Procurement and tendering
| Question | Answer |
|---|---|
| What is Procurement? | Procurement is the overall act of obtaining goods and services from external sources (i.e. a building contractor) and includes deciding the strategy on how those goods are to be acquired by reviewing the client’s requirements (i.e. time, quality and cost) and their attitude to risk. |
| What are the different Procurement routes? | a)Traditional / general contracting b) Design and build c) Management contracting d) Construction management |
| What is traditional procurement? Can you please explain your understanding of traditional procurement? | Under a traditional procurement route, the design is completed by the client’s design team before a main contractor is employed to build what the designers have specified. The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team. The client maintains responsibility and risk for the design and design team performance. |
| What is the risk allocation in 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 is it appropriate to use traditional procurement? | a) If the employer has had the design prepared b) If the design is substantially completed at time of contractor selection c) The client wishes to retain control over the design and specification d) Cost certainty at start on site is important e) The shortest overall programme is not the client’s main priority |
| What are the advantages of traditional procurement? | a) Competitive fairness and transparent process – increase value for money b) The client and their design team retains control over the design which can lead to higher quality over the materials and products that are specified. c) With a design largely complete at the time of tender and agreement of the contract sum, traditional procurement can also offer increased levels of cost certainty in comparison to other procurement methods. d) Well known procedures e) Design changes are also reasonably easy to arrange and value as there are typically rates listed within the contract sum that will form the method of valuation. |
| What are the disadvantages of traditional procurement? | a) The overall project duration may be longer than other methods of procurement due to there being no overlap between design and construction phases. b) There is no input into the design and planning stages by the contractor and therefore no opportunity to utilise the contractors buildability expertise. c) Strategy based on price competition – could lead to adversarial relations d) There is a dual point of responsibility with the design team controlling the design and the main contractor retaining responsibility for the construction meaning there are two separate relationships for the client to manage. e) If design not complete at time of tender, cost and time certainty are reduced |
| What contracts might be used for traditional procurement? | Lumpsum • JCT Standard Building Contract 2011 (the ‘with Quantities’ and ‘without Quantities’ versions) • JCT Intermediate Building Contract 2011 • JCT Minor Works Building Contract 2011 • NEC3 ECC Option A Remeasurement • JCT Standard Building Contract 2011 (the ‘with Approximate Quantities’ version) • JCT Measured Term Contract 2011 • NEC3 ECC Option B • FIDIC Red Book • FIDIC Pink Book |
| What are the contract documents for traditional procurement? | Volume 1: Conditions of contract such as Contract agreement, Letter of Acceptance, Letter of Tender, Particular and General conditions Volume 2: Specifications Volume 3: Drawings Volume 4: Bill of Quantities Volume 5: Soil investigation report Volume 6: Any other documents such as clarifications, addendums, forms etc. |
| 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. The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works |
| When is it appropriate to use design and build? | a) Where there is a need to make an early start on site – can overlap design and construction b) Where the client wishes to minimise their risk – not got responsibility for design c) For technically complex projects – benefit of contractor’s expertise d) Where the employer does not want to retain control over the design development |
| What are the advantages of design and build? | a) An earlier commencement of the construction works may be possible as there can be overlap between the design and construction phases. b) There is a single point of responsibility for the design and construction of the project meaning it may be easier for the client to manage one relationship. Transferring risk of the design to the contractor can work in the client’s favour as any design issues incurred are the liability of the main contractor. c) For technically complex projects – The client can also benefit from the contractor’s buildability expertise during the planning and design stages. d) Where the employer does not want to retain control over the design development e) By agreement of a fixed priced lump sum, design and build procurement can offer high levels of cost certainty. |
