Procurement & Tendering: Philippine Institute of Certified Quantity Surveyors (Picqs)

PROCUREMENT & TENDERING 1
Philippine Institute of Certified Quantity Surveyors

(PICQS)
Mr Grant McIntosh
BSc (Hons) QS, FRICS, FCIOB 2
Presentation Outline 3
The presentation deals with how a construction

project is structured and delivered in terms of the
risk allocation and the contractual relationships
(Procurement) and how the selection processes are
used to establish a contract price (Tendering)
Presentation Content 4
1. What is Procurement?
2. What is Tendering?
3. What factors govern the choices for Procurement?
4. What are the most common Procurement Options?
5. Detailed review of the common Procurement Options
6. Other Procurement Options?
7. What factors influence Tendering?
8. What are the most common Tendering Options?
9. Detailed review of the common Tendering Options.
10. Other Tendering Options?
11. Procurement & Tendering Overview
12. RICS APC (Procurement & Tendering)
Section 1 – What is Procurement? 5
The Dictionary Definition
• pro·cure·ment
1. the act of procuring, or obtaining or getting by effort, care, or the use of special means; or
2. the act of obtaining equipment, materials, or supplies.

Another Definition
• Procurement is generally seen as the process of obtaining goods and services for a stated task, in
return for money.
• In the context of construction, procurement is the process - led by the construction project manager,
of acquiring professional expertise.
• The purpose of procurement is to design and construct the proposed project, and covers the
acquisition of relevant expertise from professional construction consultants, main contractors, sub-
contractors, manufacturers and suppliers.
The RICS Definition
(from RICS Guidance Note – ‘Tendering Strategies’ 1st Edition 2014)

Section 2 – What is Tendering? 9
The Dictionary Definition
• ten·der (ten·der·ing)
1. to present formally for acceptance; make formal offer of; or

2. to offer, as money or goods, in payment of a debt or other obligation; or
3. to make or submit a bid; or
4. an offer of something for acceptance; or
5. something tendered or offered, especially money, as in payment; or
6. an offer made in writing by one party to another to execute certain work, supply certain
commodities; or
7. an offer, as of money or goods, in payment or satisfaction of a debt or other obligation.
The NBS (National Building Specification) Definition
• Tendering is the process by which bids are invited from interested contractors to carry out specific
packages of construction work.
• It should adopt and observe the key values of fairness, clarity, simplicity and accountability, as well
as reinforce the idea that the apportionment of risk to the party best placed to assess and manage it
is fundamental to the success of a project.
(from www.thenbs.com)
The RICS Definition

Summary of Sections 1 & 2
Definition of Procurement & Tendering 13
• Does anybody remember Slide #3?
• PROCUREMENT is how a construction project is structured and delivered

in terms of the risk allocation and the contractual relationships; and
• TENDERING is how the selection processes are used to establish a

contract price.
Section 3 – What factors govern the choice for
Procurement? 14
Procurement? 15
KEY PROCUREMENT GOALS (from our definition)
• how a construction project is structured
• how a construction project is delivered;
• risk allocation; and
• the contractual relationships

Procurement? 16
• Procurement should be based on understanding the client’s business needs and drivers and to
appreciate the market in which it operates.
• This is fundamental in establishing how efficiently the construction project can assist the client
in achieving their business success.
• The selection of an appropriate procurement strategy is a major contributor to project success.

But which route is the most appropriate depends on the goals, requirements and resources
available.
Procurement? 17
• In order to successfully deliver a construction project for the client, the construction project
manager will need to enlist the support of a number of design, costing and construction professionals
and organisations.
• How these professionals and organisations operate, when they are appointed, and what they actually
contribute to a project and when they carry this work out, is reflected in the chosen procurement
route selected.
• They will also be appointed by a tendering process of which there are several options. (For
discussion later in this presentation)
Procurement? 18
• The procurement strategy developed should balance risk against project objectives at an early stage.
Even at an early stage, initial concept designs can be developed to enable the client to look at how
initial designs will respond to their business needs.
• Construction as a process is typified by project risks and once these risks have been identified and
prioritised, a suitable procurement route to reflect the project risk profile can be selected.
• The bespoke nature of construction projects increases the inherent risks.
• These risks include completing a project which does not meet needs, which is delivered late or costs
more than the client can pay or fund.
Procurement? 19
• Many procurement strategy selection techniques have been developed, with a view to assisting
clients in their choice of the most appropriate procurement approach for their projects.
• It is normal for this procurement process to be crystallised into formal contractual arrangements.
• The words that follow construction procurement can range from ‘strategy’, and ‘options’ to ‘routes’.
Generally it all means the same thing, i.e. what contractual organisational method will be used to
realise the project.
• Most conventional procurement selection techniques are based around the concepts of time, cost
and quality.
Procurement? 20
Procurement? 21
•T (sp pl )
• s (p l v l s )
•Q l ( l p )
Procurement? 22
Time (Speed or Certainty of Completion Date)
• Most projects are required within a specific time frame.
• It is important that an adequate design time is allowed, particularly if design is required to be

