Procurement and Tendering - Part IV

Procurement and Tendering for RICS APC Candidates – Part IV

A guide to the key aspects of procurement and tendering in construction projects

Procurement and tendering are essential skills for construction professionals who want to achieve the RICS Assessment of Professional Competence (APC). In this blog post, we will explain the main concepts and processes involved in procurement and tendering, and how they relate to the RICS guidance notes and the UK laws. We will also provide some real-life examples to illustrate the practical application of these skills.

This blogpost covers the following topics:

• · Compilation of tender documents

• · Pre and Post tender estimates

• · Tender analysis

• · Tender reports

• · Partnering – project and strategic

1 Compilation of tender documents

Tender documents are the documents that are issued by the client or the employer to invite bids from contractors or suppliers for a construction project. They include the instructions to tenderers, the form of tender, the contract conditions, the specifications, the drawings, the bills of quantities, and any other relevant information. The purpose of tender documents is to provide a clear and consistent basis for the tenderers to prepare and submit their bids, and for the client to evaluate and compare them.

The compilation of tender documents requires a thorough understanding of the project requirements, the procurement strategy, the contract type, and the market conditions. The RICS guidance note on procurement and tendering (2018) provides a detailed framework for the preparation of tender documents, based on the RIBA Plan of Work stages. The UK laws also regulate the content and format of tender documents, especially for public sector projects, to ensure fair and transparent competition and compliance with the EU procurement directives. [2]

A real-life example of the compilation of tender documents is the Crossrail project, which is one of the largest and most complex infrastructure projects in Europe. The project involved the procurement of over 100 contracts, ranging from tunnelling and station works to rolling stock and signalling systems. The tender documents for each contract were carefully prepared and tailored to the specific scope, risks, and objectives of the project, following the RICS and UK standards and best practices. [4]

2 Pre and post tender estimates

Pre and post tender estimates are the estimates of the cost of a construction project that are prepared before and after the tender process. They are used to inform the budgeting, funding, and decision-making of the client and the contractor, and to monitor and control the project cost.

Pre tender estimates are the estimates that are prepared by the client or the employer before inviting tenders, based on the available design information and the expected market conditions. They are used to set the budget and the target cost for the project, and to evaluate the feasibility and viability of the project. Post tender estimates are the estimates that are prepared by the contractor or the supplier after submitting the tender, based on the final tender documents and the actual market conditions. They are used to confirm the tender price and to establish the baseline cost for the project.

The RICS guidance note on cost prediction (2017) provides a comprehensive framework for the preparation of pre and post tender estimates, based on the RICS New Rules of Measurement (NRM). The UK laws also require the accuracy and reliability of pre and post tender estimates, especially for public sector projects, to ensure value for money and accountability for the public funds.

A real-life example of the preparation of pre and post tender estimates is the London 2012 Olympic Games, which was one of the largest and most successful mega-events in history. The project involved the procurement of over 1,400 contracts, with a total budget of £9.3 billion. The pre tender estimates for each contract were prepared by the Olympic Delivery Authority (ODA), based on the design briefs and the market intelligence. The post tender estimates for each contract were prepared by the successful contractors, based on the tender documents and the market conditions. [5]

3 Tender analysis

Tender analysis is the process of evaluating and comparing the bids received from the tenderers, and selecting the most suitable one for the project. It involves the assessment of the technical, commercial, and financial aspects of the bids, as well as the qualitative and subjective factors, such as the experience, reputation, and performance of the tenderers.

The tender analysis requires a clear and objective criteria and methodology, based on the project requirements, the procurement strategy, the contract type, and the evaluation model. The RICS guidance note on procurement and tendering (2018) provides a comprehensive framework for the tender analysis, based on the RIBA Plan of Work stages and the RICS Code of Practice for Tendering (2012). The UK laws also regulate the tender analysis, especially for public sector projects, to ensure fair and transparent selection and award of contracts, and compliance with the EU procurement directives. [2]

A real-life example of the tender analysis is the HS2 project, which is one of the largest and most ambitious high-speed rail projects in the world. The project involves the procurement of over 300 contracts, with a total budget of £55.7 billion. The tender analysis for each contract is conducted by the HS2 Ltd, the client organisation, based on the tender documents and the evaluation criteria. The tender analysis considers the technical, commercial, and financial aspects of the bids, as well as the qualitative and subjective factors, such as the innovation, sustainability, and social value of the bids. [6]

4 Tender reports

Tender reports are the documents that are prepared and issued by the client or the employer to communicate the outcome of the tender process, and to justify and document the selection and award of the contract. They include the tender summary, the tender evaluation, the tender recommendation, and the tender approval.

