RICS Draft Guidance Note - Tendering Strategies

6/1/2016
RICSiConsultRICSdraftguidancenoteTenderingStrategies
RICSdraftguidancenoteTenderingStrategies
TableofContents
1Introduction
1.1Minimumlevelofservice
2Generalprinciples(Level1Knowing)
2.1Thedifferencebetweentenderingandprocurement
2.2.Themaintypesoftenderingprocedures
2.2.1Singlestagetendering
2.2.2Twostagetendering
2.2.3Negotiatedtender
2.3Earlycontractorinvolvement(ECI)
2.4JCTpracticenote
2.5BS11000Collaborativebusinessrelationships
2.6TheRICSConstructionPolicy
2.7Reasonsforrobusttenderingstrategies
3Practicalapplication(Level2Doing)
3.1Producingthepretenderestimate(PTE)
3.2Choosingthemostsuitabletenderstrategy
3.3RIBAPlanofWorks/APMworkplan
3.4Settingupthetender
3.4.1Selectionoftenderingcontractors
3.4.2TheeffectofOJEUtenderingrulesontendering
3.5Assessingasuitabletenderperiod
3.6Producing/compilingthetenderdocuments
3.6.1Invitationtotenderletter
3.6.2Formoftender
3.6.3Contractconditions
3.6.4Instructionstotenderersdocuments
3.6.5Projectinformation(preliminaries/worksinformation/employer'srequirements)
3.6.6Designinformation
3.6.8Pricingdocument
3.6.9Typicalappendices
3.7Consideringhowprojectspecificfactors/abnormalsinfluenceatender
3.8Issuingthetenders
3.8.1Traditionalissue
3.8.2Onlineetendering
3.9Duringthetenderprocess
3.9.1Tenderqueries
https://consultations.rics.org/consult.ti/tenderingstrategies/printCompoundDoc?docid=4673556&partid=4673556#doc_4673556_ID_4673684
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3.9.2Tenderaddendums
3.9.3Midtenderinterviews
3.9.4Tenderwithdrawals
3.10Receivingtenders
3.10.1Openingtenders
3.10.2Reviewingthetenders
3.10.2.1Checkingforerrorsandconflicts
3.10.2.2Raisingtenderqueriesandconflictsininformation
3.10.2.3Equalisation/normalisationprocess
3.11Tenderinterviews
3.12Checklistoffurtheritemstoreview
3.13Posttender
3.14Tenderreportandnotifyingtenderers
4Practicalconsiderations(Level3Advising)
4.1Tenderscoringtechniques
4.2Adviceontenderingstrategies(timingoftenderaction)
4.3Managingandreporting:tenderandnegotiationprocessesandoutcomes
4.4Furtheradviceontenderreports
4.5Addressingprojectabnormals
4.6Designcheckingperiodsbetweentenderreturnsandsigningthecontract
4.7Theroutefromtendertocontract
4.8Serialtendering
4.9Termcontracts
4.10Frameworks/approvedsupplierlists
4.11Arebillsofquantitiesabarriertocollaboration?
4.12Doestwostagetenderingpromotecollaboration?
4.13Thesecondstageprocess
4.13.1Targetcosts/guaranteedmaximumprice/shareofsavingmechanismsmerits
andpitfalls
4.14Agreeingcontractconditions
4.15WhatimpactdoesBIMhaveontendering?
4.16Alternativetendersubmissions/alternativescopeoptions/valueengineeringand
reducedprogrammetenders
4.17Sharingvalueengineeringproposals
4.18PFI/PPP
AppendixA
RICSguidancenote
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RICSProfessionalGuidance,UK
Tenderingstrategies
1stedition
Acknowledgments
RICSwouldliketothankthefollowingfortheircontributiontothisguidancenote:
Technicalauthor:
JamesGarnerFRICS(Associatedirector,Gleeds)
Workinggroup:
Chair:AndrewSmith(LaingO'Rourke)
JohnGCampbell(BAMConstructionLimited)
DavidCohen(AmicusDevelopmentSolutions)
AlanCripps(RICS,AssociateDirector,BuiltEnvironmentProfessionalGroup)
StuartEarl(GleedsCostManagementLimited)
RolandFinch(NBS)
ChristopherGreen(CapitaSymondsLtd)
WilliamHall(LendLease)
RoyMorledge(NottinghamTrentUniversity)
MichelleMurray(Turner&Townsendplc)
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MichaelTO'Connor(CarillionConstructionLimited)
MatthewSaunders(RICS,AssociateDirector,BuiltEnvironmentProfessionalGroup)
KevinWhitehead(McBainsCooperConsultingLimited)
PublishedbytheRoyalInstitutionofCharteredSurveyors(RICS)
ParliamentSquare
London
SW1P3AD
UK
www.rics.org
Noresponsibilityforlossordamagecausedtoanypersonactingorrefrainingfromactionasaresultofthe
materialincludedinthispublicationcanbeacceptedbytheauthorsorRICS.
ProducedbytheQuantitySurveyingandConstructionProfessionalGroupoftheRoyalInstitutionofChartered
Surveyors.
ISBN
RoyalInstitutionofCharteredSurveyors(RICS)July2014.Copyrightinallorpartofthispublicationrestswith
RICS.Nopartofthisworkmaybereproducedorusedinanyformorbyanymeansincludinggraphic,electronic,
ormechanical,includingphotocopying,recording,tapingorwebdistribution,withoutthewrittenpermissionof
RICSorinlinewiththerulesofanexistinglicence.
TypesetinGreatBritainbyColumnsDesignXMLLtd,Reading,Berks
Contents
Acknowledgments
RICSguidancenotes
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1Introduction
2.4JCTpracticenote
10
10
10
11
12
13
14
3.7Consideringhowprojectspecificfactors/abnormalsinfluenceatender
17
17
18
19
22
22
3.13Posttender
22
23
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24
24
24
4.3Managingandreporting:tenderandnegotiationprocessesandoutcomes
25
25
26
4.6Designcheckingperiodsbetweentenderreturnsandsigningthecontract
26
26
4.8Serialtendering
26
4.9Termcontracts
27
27
27
28
28
4.14Agreeingcontractcondition
29
29
4.16Alternativetendersubmissions/alternativescopeoptions/valueengineeringandreducedprogramme
29
tenders
29
4.18PFI/PPP
30
AppendixA
31
RICSguidancenotes
Thisisaguidancenote.Whererecommendationsaremadeforspecificprofessionaltasks,theseareintendedto
represent'bestpractice',i.e.recommendationswhichintheopinionofRICSmeetahighstandardofprofessional
competence.
Althoughmembersarenotrequiredtofollowtherecommendationscontainedinthenote,theyshouldtakeinto
accountthefollowingpoints.
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Whenanallegationofprofessionalnegligenceismadeagainstasurveyor,acourtortribunalmaytakeaccount
ofthecontentsofanyrelevantguidancenotespublishedbyRICSindecidingwhetherornotthememberhad
actedwithreasonablecompetence.
IntheopinionofRICS,amemberconformingtothepracticesrecommendedinthisnoteshouldhaveatleasta
partialdefencetoanallegationofnegligenceiftheyhavefollowedthosepractices.However,membershavethe
responsibilityofdecidingwhenitisinappropriatetofollowtheguidance.
Itisforeachmembertodecideontheappropriateproceduretofollowinanyprofessionaltask.However,where
membersdonotcomplywiththepracticerecommendedinthisnote,theyshoulddosoonlyforagoodreason.In
theeventofalegaldispute,acourtortribunalmayrequirethemtoexplainwhytheydecidednottoadoptthe
recommendedpractice.Also,ifmembershavenotfollowedthisguidance,andtheiractionsarequestionedinan
RICSdisciplinarycase,theywillbeaskedtoexplaintheactionstheydidtakeandthismaybetakenintoaccount
bythePanel.
Inaddition,guidancenotesarerelevanttoprofessionalcompetenceinthateachmembershouldbeuptodate
andshouldhaveknowledgeofguidancenoteswithinareasonabletimeoftheircomingintoeffect.
Thisguidancenoteisbelievedtoreflectcaselawandlegislationapplicableatitsdateofpublication.Itisthe
member'sresponsibilitytoestablishifanychangesincaselaworlegislationafterthepublicationdatehavean
impactontheguidanceorinformationinthisdocument.
Documentstatusdefined
RICSproducesarangeofprofessionalguidanceandstandardsproducts.Thesehavebeendefinedinthetable
below.Thisdocumentisaguidancenote.
Typeof
Definition
Status
document
Standard
International Aninternationalhighlevelprinciplebasedstandarddevelopedin
collaborationwithotherrelevantbodies
Standard
Mandatory
Practice
Statement
RICS
Documentthatprovidesmemberswithmandatoryrequirements
practice
underRule4oftheRulesofConductformembers
Mandatory
statement
Guidance
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RICSCode
DocumentapprovedbyRICS,andendorsedbyanother
Mandatoryor
ofPractice
professionalbody/stakeholderthatprovidesuserswith
recommendedgood
recommendationsforacceptedgoodpracticeasfollowedby
practice(willbeconfirmed
conscientiouspractitioners
inthedocumentitself)
RICS
Documentthatprovidesuserswithrecommendationsforaccepted
Recommendedgood
Guidance
goodpracticeasfollowedbycompetentandconscientious
practice
Note(GN)
practitioners
RICS
Practicebasedinformationthatprovidesuserswiththelatest
Informationand/or
Information
informationand/orresearch
explanatorycommentary
Paper(IP)
1Introduction
Thisguidancenotessummariseswhattenderingisandhowtenderingprocessesareusedtoestablishacontract
price.Italsoreviewsdifferenttypesoftenderingandnegotiationstrategiesandtheiradvantagesand
disadvantages.Itseekstoenhancetheknowledgeandunderstandingofthetenderingandnegotiation
processesinvolvedinprocurement.