| What are the disadvantages of design and build? | a) Client may find it hard to prepare a sufficiently comprehensive brief b) The client has to commit to a concept design early on in the project and any errors or omissions from the employers requirements may prove costly. c) Variations from the employer’s requirements are usually more difficult to arrange and value than other methods of procurement as there is no bill of quantities with rates that can be used to value variations. d) Harder to compare tenders – harder to determine if getting value for money e) Ease of fabrication may be prioritised above aesthetic quality f) May be less real competition due to fewer design and build firms g) There is also less control over the design and type of building materials to be used as design responsibility is transferred across to the main contractor. |
| What contracts might be used for design and build? | • JCT Design and Build Contract 2011 • JCT Major Project Construction Contract 2011 • NEC3 ECC Options A–E • FIDIC Yellow Book |
| What are the contract documents for Design & Build? | 1. Conditions of contract 2. Employer’s requirements 3. Concept drawings 4. Performance parameters 5. Contractor’s proposals 6. Contract Sum analysis |
| What is novation? | A new contract that transfers the rights and obligations of one contractual party to a new third party e.g. design rights and obligations of architect transferred from Client to contractor. If you want to transfer the burden of a contract as well as the benefits under it, you have to novate. |
| What is assignment? | Assignment involves the transfer of an interest or benefit from one person to another. However the ‘burden’, or obligations, under a contract cannot be transferred. In the context of a building contract: – the employer may assign its right to have the works constructed, and its right to sue the contractor in the event that the works are defective – but not its obligation to pay for the works; – the contractor may assign its right to payment of the contract sum – but not its obligation to construct the works in accordance with the building contract or its obligation to meet any valid claims, for example for defects. E.g. Collateral warranty |
| What are the types of Novation? | 1. Switch novation – the original agreement between the consultant and the client terminates on appointment of the contractor, and there is then a new agreement between the contractor and the consultant. This can be seen to provide better clarity of the contractual relationships. However, because the consultant’s liability to the client for pre-switch services remains, some argue that there is a greater risk of conflict of interest. As far as the contractor is concerned, liability for work before the switch remains with the client, who would then have to seek redress from the consultant. This complex position can be simplified if the building contract specifically states that the contractor has examined the design and adopted it. 2. Ab initio novation – The employer transfers its interest in a design consultant’s appointment to the contractor. The contractor steps into the shoes of the employer as far as the consultant’s appointment is concerned and is treated as if it (the contractor) was always a party to appointment. The consultant becomes liable to the contractor for design services it carried out for the employer prior to the novation. The contractor becomes liable to the employer for all the design of the works (both pre and post novation). Employers favour this type of novation as it means that that they can hold the contractor responsible for any design defect. There is a ‘one stop shop’ for design responsibility. |
| What is Reasonable Skill & care? | In the absence of any written terms and conditions to the contrary, a professional designer will have a duty to act with reasonable skill and care. It requires the supplier of a service to provide the service with reasonable skill and care. The common law test for negligence provides that a professional person is not negligent if he carries out his work to the same standard that another reasonably competent member of his profession would have met. Due to the reliance on skill and judgement, a designer’s duty does not necessarily require him to achieve a particular result as long as he has exercised the requisite level of care. |
| What is Fit for purpose? | It is an absolute obligation to achieve a specified result, a breach of which does not require proof of negligence. It imposes implied terms on any seller acting in the course of business that the goods supplied will be of satisfactory quality and, where the purchaser makes known any particular purpose, are reasonably fit for their intended purpose. In a construction context, this means that a contractor is effectively guaranteeing that the components and the finished building will be fit for their intended purpose. |
| What is management contracting? | A management contractor is employed to contribute their expertise to the design and to manage construction and is paid a fee for doing so. – The management contractor has direct contractual links with all of the works contractors – They have the responsibility for the construction works without actually carrying them out – Not all of the design need be completed before the first works contractors start work – The MC selects the works contractors through competitive open book tenders – The client reimburses the cost of these packages to the MC plus their fee – The MC’s role is low risk – get prime cost plus a fee |
| When is it appropriate to use management contracting? | – Where an early start on site is a priority – Where the client does not want cost certainty before commencement |