The preparation and issuance of tender reports require a clear and concise presentation of the tender analysis, the tender decision, and the tender rationale, based on the project requirements, the procurement strategy, the contract type, and the evaluation model. The RICS guidance note on procurement and tendering (2018) provides a comprehensive framework for the preparation and issuance of tender reports, based on the RIBA Plan of Work stages and the RICS Code of Practice for Tendering (2012). The UK laws also regulate the preparation and issuance of tender reports, especially for public sector projects, to ensure fair and transparent communication and notification of the contract award, and compliance with the EU procurement directives. [2]

A real-life example of the preparation and issuance of tender reports is the Thames Tideway Tunnel project, which is one of the largest and most complex sewerage projects in the UK. The project involves the procurement of three main works contracts, with a total budget of £4.2 billion. The tender reports for each contract are prepared and issued by the Thames Tideway Tunnel Ltd, the client organisation, based on the tender documents and the evaluation criteria. The tender reports present the tender summary, the tender evaluation, the tender recommendation, and the tender approval, and are published on the project website and the Official Journal of the European Union (OJEU). [7]

5 Partnering – project and strategic

Partnering is a collaborative approach to procurement and tendering, where the client and the contractor or the supplier work together as a team, based on mutual trust, respect, and cooperation, to achieve the common goals and objectives of the project. Partnering can be applied at two levels: project and strategic.

Project partnering is the application of partnering at the level of a single project, where the client and the contractor or the supplier form a partnership for the duration of the project, and share the risks and rewards of the project. Strategic partnering is the application of partnering at the level of a programme or a portfolio of projects, where the client and the contractor or the supplier form a long-term relationship, and share the vision and values of the programme or the portfolio.

The benefits of partnering include improved communication, coordination, and integration, reduced conflicts and disputes, increased innovation and efficiency, enhanced quality and performance, and greater value and satisfaction. The RICS guidance note on procurement and tendering (2018) provides a comprehensive framework for the implementation of partnering, based on the RIBA Plan of Work stages and the RICS Code of Practice for Tendering (2012). The UK laws also support and encourage the use of partnering, especially for public sector projects, to ensure better delivery and outcomes of the public services and infrastructure.

A real-life example of the implementation of partnering is the Heathrow Airport Expansion project, which is one of the largest and most controversial airport projects in the UK. The project involves the procurement of multiple contracts, with a total budget of £14 billion. The project adopts a partnering approach, where the Heathrow Airport Ltd, the client organisation, and the contractors and the suppliers form a collaborative delivery team, and work together as a single integrated entity, based on the principles of trust, respect, and cooperation. The project also adopts a strategic partnering approach, where the Heathrow Airport Ltd and the contractors and the suppliers form a long-term alliance, and share the vision and values of the airport expansion programme. [8]

6 Reflections

In conclusion, procurement and tendering are essential skills for construction professionals who want to achieve the RICS APC. They involve the key aspects of tender documents, estimates, analysis, reports, and partnering, which require a thorough understanding of the project requirements, the procurement strategy, the contract type, the market conditions, the evaluation model, the RICS guidance notes, and the UK laws. They also require the application of real-life examples to illustrate the practical application of these skills.

7 References:

1. RICS (2017) Cost prediction. 1st edition. RICS guidance note. London: RICS.

2. RICS (2018) Procurement and tendering. 1st edition. RICS guidance note. London: RICS.

3. RICS (2012) Code of practice for the selection of main contractors. 1st edition. RICS code of practice. London: RICS.

4. Crossrail (2020) Procurement. Available at: https://www.crossrail.co.uk/procurement (Accessed: 30 November 2020).

5. London 2012 (2012) Procurement. Available at: https://webarchive.nationalarchives.gov.uk/20130228114959/http://www.london2012.com/about-us/the-people-delivering-the-games/procurement/ (Accessed: 30 November 2020).

6. HS2 (2020) Procurement. Available at: https://www.hs2.org.uk/building-hs2/procurement/ (Accessed: 30 November 2020).

7. Thames Tideway Tunnel (2020) Procurement. Available at: https://www.tideway.london/the-tunnel/procurement/ (Accessed: 30 November 2020).

8. Heathrow (2020) Heathrow expansion procurement. Available at: https://www.heathrowexpansion.com/procurement/ (Accessed: 30 November 2020).