Thisguidancenotealsolooksatthepracticalissuesofproducinganinvitationtotenderandassessingtender
returnsonapracticallevel.
Thisguidancenotedoesnotcoveronlineliveauctions(alsoknownas'Dutchauctioning').
Practicalconsiderationsuchasadvisingontenderingstrategiesandanalysingandreportingontenderreturnsis
alsoconsidered.
Thisguidancenotedoesnotprovideadetailedreferencetopublicprocurementtechniquessuchastheuseof
competitivedialogue.Thisguidancenoteisrestrictedtothetenderingofconstructionprojects(asopposedto
privatefinanceinitiative(PFI)/publicprivatepartnerships(PPP)arrangements),althoughthesearrangementsare
brieflyreviewedinsubsection4.18.
ThisguidancenotealsodoesnotseektoreplicatetheinformationincludedintheJCTtenderingpracticenote
2012butratherreferstothisinformationwherenecessaryandgivesanoverviewoftheinformationcontainedin
thispracticenoteandwhyitisimportanttoconsult.
Forthepurposesofgivingguidance,theclientisreferredtoasthe'employer'andthemaincontractorasthe
'contractor'.However,muchoftheguidancecanequallybeappliedtoacontractor/subcontractororsupplier
arrangement.
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Guidanceisgiveninrelationtothemainformsofcontractandmainprocurementroutesunderthefollowing
headings,whichmaptotheAssessmentofProfessionalCompetence(APC):
Generalprinciples(Level1Knowing)
Practicalapplication(Level2Doing)
Practicalconsiderations(Level3Doing/advising)
Thequantitysurveyorisexpectedtofulfilthefollowingduties,notwithstandingthedetailedtermsofany
appointmentorcontractualobligation:
takeaninitialbrieffromtheemployerinordertounderstandtheirrequirementsfortendering
chooseasuitabletenderingstrategywiththeprojectteam
collateandproducetheinvitationtotenderdocumentsandissuetheminanappropriatemanner
dealwithtenderqueriesandensuretheyareansweredinatimelymanner
openandanalysetenderreturns,collatetenderqueriesfromthedesignteamandproduceatenderreport,
whichshouldincluderecommendationsofpreferredcontractorstatus,agreedbythewholeprojectteamand
advisetheclientonmorecomplextenderingissues,asappropriate.
Guidanceisgiveninthissectioninrespectofwhattenderingisandhowitdiffersfromprocurement.Itexplains
thecommonmethodsoftenderingintheconstructionindustryandthecommoncodesofpracticethatarereferred
to.
Thereisoftenconfusionintheindustryaboutthedifferencesbetweentenderingandprocurement.Thetermsare
sometimesusedinterchangeablywithoutthoughtgiventotheactualmeaning.Theyaredistinctactivitiesinthe
constructionprocessanditisnecessarytoproperlyunderstandthemtobeabletoexplainthedifferences.
Procurementistheoverallactofobtaininggoodsandservicesfromexternalsources(i.e.abuildingcontractor)
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andincludesdecidingthestrategyonhowthosegoodsaretobeacquiredbyreviewingtheclient'srequirements
(i.e.time,qualityandcost)andtheirattitudetorisk.
Tenderingisanimportantphaseintheprocurementstrategybutprocurementinvolvesmuchmorethansimply
obtainingaprice.Tenderingisthebiddingprocessinobtainingapriceandhowacontractorisactually
appointed.
Therearecommonlythreemaintypesoftenderingstrategy,whicharecommontotheconstructionindustry,
althoughtheremaybesubtypesofeach.Notethatthechosenprocurementrouteshouldnotaffectthetendering
strategy,aseachtenderingstrategycanbeusedwithinmostprocurementstrategies.
2.2.1Singlestagetendering
Themostcommontypeoftenderingstrategyisthesinglestagecompetitivetenderforobtainingapriceforthe
wholeoftheconstructionworks.Invitationtotenderdocumentsareissuedtoanumberofcompetingcontractors
whoareallgiventhechancetobidfortheprojectbasedonidenticaltenderdocumentation.
ThisisusuallydoneatRIBAStage4,sothatthetenderingcontractorsreceivethemostdetailedinformationto
basetheirbidon.Thebiddingcontractorsaregivenapredeterminedamountoftimetosubmittheirtenders,
whicharethenanalysed,intermsofcostandquality,beforeasinglecontractoristhendeclaredthepreferred
contractor.Theythenultimatelyenterintoabuildingcontractwiththeclienttodeliverthetenderedworks.
2.2.2Twostagetendering
Twostagetenderinghasbecomemorecommoninrecentyearsandisoftenusedwheretimeisaconstraint(asit
enablesdesignandtenderingtooverlap).Itisalsousedifthedesignprocesswouldbenefitfromthetechnical
inputofacontractorinthelatterdesignstages.Inthissenseitisusedtoobtaintheearlyappointmentofa
contractor.
TheprocessinvolvesfirststagetenderenquirydocumentationbeingissuedtobiddingcontractorsatRIBAStage
2or3.Ratherthanrequestingabidforconstructingtheentireproject(whichisstillintheprocessofbeing
designed),thepreferredcontractorischosenonthebasisofthequalityoftheirbid,thequalityoftheirteamand
theirpreliminariespriceandoverheadandprofitsallowances.Thepreferredcontractorthenjoinsthedesign
teamonaconsultancybasisusingapreconstructionservicesagreement(PCSA).Thepreferredcontractorthen
workswiththeprofessionalteamtocompletethedesignusuallytoRIBAStage4beforepresentingabidforthe
worksatthisstage.Therearebenefitsanddisadvantagesofthisroutewhicharediscussedinsubsection3.2.
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2.2.3Negotiatedtender
Anegotiatedtenderiseffectivelyasinglestagetenderwithasinglecontractorwhoreturnswithaninitialprice.
Thisisthennegotiatedwiththeclient'sprofessionalteam(usuallytheprofessionalquantitysurveyor(PQS)).
Thebenefitofthisrouteisthespeedwithwhichapricecanbeobtainedfortheworks.However,thecompetitive
advantageofaformalbiddingprocessiscompromised.Alsomanypublicbodiesandgovernmentdepartments
willnotallownegotiatedtenders,exceptinexceptionalcircumstances,asitisdifficulttoprovethatvaluefor
moneyinthecurrentmarkethasbeenachieved.
Asbuildingsbecomemorecomplicated,engineeringevolvesandasBuildinginformationmodelling(BIM)
becomesmorewidelyused,theearlyengagementofacontractorisbecomingmuchmoreimportant.Inessence
ECIisaformofnegotiatedtenderbutemphasisisputonthecontractorastheleaddesignerfromtheoutsetofthe
project.Thisisbeginningtobeseenininfrastructureprojectswheretheearlyappointmentofacontractorcan
significantlyaffectthedirectionoftheemergingdesign.
ECIinvolvesthecreationofadesigner/contractorteamledbythecontractor.Methodstosuccessfullyachievethis
arestillintheirinfancyand,atpresent,methodsofECIarebespoketoaparticularproject.Contractorselectionis
similartotwostagetendering,asitisdonenotonacostbasisbutratheronthequalityoftheteamandbid.Itis
beyondthescopeofthisguidancenotetoaddressECIindetailbutcandidatesshouldbeawareofitsusesand
wideningroleintheindustry.
2.4JCTpracticenote
TheJCThasrecentlyupdatedits2002Practicenote6(series2)maincontracttenderingandretitledittheJCT
tenderingpracticenote2012.Itnowdescribesindetailtheindustrypracticefortenderingintheconstruction
industry.Thelatestiterationofthepracticenoteincludesmoreofanemphasisontwostagetenderingmethods
andother'nonlowestprice'qualityledtenderingmethods.Italsoincludesguidanceonprequalification.
Italsoincludessomemodelforms,whichcanbeusedtoensureadherencetotheindustrystandard.
Thepracticenotelikewiseincludesadviceonhowtodealwitherrorsintendersandisgenerallyseenasbest
practiceguidancetofollowwithregardtotenderingprocedures.Itisthereforeimportanttoascertainwhatthe
latestiterationofthepracticenoteisatthetimeoftenderingandensureitisfollowed.
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ThereleaseoftheBritishStandard(BS)11000Collaborativebusinessrelationships:Aframeworkspecificationin
2010hashadabigimpactonlargeinfrastructurecompaniesandstrictlyrelatestopartneringprojects.The
partnerselectionphasegivesguidanceonhowtoselectandevaluateproposedpartnerbids.Itisbeyondthe
scopeofthisguidancenotetodescribethestandardindetailbutforanylargeinfrastructurePFI/PPPschemethe
existenceoftheBritishStandardshouldbeunderstood,particularlyitseffectonthepartnerselectionstage.
ThelatestversionoftheRICSConstructionPolicywaspublishedinMarch2013.Italsocontainsimportant
guidance,particularlyrelatingtocurrenttrends.
Robusttenderingtechniquescanhelptoensurepositivetenderresultsthrough:
accountability
auditability
ensuringeverythinghasbeenpickedup
parity
helpingtoreduceclaimsofcorruptionand
ensuringthatthecorrectpricehasbeenpaidfortheproposedworks.
Thissectioncovershowgeneralprinciplesareputintopracticetosatisfythe'doing'requirementsoftheLevel2
APCcompetency.Itlooksinmoredetailatthepracticalapplicationsoftendering.Itfocusesspecificallyon
tenderingformaincontractorservicesforconstructionprojectsbutmanyoftheprincipleswillequallyapplyto
tenderingforconsultancyservicesorPFI/PPParrangements.
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Asaprecursortothetenderingphaseoftheprojectthereisaminimumamountofdesignworkthathastobe
produced.Thismightbetoagreaterorlesserdegree,dependingonthechosenprocurementroute.
Beforethetenderactioniscarriedoutitisimportanttoknowtheestimatedcostoftheprojectfortworeasons.
