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Flashcards in Procurement and Tendering Deck (78)
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1

What is procurement?

The act of obtaining goods or services from an external source

2

What is tendering?

Tendering is an important phase in a procurement strategy.

It is:

- the bidding process, to obtain a price; and

- how a contractor is actually appointed

3

What are the common procurement routes?

- Traditional
- Design and Build
- Management Contracting
- Construction Management
-Joint Venture/ Partnering
-Prime Contracting
-Admeasurement

4

What is the traditional procurement route?

- Project can be broken into sequential phases: Brief, Design, Tender then Construction

- Client appoints design team. Design is fully developed. Full design is tendered. Winning Contractor constructs design.

5

What are the advantages and disadvantages of traditional procurement?

Advantages:

- Quality of product is generally higher

- Client maintains control of design

- Post-contract changes easy to manage

Disadvantages:

- Longer project duration due to sequential phasing, no overlaps

- Buildability can be poor due to no Contractor involvement

- Design open to abuse

6

What is the design and build procurement route?

- Design and construction phases overlap. Project is tendered before design is complete, Contractor finishes design. Allows design and construction phases to occur concurrently.

- Good brief is important to avoid Contractor designing a building not fit for purpose.

- Contractor take on risk of the project

7

What are the advantages and disadvantages of the D&B procurement route?

Advantages

- Low cost risk as client pays lump sum for Contract, absorbing design/construction risk. Contract Sum will be inclusive of a %age fee to cover design development/risk

- Low time risk: due to the ability to begin construction before design has been completed means this is a fast track procurement route.

- Cost certainty, if a lump sum contract, known early on in the project timeline.

- Early contractor involvement generally is good for buildability

- Single point of responsibility for the client

Disadvantages

- High design risk. Client loses control over design. Contractors will aim to meet ER's whilst maximising their margins

- Post-contract changes difficult to manage and often are expensive

8

What is management contracting?

- Management Contractor is appointed to manage the project

- Project is split into Works packages which are individually let through MC

- MC is paid on a fee basis and is brought into the project early on in the project timeline

9

What are the advantages and disadvantages of management contracting?

Advantages

- Fast track procurement option as early packages can be let whilst later packages are still being designed

- Client maintains design control

- Late changes accommodated so long as that package hasn't been let

- Good buildability with early appointment of MC

Disadvantages

- MC is paid on a fee basis and doesn't take project cost risk, leaving the client exposed

- Although procurement is fast, time certainty is poor until the final package is let

- Cost certainty is also poor until the final package is let.

10

What is the construction management procurement route?

- Construction Manager is appointed as a consultant

- Client has many points of responsibility: Consultants (incl Cons Manager) and all trade contractors

- Project is split into trade packages and client is responsible for each sub-contractor

- Design and construction phases can overlap

11

What are the advantages and disadvantages of the construction management route?

Advantages

- Fast track procurement route as design and construction can overlap

- Arguably a cheaper price is obtainable due to cutting out the main contractor's OH&P costs.

- Accommodates late changes if the package has not been let

- Client maintains design control

- Good buildability with early involvement of Construction Manager

Disadvantages

- Client must be experienced as all parties report to them.

- Time certainty is not known until last package is let

- Construction Manager may not be motivated by cost as he is appointed on a fee basis, resulting in high project cost

12

What is prime contracting?

- Prime contracting is a procurement route in which a Contractor is appointed by a Client to deliver one or more projects

- Contractors are appointed based on tender submissions of their Schedule of Rates

13

What is serial tendering?

- Serial tendering is a tendering mechanism that can be used in a prime contracting procurement route

- Serial tendering involves submitting a schedule of rates for your tender bid, or pricing a hypothetical Bill of Quantities for a typical project

- The winner of the tender will be appointed as and when the client requires their services. Useful for a client that has repeat work or maintenance.

14

What Contract would you use in a prime contracting procurement route?

- JCT MTC 2016

- Measured term contract.

- Defines works covered and over what term (2-3 years typically)

- Estimates likely value and size of individual orders

- Agreed on schedule of rates

15

What is PPP/PFI?