| What contracts might be used for management contracting? | • JCT Management Building Contract 2011; and • NEC3 ECC Option F |
| What are the advantages of management contracting? | a) Overall project duration is shorter due to overlapping design and construction b) The client can benefit from early contractor expertise during the design and planning stages. c) Changes can be accommodated in packages not yet let if they have no further impact d) The works are let competitively at current market prices on a firm price basis |
| What are the disadvantages of management contracting? | a) The price for the works is not finalised until the last works package contractor has been appointed resulting in reduced cost certainty for the client. b) Changes to the design of later packages may affect packages already let – expensive c) There is little incentive for the management contractor to reduce costs as they usually receive a flat management fee plus the cost of the works. d) May become a ‘post box’ system e) In practice, the MC has little legal responsibility for the defaults of the works contractors |
| What is construction management? | The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction manager who acts as a consultant to coordinate the contracts. – The trade contractors carry out the work – The construction managers supervises the construction process and coordinates the design team – The CM has no contractual links with the trade contractors or members of the design team – Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works |
| When is it appropriate to use construction management? | – on large, complex projects were the advantages of CM can be put to use e.g. upfront buildability knowledge, programme advise, specialist input from trade contractors – Where early start on site is key – Flexibility in design, procurement, construction strategy – Where price certainty before commencement is not key – Where the client is experienced in construction |
| What contracts might be used for construction management? | • JCT Construction Management Appointment 2011 • NEC3 ECC Option F |
| What are the advantages of construction management? | a) Overall project duration reduced by overlapping design and construction b) Construction manager can contribute to the design and project planning processes c) Roles, risks and relationships for all parties are clear d) Changes in design can be accommodated without paying a premium e) Prices may be lower due to direct contracts with trade contractors f) Client has means of redress to trade contractors through direct contractual links |
| What are the disadvantages of construction management? | a) Price certainty not achieved until last trade package is let b) Changes to later packages may adversely affect packages already let – expensive c) Need an informed, pro active client d) Client has a lot of consultants and contractors to deal with – not just one – more fees |
| What is the difference between management contracting and construction management? | – Under construction management the client is in direct contractual relationships with each of the trade contractors and the construction manager isn’t – Under management contracting, the MC is in direct contractual relationships with the trade contractors and the client is in contract with the MC only |
| What is Prime Contracting? | Prime contracting is a form of procurement in which the client enters into a relationship with a contractor who provides a single point of contact (prime contract) for a supply chain to deliver one or more projects. Prime contracting, a streamlined project delivery method, centralizes accountability under one contractor to improve communication, reduce risks, and ensure projects stay on track and within budget. Ideal for complex projects, it ensures efficiency and successful outcomes. It is one of the three procurement routes recommended by Government Construction Strategy for publicly-funded projects in UK. |
| What is EOI? | An expression of interest (sometimes referred to as request to participate) is a submission made by a prospective tenderer in response to an advert (or contract notice) for the supply of goods or services. |
| What is RFP? | A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals. Can be used in Design & Build projects where scope may not be defined. |
| What is RFT? | A request for tenders (RFT) is a formal, structured invitation to suppliers to submit a bid to supply products or services. Scope will be defined. |
| What is RFQ? | A request for quotation (RFQ) is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ generally means the same thing as IFB (Invitation For Bid). Basically a small version of RFT without having any major documents. |
| What is BAFO? | Best And Final Offer (BAFO) Term used in bids to indicate that no further negotiation on the amount or terms is possible. BAFO is issued often in response to the request a principal (customer) sends to those contractors or suppliers whose bids are within a close range of one another. |
| What is TOR? | Terms of Reference is an instruction documents also provides guidance to contractors to submit a tender which responds to all technical and administrative requirements of the Contracting Authorities and defines the scope of works , and later to serve as the contractor’s mandate during project implementation. |