complete before construction.
• If early completion is a critical factor then design and construction activities can be overlapped
so that construction can commence earlier on-site.
Procurement? 23
Cost (Price Level or Cost Certainty)
• An assessment of the need for price certainty by the client should be undertaken considering that
there is a time delay from the initial estimate to when tenders are received.
• The extent to which design is complete may influence the cost at the time of tender. This may be
related to the cost of risk.
• If price certainty is required, then potentially the design should be complete before construction
commences and thus design changes avoided.
Procurement? 24
Quality (Functionality & Performance)
• What level of Quality must the delivered product have?
• Quality is very much linked to the other factors of Time & Cost.
• However, certain projects (such as Clean Rooms, Data Centres) require the quality (standard of
construction) to be flawless for their operation.
Procurement? 25
Quality (Functionality & Performance)
• The extent to which the delivered quality (finished standard of construction) will achieve is normally
linked to the speed (time) for the construction.
• The extent of the delivered quality (standard of finish – e.g. Gold Taps v’s Stainless Steel) is
normally linked to the cost (budget) constraints.
Procurement? 26
In most cases the priorities of the

projects will fall into the areas
In theory
illustrated as B, C or D in the diagram.
i.e. where two of the three criteria are

identified as most important to project
success.
In theory, it is rare for time, cost and

quality to be equal in either
importance or impact.
Procurement? 27
• As discussed, there are a number of variables that can influence the choice of a procurement
method.
• Once the primary strategy for a project has been established, (Time, Cost & Quality) then other
factors could also be considered when evaluating the most appropriate procurement strategy
• Many of these will be Client, Location or Project specific.

OTHERS 04 TIME
• External Factors
• Client Characteristics
• Project Characteristics
•
•
Ability to Make Changes
Risk
03 01
02
QUALITY COST
The 4th Dimension to Time, Cost & Quality 28

Procurement? 29
• External factors – consideration could be given to the potential impact of the following which
influence the client and their business:-
• economic (Boom or Bust);
• commercial (Speed to Market);
• technological (Electric Cars v’s Petrol Cars);
• political (New Governments with new policies);
• social (what is ‘trending’); and
• legal factors (New Legislations)

Procurement? 30
• External factors – consideration could be given to the potential impact of the following which
influence the client and their business:-
COVID-19…….!
Procurement? 31
• Client characteristics – a client’s knowledge, experience of the organization with procuring building
projects and the environment within which it operates.
• Client objectives are influenced by the nature and culture of the organization. The degree of client
involvement in the project is a major consideration.
• Project characteristics – The size, complexity, location and uniqueness of the project should be
considered as this will influence time, cost and risk.
Procurement? 32
Jaun Carlos 1 – Spanish Antarctic Base

Procurement? 33
Ability to make changes
• Ideally the needs of the client should be identified in the early stages of the project.
• This is not always possible. For example - changes in technology may result in changes being
introduced to a project.
• Changes in scope mostly result in increased costs and time, especially they occur during
construction.
• It is important at the outset of the project to consider the extent to which design can be
completed and the possibility of changes occurring.
Procurement? 34
Risk
• The unique / bespoke nature of building projects means that clients who decide to build are
potentially confronted with high degrees of risk.
• The risk inherent in every construction project can be assumed by, or transferred to, another
party – usually the Contractor.
• A principal guideline in determining whether a risk should be transferred is whether the