First,theclientwillwanttoknowthattheycanaffordtheproposeddevelopmentandsecond,sothereisabasis
ofcomparisonwhenthetendersarereturned.Thisestimateiscalledthepretenderestimate(PTE)andshould
becarriedoutinaccordancewithRICS'Newrulesofmeasurement(NRM)1:orderofcostestimatingandcost
planningforcapitalbuildingworks.
Whilethepretenderestimateisnotstrictlypartofthetenderingprocess,itisimportantthatitexistsbeforethe
tenderiscarriedoutotherwiseanalysiscouldbeveryproblematic.
Insubsection2.2,thethreemaintypesoftenderingstrategywereoutlined.Thissectionseekstoshowhowtypes
oftenderingstrategyrelatetodifferentprocurementroutes.
Whistallthreetenderingstrategiescanbeusedwithalmostanyprocurementroute,itisreasonabletostatethat
somesuitcertainstrategiesbetterthanothers.Atwostagetenderingstrategyisusefulwhereaquickstartonsite
isrequired,astenderinganddesigncanbeoverlapped.Thereforeitwouldseemanaturalfitforconstruction
management/managementcontractingprocurementroutes,whichwouldsupportaquickerstartonsite.
Traditionalprojectsaregenerallyadvancedtoafargreaterlevelofdesigndetailbeforegoingtotender.Asthe
contractoristhereforenotresponsibleforthedesign,itgenerallysupportsasinglestagetender,unlessthe
projectisparticularlycomplex,inwhichcaseitmaybenefitfromtheinputofacontractorinthedesignstages.
Designandbuildprojectspassalargerproportionoftheriskanddesignresponsibilityontothecontractor,
thereforeatwostagetendercanbenefitacontractor'sunderstandingoftheproject.Theywillbepartofthefinal
stagesofdesignbeforeacontractsumisagreedandawarded.TheycanoftenbeappointedunderaPCSAasa
consultantduringthesecondstageofthetender.
TherearemanyscenariosanddifferentoptionsandTable1outlinestheadvantagesanddisadvantagesofhow
differentprocurementstrategiesrelatetothethreemaintenderingstrategies.
Table1:Theeffectivenessofcertaintenderingproceduresforcertainprocurementroutes
PLEASESEEPDFATTACHMENTFORTABLE1
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Therearevariousworkplansforthedesignandconstructionofaconstructionproject.Previousversionsofthe
RIBAPlanofWorkreflectedthenaturalpositionfortenderingtobecarriedoutinatraditionalmanner,usually
afterStageF.Thenewplanofwork(RIBAPlanofWork2013)nowrecognisesthechangesintheindustryand
specificallytheadoptionoftwostagetenderingtechniques.Itrecognisesthattenderingcanbecarriedoutat
variouspointsthroughoutthedesignlifeofabuilding.Therearealsootherplansofwork,suchastheAssociation
ofProjectManagement(APM)workplanandGovernanceforRailwayInvestmentProjects(GRIP)stagesusedby
theOfficeofGovernmentCommerce(OGCusedpredominantlyforinfrastructureprojects)andtheOGCGateway
Process.
Table2mapsthetenderingprocedurestotheRIBA2013PlanofWorksandRIBA2007PlanofWorksandthe
currentOGCGateways(applicabletoprojects).
Table2:Tenderingproceduresmappedtocommonworkplans
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3.4.1Selectionoftenderingcontractors
Theselectionofthetenderingcontractorsisanextremelyimportantpartofthetenderingprocess,asthequalityof
tenderreturnswillonlybeasgoodasthequalityofthetenderersonthelist.Itisadvisableforprojectteamsto
startconsideringsuitablecontractorsassoonastheprojectbegins.Thismayinitiallybeonthebasisofprevious
experience,wordofmouthorfrommeetingsandpresentationsfromcontractorslookingtosecurenewwork.
Therearethreemaintypesofcontractorselectiontechniques:
Opentendering:thisallowsanyonetoexpressaninteresttotender.Theproposedtenderopportunityis
usuallyadvertisedinjournalsoronwebsites.Publicprocurement(alsoknownastheOfficialjournalofthe
EuropeanUnion(OJEU)tendering)isaformofopentendering(albeitwithsomecaveatsastosuitable
contractors).
Selectivetendering:thiscanbeintheformofashortlistdrawnupbytheproject/clientteamormaybedrawn
fromapreagreedframework/approvedsupplierslist.Thekeydifferencefromopentenderingisthatitisnot
opentoeveryoneandthelistofsuitablecontractorsischosenbytheprojectteam.Onceaprojectislikelyto
becomearealitythenalonglistshouldbedrawnupfromallmembersofthedesignandclientteam.
Singlecontractorselection:thisworkshandinhandwithnegotiationasatendertechnique.Acontractoris
selectedandthenthenegotiationprocessbegins:itisbasicallyashortlistofone.
Onceobviousunsuitablecontractorsarediscountedfromthelonglist,thenextstepwouldbeaformalcontractor
prequalificationprocess.Thismaybeashortintervieworperhapsaprequalificationquestionnaire(PQQ)
dependingonthesizeandcomplexityoftheproject.Theaimistoensurethattheproposedcontractorshavethe
relevantexperience,therelevantfinancialstanding(furtherfinancialchecksmaybenecessary)andasuitable
healthandsafetyrecord.
ItshouldalsobeascertainedearlyonwhethertheprojectissubjecttoOJEUtenderingregulations.Ifitis,orif
thereisanydoubt,thentheOJEUrulesmustbefollowed.TheUKgovernment'sstandardformofPQQisPAS91
2013andRICShascalledonthegovernmenttomandatethis.Itisthereforeimportantthattheguidancewithin
thisdocumentisfollowedifOJEUrulesaretobefollowed.
AlsonotethattheJCTtenderingpracticenote2012givesusefuladditionalguidanceoncontractorselection.
3.4.2TheeffectofOJEUtenderingrulesontendering
TheOJEUpublishestenderingopportunitiesthataresubjecttopublicprocurementrulessetoutbytheEuropean
Union.ThethresholdswhichdictatewhetheraprojecthastocomplywithOJEUruleschangeonaregularbasis
andifthevalueofatenderexceedsthesevaluesthenitmustbelistedintheOJEU,whichisnowanonline
service.
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Itisimportanttogivecontractorsasuitableperiodtorespondtotenderenquires.Thisperiodwillvaryonaproject
byprojectbasis,butsomeofthekeyfactorswillinclude:
thecomplexityofproject
thesizeofproject
timeofyear(e.g.Christmasperiod)and
marketconditions.
Itisalsocommonforthefirststageofatwostagetendertohaveashorterperiodthanasinglestagetender.This
isbecausethecontractorsonlyhavetopricepreliminaries,overheadsandprofitsandthequalitativepartofthe
bid,whereasforasinglestagetenderacontractorwillhavetofullyunderstandandprovideaformalquotationfor
theentireproject.Thismeansthattheywillneedadditionaltimetoreceiveinformationbackfromtheirsupply
chain.
Whenthereareprogrammepressuresonaprojectitisnotuncommonforthetenderingperiodtobecurtailed.
Thisisadangerousstrategy,sinceiftenderersarenotgivenenoughtimetoproperlyconsiderandpricethe
project,thenthetendermaybeeitherartificiallylow(duetothecontractormissingimportantinformation)or
artificiallyhigh(ifthecontractordeemstheretobetoomuchriskattachedtotheproject).
DuringthePQQperiod,itisworthseekingthecontractor'sviewonwhattheywouldconsidertobeanadequate
tenderperiod(dependingonthetenderroutetaken).
Thisresponsibilitygoesbothways,ascontractorsmustensurethat,iftheyhaveagreedtorespondtoatender,
thentheymuststartworkonitstraightawayandgivethemselvesenoughtimetoproperlycompletethetender.
Settingtherighttenderperiodisalsocrucialtoavoidcontractorsfromwithdrawing.Ifacontractordeemsthatthey
donothaveenoughtimetheyaremorelikelytowithdrawfromthetenderratherthanrisksubmittingwhatthey
feelwouldbeasubstandardbid.AssurancesshouldbesoughtfromcontractorsatthePQQstagethattheywillbe
submittingatender.
Itisnotunusualfortenderextensionstoberequestedbycontractorsduringthetenderprocessthismaybedue
tothemunderestimatingtheamountofworkrequiredtocompletethetender,theircurrentcommitments,tender
addendumsbeingissuedorleavingthetendertoolate.Ifanextensionisgrantedthenthisextensionmustbe
giventoallcontractorssothatanunfairadvantageisnotgiven.Itisadvisablefortheprojectmanagertobuildina
smallamountoffloatintotheirprogrammeforthepossibilityofatenderextension.
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Thechoiceofprocurementrouteandcontracttypewillhaveadirecteffectonhowthetenderdocumentsare
compiled.Underatraditionalcontractthedesigninformation,billsofquantities/scheduleofworks/scheduleof
ratesandpreliminarieswillbeissued,whereasunderadesignandbuildcontractthedocumentsarecompiled
togetherinadocumentcalledtheemployer'srequirements,whichthecontractorrespondstowiththeir
contractor'sproposals.Theuseofabillofquantitieswillalsobedictatedbythechoiceofcontracttype.
Industrystandard'codesofpractice'(e.g.RICSCodeofmeasuringpractice)shouldbedealtwithwithinthe
tenderdocumentsandreferredtowherenecessary.
Table3summarisesthedifferenttypesofinformationgenerallyrequiredforthedifferentcontracttype.
Table3:Tenderdocuments
Contracttype
1.Traditional
Informationrequired
Billsofquantities(dependingoncontract)orpricingdocument,
preliminaries,anddesigninformation.
1.Traditionalwithcontractor
designedportion(CDP)
Asaboveplusemployer'srequirementsforcontractordesigned
1.Designandbuildcontract
Employer'srequirements.
1.Managementcontract
Billsofquantities(dependingoncontract)orpricingdocument,
portion.
preliminaries,anddesigninformation.