| What is Hybrid Procurement? | It is a combinaton of central and local procurement models. Hybrid models adopt a pick-and-choose approach to procurement, with a central leadership structure supported by local managers with some degree of autonomy. E.g. procurement of RMC, steel and formwork can be done from Head office common for all the projects while procurement of subcontracts can be done on each project as per their requirement |
| What is PFI? | The private finance initiative (PFI) is a procurement method in UK which uses private sector investment in order to deliver public sector infrastructure and/or services according to a specification defined by the public sector. |
| What is the difference between PFI and PPP? | PFI is a sub-set of a broader procurement approach termed public-private partnership (PPP), with the main defining characteristic being the use of project finance (using private sector debt and equity, underwritten by the public) in order to deliver the public services. |
| What is SPV? | A special-purpose entity (SPE), also called a special-purpose vehicle (SPV) or a financial vehicle corporation (FVC), is a legal entity typically formed for the specific purpose of providing the PFI. It is owned by a number of private sector investors, usually including a construction company and a service provider, and often a bank as well. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt. A special purpose vehicle is sometimes referred to as a bankruptcy-remote entity for this reason. |
| Why does the government opts for a private sector in PFI? | Public Saving. Better Management Skills of Private sector Risk Transfer to private sector |
| What is Framework agreement? | A framework agreement sets up pre-negotiated terms for repeated transactions, streamlining long-term business relationships. They allow the client to order from suppliers of goods and services over a period of time on a call-off basis as and when required. |
| What is Tendering? | Tendering is a structured process for obtaining offers or proposals from suppliers or contractors to perform specific work or services. It is used to award business activity either through competition or negotiation with a single contractor. The purpose of tendering is to ensure transparency, fairness and competitiveness in awarding contracts. |
| What are the types of Tendering? Please explain the main methods of tendering you are aware of? | The main tendering methods I am aware of include:- 1. Open tendering – This method allows any interested contractor to submit a tender. It is open to the general market and typically advertised publicly to ensure wide participation. 2. Selective tendering – Contractors are pre selected based on criteria such as financial stability, experience and resources. It includes two sub types:- a. Single-stage selective tendering – All tender documents are provided upfront to a group of pre-qualified contractors. b. Two-stage selective tendering – The process is divided into two phases with selection of the main contractor in the first phase and negotiation of a final price in the second stage. 3. Negotiated tendering – The client negotiates directly with a single contractor, often due to prior experience or a strong working relationship. 4. Serial tendering – A contractor is awarded multiple similar projects based on agreed rates from an initial tender. |
| What is open tendering? | Open tendering is the process of inviting bids from all interested contractors or suppliers. Open tendering does not require pre-qualification, allowing any contractor to submit a tender, which ensures inclusivity but may increase the workload for tender evaluation. Advertisements are placed in public platforms like newspapers or technical publications to maximise participation. |
| What are the advantages of open tendering? | 1. It provides opportunities for contractors who may not have previously worked with the client. 2. This may allow the client to harness the innovation and capability of specialist suppliers that are not usually considered. 3. It also creates maximum pricing competition among tenderers and potentially leads to agreement of a more competitive price. |
| What are the disadvantages of open tendering? | 1. Bids may be received from contractors that are not financially stable. 2. Tenderers may also not possess the specialist skills needed to fulfil the clients requirements. 3. A lack of familiarity with the client’s requirements may create pricing uncertainty during the tender process. 4. A higher volume of tenders being received may result in additional time and costs in order to undertake a detailed tender analysis. |
| What is selective tendering? | Selective tendering limits the number of contractors allowed to submit tenders by pre-qualifying them based on specific criteria. This ensures that only capable contractors participate in the process. |