receiving party has both the competence to fairly assess the risk and the expertise necessary to
control or minimize it.
• Both parties must have a clear and similar understanding of the risk.
Procurement? 35
SUMMARY
• The selection of a procurement method should be viewed as an iterative process whereby project
objectives and constraints are compared with possible procurement solutions.
• Key to procurement is to identify the priorities in the objectives of the client and to plan a path to
completion using a procurement route that will be most appropriate.
• Priorities must be put in order of precedence, each in order before other, because by definition there can
be only one priority.
Section 4 – What are the most common
Procurement Options? 36
A number of procurement methodologies are available to satisfy a client’s priorities in the project
objectives. There are procurement methods that will achieve:
• Certainty of cost and time for a design developed by an architect employed by the client.
However, this is a sequential and consequently a slow process
• Relative speed and cost certainty. However, the design will usually be the responsibility of a
contractor and consequently the client will lose some control over the design process; and
• Relative speed for a design developed by an architect employed by the client. However, cost is
uncertain almost until completion.
4
1
• Traditional
3
2
• Design & Build
2
3 • Management Contracting 1
4
• Construction Management
The main options for Procurement are usually:
• TRADITIONAL (where the Client engages the Design team and the Contractor directly)
• DESIGN & BUILD (where the Client engages the Contractor who in turn employers the Designers)
• MANAGEMENT CONTRACTING (where the Contractor performs the role of managing the works
contractors who carry out the works and are directly and contractually responsible to the
management contractor)
• CONSTRUCTION MANAGEMENT (where a Construction Manager is employed to arrange trade

contracts and monitor them but with the client responsible for directing the project and
entering into all trades contracts)
Section 5 – Detailed review of the common
Procurement Options 40
Traditional Procurement 41
1
Traditional Procurement
• The client develops the business case for the project, and provides a Scope and Budget;
• The Client appoints a team of consultants to prepare a design, plus tender documents;
• The client appoints the building contractor to construct the works to the design, by the contract
completion date and for the agreed price (a Lump Sum);
• Sometimes most of the work is sub-contracted by the Main Contractor to specialist firms but the
Main Contractor remains liable overall; and
• The consultants usually administer the contract on behalf of the Client and advise on aspects
associated with design, progress and payments which must be paid by the client.
1
This route is probably the most commonly used method of procurement and it is suitable for:
- all clients, including inexperienced clients;
- complex projects and projects where functionality is a prime objective;
- time predictability; and
- cost certainty.
However, it is potentially not suitable for fast track projects.

1
Advantages:
• The Client retains full control over the Design Process;
• This strategy is a low-risk option for clients who wish to minimize their exposure to the risks of
overspend, delays or design failure
• Direct control of the Design Team to ensure the required quality is reflected; and
• No (or reduced) built in Contractor Risk Premiums.

1
Disadvantages:
• No one person is responsible for the Design & Construction as they are separated;
• The separation of the contractor from the design can mean missed opportunities for the contractor
or specialist contractor to input on buildability;
• The exposure to risk will potentially increase where the design phase is rushed, where unreasonable
time targets are set or where the tender documents are not fully completed.
• Design needs to be developed as fully as possible prior to the Contract; and
• Time & Costs are could increase if the Design is then varied.
Design & Build Procurement 46
2
Design & Build Procurement
• The main contractor takes responsibility for both the design and construction and may use either in-
house designers or employ consultants to carry out the design.
• Most of the construction work will be carried out by specialist or sub-contractors;
• The contractor tenders against a Client Brief (Employer’s Requirements Document) and will often
follow an initial concept or scheme design prepared by consultants appointed to advise the client;
and
• The design will then be developed by the contractor and the works will be completed, usually for a
fixed price.
2
• The Design & Build approach gives the client a single point of contact.
• However, the client commits to the cost of construction, as well as the cost of design, much earlier
than with the Traditional approach.
• Changes made by the client during design can be expensive, because they affect the whole of the
Design & Build contract, rather than just the design team costs.
2
• There is potentially a high design/quality risk associated with this approach as the contractor develops
the design.
• To overcome this, there can be a refinement to this approach where the client has the design prepared
to concept or scheme design stage and the contractor takes on ‘finishing off’ the design and
construction (develop & construct).
• The contractor may re-employ the original designers to complete the design in a practice known as
novation.
2 Design & Build Procurement

This method of procurement involves the contractor being responsible for design as well as
construction, it can be suitable for:
• all clients, including inexperienced clients and those requiring distance from the project;
• cost certainty (assuming limited variation); and
• faster construction.
However, it might not be suitable for:
• an uncertain or developing client brief; and
• complex buildings
2
Advantages:
• Well established in the Construction Industry;
• Single point responsibility and contact;
• Early involvement of the Contractor; and
• Cost Certainty
2
Disadvantages:
• Less control over the final quality / specification of the work
• Tendering tends to be more expensive due to higher risk for the Contractor; and
• Post Contract changes tend to be more expensive.