1.NECcontract
Dependsonoptionusedbutgenerallyworksinformationandsite
information.
Itisthereforeimportanttostartthetendercompilationprocessbyproducingachecklistofwhatisrequired
dependingontheprocurementrouteandcontracttype.
Whiletheterminologymaydifferonacontractbycontractbasis,alltenderenquiriesshouldincludethegeneral
informationasdescribedbelow:
3.6.1Invitationtotenderletter
Thisletterformalisesthatthecontractorisbeinginvitedtotenderontheproject.Italsodescribestheproject,
confirmsthereturndateandthecontactdetailsforanyqueriesthatareraised.
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3.6.2Formoftender
Thisistheformthatthecontractorsignsandreturnswiththeirproposedtender,intermsofbothpriceand
programme.Sometendersmayalsoincludeadifferentformoftenderforalternativeproposals(i.e.contractors
whomaybeabletoachieveareducedprogrammetenderorwhoareofferinganalternativedesignsolution).
3.6.3Contractconditions
Thismayincludeacommentaryontheproposedcontractconditionswhichmaybedictatedbybodiesotherthan
theclient(e.g.funder'slawyer).Itisalsothelogicalplacetoincludeanyproposedcontractamendments.
3.6.4Instructionstotenderersdocuments
Mosttendersshouldincludeaninstructiontotenderersdocument(sometimescalledconditionsoftender)that
setsoutwhatisexpectedtobereturnedbythecontractorandonwhatdate.Itwillalsoincludetheproposed
scoringmechanism,anyapplicablequestionnaires,detailsforarrangingsitevisitsanddetailsforsubmitting
tenderqueries.
Theinstructiontotenderersdocumentisdistinctfromtheotherdocumentsinthetenderpackage.Theother
tenderdocumentswilleventuallyformthebasisforthecontractdocuments,whereastheinstructiontotenderers
willnot.Therefore,anyinformationthatislikelytobepartofthecontractdocumentationshouldnotbeincludedin
theinstructiontotenderersbutinsteadshouldbeincludedinthepreliminaries/employersrequirements
document.
ThissectionalsoclarifieshowerrorsaretobedealtwithandshouldbeclarifiedinaccordancewiththeJCT
tenderingpracticenote2012.
Theinstructiontotenderersdocumentwilloftenalsohaveinformationabouttheproposeddatesformidand
posttenderinterviewssothattendererscankeeptheprobabledatesfreeintheirdiaries.
Theproposedscoringmechanismshouldbemadeexplicitintheinstructionsfortenderersdocument.Thesplit
betweenproposedpriceandqualityofbidshouldbeconfirmed.Thismaybeshownasapercentageormaybe
brokendownfurther,withthequalitysectionperhapshavingadditionalsubsections.Thescoringcriteriawillbe
projectspecificandshouldbeagreedbytheteambeforethetenderisissued.
3.6.5Projectinformation(preliminaries/worksinformation/employer'srequirements)
Differentcontractsidentifythissectiondifferently,butprincipallythisiswheretheprojectisdescribedindetailand
wherethecontractualobligationsthatthecontractorisbeingaskedtoundertakeareoutlined.Itwillinclude(butis
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certainlynotlimitedto):
settingthebasedate
fluctuationprocedures
completionstrategies(i.e.partialpossession,sectionalcompletion)
thelevelofliquidateddamages
methodofpaymentstrategy
performanceguaranteesstrategy
insurancestrategy
periodofsuspension
disputeresolutionstrategyandalternatives
collateralwarrantyrequirementsandstrategyand
JointFireCodeapplication,etc.
Fordesignandbuild(ortraditionalcontractswithcontractordesignedportion(CDP))itwillalsoincludethelevel
ofdesignresponsibilityrequired.
TheNECversionofthisdocumentisknownastheWorksInformationanditisherethattheprocurementstrategy
issetouttherefore,iftheprojectisdesignandbuild,thenthenarrativeinthissectionwilldictatetowhatlevelthe
designresponsibilityisrequired.
Anyinformationthatisrequiredtobecompletedinthecontractshouldbeincludedinthissection.
Theprojectinformationshouldalsoincludethekeysupplementaryinformationasappendices.Thesewillvaryon
aprojectbyprojectbasisbutalistofkeyappendixdocumentsaresetoutinsubsection3.6.9.
3.6.6Designinformation
Thedesigninformationisthekeyconsultant'sdesignandspecifications.Thistypicallyincludesthearchitect,
structuralengineerandservicesengineerbutmayalsoincludeanyspecialistdesigninformationthatisrequired
foraparticularproject(e.g.acousticianorlightingspecialist).Thisinformationshouldbepresentedtothe
contractorinaclearandconcisemanner,withcrossreferencingtootherdocumentswherenecessary.
Adrawing/specificationissuesheetshouldalsobeincludedsothatthetendererhasallthenecessary
information.Thetenderdocumentsshouldlisttherevisionstatusofeachdocumentanddrawingthatcomprises
thetenderdocuments.
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3.6.8Pricingdocument
Thetypeofpricingdocumentdependsontheformofcontractandthechosenprocurementroute.Foratraditional
projectafullbillofquantitiesisacommonpricingdocument(inaccordancewithRICS'NRM2:Detailed
measurementforbuildingworks.However,atraditionalcontractmayalsobetenderedonaspecificationand
drawingsbasis,whereitwillbethecontractor'sresponsibilitytoproducethequantities.
ThepricingdocumentmayalsobeproducedinaccordancewithRICS'NRM1:Orderofcostestimatingand
elementalcostplanning,givingthecontractortheresponsibilityforproducingthemoredetailedbillsforpackage
subtenders.
Foradesignandbuildcontractthecontractorisexpectedtoreturnacontractsumanalysisthiscanbeincluded
inthissectionofthetenderdocuments.
Fortermcontracts,ortendersforframeworks,thepricingdocumentmaybeascheduleofrates,whichcanbe
usedtodrawdownworkasrequired.
Anyprovisionalsumsshouldbelistedanddefinedasbeingeitheradefinedorundefinedprovisionalsum(in
accordancewithRICS'NRM2:Detailedmeasurementforbuildingworks).Contractorsshouldbeaskedtoreview
theadequacyoftheprovisionalsumsfromtheinformationthattheyhaveattheirdisposal.Itshouldalsobemade
clearthat,intheabsenceofanyclarification,thedefinitionofeachoftheprovisionalsumsisdeemedas
accepted.
Thecontractorwillgenerallynotberequiredtopricethecostoftheworkaspartofatwostagetenderbuttheywill
requiredtopricethepreliminaries.Therefore,thetenderdocumentsshouldincludeaformatforpreliminariesto
bepresented.ItissuggestedthatapreliminariespricingdocumentbebasedonRICS'NRM1:Orderofcost
estimatingandcostplanningforcapitalbuildingworksorNRM2:Detailedmeasurementforbuildingworks,which
definesindetailwhatisexpectedtobeincludedinthecontractorspreliminaries.
Thecontractor'spricingdocument,whateverformatthathappenstobe,shouldbeincludedinthissection.Itisfar
bettertoincludeamoredetailedbreakdownofcoststhatcanassisttheanalysisphase.
3.6.9Typicalappendices
Appendixinformationshouldbeusedcarefullyandshouldonlyincludeinformationthatwillbeofbenefittothe
tenderingcontractors.Itissometimestemptingtothrowinalltheinformationavailable,butthiswillonlyserveto
confusethetendererandmayultimatelyleadtotheirwithdrawalortheirrequestforanextensiontothetendering
timeline.
Thefollowinglistincludesexamplesofpotentialdocumentstoincludeintheappendicestotheproject
information,andisbynomeansexhaustive:
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healthandsafetydocumentation(preconstructioninformation)
keysurveysforthesitebuilding(drainage,asbestos,electrical,ecological)
planningpermissioninformation
buildingcontroldocumentation
proposedwarranty/parentcompanyguarantee/performancebondwording
designresponsibilitymatrix
partywallagreements
buildingconditionsurveysand
riskregister(outlinewhichriskthetenderersareexpectedtotakeon).
3.7Consideringhowprojectspecificfactors/abnormalsinfluencea
tender
Whilegeneralproceduresandguidanceisimportant,itisalsoimperativetorecognisethateveryprojectis
unique.Projectspecificfactorsand'abnormals'mustbeconsideredinthetenderdocumentation.
Beforethetenderdocumentsarestructuredandproducedthefollowingquestionsshouldbeconsideredthislist
isbynomeansexhaustivebutgivesaflavourofthetypesofquestionsthatshouldbeconsidered:
1.Doestheclienthaveanyinternalprocedurestofollowthatshouldbeincludedinthetender
documents?
2.Arethereanylandownershipissuesthatthetenderersshouldbeawareof?
3.Arethereanynonworkingtimesthatthetenderersshouldbeawareofwhenproducingtheir
programme?Thisisparticularlysensitiveforschoolsandothereducationalfacilitiesthatmayhave
examperiodstoconsider.
4.Arethereanythirdpartyagreementstobeawareof?
5.Willtherebeanyconcurrentactivitiesonsite(e.g.enablingworks,furnitureandfitoutcontracts)that
mayaffectthecontractor'sprogramme)?
6.Hasthephasingoftheprojectbeenproperlysetoutintheprojectinformation?
Themethodofissuingthetenderinformationhaschangedmarkedlyinrecentyearswiththeadoptionof
electronictenderingtechniques.Thishasmadetheprocessfarsimplerandlesscumbersome.However,to
properlyunderstandtheprocessitisimportanttoreviewthetraditionalmethodofissuingtendersfirst.
3.8.1Traditionalissue
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Traditionallyalltenderdocumentswouldbeassembledandboxedupintoidenticalpackagesandissuedto
tenderersbypostatthesametime.Thiscouldincludeahugeamountofinformation,dependingonthesizeofthe
tender,whichcouldbeagreatexpense.Thetenderwouldusuallyincludearequirementtoconfirmreceipt,so
thattheclientknewthatalltenderershadreceivedthetenderandstartedtopaythenecessaryattentiontothe
documentation.