| What are the two types of selective tendering? | The two types of selective tendering include:- 1. Single-stage selective tendering – This is where contractors submit their bids based on a complete tender package provided at the outset. Pre-qualification criteria include financial stability, certifications, track record, health & safety information and client references. 2. Two-stage selective tendering – This comprises a first stage where the contractor is appointed based on an outline scope of work and initial pricing of preliminaries and schedules of rates. This is then followed up with the second stage where the contractor collaborates with the client to develop the final design. The second stage also involves negotiating the final price between the client and contractor based on the initial pricing information that was submitted in the first stage. |
| What is single stage tendering? | The most common type of tendering strategy is the single-stage competitive tender for obtaining a price for the whole of the construction works. Invitation to tender documents are issued to a number of competing contractors who are all given the chance to bid for the project based on identical tender documentation. The bidding contractors are given a predetermined amount of time to submit their tenders. These are then analysed, in terms of cost and quality, before a single contractor is declared the preferred contractor. They then ultimately enter into a building contract with the client to deliver the tendered works. |
| What are the advantages of single stage tendering? | Advantages: – Most competitive price – Ensures only capable and approved firms submit tenders – Tends to reduce the aggregate cost of tendering – client gets a lump sum for the whole works |
| What are the dis-advantages of single stage tendering? | Dis-advanatages: – Contractor not fully understanding project may lead to a higher ‘risk allowance’ – No contractor involvement in design – May lead to high levels of provisional sums and risk items on the client side – Programme implication to include tender period |
| What is two stage tendering? | Two-stage tendering has become more common in recent years and is often used where time is constrained (as it enables design and tendering to overlap). It is also used if the design process would benefit from the technical input of a contractor in the later design stages. In this sense it is used to obtain the early appointment of a contractor. The process involves first-stage tender enquiry documentation being issued to bidding contractors at RIBA Stage 2 or 3. Rather than requesting a bid for constructing the entire project (which is still in the process of being designed), the preferred contractor is chosen on the basis of the quality of their bid, the quality of their team and their preliminaries price and overhead and profits allowances. The preferred contractor then joins the design team on a consultancy basis using a pre-construction services agreement (PCSA). The preferred contractor then works with the professional team to complete the design, usually to RIBA Stage 4, before presenting a bid for the works at this stage. |
| What are the advantages of two stage tendering? | a) Early involvement of the contractor in design stages b) Encourages collaborative working c) Potential for earlier start on site d) Greater client involvement in selecting the supply chain e) Contractor can help identify and manage risk |
| What are the disadvantages of two stage tendering? | a) Cost certainty may not be achieved before construction starts b) Additional pre-construction fees for the contractor c) pricing competition is reduced during the second stage as the client is only then negotiating with one contractor. This can lead to a higher price being agreed when compared to single stage tendering with numerous contractors. d) Potential for parties to not agree contract sum – risk – cost of retendering |
| Why should you use 2 stage tendering? When would you recommend the use of two-stage tendering? | I would typically recommend two stage tendering for use on complex projects with an undefined scope of works. These criteria usually mean that early contractor involvement is essential for risk management, planning and to utilise their buildability expertise. Due to the overlap of design development and agreement of the tender price, it may also be beneficial for clients who require an earlier start on site than could be achieved with single stage tendering. I would not recommend the use of two stage tendering for clients who require maximum cost certainty as this is not achieved until a tender price is agreed upon conclusion of the second stage. Full pricing competition under live market conditions is also not possible due to the second stage being negotiated, two stage tendering therefore may not be suitable for clients who are looking to achieve the lowest tender price. |
| What is Negotiated tendering? | Negotiated tendering involves the direct discussions between the client and only one singular, preferred contractor. This option is typically chosen due to the clients previous strong relationship and experience with the contractor. Due to the familiarity the contractor has of the clients requirements, it is often thought to be advantageous and more cost effective to negotiate with the preferred contractor than inviting multiple tenderers. This often results in an earlier start on site date as tender negotiations are quicker and can be agreed using schedule of rates and pricing information from previous projects costs. The cost and time implications of managing an open tender process is negated. |
