractors’ PCSA fees, preliminaries, and OH&P percentages?

Answer 22

As this was a two stage tender approach, the PCSA fees, preliminaries, OH&P and risk would be treated as fixed.

Therefore, the criteria I applied was ensuring that the contractors had all allowed for the same items so they were comparable.

This would give me the best spread of information and allow me to make my recommendation.

Question 23

For the PQQ process on the Focus Apartments project, what specific criteria formed your scoring matrix, and how did you weight different factors?

Answer 23

I analysed the PQQ on specific elements,

Company details
Accounts
H&S
Key Personnel
Previous Experience
Programme

I applied a weight factors on each of these depending on the their alignment with the clients key drivers.

Question 24

What financial indicators did you ask the client's accountant to review from the contractors' submissions for the Focus Apartments project?

Answer 24

The liquidity ratio (current assets / current liabilities) The stability of the cash flow Assess how quickly the contractor pays it's creditors Excessive borrowing Decline of revenue

Question 25

On Focus Apartments, you provided a recommendation to the Client following a PQQ process. Can you tell me how you advised on the scoring criteria for the PQQ returns?

Answer 25

The contractors were requested to provide relevant experience, audited financial accounts, management staff, health and safety information. I then applied a score weighting to these elements, such as 2.5, and scored them out of 10. I then multiplied their score by the weighting and added these together to give them a total score.

Question 26

What key factors influenced your recommendation to the client on the Taper Building project beyond just the lowest price?

Answer 26

Whilst the clients main driver was cost, the project required the tendering contractors to consider the scheme in as much detail as possible. Therefore, I scrutinised any elements of work which appeared low to ensure the adequate allowance had been made.

Question 27

How do you handle situations where contractors include significant qualifications or exclusions in their tender returns?

Answer 27

I will schedule the qualifications and exclusions out in my tender clarifications schedule and provide my commentary on these elements with the aim of reducing the number of both. When I recommend a contractor, I will always advice the client to engage their lawyers to review any contractual comments made by the contract.

Question 28

When compiling a tender report, what do you consider to be the most important information to highlight to clients?

Answer 28

This will align with the clients key drivers. For example, if the clients key drivers are programme and cost, I will provide my detailed analysis on these elements and summarise them in my recommendation.

Question 29

How long is a tender valid for?

Answer 29

13 weeks.

Question 30

Scenario: During a tender process, one contractor requests a two-week extension to the submission deadline. How would you advise your client on handling this request?

Answer 30

A two week extension is a lengthy request. Firstly, I would confirm with the other tendering contractors that they were on track to submit their documents by the deadline date. I would then discuss the request with the client and highlight how this would impact the programme. Depending on the outcome of that, I would provide the contractor with the response.

Question 31

Scenario: Your analysis reveals that the lowest tender is significantly below your pre-tender estimate and the other submissions. What approach would you take to investigate this anomaly?

Answer 31

I would review which elements of their tender return were significantly low and review these against the PTE to see where the differences were. I would then analyse the contractors costs for these to ensure they had made all necessary allowances and compare these to the other tendering contractors rates. If all items had been allowed for, I would look to discuss this further in a post tender interview and discuss their methodology.

Question 32

Scenario: In a two-stage tender process, the contractor's second stage price is substantially higher than anticipated during the first stage. How would you approach this situation?

Answer 32

I would highlight any additional scope which had been included in the first stage and identify these costs. I would then analyse the remaining costs to see if they were comparable with the PTE. I would review the contractors rates with my firms benchmark data and consider if these were market facing rates.

Question 33

Scenario: After tender returns, your client wants to make significant changes to the project scope. How would you advise on the procurement implications?

Answer 33

It would depend on the significance of the changes, but two options I would consider would be negotiating with the most favourable tenderer or potentially advising the client to re-tender the project if it became clear they would not be achieving a competitive cost. I would advise the client on the advantages and disadvantages of each option.

Question 34

Scenario: A contractor has submitted a competitive price but has a poor track record of delivering similar projects. How would you present this information to your client?

Answer 34

I would review this in line with the clients key drivers as cost may not be the main focus of the tender criteria. I would then analyse the contractors return and ensure they had allowed for all required elements to adequately carry out the project. If they had and they were in poll position for recommendation, I would make a clear statement advising the client that the contractor had a poor track record on delivering similar projects and suggest if they're appointed adequate protection is put in place, such as a performance bond or potentially increased retention.

Question 35

How do you approach the analysis of preliminaries costs to ensure they are appropriate for the project's scope and duration?

Answer 35

I would review the project scope and understand the specific requirements, site conditions and the complexity to determine the necessary preliminary expenses. I would request that the contractor breakdowns their preliminary activities, identifying which items were time related or fixed. I would also compare the preliminaries cost to benchmark data for similar projects in both scope and site similarities. Additionally, I could breakdown these costs to a percentage and weekly rate.