Management Contracting Procurement 53
Management Contracting Procurement
3
• The client appoints designers and a contractor (management contractor) separately and pays the
contractor a fee for managing the construction works.
• A feature is the early appointment of the contractor to work alongside the design team to develop a
programme for construction and contribute to the design and costing of the works.
• The Contractor performs the role of managing the works contractors who carry out the works and are
directly and contractually responsible to the management contractor.
• This approach often means that design and the start on site overlap, with the design and tender packages
becoming available ‘just-in-time’ to suit the construction programme.
3
• The management contractor will not normally carry out construction work.
• This preserves the management contractor’s independence and reinforces a consultancy relationship
with the client.
• Payment is generally made to the management contractor on the basis of the cost of the works
packages plus the agreed fee.
• Much of the success of this approach depends on the contractor’s team. Unless the team is drawn
from companies which are experienced in this kind of team working, the benefits are not always
realised.
3
• There is less price certainty at the outset, because construction tends to start ahead of completion
of all design stages and at a point when many of the work packages have yet to be tendered.
• This often means adjustments (Value engineering) are made to the design and specification of works
packages later in the programme to keep the project within budget.
• However, the overall process of design and construction tends to be shorter than in either traditional
or design & build situations.
3 Management Contracting Procurement
This is generally more suitable for:
• fast track projects;
• complex buildings; or
• a developing brief
However, it is generally less suitable for:
• inexperienced clients;
• cost certainty before starting construction; or
• clients wanting to pass risk to the contractor

3
Advantages:
• Management Contractor has early involvement and manages the works Contractor’s;
• Early Constructability advice; and
• Can appoint earlier (procurement of Works Contractors benefits)

3
Disadvantages:
• No single point responsibility for Design & Construction;
• The Management Contractor is only responsible for workmanship to the extent that the Works
Contractor is responsible or able to pay;
• There is potential for reduced cost certainty at the outset.

Construction Management Procurement 60
Construction Management Procurement
4
• This approach is similar in concept to Management Contracting.
• Contractors are contracted directly to the client and the construction manager manages the process
for the client on a simple consultancy basis.
• Although in a sense this gives the client a greater measure of control, it also means that the client
accepts a higher amount of risk compared to other procurement options.
• The management contractor is simply an agent, and usually cannot guarantee that the project will
be finished to time and cost.
• As it requires constant involvement by the client this approach is really only suitable for experienced
clients.
4 Construction Management Procurement
This is generally more suitable for (the same as Management Contracting!):
• fast track projects;
• complex buildings; or
• a developing brief
However, it is generally less suitable for (the same as Management Contracting!):
• inexperienced clients;
• cost certainty before starting construction; or
• clients wanting to pass risk to the contractor

4
Advantages:
• The construction work is more closely integrated into the management of the project.
• Close liaison between the construction manager and design team leads to prompt identification of
and decisions relating to practical problems.
4
Disadvantages:
• The client has one more consultant and a number of contractors with whom to deal instead of only
one main contractor.
• The client’s financial commitment is uncertain until the last of the works contracts has been signed.
Quick Summary of Procurement Options 65
An ‘Elevator Pitch’ Summary of the Options

• Traditional Contract - a single-stage project where a consultant works to develop the design in
partnership with the client. After this, a contractor is appointed under a lump-sum construction
contract. The contractor may have no responsibility for any of the design, with the exception of
temporary works.
• Design and Build - the design and build procurement route starts with the appointment of a main
contractor to design and construct the works. In this way, it gives the client a single point of
responsibility for delivering the project.
An ‘Elevator Pitch’ Summary of the Options

• Management Contracting - the works will be constructed by a number of different contractors, all of
whom are contracted and managed by a management contractor; who is usually appointed on the
basis of a fixed fee which will usually be paid a fee in the form of a percentage.
• Construction Management - largely similar to that of Management Contracting with the exception
that within this route the Client is not in direct contractual relationships with the trade contractors
as it is with the former. They appoint a management team and a construction manager on a fee basis
which can be obtained in competition.
Section 6 – Other Procurement Options? 68
Private Finance Initiative [PFI] 69
Private Finance Initiative (PFI)
• A recent/modern form of procurement to encourage private investment into public sector projects
(most commonly Schools, Hospitals and Infrastructure).
• Was introduced into the UK in circa 1992 as an initiative designed to reduce the pressure on public
sector borrowing.
• A single contractor will be appointed to build, design and operate the project, in order to deliver
services demanded by the public sector.
• This contractor will have expertise in design, construction, facilities management and funding
capability.
• The contractor will finance the project and lease it to the client for an agreed period.
• After this, the development will revert to the client.