| When is Negotiated tendering used? | – In Partnering type of contracts under the so called win-win formula. – Where the employer has a long term business relationship with the contractor. – In situations where the parties are in a relationships of holding and subsidiary companies. – Where the contractor is involved in the financing of the project. – In situations where the employer finds it advantages to employ the same contractor to continue an initial or existing contract for the new works – Where there is a pressing need to have a very early start of work on the site and to complete the works on a fast tract basis. – In special circumstances e.g. Security reasons, emergencies etc where it is expedient to secure the services of a particular contractor only. – Where there is only a single contractor who is the only one available or with ether the special skill or resources to carry out the particular works. – The employer’s resources are either limited or constrained thereby making the use of the other tendering impractical. |
| What are the advantages of Negotiated tendering? | – only reputable contractor are invited for negotiation. – the contractor can contribute his expertise during design stage. – early commencement of work on site. it shortens the period involved in appointing the contractor. – Experience has shows that contracts let out this basis result in fewer disputes and claims during the construction stage. |
| What are the disadvantages of Negotiated tendering? | – The cost work is likely higher than competitive tender. – Reduces the availability of work for other contractors. |
| What is serial tendering? | Serial tendering involves the award of a series of projects to the same contractor under agreed rates and contractual terms. It is often used when multiple similar projects are planned by the same client to ensure consistency and efficiency. Tenders are negotiated based on agreed schedule of rates which are used to value the works across a series of projects. This option can be utilised when the clients is undertaking a series of projects that are repetitive with few project specific abnormal items. e.g. ADNOC wants to build multiple petrol stations, Starbucks wants to build multiple coffee shops with same design |
| What is a Term Tender? | – term tendering is normally used on major maintenance projects. – it may be awarded to a contractor to cover a range of different buildings in different locations. – it is often limited to a fixed time period. – the type of work is usually specified and priced in a schedule of rates. – Where the client supplies the rates for the work, the contractors are given the option of quoting a percentage addition or deduction from these rates depending upon their desire to win the project. the contractor offering the most advantageous percentage to the client will then be awarded the contract. |
| What is a Conventional Tendering Process? | 1. Pre-tender Stage 2. Tender Advertisement 3. Closing of Tender 4. Tender Opening and Evaluation Process 5. Tender Award |
| What is TPI? | The TPI or tender price inflation/index is a measure intended to show the trend of contractors’ pricing levels in accepted tenders, i.e. cost to the client. It includes allowances for output cost rises caused by materials, plant and labour. It also reflects commercial decisions made by the contractor such as level of preliminaries, discounting obtained, profit and overheads margins, allowance for risk, directors adjustments indicating their desire to win the work. |
| What is cover pricing? | The term “cover pricing” refers to a practice that occurs where a company wishes, or believes it is necessary, to be seen to tender for a particular project but either does not wish to win the tender; or does not have the time or resources to prepare a carefully priced tender for that project. The company accordingly submits a high bid that it does not expect will be successful. |
| What is Tender Adjudication? | From a contractor’s perspective: The process of converting the contractor’s estimate into a tender bid is called adjudication. Normally tender adjudication is happening in a meeting with company top management. After preparation of the basic tender estimation, top management take decisions about Overhead and profit related to that tender. During that meeting they take decisions on company overhead, by considering several factors such as market condition and decide profit margin, allow for risk, allow for price fluctuation if that is not allowed in the ender, And make changes to the basic cost by considering construction methods or any other expected discounts and etc., Type of client, Consultant, Importancy of the project, Availability of resources From a client’s perspective: The tender adjudication process is a procedure where a panel reviews all bids against set criteria and selects the most appropriate supplier. |
| What is MEAT? | The Most Economically Advantageous Tender (MEAT) is a method of assessment that can be used as the selection procedure, allowing the contracting party to award the contract based on aspects of the tender submission other than just price. Tender is evaluated not only in terms of lowest price but also for ● Price ● Quality ● Aesthetic and functional features ● Efficiency ● After-sales service ● Technical merit ● Date of delivery ● Environmental performance ● Lifecycle cost, etc. Each of the criteria used is given a relative weighting, which must be set out in the tender documents. Alternatively, they can be listed in descending order of importance. |
