Contents
1.1 Types of Procurement
1.2 Types of Tendering
1.3 Tender Stage1.1 Types of Procurement
The system that is commonly used in the construction industry for the completion of a project is for a client to engage a company to carry out the work on its behalf.
In order to do this they will generally appoint a contractor, directly or through an Architect, Engineer or Project Manager.
The procurement process may take a number of formats in order to select, evaluate and appoint a contractor for a project, the choice between the various systems will be determined by the employing authority and the constraints applicable to the contract.
The main options available are considered below.Traditional
This method usually uses the standard form of contract by the Joint Contracts Tribunal (JCT) or a similar. The contract requires the contractor to carry out the construction according to the drawings and specification drawn up by the design team. All work is supervised on behalf of the client by the design team leader, which is normally the architect or on civil engineering projects, the Consultant Civil Engineer.Design and Build
In this case the Contractor is responsible for the design, specification and the construction. The contract may be on a fixed price or cost reimbursement basis, which may be either negotiated, or subject to tender. These are normally used for repetitive types of building of a standard type i.e. industrial unit which the contractor has constructed previously. Past experience and familiarity of the design and construction should result in cost savings for the client.
Ø Management Contracting
In this, the design team specify the building requirements and specialist subcontractors are supervised and co-ordinated by the management contractor to carry out the construction. The management contractor receives a fee, which may be a set fee or a percentage of the contract cost. The management contractor is responsible for providing site accommodation for which he will be reimbursed either at cost or as a laid down lump sum in the tender document. Generally used on complex projects that require a short contract period, though which must have flexibility for modifications during construction.Construction Management
Construction management is similar in most respects to management contracting except that whereas with management contracting the contract is between the client and the contractor (the subcontractors are engaged through the main contractor) in construction management the contracts for the work packages are with the client. The construction manager is employed to manage the construction work. This system tends to be used only on large, specialist technical projects such as power stations.Project Management
Project Management is "the overall planning, control and co-ordination of a project from inception to completion aimed at meeting a client's requirements and ensuring completion on time, within cost and to required quality standards".
Project management can be used on projects of any size, though it is normally used on larger developments. The Project Manager may be an organisation or an individual who guides the client in the selection of a suitable procurement system, appoint all members of the construction team and controls and organises the project. Appointed on a fee basis, which is not dependent on the cost of the contract. This tends to ensure that the project manager works solely for the client's interest, as he earns no commission.Partnering
Partnering is the creation of a special relationship between contracting parties in the design/construction industry. This relationship encourages the parties to change their traditional adversarial relationships to a more co-operative, team based approach, which promotes the achievement of mutually beneficial goals, including the prevention of major disputes.
The method of procurement should be selected on the basis of the priorities for the contract, cost lead time duration of the works form of contract quality anticipated are a few of the considerations but each contract will have its priorities defined during the feasibility and design process.
1.2 Types of Tendering
The majority of builders still obtain much of their work by the system of tendering, especially for new work or work of some importance as opposed to smaller or repair work.
Tendering for work takes various forms; all cost money to prepare yet many tenders are unsuccessful. Success rates vary according to the companies tendering strategy.Open Tendering
This usually takes the form of an advertisement in the national or local press stating that tenders are required to carry out a construction contract. The system has disadvantages but does give contractors new to an area or those starting new businesses the chance to tender or establish themselves.Selective Tendering
Contractors apply to be included on an approved list maintained by an employing body often an architectural practice, local authority or statutory body. These organisations have extensive knowledge and experience of individual contractors and regularly review contractor performance an approved list. From such lists they are able to select contractors most suited to the contract the number invited will vary according to the value of the contract.
The main advantage of this system is that the contractors are known and vetted by the employing authority and be assured as is possible that they will meet their contractual obligations. The system of vetting usually by pretender questionnaires and the interviewing of contractors can work against contractors who are trying to establish themselves in a particular market or newer companies which are expanding. However the system is used extensively throughout the construction Industry.Serial Tendering
This type of tender the contractor is required to submit costs for carrying out work usually not against a particular project but against sample Bills of Quantity , Works Schedule, or price for a sample structure in the knowledge that others of a similar nature will be undertaken. The rates given in such documents will form the basis of costing for future work undertaken, which will be measured and valued by both parties to the contract. The contract is usually also for a fixed period of time (often 5 years) after which the tendering procedure will be repeated.