Thismethodisstillused,particularlyforsmallerprojects.Thereissomelogictothisprocesswhenthetender
documentationismoremodest,asitsavesthetenderersfromprintingoutalltheinformationoncereceived.
3.8.2Onlineetendering
Thereareanumberofonlinetenderingportalsbutallprovideasimilarservice,whichistoissue,trackand
provideaportalforqueriesandreturnoftenders.TheRICSguidancenoteEtenderingcontainsmoreinformation
onthisprocess.Thisguidancenotedoesnotseektoreplicatethatguidancenote.
Someofthebenefitsofetenderingareobvious(suchasthereductioninpaper,printingandpostagecosts)but
othersmaybelessobvious.Afurtherbenefitistheabilitytotrackthetimeoftenderopening(whichcouldprove
invaluablewhenarequestforanextensiontothetenderperiodissubmitted).Anotherbenefitisthecollationof
tenderqueriesinoneplace.
Itislikelythattheuptakeofonlinetenderingwillincreaseanditisalsoprobablethatonlinetenderingcompanies
willkeepaddingadditionalfeatures.Itisthereforeimportanttokeepuptodatewithadvancesinonlinetendering
technology.
3.9.1Tenderqueries
Almostalltenderprocesseswillpromptquestionsfromtenderers.Thiscanbeseenaspositiveandshowsthat
thetenderersarereviewingthenecessarydocumentation.Theabsenceofanyquestionsshouldcausesome
concernandshouldpromptenquiriesastowhethertenderersarereviewingthetenders.
Itisimportantthatanytenderqueriesraisedareansweredbacktoalltenderingcontractorsandnotjustthosethat
askedthequestion.Thisistoensurethatparityismaintainedandthatnooneisgivenanunfairadvantage.The
nameofthetendererraisingthequeryshouldnotbementioned.Acollatedresponseincludingtheanswerstoa
numberofqueriesshouldbeissuedsothatitiscleartotenderersthateveryoneisbeingfedthesameimportant
information,raisedthroughtenderqueries.
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Withanonlinetenderingsystemtheresponsetoqueriesisstraightforward,asitisusuallydonethroughthe
onlineportal.Foratraditionaltender,theresponsescansimplybesentviacorrespondence(viaablindcopyto
ensuretenderers'identitiesareprotected).Whateverthesystemforrespondingtoqueries,itshouldbeclearly
outlinedintheinstructiontotendererssectionofthetenderdocuments.
Rememberthatanyimportantinformationissuedasanaddendummustbeincludedinthecontract
documentationwhenformingthecontract.Itisthereforeadvisabletokeepasecurelistoftenderqueriesand
answersastheyareraisedandwordtheminawaythatwouldbesuitableasacontractdocument.
3.9.2Tenderaddendums
Tenderaddendumsarenotdesirableastheycangivetendererstheimpressionofdisorganisationwithinthe
projectteam.Itishoweveracceptedthatsometimestheyareinevitable.Thismaybeduetonewinformation
beingmadeavailableafterthetendersubmissions(e.g.thereleaseofsurveyinformationorachangeofclient
objectives).
Whereitisknownthatsomeadditionalinformationislikelytobeissuedduringthetenderprocessthenthis
shouldclearlybenotedintheinstructiontotenderersdocumentationsothattenderersexpectadditional
information.
Tenderqueriesmayalsonecessitatetherequirementforanaddendumtobeissued(e.g.ifatendererasksforthe
releaseofaparticularsurveymentionedbutnotincludedinthecontractinformation).Ifatenderaddendumis
requiredthenitshouldbedoneasasoonaspossibleandshouldtrytoincludeasmuchinformationaspossible
inasingletenderaddendumratherthanissuingtoomanyaddendums.
3.9.3Midtenderinterviews
Itisbecomingmorecommonformidtenderinterviewstobeheld,especiallyforlarger,morecomplexprojects.
Thebenefitsofmidbidinterviewsare:
1.itisanopportunitytomeetthepeopleworkingonthetender
2.tendererscanraisequeriesinafacetofaceenvironment
3.itisoftencarriedoutonsite,thereforecanbecombinedwithsitevisits
4.itisanopportunityfortheclientteamtoassesstheprogressofeachofthetendererstodateand
5.itisanopportunitytoreaffirmcommitmenttothetenderfrombothparties.
Itisextremelyimportanttorememberthatanyimportantinformationwhichisdisclosedduringthecourseofthe
interviewsshouldbeformalisedandissuedastenderqueriesoratenderaddendumtoalltenderers.Thiswill
ensurealltenderersaregiventhesameinformation
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3.9.4Tenderwithdrawals
Despiteallthestepstakenaboveitisstillnotpossibletoruleoutthepossibilityofoneormoreofthetenderers
withdrawingfromthetenderprocess.Thiscanhappenforanumberofreasonsbutwouldtypicallyinclude:
1.tenderersworkcommitmentspickupandtheydonothavethenecessaryresourcestocompletethe
tenderresponseand
2.havingreviewedtheinformationtheydonotthinktheywillbecompetitiveorbelievethisprojectistoo
risky.
Ifthishappensthenitisimportanttofollowtheclient'sprocessfortenderwithdrawals.Publicprocurementrules
maydifferfromprivateclientsastowhetheranothertenderercanbeaddedtothelistorwhetherthetendermust
continuewiththeremainingtenderers.Ifmorethanonetendererwithdrawsthenthereisalsotheoptionof
cancellingthetenderandstartingtheprocessagainwithanewselectionoftenderers.
Ifitisagreedtointroducenewtenderers,thenalltenderersshouldbenotifiedandalltendersgivenany
necessaryextension(asagreedwiththenewtenderers).
3.10.1Openingtenders
Themethodforsubmittingandreceivingtendersshouldbeclearlysetoutintheinstructiontotenderers
documentation.Thisshouldincludeatime,dateandlocationfortenderstobesent.Itshouldalsonamethe
personthatthetenderreturnsshouldbeaddressedto.Itiscommonforclientstorequesthardcopiesoftender
returns,evenwhenusingonlinetendering,foropeningpurposes.
Oncetheduedateandtimeelapsesnoothertenderreturnsshouldbeconsideredaspartoftheopening
process.Latetendersshouldcertainlynotbeconsideredforpublicprocurementprojects.Privateclientsshould
beadvisedwhichtenderswerelateandiftheywishthemtostillbeconsideredthentheymustprovideexplicit
instructiontodoso.
Atenderopeningformshouldbeused(seeexampleinAppendixA)andanotherqualifiedconstruction
professionalshouldbepresenttowitnesstheopeningofthetenders.Theclientandothermembersofthedesign
teamshouldalsobeinvitedtothetenderopening.
Eachtendershouldbeopenedandthegeneralrawinformationnotedonthetenderopeningform.Thistypically
includesthetenderprice(perhapssplitintopreliminaries,overheadsandprofitandprimecost),theproposed
programme,anykeycomments/exclusions,anyalternativetenderoffersandaconfirmationthatalldocuments
havebeensubmittedornot.
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Oncealltendershavebeenopenedthenthetenderopeningscheduleshouldbesignedanddatedbyallparties
presentasthiswilleventuallyformpartofthetenderreport.
3.10.2Reviewingthetenders
Thereviewandanalysisofthesubmittedtendersmustbecarriedoutmethodicallyandthoroughlytoensure
parityforalltenderersandtoensuretenderreturnsarereviewedonalikeforlikebasis,
3.10.2.1Checkingforerrorsandconflicts
Alltenderreturnsshouldbecheckedforerrorsbeforeanydetailedanalysisisundertaken.Thisinvolvesafull
arithmeticalcheckforthepricingsideofthetenderreturnandalogiccheckfortherestofthetender.Apartfrom
obviousarithmeticalerrorsthekeyissuestobeawareofare:
obviouserrorsinprogrammedates
anyqualificationsthatrenderthetendernullandvoidand
conflictsofinterest(e.g.reviewproposedkeysubcontractors).
TheJCTtenderingpracticenote2012dictatesthecourseofactionifanyarithmeticalerrorsexist(dependingon
theformofcontractbeingused).Aspreviouslydiscussed,themethodofdealingwitherrorsshouldhavebeen
outlinedintheinstructiontotenderers.Thebasicoptionsareeithertoallowthecontractorstocorrecttheirerroror
forthecontractorstostandbytheirprice.
Ifanyothersignificanterrororconflictisdiscoveredthencontactmustbemadewiththecontractorassoonas
possibletoclarifythequalification/issue.Ifitcannotberesolvedthentheymustbemadeawarethattheywillbe
discountedfromthetenderprocess.Ifitcanberesolved(e.g.iftheirconflictofinterestcanbedealtwithby
changingtheproposedsubcontractor)thenthetenderermustconfirmthisinwriting.
Thetenderreturnsshouldalsobeissuedtoallmembersofthedesignfortheirfeedbackandinput.
3.10.2.2Raisingtenderqueriesandconflictsininformation
Tendersshouldbereviewedinthoroughdetailbytheentireclientanddesignteamandalistofposttender
queriessenttoeachofthetenderers.Thisistoensurethatpricesarereviewedonalikeforlikebasis.
Fromaqualitativeperspectiveallteammembersshouldraisequerieswhereadditionalclarificationisrequired,
wherethereisaconflictbetweeninformationwithinthetenderreturnorwherekeyinformationseemstobe
excluded.Caremustbetakentoensuretenderersarenotbeinggivenanopportunitytohaveanotherattemptat
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resubmittingtheirtender.Thequeriesmustthereforebewordedinsuchawaythatthetenderersarerestrictedin
theirresponse.