| What is Best value tendering? | Same as MEAT, looks at factors other than only price, such as quality and expertise, when selecting vendors or contractors. |
| What are Tender table documents? | All tender documents issued till date are kept on a table in Client’s office. Tenderers can check any time to see if all documents are received by them or not and they have not missed out on any important documents such as Addendums, Pre-tender clarifications etc. |
| What is Tender optimisation? | Process to minimise or refine the tender process. |
| What are the contents of a Tender report? | The tender report provides an audit trail for the selection process and might include: – The background to the contract. / executive summary – The scope of the contract. – Pre-qualification criteria. – The tender evaluation criteria. – Reasons for rejection of unsuccessful tenders. – Reasons for the recommendation. – A summary of any post-tender negotiations. – Comparison with the pre-tender estimate. – Any implications for the project. |
| What is the purpose of Pre-Qualification process? | The aim is to ensure that the proposed contractors have the relevant experience, the relevant financial standing (further financial checks may be necessary) and a suitable health and safety record. |
| What is the difference between NDA and Confidentiality agreement? | An NDA is better suited when only one party’s information sharing rights are being governed. E.g. Non-disclosure agreements sent to new employees A confidentiality agreement, by comparison, is typically used when multiple parties pledge to keep the information they exchange between them confidential. e.g. a partnership between a manufacturer and vendor. The vendor needs to trust the manufacturer with confidential information about the design and specifications of their products, and it’s likely that the manufacturer wants to keep the specific details of their processes private too. |
| What are the consequences of selecting an unsuitable contractor? | Implications resulting from appointment of an unsuitable contactor could include:- Strained working relationships between the client and contractor. Project delays and increased costs. Substandard quality of works. Financial instability or insolvency of the contractor. Reputational damage of the client. Poor health & safety performance. Environmental impacts and poor sustainability performance. |
| Could you please explain the items you would include within a tender pack? | Invitation to Tender (ITT): A formal letter inviting contractors to bid. Instructions to Tenderers: Includes submission deadlines, evaluation criteria, and tendering procedures. Conditions of Contract: Specifies the contractual terms. Pricing Documentation: Details the structure and format for tender pricing. Specifications and Drawings: Defines the technical requirements. Employer’s Requirements: Outlines the project scope and expectations. Pre-construction Health & Safety Information: Ensures compliance with regulations. Form of Tender: A formal statement for the tenderer to provide their offer. |
| What is a form of tender? | The form of tender is a standardised document in which the contractor formally agrees to undertake the work at the specified price. It typically includes the tenderer’s details and the total sum offered for the project. |
| What is the purpose of a Tender bond? | Security for the Project Owner: The tender bond provides the project owner (the obligee) with security that the bidder (the principal) is serious about their bid and will not withdraw it after the tendering process is complete. Deterrent to Frivolous Bids: It discourages bidders from submitting unrealistically low bids or bids they cannot fulfill, as they risk losing the bond amount if they withdraw or fail to perform. Financial Cushion: If a bidder is awarded the contract but then defaults, the project owner can claim against the bond for financial losses incurred due to the default, such as the cost of re-tendering. |
| How will you fix the value of a tender bond? | A tender bond’s value is typically fixed as a percentage of the estimated project cost or the tender price, usually between 2% and 5%. The specific percentage can vary based on the project owner’s requirements and the nature of the project, with some government-funded projects requiring a higher percentage, potentially up to 20%. This bond acts as a guarantee that the bidder will honor their tender and enter into a contract if awarded the project. |
| How will the tenderers understand why their bid was unsuccessful? | The Invitation to Tender should clearly define the debriefing process and information that will be provided to the unsuccessful proponents. Tenderers should request for a debrief meeting to get feedback. |
| What will you advice to your management when 2 Contractors submit their Bid with the same price and the same qualifications? | Select the contractor having related project experience, previous work experience with Client, better financial status. |
| What type of payment mechanism you will advice for a refurbishment project? | I would suggest remeasured contract since exact quantum of works to be repaired may not be easily quantifiable at the beginning. |