Some contractors specialise in this form of contract in the knowledge that once secured they have continuity of work for their employees.Negotiated Contract
Negotiated contracts take many forms it is very much dependent upon the type of construction and the requirement by the client for factors such as speed, quality, repetition, cost, desire to retain the services etc.
Generally the negotiated contract is credited with saving much of the costs arising from selective tendering and allows early contractor involvement but other factors disadvantages are also present it is important that the Client and contractor determine the parameters for negotiation before commencement and that the stages at which each may withdraw are agreed together with any associated costs at each stage.
There are three methods used to calculate a final contract price;-
The maintenance of positive relationships during the negotiation process is essential , trust partnering and mutual benefit of the contract to both parties during negotiations and the actual contract works is required.Package Deal Tendering and Turnkey Contracts
These aim at provide the client with a complete service from enquiry to completion with the responsibility for all design, construction and associated works being borne by the contractor. The Turnkey option will usually include everything needed by the client to commence work ( Desks, Chairs Computer installations etc) It is usual for the client to approach one or more contractors y and carry out initial discussions before entering into formal design and contractual discussions with the selected contractor, this process is similar to the Negotiated tender process.
This type of contract is often associated with commercial and industrial structures where simple repetitive design and speed of construction are the main criteria and with clients who wish to retain the services of a contractor who has given good service and value in the past and with whom a positive relationship exists.
Package deals are also popular in that they provide a service which usually involves only two parties the client and the builder, the builder being responsible for securing and managing other building professions which in the construction process.Recommendation and Reputation
Much work may come to the builder through other ways other than that of tendering or the various methods already dealt with. One of the most likely sources is of course, the reputation of the builder, which has taken possibly many years to build up and all members in the organisation have to play their part in achieving this, from management to operative.
Another method closely related to the firm’s reputation is that of receiving work on the recommendation of a satisfied client, this can also result in work of a continuous nature such as maintaining various properties, for example, banks, supermarkets etc., after showing competency for work of this type. Speculative or spec. building, as it is often termed, is now quite common and this generally means that the builder takes a gamble (usually a very calculated one) of building houses, office blocks, etc. before having any client. These methods of obtaining work all hold a place on the make-up of a progressive company and to create a steady flow of work - all must be exploited to the full.1.3 The Tender Stage
The tender stage comprises of the gathering together of all resources (physical and human) required to carry out a contract; the pretender team determining via the use of critical analysis of information available the most efficient and cost effective process by which the contract may be progressed and completed.
The Estimator will contribute to this process by providing advice on the overall cost of the various constructional strategies proposed but until the method statements have been produced the Estimator is not in a position to accurately cost the work proposed. The production of a contract programme derived from method statements produced for the various elements of work to be completed and encompassing health and safety assessments is central to the estimating (and subsequently to the construction) process.
Each company tendering for a contract will have their own strategy on constructional techniques to be used and resources available and will incorporate these into the estimating process.
The estimating of the rates used within the tender is both an art and a science and it must never be assumed that an Estimators role is to place predetermined unit rates derived from historical data and synthesis into Bills of Quantity.
The estimate is only a part of the tender process and it should not be assumed that the estimate derived by the pretender team will be the final tender figure presented to the client. The importance of commercial awareness at adjudication to convert the estimate into a tender cannot be overstated.
Pre-Tender and Pre- Contract Processes
The majority of work secured by a contractor is done so by some form of competitive tendering process.
The importance of gaining as much information as possible about the proposed contract and site cannot be overemphasised.
The contract documentation and tender drawings will provide a useful starting point but most Estimators will need to visit the proposed site to get a ‘feel’ for the contract and the environment in which the work will take place.
The initial examination of a site may be divided into 3 stages:
In this, the design team specify the building requirements and specialist subcontractors are supervised and co-ordinated by the management contractor to carry out the construction. The management contractor receives a fee, which may be a set fee or a percentage of the contract cost. The management contractor is responsible for providing site accommodation for which he will be reimbursed either at cost or as a laid down lump sum in the tender document. Generally used on complex projects that require a short contract period, though which must have flexibility for modifications during construction.Construction Management
Construction management is similar in most respects to management contracting except that whereas with management contracting the contract is between the client and the contractor (the subcontractors are engaged through the main contractor) in construction management the contracts for the work packages are with the client. The construction manager is employed to manage the construction work. This system tends to be used only on large, specialist technical projects such as power stations.Project Management
Project Management is "the overall planning, control and co-ordination of a project from inception to completion aimed at meeting a client's requirements and ensuring completion on time, within cost and to required quality standards".