- Public Private Partnership

- Public Finance Initiative

16

What are PPP/PFIs?

- Joint ventures between the public and private sectors

- Generally, the public uses PPP/PFI to procure a service from the private sector, such as providing a hospital or train station

- In return for the asset, the public sector pays a regular fee to the private funder

- Generally these relationships last 25-30 years, and the end of which the asset is handed back to the public

- The private sector is responsible for the maintenance of that asset throughout it's lifecycle

- There are many variations of PPP/PFI

- The advantage for the public sector client is that they can build needed infrastructure such as schools and hospital at no CAPEX cost

17

What is the RIBA Plan of Works 2019?

- Comprises of 8 work stages

- establishes boundaries between stages and details tasks and outputs at each stage

18

What is RIBA Stage 0?

Strategic Definition

- Identify client's Business Case and Strategic Brief

- Establish project programme (will be reviewed at every stage going forward)

- Initial considerations made for assembling project team

19

What is RIBA Stage 1?

Preparation and Brief

- Develop Project Objectives

- Develop Project Budget (Order of Cost Estimate)

- Develop Initial Brief

- Undertake Feasibility Studies

20

What is RIBA Stage 2?

Concept Design

- Prepare Concept Design

- Develop Cost Information (Cost Plan)

- Consider strategies for sustainability M&O, handover, H&S and risk assessments

21

What is RIBA Stage 3?

Developed Design

- Prepare developed design including coordinated and updated proposals for structural and MEPH.

- Develop Cost Information (Cost Plan)

- Review and update strategies for sustainability M&O, handover, H&S and risk assessments

22

What is RIBA Stage 4?

Technical Design

- Prepare technical design to include all architectural, structural, MEPH and specialist subcontractor design information.

- Prepare and submit Building Regulations submission and any other third party submissions requiring consent.

- Develop cost information. (Bill of Quantities)

- Review and update strategies for sustainability M&O, handover, H&S and risk assessments

23

What is RIBA Stage 5?

Construction

- Construction of project inclusive of offsite manufacturing

- Resolution of design queries

- Regular site inspections, for the PQS to value works complete and variations from the Contract

24

What is RIBA Stage 6?

Handover and Close Out

- Handover of building and conclusion of Building Contract

- Final Account settled

- Defects Liability Period; defects made good prior to Certificate of Making Good Defects certified and remaining retention released

- Carry out activities listed in handover strategy

25

What is RIBA Stage 7?

In Use

- Concludes handover strategy activities incl post-occupancy evaluation

- Contractor may be back for maintenance if part of contract was to provide maintenance

26

Why is it important to have a robust tendering strategy?

- Accountability

- Auditing

- To ensure everything has been picked up

- Parity

-Reduce claims of corruption

- Ensure correct price is paid for proposed works

27

What are the standard rules for tendering?

- All tenderers must receive the same information

- If one submits a query, all must receive the query and response. The exception to this is if the response would reveal a particular suppliers commercial proposal/programming advantage/methodology.

- After the deadline has closed, all tenders must be opened with a witness

- Submissions must be compliant, and submitted prior to deadline

Read JCT Tendering Practice Note 2017

28

What is single stage tendering?

- Obtaining a price for the whole construction works

29

When would you use single stage tendering?

- Where ERs are sufficiently defined so it can be easily priced

- Usually done at RIBA Stage 4 so tendering contrators receive most detailed information to base bid on

30

What is two-stage tendering?

Tender process split into two stages:

1) Tender enquiry documentation issued to Contractors at RIBA Stage 2 or 3. Rather than requesting a bid, Contractor is chosen based on quality of bid, team, preliminaries price, OH&P allowances. Sometimes provisional bid is requested based on the ERs provided but carries less weight than in single stage.

2) Preferred contractor joins design team on a consultancy basis on a PCSA (Pre-Construction Service Agreement). During this time they develop the design. At the end of the PCSA period they submit their Contract Sum for the project, which will often be subject to negotiation with the client/PQS.