3.10.2.3Equalisation/normalisationprocess
Thenormalisationofthefinancialaspectsofthetenderreturnsisperhapsthemostcomplexpartofthetender
analysisandrequiressomeonewithahighdegreeofskillandexperienceinreviewingtenderreturnstoproperly
analysethem.
Thereareanumberofmethodsandtechniquesatthedisposalofthequantitysurveyortonormalisethetender:
1..useanaverageofthesubmittedcosts
2.usethehighestpricefromthetenderreturnsor
3.usethecostplanallowanceforthatparticularelement.
Eachmethodhasitsownadvantagesanddisadvantagesandthereisnocorrectmethodthekeyistobe
consistentintheapplication.Thesecanthenbeworkedthroughwiththepreferredcontractoruponselection.
Uponanalysis,ifthereareanyparticularratesorcoststhatseemextremelyoutofplaceorundulyhighorlow
thenthetenderer'sattentionshouldbedrawntotheitemandtheyshouldbegivenachancetoconfirmorexplain
theapparentdisparity.Nousefulpurposeisservedinspottingapotentialerrorinpricingorratesandkeeping
thisfromthetenderer.Theideaofthetenderanalysisprocessistoensurethattherightpriceisbeingpaidforthe
proposedproject.Thereisthereforeadutytomaketenderersawareofanythingthatseemstobeanerror.
Ifabillofquantitiesorapricingscheduleisnotused,thenthepricemaybesubmittedinvariousformats
(althoughitisrecommendedthataproposedformisincludedinthetenderdocuments).Thismaygiveriseto
variancesindescriptionsattachedtopricesinthepricingdocument.Queriesmayalsoberaisedonthebasisof
thedescriptiontoensurealikeforlikecomparisoniscarriedout.
Thepricingofpreliminariesandoverheadandprofitsmustalsobeequalised.RICS'NRM1:Orderofcosts
estimatingandcostplanningforcapitalbuildingworksandNRM2:Detailedmeasurementforbuildingworks
identifythestructurethattenderers'preliminariesshouldtake.Thenormalisationoftendersmustensurethatall
tenderershavepricedthepreliminariesinthesameway,sothatthiselementoftheworkcanberingfenced.
Ifthereareanyprovisionalsumsincludedinthetenderthenthesemustalsobeequalised.Ifanytendererscome
backwithconcernsorqueriesregardingtheadequacyoftheprovisionalsumthenitmustbechangedforall
tenderers.
Ifdayworkistobeusedontheprojectthenthesesubmittedratesshouldalsobeanalysedandtakenintoaccount
intheoveralltenderanalysis.
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Designandbuildcontractorswillincludeariskallowancewithintheirtenderreturnandthisshouldreflectthe
completenessofdesignandresidualrisks.Itisprudenttoincludetheriskregisterinthetenderdocuments,
clarifyingwhichrisksthecontractorisexpectedtotakeforwardandwhichrisksremainwiththeclient.This
registercanthenbeusedtobasetheirpricedriskallowancesonandthiscanbeanalysedandnormalisedina
similarfashiontotheworkscost.Asanexample,ifatendererhasexcludedakeyriskthattheothertenderers
havepricedforthenthisshouldbeaddressedandeitherexcludedfromalltenders(withtheclient'sagreement)
orthetendererwhohasexcludeditgivenachancetoincludeapricefortakingtheparticularrisk
Foroverheadsandprofitsthecontractorsshouldsplittheirpercentageratetoshowtheamountforoverheads
andtheamountforprofit.Anyunreasonablylowoverheadandprofitspercentagecanraiseavalidqueryabout
howthecontractorhopestomakeaprofitontheproject.
Posttenderinterviewsshouldonlytakeplaceoncetheinitialqueriesandequalisationprocesshastakenplace,
astheseanalyseshelptoinformthetenderinterviewprocess.Thestructureofthetenderinterviewshouldbe
agreedinadvanceandalltenderersinvitedtointerviewshouldbegiventhesamestructureandsameoutline
queries(althoughitisacceptedthattherewillbesomequestionsthatarespecifictoonlycertaintenderers).Itis
alsoimportanttoagreeinadvancewhichteammembersshouldattendtheinterview.Thiswillbedifferent
dependingonthetypeoftenderandtypeofprocurementroute.Forexample,atwostagetendererwouldbe
interestedinmeetingtheproposedsecondstagenegotiatingteam.
Theposttenderinterviewsareachancetoproperlyunderstandthetenderer'sproposalsandraiseanyindepth
queriesthatcouldnotbepracticallyansweredbycorrespondence.Thismightincludediscussingconstruction
detailinginmoredetail,programmelogic,methodstatements,understandingofcostsandsoon.
Itisalsoachancetoproperlymeettheproposedteamfortheproject.Forexample,onadesignandbuild
contractyoumayexpecttomeettheproposeddesigners.
Anyagreementmadeduringthetenderinterviewsshouldbeconfirmedinwritingbacktothetenderer,
rememberingthatthecorrespondencemaybecomepartofthecontractdocuments.
Ifthereisanysignificantinformationthatcomesoutthetenderinterviewsthatcouldchangethewholebasisofthe
tender,thentheothertenderersshouldbegiventhesameinformationandgivenachancetorespond
accordingly.
Adetailedsummaryofthemainissuessurroundingissuingandreviewingatenderhavebeengiven.However,
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tenderscanbebespokeandeveryissuemaynothavebeentakenintoaccount.Forconveniencethefollowing
checklistlistsotherissuesthatshouldalsoformpartofthetenderanalysis:
1 Checkthatinsurancesarelikeforlike(intheaggregatepoliciesoreachandeveryclaimbasis)
2 Checkthatinsurancecertificatesareprovidedforallinsurancerequestedandaretothelevelsincludedin
thetender.Itisimportanttochecktherenewaldateforinsurancepoliciesandremembertosetareminder
toaskforrenewalcertificatesattheappropriatetime.
3 Carefullyreviewallqualificationsandassumptionsandensurethattheseareissuedtothedesignteam,
projectmanagerandclientforcomment.
4 Ensuretenderreturnsareissuedtoallmembersofthedesignteamforcomment.
5 Checkforproposedsubcontractors/suppliersandretrievecommentsofdesignteam.Ifnecessaryrequest
financialchecksforanykeysubcontractors.
6 Reviewanypricedriskregistersincludedintenderandensureriskshavebeenappropriatelycosted.
3.13Posttender
Followingafullanalysisandtenderinterviewsafullposttenderestimateshouldbeproduced.Thiswilltakethe
equalisedtenderfiguresfromeachofthecontractorsandaddonothercostcentrestoshowafullprojectpost
tenderestimate.Thiswillthenshowtheequalisedtendersonalikeforlikebasis.Theappropriatescoring
mechanismshouldthenbeappliedtocomeupwithanoverallscoreforthepricingelementofthetender.
Thequalitativeassessmentshouldthenbecompletedinlinewiththeagreedscoringmechanism.Anexampleis
showninTable4.
Table4:Exampletenderanalysistable
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Beforepublicationthedraftscoringshouldbediscussedwiththeteamandclientandanynecessary
amendmentsmade.Onceadecisionhasbeenreachedthefindingsshouldbeincludedinafulltenderreport,
whichincludesarecommendationforawardofcontract.
Oncethetenderreporthasbeenissuedandacceptedbytheclient,thenalltenderersshouldbenotifiedofthe
decision.Someclientswillincludeacoolingoffperiodandpublicprocurementruleswillalsodictatetimesfor
unsuccessfultendererstoraiseobjections.
Theunsuccessfultenderersshouldbethankedfortheirtimeandeffortandtheirscoringonboththequalitative
andquantitativeelementsofthetenderanalysis,inrelationtothewinningtender,shouldbecommunicatedto
them.Itisalsogoodpracticetoinvitetheunsuccessfultendererstomeetinpersonsothattheanalysisoftheir
tenderreturncanbediscussedinmoredetail.
Thissectioncoversthemorecommondifficultiesorcomplexitieswhichmayinfluenceadviceregardingthe
selectionofatenderingroute.
Acharteredsurveyorshouldconsiderthefollowingwhenadvisingontenderingproceduresandinparticular
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whenanalysingtenderreturnsandmakingrecommendations.
Itisimperativethattheproposedscoringmechanismisdisclosedintheinstructionstotenderersdocumentand
thatthisprocessisadheredto.Therearemanytenderscoringtechniquesusedandmanyarebespokeand
producedforaparticulartender.Thesplitbetweenqualityversuspricewillbedictatedbyanumberoffactors
whichcouldinclude:
whetherthetenderisasingle,twostageornegotiatedtender
thecomplexitiesoftheprojectand
thechosenprocurementroute.
Subection3.3mapsvariousplanofworksagainsttenderingstrategies.Rememberthattenderingcanoccurat
anytimeduringthedesignprocess.ApuredesignandbuildprojectcouldbetenderedatRIBAStage1,withthe
contractortakingresponsibilityforcompletingtheconceptdesignagainstthehighlevelemployer'srequirements.
Thescoringandanalysisforthistypeoftenderwouldbeverydifferenttothescoringandtenderanalysisofa
singlestagetender,withbillsofquantities,attheendofRIBAStage4.
Thetimingoftenderactionwillbedictatedmainlybytheamountofinputrequiredfromthecontractor.Ifthetender
issimplytobuildinexactcompliancewiththefullydesignedtenderdocumentthenthetimefortenderaction
wouldbedifferenttoatendertodesigntheconceptandtakeresponsibilityforthedesignofthebuilding.Figure1
illustrates(inasimplisticformforillustrationpurposes)thelinkbetweendesignrequirementandoptimumtimefor
tenderaction.