Project management can be used on projects of any size, though it is normally used on larger developments. The Project Manager may be an organisation or an individual who guides the client in the selection of a suitable procurement system, appoint all members of the construction team and controls and organises the project. Appointed on a fee basis, which is not dependent on the cost of the contract. This tends to ensure that the project manager works solely for the client's interest, as he earns no commission.Partnering
Partnering is the creation of a special relationship between contracting parties in the design/construction industry. This relationship encourages the parties to change their traditional adversarial relationships to a more co-operative, team based approach, which promotes the achievement of mutually beneficial goals, including the prevention of major disputes.
The method of procurement should be selected on the basis of the priorities for the contract, cost lead time duration of the works form of contract quality anticipated are a few of the considerations but each contract will have its priorities defined during the feasibility and design process.
1.2 Types of Tendering
The majority of builders still obtain much of their work by the system of tendering, especially for new work or work of some importance as opposed to smaller or repair work.
Tendering for work takes various forms; all cost money to prepare yet many tenders are unsuccessful. Success rates vary according to the companies tendering strategy.Open Tendering
This usually takes the form of an advertisement in the national or local press stating that tenders are required to carry out a construction contract. The system has disadvantages but does give contractors new to an area or those starting new businesses the chance to tender or establish themselves.Selective Tendering
Contractors apply to be included on an approved list maintained by an employing body often an architectural practice, local authority or statutory body. These organisations have extensive knowledge and experience of individual contractors and regularly review contractor performance an approved list. From such lists they are able to select contractors most suited to the contract the number invited will vary according to the value of the contract.
The main advantage of this system is that the contractors are known and vetted by the employing authority and be assured as is possible that they will meet their contractual obligations. The system of vetting usually by pretender questionnaires and the interviewing of contractors can work against contractors who are trying to establish themselves in a particular market or newer companies which are expanding. However the system is used extensively throughout the construction Industry.Serial Tendering
This type of tender the contractor is required to submit costs for carrying out work usually not against a particular project but against sample Bills of Quantity , Works Schedule, or price for a sample structure in the knowledge that others of a similar nature will be undertaken. The rates given in such documents will form the basis of costing for future work undertaken, which will be measured and valued by both parties to the contract. The contract is usually also for a fixed period of time (often 5 years) after which the tendering procedure will be repeated.
Some contractors specialise in this form of contract in the knowledge that once secured they have continuity of work for their employees.Negotiated Contract
Negotiated contracts take many forms it is very much dependent upon the type of construction and the requirement by the client for factors such as speed, quality, repetition, cost, desire to retain the services etc.
Generally the negotiated contract is credited with saving much of the costs arising from selective tendering and allows early contractor involvement but other factors disadvantages are also present it is important that the Client and contractor determine the parameters for negotiation before commencement and that the stages at which each may withdraw are agreed together with any associated costs at each stage.
There are three methods used to calculate a final contract price;-
The maintenance of positive relationships during the negotiation process is essential , trust partnering and mutual benefit of the contract to both parties during negotiations and the actual contract works is required.Package Deal Tendering and Turnkey Contracts
These aim at provide the client with a complete service from enquiry to completion with the responsibility for all design, construction and associated works being borne by the contractor. The Turnkey option will usually include everything needed by the client to commence work ( Desks, Chairs Computer installations etc) It is usual for the client to approach one or more contractors y and carry out initial discussions before entering into formal design and contractual discussions with the selected contractor, this process is similar to the Negotiated tender process.
This type of contract is often associated with commercial and industrial structures where simple repetitive design and speed of construction are the main criteria and with clients who wish to retain the services of a contractor who has given good service and value in the past and with whom a positive relationship exists.
Package deals are also popular in that they provide a service which usually involves only two parties the client and the builder, the builder being responsible for securing and managing other building professions which in the construction process.Recommendation and Reputation
Much work may come to the builder through other ways other than that of tendering or the various methods already dealt with. One of the most likely sources is of course, the reputation of the builder, which has taken possibly many years to build up and all members in the organisation have to play their part in achieving this, from management to operative.
