This week, we guide your through the core competency for the Quantity Surveyor and Construction pathway, which the candidate must achieve at level three
This week's APC Trainer article focuses on the Procurement and Tendering competence (T062) and in particular two stage tendering. We’ll explain the type of questions the APC assessor may ask and what they look for from the candidate to demonstrate they have achieved the required level of competence. This is a core competency for the Quantity Surveying and Construction pathway, which the candidate must achieve at level three.
As noted in previous Building APC articles, to achieve competence levels two and three, the candidate must be able to demonstrate actual experience. At level three, you must give reasoned advice to clients. The questions and answers will be dependent upon the candidate’s actual experience and the pathway they have followed, so the questions and answers below should be considered as indicative only.
Question What do you understand by two stage procurement and what are the perceived advantages and disadvantages of this route?
Answer Two stage tendering is currently very popular in the market and is the preferred route for a number of public sector clients and contractors in general. There are a number of variants on the two stage tendering process and it may be used through a traditional or design and build approach. Typically, a stage one contractor is appointed early on in the design, around RIBA stage C or D, on the basis of limited information, with the objective of achieving cost-certain and time-certain outcomes for the employer through further negotiation with the preferred contractor. A contract for the construction works is entered into at the end of stage two once the detailed design, procurement and planning work is complete.
In considering the advantages and disadvantages of two stage, the candidate would not be expected to identify every item below, although you do need to demonstrate a good general understanding.
The advantages can be considered from the client and contractor’s perspective:
? Clients :
o Early involvement of the main contractor and their supply chain enables their input into buildability and value engineering as the design progresses
o Encourages collaborative working between the main contractor, their supply chain and the design team
o Potential for earlier start on site through enabling works
o Potential for greater client involvement in selecting the supply chain
o Reduced risk of price increases during construction stage, as greater tendering certainty can be achieved through second stage procurement process
o Improved programme certainty prior to contract, through early contractor involvement and allowing sufficient time to consider sequencing, lead ins and specialist works
o Reduced risk of construction delays due to improved planning during second stage
o Potential to transfer a greater degree of design and other construction risk to the contractor
o Contractor can help identify and manage risks at an earlier stage
? Contractors :
o Costs of abortive tendering significantly reduced
o Profitability secured through first stage and costs secured through second stage procurement
o Contractor can influence the design, programme and delivery strategy at an earlier stage
o Less risk for the contractor as they are able to achieve greater cost and programme certainty prior to committing to a lump sum
o Unless all packages are firmed up, or the risk is transferred to the contractor, the client will not achieve procurement cost certainty at the end of the second stage and may commence construction with an element of provisional sums to be firmed up post contract
o Costs can increase and delays can occur if the contractor’s design information release requirements are not adhered to by the design team
o Additional pre construction costs in the appointment of the contractor
o Commitment required to the contractor’s stage two costs prior to achieving cost certainty on the construction works
o Procurement takes longer than single stage and this may delay the start on site date
o All advantages can be lost if the team fail to engage and therefore the approach and quality of the consulting and second stage contracting team is essential.
o A contractor could take advantage of the second stage negotiations leading to cost increases and a higher than anticipated second stage tender
o Potential for failure of the parties to agree the contract sum at the end of stage two, leaving the client open to the risk and cost of re-tendering
Question On your project [X], which was carried out under a two stage procurement approach, what selection criteria was applied in appointing the contractor at stage one?
Answer The candidate should be able to draw upon their experience to explain the commercial and technical/ qualitative criteria used, the weighting applied and why these were applied.
? Commercial criteria:
o The costs requested from the contractor at stage 1 will vary depending upon the contracting approach, the stage of the project, the information available for the contractor to price and whether any enabling works are required. The costs should be split into stage two and construction stage and would typically include :
? Staff costs
? Overhead and profit
? Allowances for risk
? Design team fees if under a design and build route
? Detailed preliminaries pricing
? The contractor may also be requested to provide a lump sum for enabling works or some early works packages
? Technical criteria would typically include:
o Contractor’s approach to two stage tendering, including commercial considerations, interfacing with the design team and ability to provide value for money
o Relevant experience and track record of contractor
o Structure and experience of proposed team at each stage
o Appropriateness of resource applied to second stage and construction
o Understanding the project objectives and constraints and how these will be achieved
o Health and safety track record and approach
The weighting of the selection criteria should be agreed with the client prior to tender and communicated to all tenderers. It should be heavily weighted towards the technical/ qualitative criteria to obtain best overall value for money from the two stage process.
Question How did you evaluate the stage 1 tender returns and how did you then make your recommendation to the client?
Answer The candidate should relate to their actual project in providing the answer to this competency based question, which may include :
? Tender Evaluation :
o Tender returns checked for compliance with the invitation to tender
o Arithmetical checks carried out on cost components
o Any non compliant tenders treated in accordance with the conditions outlined in the Invitation to Tender
o All tenders aligned on a like for like basis and compared with each other and the pre tender estimate
o Analysis undertaken of resource levels committed by each contractor and on the merits of the team proposed
o Post tender interviews carried out with short listed tenderers
o Tenders scored against the pre-determined selection criteria
? Tender recommendation report prepared and presented to client, including :
o Bid history
o Summary of tender returns
o Aligned tenders
o Scoring of tenders against technical and commercial criteria
o Recommendation on what tender represents overall best value for money
o Outline of future actions and contracting approach
Dean Mills is a director of Turner & Townsend
Building's APC advice is intended as a guideline only and should not replace your own study.