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4.3Managingandreporting:tenderandnegotiationprocessesand
outcomes
Section3,Practicalapplication(Level2Doing),reviewsthemanagementandreportingtechniquesforasingle
ortwostagecompetitivetender.Anegotiatedtenderpresentsmoreinnovativethoughtregardingboththe
processandreport.Theprocessisessentiallythesameasacompetitivetenderuptothesubmissionofan
invitationtotender.Thenominatedtendererwillreceivethetenderinformation,astheywouldinacompetitive
environment,andwilltakesometimetopricetheworkandproposeasuitableprogramme,proposedteam,and
incertaincases,methodstatements.Theclient'ssurveyorwillhaveapretenderestimateprepared,asthey
woulddoforacompetitivetenderforcomparisonpurposes.
Thedifferencewithacompetitivetendertakesplaceatthesubmissionoftheinitialpricebythecontractor.Atthis
pointtheclientteamandcontractorreviewtheproposalandnegotiateonthesubmittedtender.Anyagreements,
errors,changesandsoonshouldstillbeformalisedandrecordedbutwiththeabsenceofanyothertenderersthe
processisnotrequiredtocomplywiththeJCTtenderingpracticenote2012,aslongasthefinalcontract
documentspickupallthechanges.
Thebiggestriskwiththenegotiatedrouteisthatthepartiesaretoofarapartintheirassessmentofasuitable
priceandcannotreachagreement.Thetenderdocumentsshouldstatethattheclientisnotboundtoagreea
contractsumandcanwalkawayifapricecannotbeagreed.
Thenegotiationsshouldfocusondealingwiththeitemswhichhavethebiggestvariancebetweentheparties.
Thisshouldcomefromnotonlyacostperspectivebutmayalsoincludecontractualitemsorprogrammeissues.
Oncethesebiggeritemsareresolvedthesmalleritems(i.e.dealingwithasmallvarianceinopinionofrates)are
moreeasilyovercome.
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Theclientwillrequirereassurancethattheyareobtainingbothvalueformoneyandacompetentcontractor.The
tenderreportshouldthereforemakeaclearstatementonbothoftheseissues.Thereportshouldalsohighlight
themainissuesthatwerediscussedandagreedduringthenegotiationprocess.
Certainprojectsneedamoredetailedtenderanalysis.ThiswouldcertainlybethecaseforPFI/PPPtenders,
whichneedtofocusonafarwiderrangeofissuesthanaconstructionproject(andarebeyondthescopeofthis
guidancenote).
Particularlycomplexprojectsmayrequirethetenderreporttocommunicatethefollowingfactors,dependingon
theproject:
whatthirdpartyactionsarerequiredgoingforward,perhapsasaconditiontotherecommendation(i.e.the
tenderrecommendationmaybeonthebasisthatcertainthirdpartyactionsarecarriedout)
anyoutstandingcontractualissuesthatmightneedresolution.Atenderreportmaybeproducedonthebasis
ofcertaincontractualcaveatsthatwillneedtoberesolved.Thiswouldparticularlybethecasefortwostage
tenders,whichwillgivesomeconditionsregardingthefinalappointmentofthecontractorfortheconstruction
phasebasedoncaveatsbeingcleared
alternativetimetenders:atenderermayproposeanalternativetimetender,whichmayhavetheadded
benefitofalsohavingareductioninpreliminariescost.Toensureparitythetendererwouldhavetobecome
thepreferredcontractorwithacompliantbidfirst.Ifthealternativetenderwasthenacceptedthiswouldneed
tobeproperlycommunicatedinthetenderreportand
foratwostagetenderthepreferredcontractorwouldtypicallyhavealimitedappointmentforthesecond
stageofthecontractonly(perhapsunderaPCSAforthesecondstage).Thecontractor'sscopeforthe
secondstageshouldbeclearlysetoutinthetenderreportwithanyconditionsthataretobemetalsoclearly
setout.
Someprojectswillbeofaparticularlybespokenature.Examplesmayincludejointventures,whereacontractor
issteppingintoadistressedproject,whereacontractorhasenteredintoadministrationorprojectsthatarepartof
acomplexmanagementcontractingarrangement.Thoughthisguidancenotecoversthemajorityoftendersit
cannotdealwitheveryeventualityrelatedtotenderingandanyparticularabnormalsituationneedstobedealt
withonitsownmeritsanddiscussedcarefullybeforesettingupthetenderprocedure.
4.6Designcheckingperiodsbetweentenderreturnsandsigning
thecontract
Someclientshaveseenthewisdomofintroducingadesigncheckingperiodbetweentheappointmentsofa
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preferredcontractorandsigningtheconstructioncontract.Thiscanbeparticularlyusefulforsinglestagetender
actions,wheretheprojectiscomplicatedorinvolvesalotofdesigncoordination.Thisallowsthecontractoraset
periodafterbeingnamedthepreferredcontractortoreviewallthedocumentation,toeitherclarifytheirtender
sumorsuggestanyadjustments.
Someseethisasgivingcontractorsanotherattemptattheirtendersubmissionsomeseeitasausefulexercise
toensurethatthetenderershavepickedupanythingtheymissedbeforetheystartbuilding,ratherthanoncethey
areonsite.
Asthisallowsthepreferredcontractoragreaterunderstandingoftheprojectandcoordination,itthereforeallows
agreaterdegreeofrisktransfertothecontractor.Theadvantagesofthisprocessarethatitprovidesthe
competitivenessofasinglestagetenderbutalsogivesthecontractorthebenefitofatwostageprocessby
allowingthemtoreviewwiththeteam(inthepositionofpreferredcontractor).
Ithasbeensuggestedthroughoutthisguidancenotethatcognisanceofthefinalcontractdocumentationis
maintainedthroughoutthetenderstage.Initssimplestformthecontractdocumentswillbeexactlythesameas
thetenderdocuments.Ifthetenderersubmitsapricethathasnoqualificationsandnofurtherinformationis
issued,eitherintheformofanswerstoqueriesoraddendums,thenthetenderdocumentscansimplybe
relabelledascontractdocumentsandappendedtothechosenformofcontract.Thisisararityandmoreoften
thannottherewillneedtobesomeupdatestothetenderdocuments(particularlytheemployers
requirements/worksinformation)toreflectthechangesthattookplacesthroughoutthetenderprocess.
Thesimplestwayofdoingthisistoappendthequeryandanswersheetsandtenderaddendumstotheoriginal
tenderdocuments,aslongastheyhavebeendraftedinamannerthatallowsthemtobeappendedinthis
fashion.Theadvantageofthisapproachisthatitshowsaclearaudittrailfromtenderissuetocontractthatall
partieswillunderstand.
Thereareoccasionswhentoomanychangestothetenderdocumentsmakeitbothundesirableandinsome
casesnotpossibletosimplyappendtheaddendumandqueryinformation.Inthesecasesacarefulexercisemust
becarriedouttoupdatethetenderdocumentstoreflectthefinalagreementsreadyforcontract.Thiswillneedto
becarriedoutbybothpartiesandmayalsoinvolvethedesignteamchangingtheirdocumentationtosuit.This
willusuallythecaseforatwostagetender,asthetenderdocumentationwillbebasedonearlydesign
informationanditislikelythatsignificantchangeswillbemadebetweenappointmentofathesecondstage
contractorandagreementofthecontractsum.
4.8Serialtendering
Serialtenderingismoreofahybrid/advancedmethodtenderingwhichcombinesanormalcompetitivetender
(whethersingleortwostage)withnegotiation.Itisoftenusedforclientswhohaveanumberofphasesofsimilar
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work.Wherethisisthecasetheoriginalcompetitivetenderwillserveasaframeworktonegotiatefollowing
phasesofwork.Ifitisknownthattherewillbeadditionalphases,thentheoriginaltenderdocumentationcan
includeasectionforschedulesofratestobeagreedsothatnegotiationoffuturephasescanbebasedonprices
obtainedincompetition.
Theadvantageofserialtenderingisthattheclientknowsthatthecontractorwasselectedinacompetitive
environmentinthefirstphase,thereforethebasisoftheirfollowonnegotiatedtendershouldbesound.However,
thedisadvantageisthatthepitfallsofnegotiationstillapplyandastimegoesonthebasisoftheoriginaltender
willnolongerbeapplicableandwouldneedtoberenegotiatedanyway.
4.9Termcontracts
Termcontracttenderingisgenerallyformaintenanceworks,minorworksandworksforaclientwhohasa
continuedsupplyofminorworkswhichsuitsascheduleofrates.Tenderingforsuchworkiscarriedoutona
scheduleofratesbasisforthecommonworkstakingplacefortheclientandthenminiorderswillbeprovidedfor
eachdiscreetwork,basedonthetenderedrates.Thetenderingstrategyfortermcontractsistodemonstratethe
competenceofthecontractorsandtoshowthatthepricedscheduleofratesrepresentsvalueformoneyforthe
client.
Manylargerclientsnowuseaframeworkofapprovedsuppliers.Opentendersareusuallyadvertisedforfirmsto
applytobeonaframeworkandeventuallyincludedonasmallerframeworkofcontractors/consultants.Oncethe
framework/approvedlistisagreedthenanyfurtherworkwillonlybeselectedfromtheframework/approvedlist.
Thisisusuallydoneintwoways.
Callingoffbasedonagreedfees:theframeworkinvitationtotendermayaskforfeesscalesorratesbased
onprojectsize/complexity.Thesewillbeagreedattheframeworkstageandthencontractorsarecalledoff
thelistbasedonthoserateswithnofurthertenderingnecessary.
Minitenders:thesecondscenarioisiftheframeworkisineffectanapprovedsupplierlist,wherebyashortlist
isdrawnfromtheapprovedsupplierlist.Theshortlistedfirmsthenstillhavetogothroughtheprocessofa
minicompetitivetender.
Thereareadvantagesanddisadvantagesofbothmethodswhichsuitcertainclientsoverothers.Theinitialtender
togetcontractorsontoaframework/approvedlistwillbeverysimilarwhetheraframeworkorapprovedsupplier
listisused.Thefocusshouldbeonchoosingagoodspreadofcompetentcontractorswhocanhandlea
potentiallyhighvolumeofworkfromoneclient.
