Procurement and Tendering

Procurement & Tendering Strategy

A desk top study has shown that the development plot in question has been a home to a multitude of industrial activity since the mid 1700’s. The building survey carried out in this feasibility study has shown that the current substructure and super structure of the building would not be suitable to be utilised in the future development. This means that the most likely option is to demolish and re-use any building materials that can be salvaged in a non-structural type of manner. Before the building survey was carried out, a refurbishment option was considered for the development but upon the outcome of the building survey, it became apparent that this would not be feasible.

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The development proposal includes a four-story mixed-use building situated on a 0.21-acre plot of land. The building will be comprised of a ground floor suitable for car parking, the first and second floor will be utilised for commercial space, and the third and fourth floors will be separated into residential apartments, 18no. in total. Eight of the apartments will be two bed and the remaining ten will be one bed apartments.

The nature of the project would facilitate a range of procurement routes and tendering strategies, however it was deemed that the most suitable route for this project would be a design and build procurement route with a two-stage tender.

By utilising a Design and build procurement route, it would limit the clients risk exposure. The only risk that the client would take is the overall outcome of the design. Design and build procurement transfers the responsibility of the design onto the contractor which often leads to the contractor providing a minimal quality end product. If the client does not specify their requirements in the employers’ requirements, the contractor will look to save cost and provide a minimum standard which adheres to building regulations. The client in this scenario, loses all control over design.

Due to the nature of the site location, it quickly became apparent the construction and design phase may offer significant risk, so to offload that onto the contractor via the utilisation of a design and build option offered the best outcome to the client.

As stated in the client profile, it was considered that cost and time would be a prioritisation for the client. A two-stage tendering strategy would be a suitable option where cost and time is a constraint. It allows the design and tendering stage to overlap. This also allows technical input from the contractor at an early stage which is a benefit to the client as it encourages collaboration, alleviates potential disputes and claims further down the line.

Further advantages to the client of using a two-stage tender strategy are, early contractor involvement helps reduce and or alleviate design and construction risks, there is also an element of competition in the tendering stage one which helps prove value for money.

TENDERING

KID is advised to use a two-staged tendering procedure as this is most effective in conjunction with a Design & Build procurement route. The increased collaboration between KID and the main contractor within the second stage of the tendering process will provide greater cost certainty. A reduced design process will increase time efficiency for the client as the main contractor develops the design as construction progresses.
It is advised that KID use an online e-tendering procedure due to the benefits it provides to collation of tenderer queries and ease of return. This is to avoid postal delays which could prevent tenderers from having their tender reviewed.

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KID will have to produce several documents before they can complete the first stage of their tender. These documents include;

Pre-qualification questionnaire (PQQ) – to assess contractor suitability. Includes two sections;

o Section 1 – Insurance information, health & safety policy, environmental policy, financial accounts, organisation structure and references.
o Section 2 – past experience within project area and past projects they see as case studies.

Invitation to tender (ITT) – this is the formal document sent to a list of pre-specified contractors selected from the responses to the PQQ. This document includes;
o A letter of invitation to the tenderer list.
o Form of tender – tenderers need to sign this form within their returned documents.
o Tender rules – how queries from the tenderers will be assessed and dealt with, how and when to return tenders via an e-portal, arranging site visits,
o Scope of works – site location, site dimension and drawings, timeframe, proposed development, pricing requirements.
o Contract conditions - form of contract, procurement route and contractual conditions.
o Project information – base date, fluctuation procedure, completion strategy, level of liquidated and ascertained damages, insurance strategy, period of suspension, dispute resolution, collateral warranty and bond requirements.
o Employer’s requirements – must be specific otherwise increases risk for disputes when contractor doesn’t deliver what client hoped for.
These documents are to be provided to the list of tenderers to allow them to complete and return their tenders within the stated time decided by KID.

Tender period is dependent on the complexity, size and time of year in which the project is being completed in. The standard tender period for a construction project is 60 days, however with KID’s project using the Design & Build procurement route, the time period for tenders to be returned can be reduced due to the reduced amount of information the tenderers have to supply KID.
Tenderers are expected to return the following documents for KID to analyse and produce a tender report;
• Contractors’ proposal – includes initial proposed design
• Contract sum analysis
• Breakdown of preliminaries and schedule of rates which would be applicable to KID’s development.
• Tenderers overhead and profit allowances.
• Explanation of the buildability skills each tenderer can offer to KID.

The tendering time period will be shorter compared to traditional forms of procurement. Design & Build procurement will allow KID to skip the design phase as it passes the design responsibility to the main contractor. Although, it should be noted the two-stage selective tendering process will take time to consult the preferred tenderer, this is to increase collaboration and make sure the client maintains cost certainty.

Risk Analysis

As stated above, the geographical location of the site in question offers multiple risks to both the client and the contractor. The land has been home to a multitude of industry for a significant period of time, without testing the soil of the plot, it can be assumed that it would be contaminated, as most brownfield sites are. To what extent the contamination would affect the project is yet to be determined at this stage. But it can be assumed that this would place great risk onto the contractor which would likely drive the return tender valuations up considerably.

The plot of land in question sits adjacent the River Don which has had historic flooding events taken place in that specific location. A desk top study showed that the area in which the land sits, falls under a category 3A flood zone. Although the city of Sheffield has since taken considerable flood measures since the recent flooding of 2007, it may be the case that planning permission dictates considerable flood defence measures must be ensured in any new development taking place in that location. This would in turn increase the cost of the overall development.

Just south of the building further down Cornish Street there is a grade II listed building which provides a living space. This could mean that extensive measures to ensure the safeguarding of the heritage site would have to be taken. This could prolong the development timescales and inhibit the cheapest possible construction methods. Again, this could inflate the return tender values which increases the total cost for the client.

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