Another method closely related to the firm’s reputation is that of receiving work on the recommendation of a satisfied client, this can also result in work of a continuous nature such as maintaining various properties, for example, banks, supermarkets etc., after showing competency for work of this type. Speculative or spec. building, as it is often termed, is now quite common and this generally means that the builder takes a gamble (usually a very calculated one) of building houses, office blocks, etc. before having any client. These methods of obtaining work all hold a place on the make-up of a progressive company and to create a steady flow of work - all must be exploited to the full.1.3 The Tender Stage
The tender stage comprises of the gathering together of all resources (physical and human) required to carry out a contract; the pretender team determining via the use of critical analysis of information available the most efficient and cost effective process by which the contract may be progressed and completed.
The Estimator will contribute to this process by providing advice on the overall cost of the various constructional strategies proposed but until the method statements have been produced the Estimator is not in a position to accurately cost the work proposed. The production of a contract programme derived from method statements produced for the various elements of work to be completed and encompassing health and safety assessments is central to the estimating (and subsequently to the construction) process.
Each company tendering for a contract will have their own strategy on constructional techniques to be used and resources available and will incorporate these into the estimating process.
The estimating of the rates used within the tender is both an art and a science and it must never be assumed that an Estimators role is to place predetermined unit rates derived from historical data and synthesis into Bills of Quantity.
The estimate is only a part of the tender process and it should not be assumed that the estimate derived by the pretender team will be the final tender figure presented to the client. The importance of commercial awareness at adjudication to convert the estimate into a tender cannot be overstated.
Pre-Tender and Pre- Contract Processes
The majority of work secured by a contractor is done so by some form of competitive tendering process.
The importance of gaining as much information as possible about the proposed contract and site cannot be overemphasised.
The contract documentation and tender drawings will provide a useful starting point but most Estimators will need to visit the proposed site to get a ‘feel’ for the contract and the environment in which the work will take place.
The initial examination of a site may be divided into 3 stages:
Ø The Site Visit
Ø The Desk Top Study
Ø Soil Exploration / insitu testing (These usually result in laboratory analysis of soil samples and a formal report for use by the tender team).
Ø The extent of this investigation is in reality often limited to the site visit and desk top information which increases the risks taken by the contractor.
The extent upon which the estimator will complete each of these stages will depend upon the complexity of the contract, the need to secure the new work.
Thus the site visit and the recording of such information to relay back to the tender team will have a profound effect upon the tender figure eventually arrived at and submitted to the client.
Site visit will vary according to whether the site is Compact (Traditional enclosed area) or Extended (sewers runs, pipelines or coastal defences).
The extent upon which the estimator will complete each of these stages will depend upon the complexity of the contract, the need to secure the new work.
Thus the site visit and the recording of such information to relay back to the tender team will have a profound effect upon the tender figure eventually arrived at and submitted to the client.
Site visit will vary according to whether the site is Compact (Traditional enclosed area) or Extended (sewers runs, pipelines or coastal defences).
Ø
Considerations will include:
Considerations will include:
Ø Access and egress points to the site present
Ø Temporary roads and access points needed
Ø Ground conditions especially where bore hole information has not been provided within the contract documents.
Ø Standing surface water / ponding
Ø Excavations which can be examined.
Ø Water courses
Ø Surface contamination
Ø Existing buildings on the site
Ø Dumped rubbish or other clearance items
Ø Excavation challenges including machinery assessment removal of or storage of spoil
Ø Obvious service location and type of service
Ø Potential vandalism in the area
Ø Security arrangements and the type of hoarding or fencing required
Ø Temporary buildings location and type
Ø Adjacent buildings type and proximity
Ø Crane operation and access
Ø Local restrictions pedestrian restrictions / police restrictions local events
Ø Local knowledge
Many other considerations will apply on a site by site basis and most companies adopt a standardised site visit report or check list to ensure that items are not overlooked.
The Preliminaries section is very important in establishing the overall tender costs and will contribute a considerable percentage to the overall
The Preliminaries section is very important in establishing the overall tender costs and will contribute a considerable percentage to the overall
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