Theadvantagesofframeworks/approvedsupplierlistsinclude:
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theyreduceprocurementcostsforlargenumbersofcontractsforsimilarworksand
theyprovideagreatercontinuityofpotentialworkandthusincreasecompetitiveness.
BillsofquantitieswerehistoricallyatypicaltenderdocumentintheUKconstructionindustry.Inrecenttimesthe
popularityofbillsofquantitieshasreducedasmorecollaborativeapproachestotenderinghaveincreased.The
criticismofbillsofquantitiesisoftenthattheycanpromotean'usandthem'mentally,asthebillscanonlybe
carriedoutattheendofthedesignprocessandreducethechancesforcontractorinput.
Ontheotherhanditcanbearguedthebillsofquantitieswerehistoricallythe'guarddog'oftheconstruction
industry.Theirproductionrequirestheprojectdesignbeanalysedandinterrogatedforaccuracyand
completenessbeforeissuetotenderthisresultsinamorecompetentandcompletesetoftenderinformation.
Thereiscertainlytruthinthisstatementandareductioninthequalityofdesigninformationmaybelinkedtothe
declineofbillsofquantities.
RICS'NRM2:detailedmeasurementforbuildingworkspromotesanupdatedbillsofquantitiesformatbutthereis
alsoanalternative,whichistoproducepricingdocumentsinaccordancewithRICS'NRM1:orderofcost
estimatingandcostplanningforcapitalbuildingworks.
Thedeathofbillsofquantitieshasbeenpredictedforsometimebuttherewillprobablyalwaysbeaplacefora
welldesigned,singlestagetenderactionwithafullbillofquantitiesintheUKconstructionindustry.Thefuture
maymeanthattheinfluenceofBIMassistsintheproductionofthebill.Itisalsoworthnotingthatbillsofquantities
arestillcommonplacefurtherdownthesupplychain.
Theverynatureoftwostagetenderingmeansthatcollaborationisalmostforcedonthepartiesastheywillbe
workingtogetheratsomestagetocompletethedesignandpackagetenderingoftheproject.Theproblemis
whentwostagetenderingisnotdoneproperlyoriscarriedouttoolate.
Fortwostagetenderingtoworkwell,ithastoallowtimeforthecontractortositwiththedesignteamandgo
throughasignificantamountofdesigntoreallyshowtheirinfluence.Ifthefirststageiscarriedouttoolateinthe
process,therewillnotbeenoughdesigntimetoletthecontractorprovidetheirinfluenceonthedesign.
Thereisalsotheriskthatcontractorsseeatwostagetenderingprocessastheopportunitytobecomeengrained
inaprojectandthennegotiatethepriceoftheprojecthigherthanmarketvalue.Itisthereforeveryimportantthat
theinstructionstotendersmakeitclearwhatisexpectedfromthesecondstagecontractorduringthesecond
stageandwhatwillbedeemedasasuccess.
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Theprocedureforundertakingthesecondstagehasbeenpurposelyambiguoussimplybecausethereareso
manywaysofcarryingoutthesecondstageofthetender.Inmanywaysitdependsontheamountofcontractor
inputthatisrequiredinthesecondstage.
Ifthereasonforthechoiceofatwostagetenderwassimplyapricingexercise,usedasameanstonecessitatea
quickerstartonsite(byoverlappingdesignandtendering),thenthecontractorinputtothedesignprocesswillbe
minimal.Ontheotherhand,thecontractormaybecometheleaddesignerinthesecondstageandmaybefully
responsibleforcoordinatingthedesignandthepackagetendering.Theformatandtypeofthesecondstagemust
becarefullyconsideredbytheclientanddesignteambeforetender.Thecontractor'sresponsibilitiesshouldbe
carefullysetoutinaPCSA.
4.13.1Targetcosts/guaranteedmaximumprice/shareofsavingmechanismsmeritsand
pitfalls
Oneofthewaystoavoidacontractornegotiatingthepriceinthesecondstageistointroduceatargetcostaspart
ofthetender.Thetargetcostissomethingwhichisfamiliartomanagementcontractingroutesbutcanbeapplied
aspartofatwostagetenderbeforethecontractislet.Thetargetcostoftheprojectcanbeagreedaspartofthe
firststagetendernegotiationsandthenthecontractorcanberewarded(bywayofapercentageshare)by
beatingthetargetcost.Thiswillincentivisethemtoworktothetargetcost.Iftheycomeabovethetargetcostthey
willnotreceiveanyreward(andperhapstheprojectwillnotgoahead).
4.14Agreeingcontractconditions
Oneofthemajorstumblingblocksofanytendercanbeagreeingthecontractconditions.Itisthereforeimportant
thatthecontractconditionsareclearandthattheyareagreedasearlyaspossibleintheprocess.Ifpossibleitis
worthtryingtoagreethecontractconditionsaspartoftheprequalificationquestionnaire.Similarly,forrepeat
clients,contractconditionsmaybesimilartopreviousprojectssoifthesecanbeagreedbeforehanditwill
influencethetenderanalysisperiod.
Theindustry'sadoptionofBIMwilldictatetheimpactitwillhaveontendering.AtBIMlevel1itwillsimplyprovide
amorecoordinateddesign:BIMmodelsmaybemadeavailabletotenderingcontractorssotheycanunderstand
thecomplexitiesoftheprojectinmoredetail.AsBIMbeginstoextractquantities,itwillprovidemoredetailedand
accuratebillsofquantitiesfortendererstoprice.
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AsBIMmatures,theexpectationisthatthewholeprojectteamwillbenefitfromitsadoption.Atlevel2amore
accomplished3Denvironmentwithembeddeddatawillbeavailable,althoughstillonseparatemodelsfor
differentdisciplines(thisisgovernmentmandatedby2016).Atlevel3BIMpromisesafullyintegratedand
collaborativeprocessenabledby'webservices'utilising4Dconstructionsequencing,5Dcostinformationand6D
projectlifecyclemanagementinformation.Thiswillmeanthattenderinganalysisshouldberestrictedtothe
comparativerates,overheadsandpreliminariescosts,asallpartieswillhaveaccesstothesamecoordinated
designinformation.Thiswassomewayoffatthetimeofwritingbuttheindustryhopesthatitcanreplicatethe
manufacturingindustrytosomeextentandtakethepredictionandriskoutoftendering,withtenderanalysis
beingontheactualoverheadcosts,ratesofmaterialandlabourandqualitativeassessmentofthebidandnoton
perceivedrisk.
4.16Alternativetendersubmissions/alternativescope
options/valueengineeringandreducedprogrammetenders
Whileitisimportanttoensurecomplianttendersarealwaysissuedsothatalikeforlikecomparisoncanbe
made,thereismeritinallowingtendererstosubmitanalternativetendersubmissioninadditiontoacompliant
tender.Thismaybeforashorter/longerprogramme,adifferentconstructionmethodologyoradifferent
procurementroute.Itisessentialtomakeitclearinthetenderdocumentswhetheralternativetenderswillbe
allowedornotandhowtheyaretobedealtwith.Theusualmethodistostatethatthealternativetendermethod
willnotbeusedintheevaluationprocessandnottakenintoaccountandwillonlyreviewedinmoredetailifthey
becomethepreferredcontractor.
However,thiscouldleaveclientsinapositionwhereaveryfavourabletenderisonofferbuttheyareunableto
takeadvantage,asthecomplianttenderdidnotcompetewell.Toavoidthispossibility,theconditionsoftender
shouldmakeitclearthatalternativetendersubmissionsmaybereviewedindependentlyofthetender
competitionandcanbeexploredbytheclientteamseparatelytothetenderevaluation.Ifanyalternativetender
submissionistobeconsideredtheothertenderersmustbegivenanopportunitytosubmitalikeforlike
alternativetendertomaintainparity.
Alternativetendersubmissionsarefarmoreproblematicforpublicprocurementtendersandthereforeshouldbe
avoidedunlessexplicitlyallowedforbytheclient.
However,ifaspecificissueistobeacompetitioncriterion(e.g.programmeduration)thenthisshouldbemade
anexplicitpartofthetenderevaluationcriteria(i.e.allowingcontractorstopricealternativescopeoptionsfor
possiblesubstitutionswithtenderedscope).
Thereisbothmoralandlegaluncertaintyabouthowtodealwithanunsuccessfultenderer'svalueengineering
proposals,especiallyifthetenderevaluationwasnotbasedonthetenderer'salternativetendersubmissionsand
valueengineeringproposals.
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Cantheclientthenresurrectanunsuccessfultenderer'svalueengineeringoptionsandproposethemtothe
winningcontractor?Thisisanespeciallydifficultquestionifthelosingcontractorhasproposedsomething
bespokewhichtheymayowntheintellectualpropertyrightson.Ifindoubt,takealawyer'sadvice.
Iftheproposalisawidelyavailableconstructiontechnique(e.g.changingfromaconcretetoasteelframe)thenit
wouldnotbeunreasonabletousetheproposal.However,iftheproposalisbespoke(especiallyifithasbeen
developedspecificallyforthetender)thenitwouldseemreasonablethatadialogueshouldatleastbeheldwith
theunsuccessfulcontractortoascertainwhethertheywouldhaveanyobjectionstoitsuse,makingtheissue
transparent.Iftheyrefusethenfurtheradvicewouldneedtobetakenbuttheremayalsobeacompromise,
wherebythelosingcontractorispaidtheirtenderingcostsorarepaidanagreedlicensefeeforuseoftheiridea.
Itwouldnotbeacceptabletotakethetechnologyanduseitwithoutconsultationwiththeunsuccessfultenderer
asthiscouldbeinfringingtheirintellectualcopyright.Ifindoubttakeprofessionallegaladvice.
4.18PFI/PPP
WhilePFI/PPPtendersarebeyondthescopeofthisguidancenote,itisworthnotingthattherearesomemajor
differencesthatneedtobetakenintoaccountwhenholdingaPFI/PPPtendercompetition.
AppendixA
Exampletenderopeningform
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