• To exploit the skills and knowledge of specialist private sector firms in facilities management and
property management rather than public sector professionals.
• To reduce the total life cycle cost of assets where conventional procurement methods gave no
incentive to the contractor to reduce maintenance costs.
• To convert public sector capital expenditure into service payments over an extended period of time.
• To transfer certain risks (and the cost thereon) to the private sector who are perceived as being
better equipped and more innovative in analysing and managing them.
• Build, Own, Operate, Transfer [BOOT]
• Build, Operate, Transfer [BOT]
• Build, Own, Operate [BOO]
• Design, Build, Finance, Operate [DBFO]
• Design, Construct, Manage, Finance [DBMF]

‘Partnering’ Procurement 75
Project Partnering Procurement
• Partnering refers to some form of collaborative approach in which Clients and Contractor’s are open
with one another in order to meet common objectives;
• Partnering is a management approach used by two or more organizations to achieve specific business
objectives by maximizing the effectiveness of each participants resources; and
• Partnering can be based on a single project (Project Partnering) but a greater benefit is available
when it is based on a long term commitments (Strategic Partnering or Alliance)
• Project Partnering – which is based on a Client and Contractor working openly on a single project,
can look to achieve potential cost reductions of around 2 – 10% when compared against a more
traditional procurement method.
• Strategic Partnering – which involves the client and contractor working on a series of construction
projects could potentially achieve savings on an average of 30% per project when compared against a
more traditional procurement method of a single project.
• However, Partnering should not necessarily be viewed as simply a procurement system.
• It can actually be used as a delivery method for the four discussed common procurement methods.
• Procurement is also more of a culture and a mental attitude rather than a dogmatic standard of traditional
procurement.
• It is two partners helping each other for mutual benefit.

Traditional Partnering 79
• Adversarial; • Collaborative;
• Arms length relationship; • Trust;
• Commercial secrecy; • Open book accounting;
• Apportion blame for • Team approach to problem

problems (Claim); solving;
• Specific Design • Flexibility – encourages

Specifications; and innovation; and
• Arbitration/Litigation • Dispute Resolution.

• My personal experience in Strategic Partnering
• Jobcentre Plus / DWP Estate rationalisation – UK; and
• Costa Coffee – UAE and GCC

Variants on Procurement 81
Variants
Not for detailed discussion in this presentation, however you may wish to research further on….
• Traditional with Contractor Design Portions (CDP)
• Traditional with Remeasurement
• Traditional with Cost Plus (Cost Reimbursement)
• Traditional with Cost Plus & Target Cost (Fluctuating Fee / Bonus / Pain & Gain)
• Guaranteed Maximum Price (GMP)

Section 7 – What factors influence
Tendering? 83
Tendering? 84
• KEY TENDERING GOALS (remember our definition)
• which selection processes to use; and
• how they are used in establishing a contract price.

Tendering? 85
Tendering Strategies can help to ensure positive tender results through:
• Accountability;
• Auditability;
• Ensuring that everything required has been picked up;
• Parity/equality/fairness in the process;
• Helping to reduce claims or corruption; and
• Ensuring that the correct price has been paid for the proposed works.

Tendering? 86
When to Tender?
• As we discussed in the Procurement Section, Time (Speed) is an important aspect in Procurement.

This also affects the Tender process.
• In theory, tendering can occur at any time during the design process.
• For example a pure Design & Build project could be tendered at Concept Stage (RIBA Stage 1), with
the Contractor taking full responsibility for completing the concept design against high level
employers requirements through to construction and completion.

Tendering? 87
When to Tender?
• The timing of the tender will be dictated mainly by the amount of input required from the
contractor, which should have been identified in the Procurement route.
• If the tender is simply to build in exact compliance with the fully designed tender document
(Traditional Method) then the time for tender is different to a tender to design the concept and then
construct (Design & Build Method).
( see RICS Guidance Note – ‘Tendering Strategies’ 1st Edition 2014)

Tendering? 88
When to Tender?

Tendering? 89
Tender Documents
• The choice of Procurement route will have differing effects on how the tender documents are compiled.
• Under a Traditional Procurement route the design information, BOQ’s and Preliminaries will be issued.
• Whereas under a Design & Build Procurement route, the documents are compiled together in documents
called the Employer’s Requirements where the Contractor responds with the Contractor’s Proposal.