Question 36

What are Alternative 1 and Alternative 2 in the JCT?

Answer 36

Alternative 1 - The tenderer is informed of the errors and given the choice to either confirm or withdraw their tender. This method aligns with contract law principles, allowing the contractor to decide whether to proceed despite the errors. Alternative 2 - The tenderer is informed of the errors and given the option to correct genuine errors (such as arithmetic mistakes). If the corrected tender sum exceeds the next lowest bid, the tender is set aside, and the next lowest bid is considered instead.

Question 37

What would you do if you found errors in a Contractors tender submission?

Answer 37

Due to the nature of the projects I work on, I generally advise the client we follow Alternative 2 and allow the Contractor the opportunity to amend the errors.

Question 38

What do you issue at tender stage to ensure contractors are not colluding?

Answer 38

Our Bona Fide Tender which request the contractor sign a statement declaring they're not colluding.

Question 39

What is procurement?

Answer 39

Procurement is the process of obtaining goods, services, or works from external sources.

Question 40

What is tendering?

Answer 40

Tendering is the process of inviting bids from suppliers or contractors to carry out work.

Question 41

What premiums would you expect to pay in a Two Stage tender process?

Answer 41

The PCSA itself. Lack of competitiveness in the first stage. Risk premiums in the second stage. Preliminaries and overheads as there is longer engagement with the contractor.

Question 42

How do you manage the quality of design in a Design & Build Contract?

Answer 42

Novation. If there are specific elements the client is worried about, these could be taken to a greater level of design to ensure the standard of desired quality is achieved. Ensure that the ER's are robust. When the stage 5 drawings are produced by the contractor, the design team could grade these with A, B, C. The stage 5 drawings could be reviewed by the novated design team consultant, but a information barrier would need to be put in place between the two teams (novated, client side).

Question 43

What do you issue at tender stage to ensure contractors are not colluding?

Answer 43

Our Bona Fide Tender which request the contractor sign a statement declaring they're not colluding.

Question 44

What was the score weighting on Focus Apartments in respect of the TCQ?

Answer 44

50% cost. 40% quality (relevant experience etc). 10% time.

Question 45

What is serial tendering?

Answer 45

When a contractor is invited to tender for a series of similar works over a period of time. This is usually on the basis of an agreed schedule of rates for the works. Typically used in, - Framework agreements - Maintenance contracts

Question 46

If there is an error included in the BoQ's in a standard building contract, who is responsible?

Answer 46

If the client QS has filled out the quantities and this is where the error lies, then it would be the clients responsibility. This would entitled the contractor to a change. If the error is in the pricing element which has been filled out by the contractor, then it is their responsibility and they would not be entitled to a change.

Question 47

What are the different types of Pricing Documents used in tendering?

Answer 47

BoQ - Detailed list of quantities, units. Schedule of Works - Rough description of the works, may include quantities and units. Priced Activity Schedule - Price for whole activities, I,e, install foundations, used in D&B and NEC, paid when activity is completed. Tender Stage Cost Plan - Similar to a SOW but broken down into NRM elements. Schedule of Rates - Contractor provides rates for specific items of work which are then applied to the quantities as work is instructed during the contract.

Question 48

What are approx quants in tendering?

Answer 48

Quantities included by the client QS but it's typical to state that these will be remeasured by the contractor on site.

Question 49

When was the last JCT Tendering Practice Note released?

Answer 49

25th June 2024.

Question 50

What is Construction Management?

Answer 50

Construction Management is when a client appoints a Construction Manager to manage the sub-contractor packages on their behalf. The client places the orders directly with the sub-contractors and retains the financial risk involved with this. The advantages are that the client gains greater transparency and can react to design changes easier. A disadvantage is that they hold a higher risk profile as they contract directly with multiple sub-contractors. Construction Management is best suited for complex projects where flexibility is required and a quck programme is key as design can be developed as the project goes on.

Question 51

What is Management Contracting?

Answer 51

A Management Contractor is appointed by the client under one main contract. The Management Contractor then appoints the sub-contractors directly themselves and retain the contractual duties of this. The advantage is that there is a single point of responsibility and less risk for the client as there is only one contract. A disadvantage is there is generally a higher cost associated with Management Contracting due to the Management Contractors higher fee and risk premium. Management Contracting is best suited for complex projects where the client lacks construction administration experience and programme is key as design can be developed.

Question 52

What is FIDIC and how does it differ to JCT?

Answer 52

FIDIC stands for the International Federation of Consulting Engineers. It is suited to large scale international infrastructure projects and is available to various legal systems whereas the JCT is specific to the UK. FIDIC uses the Red, Yellow, Silver books for different procurement routes. Risk allocation is generally against the contractor compared to JCT which sets out defined roles. FIDIC follows a detailed process for valuations and variations compared to JCT which is on an interim basis.