Tendering Options? 90
1
• Single Stage Tendering 3
2
2
• Two Stage Tendering
1
3 • Negotiated Tendering
The main options for Tendering are usually:
• Single Stage Selective Tendering (The client or his PM or Architect and QS compile a list of the
preferred contractors for the proposed project who will receive the full documentation.)
• Two Stage Selective Tendering (The client or his PM or Architect and QS compile a list of the
preferred contractors for the proposed project in the 1st stage for a limited submission, with full
documentation for negotiation in the 2nd stage. )
• Negotiated Tendering (the Client Negotiates with one Contractor only).

Single Stage Tendering 94
Single Stage Selective Tendering
• Generally considered as the most common type of tendering strategy for obtaining a price for the
whole of the construction works.
• Usually undertaken at RIBA Stage 4 so that the tenderers receive the most detailed information to
base their bid on (aligns most with Traditional Procurement method).
• The bidding contractors are given a predetermined amount of time to submit their tenders.
• Invitation to tender documents are issued to a number of competing contractors who are all given
the same equal chance to bid for the project based on identical tender documentation.
• The client and/or his Project Team (PM, Architect and QS) compile a list of the preferred
contractors for the proposed project.
• Pre-selecting a limited number of contractors to tender for the works. Usually the full tender
documentation is issued to these selected companies.
• The number of tenderers is normally limited to between five & eight, depending on the size and
nature of the contract.
• Shortlist is usually based on previous experience from the Project Team.
• Tender receipts are then analysed, in terms of time, cost and quality, before a single contractor is
declared the preferred contractor.
• The preferred contractor then finalizes the process to enter into a formal contract with the client
to deliver the tendered works.
Advantages:
• It should ensure that only capable and approved/selected firms submit tenders; and
• It tends to reduce the aggregate cost of tendering (Cost to the Client for Advertisements etc).
Disadvantages:
• The cost level of the tenders received may be higher;
• This is resultant from there being less competition (compared against Open Tendering – see later)
and also to the likely higher caliber of the tenderers selected.
Two Stage Tendering 100
Two Stage Selective Tendering
• This process has become more common in recent years.
• Often used where time is constrained as it enables design and tendering to overlap.
• Can be used if the design process would benefit from the technical input of a contractor in the later design
stages (complexity, unique elements).
• In this sense it is used to obtain an early appointment of a contractor.

• Similar process to Single Stage Selective tendering to select companies for the Bid
• First stage aims to select a suitable contractor by means of limited competition.
• This may be on a % basis for Overheads and Profit for example.
• The second stage is a process of negotiation or pricing with selected contractor on the basis of first
stage tender.

Advantages:
• Generally the same as the Single Stage Selective tendering approach;
• This may have benefits of competition and at the same time to have the advantage of bringing a
contractor into the planning of the project and making use of his practical knowledge and expertise;
and
• It may also result in an earlier start on site.

Disadvantages:
• Generally the same as the Single Stage Selective tendering approach.
• The cost level of the tenders received may be higher.
• This is resultant from there being less competition (compared against Open Tendering – see later)
and also to the likely higher caliber of the tenderers selected.
Negotiated Tendering 105
Negotiated Tendering
• Only one contractor is approached.
• When the client has a preference for a particular contractor due to previous work done for him.
• On completion of the design the contractor will price the bill of quantities and enter into a
negotiation with QS.
• The contract sum will be arrived at by negotiation and an agreement will be made between the
client and the contractor.
Advantages:
• If it is part of a ‘framework’ or ‘supply chain’ then rates and the like may already be known; and
• Usually a good relationship between the Client and the Contractor has already been formed over
previous experience. (Could lead to reduced risk pricing)
Disadvantages:
• Competition is eliminated which may lead to a higher price in some instances; and
• If a price can’t be agreed with the single tenderer, then it can be lengthy to approach a ‘reserve’
Summary of Tendering Options 109
Choosing the most suitable tender strategy – Summary
Whilst all three of the most common tender strategies could in theory be used with almost any
procurement route, it is worthy to note that some suit certain strategies better than others.
• Traditional projects are generally advanced to a far greater level of design detail before tender. As
the Contractor is therefore not responsible for the design, it generally supports a single stage tender.
• D&B projects pass a larger proportion of risk and design responsibility to the Contractor. Therefore a
two stage tender can benefit from the Contractor’s understanding of the project so they can
influence the design. Single stage can also be used.
Choosing the most suitable tender strategy – Summary
Whilst all three of the most common tender strategies could in theory be used with almost any
procurement route, it is worthy to note that some suit certain strategies better than others.
• A two stage tender strategy is also useful where a quick start on site is required as tendering and
design can be overlapped. Therefore it would seem a natural fit for the management routes
(Management Contracting and Construction Management). However, for an even quicker start on
site, Negotiation could be utilized instead
Overview of Timing of Tendering
Section 10 – Other Tendering Options? 114
Open Tendering 115
Open Tendering
• An advertisement is placed in local newspapers and/or the technical press (Construction

News/Khaleej Times)
• Any contractor, irrespective of size or capability, may apply for the documents and tender.
• The advertisement will carry brief details of the location, type, scale and scope of the proposed
work.
• In GCC Countries it is usually commonplace that some sort of Fee is paid to receive the tender to
help separate genuine and non-genuine bidders.
Open Tendering
Advantages:
• There can be no accusation of favoritism as might be suggested where a selected list is drawn up;
• An opportunity is provided for a capable firm to submit a tender, which might not be included on a
selected list; and
• Maximum benefit from competition.

Open Tendering
Disadvantages:
• There is a potential danger that the lowest tender may be submitted by a incapable contractor; and
• There is no guarantee that the lowest tender is financially stable.
• Although both should be mitigated if the review process has been robust
Serial Tendering
• A hybrid/advance method of tendering which combines competitive tendering (single or two stage) with
negotiation;
• Often used for Clients who have a number of phases of similar work.
• In such cases, the original competitive tender would serve as a framework to negotiate following phases
of work;
• Where it is known that future phases of work will be required, the original tender documents can include
sections for schedules of rates to use in the negotiation.
Serial Tendering
• The advantage of Serial Tendering is that Clients know that the Contractor was selected in a
competitive environment in the first step, therefore the basis of follow on negotiations are sound;
and
• A disadvantage is that the normal pitfalls of negotiation apply and as time elapses the original tender
may no longer be applicable and would need to have been renegotiated anyway
Term Contracts
• Term Contract Tendering is generally for maintenance works, minor works and works for a
Client who has a continued supply of minor works which suits a schedule of rates.
• Tendering such works is carried out on a schedule of rates basis for common works and
mini work orders are then awarded for discreet works packages based on tendered rates.
• The Tendering strategy for Term Contracts demonstrates the competence of the
Contractor and shows that the priced schedule of rates represent value for money for the
Client and the proposed works.
Frameworks
• Larger Clients sometimes use a framework of approved suppliers.
• Open Tenders are usually used to advertise for firms to apply to be on a framework.
• Once a framework list is agreed then further works is awarded to firms on that list.
• This can be on a ‘call-off basis’ sometimes based on fee scales or rates or on ‘mini-tenders’ run like
a normal tender process.
• Generally reduces procurement costs for large numbers of contracts for similar work and greater
continuity of potential work for bidders, which increases competitiveness.
E-Tendering
• e-tendering is a web tendering service offered on a pay-per-tender basis to the construction

industry.
• It allows companies to run tenders through a secure website. It offers a simple, secure, standard,
efficient and cost effective way to manage tenders online.
• The advantages of e-tendering are obvious. Documentation is distributed and returned via a secure
web-based system.
• This avoids the need for collating paperwork and also, important for construction, creates an
automatic audit trail.
• During the tender period, updates and queries and changes are exchanged through the same system
Section 11 – Procurement & Tendering
Overview 124
Section 11 – Procurement & Tendering Overview 125
Definition
• How a construction project is structured and

delivered in terms of the risk allocation and
the contractual relationships (Procurement)
and how the selection processes are used to
establish a contract price (Tendering)
Factors influencing Procurement
OTHERS 04 TIME
• External Factors
• Client Characteristics
• Project Characteristics
•
•
Ability to Make Changes
Risk
03 01
02
QUALITY COST
Common Procurement Options

4
1 • Traditional
3
2 • Design & Build

2
3 • Management Contracting 1
4 • Construction Management
Factors influencing Tendering
• Accountability;
• Auditability;
• Ensuring that everything required has been picked up;
• Parity/equality/fairness in the process;
• Helping to reduce claims or corruption; and
• Ensuring that the correct price has been paid for the proposed works.
Common Tendering Options

3
1 • Single Stage Tendering
2
2 • Two Stage Tendering

1
3 • Negotiated Tendering
Section 12 – RICS APC
(Procurement & Tendering) 131
• Under the Quantity Surveying & Construction Pathway

• Core Technical Competencies
In simpler terms…..
• General principles (Knowing) – Level 1
• Practical Application (Doing) – Level 2
• Practical Considerations (Doing & Advising) – Level 3

A quantity surveyor is expected to fulfil the following duties, (notwithstanding the detailed terms of any
appointment or contractual obligation).
• take an initial brief from a Client to understand their requirements for procurement/tendering;
• choose a suitable procurement/tendering strategy with the project team;
• collate and produce the invitation to tender documents and issue them in the appropriate manner;
• deal with tender queries and ensure they are answered in a timely manner;
• open and analyse tender returns, collate tender queries from the design team
• produce a tender report, including recommendations or preferred contractor status; and
• advise the client on more complex tendering issues as appropriate.

• Level 1(Knowing)
• The difference between procurement and tendering;
• The main types of procurement and tendering
strategies/procedures;
• Reasons for choosing one type of procurement route
over an other;
• Reasons for tendering strategies; and
• Practice Notes (RICS, JCT etc)
• Level 2 (Doing)
• Producing a Pre-Tender Estimate;
• Choosing the most suitable tender strategy;
• Review the RIBA Plan of Work;
• Setting up the tender;
• Assessing a suitable tender period;
• Producing/compiling tender documents;
• Issue the tender and the tender process;
• Receiving tenders and post tender activities; and
• Tender report and notifying tenderers.
• Level 3 (Doing/Advising)
• Advice on procurement strategies;
• Advice on tender strategies;
• Managing and reporting – tender compilation;
• Managing and reporting – tender period;
• Tender scoring techniques;
• Further advice on tender reports;
• Dealing with Alternative Tenders; and
• Managing and reporting - negotiation processes and
outcomes.
SUMMARY
• Level 1 (Knowing) – Read, Research, Question, Understand – theory and self orientated.
• Level 2 (Doing) – Get involved – Work based
• Level 3 (Advising) – Lead and manage – Work based

Thank you for your time

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Procurement & Tendering: Philippine Institute of Certified Quantity Surveyors (Picqs)

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PROCUREMENT & TENDERING 1

Philippine Institute of Certified Quantity Surveyors

The presentation deals with how a construction

The Dictionary Definition

2. the act of obtaining equipment, materials, or supplies.

The RICS Definition

(from RICS Guidance Note – ‘Tendering Strategies’ 1st Edition 2014)

1. to present formally for acceptance; make formal offer of; or

The NBS (National Building Specification) Definition

The RICS Definition

(from RICS Guidance Note – ‘Tendering Strategies’ 1st Edition 2014)

• PROCUREMENT is how a construction project is structured and delivered

• TENDERING is how the selection processes are used to establish a

KEY PROCUREMENT GOALS (from our definition)

• how a construction project is structured

• how a construction project is delivered;

• risk allocation; and

• the contractual relationships

• The selection of an appropriate procurement strategy is a major contributor to project success.

• The bespoke nature of construction projects increases the inherent risks.

Time (Speed or Certainty of Completion Date)

• Most projects are required within a specific time frame.

• It is important that an adequate design time is allowed, particularly if design is required to be

Cost (Price Level or Cost Certainty)

Quality (Functionality & Performance)

• What level of Quality must the delivered product have?

Quality (Functionality & Performance)

In most cases the priorities of the

i.e. where two of the three criteria are

In theory, it is rare for time, cost and

• Many of these will be Client, Location or Project specific.

The 4th Dimension to Time, Cost & Quality 28

• economic (Boom or Bust);

• commercial (Speed to Market);

• technological (Electric Cars v’s Petrol Cars);

• political (New Governments with new policies);

• social (what is ‘trending’); and

• legal factors (New Legislations)

Jaun Carlos 1 – Spanish Antarctic Base

Ability to make changes

• A principal guideline in determining whether a risk should be transferred is whether the

The main options for Procurement are usually:

• CONSTRUCTION MANAGEMENT (where a Construction Manager is employed to arrange trade

- all clients, including inexperienced clients;

- complex projects and projects where functionality is a prime objective;

- time predictability; and

However, it is potentially not suitable for fast track projects.

• The Client retains full control over the Design Process;

• No (or reduced) built in Contractor Risk Premiums.

• Design needs to be developed as fully as possible prior to the Contract; and

• Most of the construction work will be carried out by specialist or sub-contractors;

2 Design & Build Procurement

• cost certainty (assuming limited variation); and

However, it might not be suitable for:

• an uncertain or developing client brief; and

• Well established in the Construction Industry;

• Single point responsibility and contact;

• Early involvement of the Contractor; and

• Less control over the final quality / specification of the work

• Post Contract changes tend to be more expensive.

3 Management Contracting Procurement

This is generally more suitable for: