Tender Process

The Construction Industry has invested very little in training over the last 30 years – and this has lead to a massive skills shortage. The worst area affected, is of course the private domestic market, where little has been done to regulate the competence of labour skills. Electrical, gas, oil and solid fuel installers are very well regulated, but everything else is pretty much a case of buyer beware!

Anyone trying to find a tradesman today needs to use every tool at their disposal. The market is flooded with ex housing site labourers, who just stick a name on a white van and call themselves a builder. Even if they were competent at what they do, there is a world of difference in skill requirements between estate built houses and bespoke self-built homes. In order to make sure a project gets the best construction team available, it is essential to carry out a professional tender process.

What is required in the tender process is clarity. There is no point in having three quotes from different builders or tradesmen if they are all written by themselves, with their own interpretation of the architects design and specification. All this will provide is three quotes which will be different in all important detail. Clarity is best achieved by producing one set of schedules of work based on the architects drawings and specifications, thereby making them easily comparable.

A schedule of work should be generated which gives all the necessary information for contractors to price the works, including quantities. In addition it should provide enough detailed information to allow for checking that the job is being carried out to the specification at a later date. It should also enable the measurement of how much work has been completed at any given time, which comes later on when the build is in progress. It is very important to provide as much information as possible and a good understanding of the technical construction process is crucial to getting the schedule right. Mistakes can cause huge problems later and will inevitably lead to cost increases.

In addition to the Schedule of Works, a set of ‘Terms and Conditions’, should be included in the tender package which will be sent to the various contractors. The terms and conditions contains details all of the do’s and don’ts, of working on the project and how the contractor is expected to behave. It might for instance forbid the workforce from using site radios, the use of which can be almost guaranteed to cause problems with neighbours. It will also lay out who is doing what and when, tying the contractor firmly to the project programme. The terms and conditions should also contain all the required details for Health & Safety compliance. It will also outline what will or will not be supplied in the way of welfare facilities and plant hire items etc. All pretty simple stuff, once you’ve done a few.

The documents are then collated into the ‘Tender Work Packages’. This will provide the individual contractors with all the information needed to price the works accurately and avoid the necessity for further negotiations regarding price and costs during the construction phase. It should allow for all eventualities and include any sums which may change due to delays or variations in the design and specifications at a later date. This is achieved by requesting a rate for hourly work or ‘day-rate’.

It is practical to put a condition in the terms, to the effect that all rates priced on the tender package will be used to calculate variations. That is, although the contractor may have priced for a given quantity of work, if that quantity becomes less or more than that shown on the schedule, then the price will be adjusted accordingly using the figures provided. This allows for variations to become a simple agreed calculation, rather than fisticuffs at dawn….

When the tender documents have been returned, a short list should be produced placing the contractors in order of preference. Definitely not always the cheapest…. for very good reasons, but certainly the best value for money should be sought. The returned tenders should be scrutinised for evidence of those who have put an effort into pricing the tender schedule properly. It should also be scrutinised for those who show a good understanding of the job in hand. It has been known for tendering contractors to make cost saving suggestions when tendering for work and this can be a useful indicator of their awareness.

It is always a good idea to give a contractor, who has made a mistake on a tender, the opportunity to re-quote. There is absolutely no point in covering up mistakes by contractors in their calculations in the hope of getting a cheaper price, as this will almost certainly lead to a dispute later. It is at this stage that trust between client and contractor begins to form and any underhand treatment will surely sour the relationship. This will always be more costly in the long run than a policy of openness and clarity.

In choosing the right build team, it is important to take up references for previous work carried out for others. This is a significant indicator and should be given a high priority. A quick chat on the phone to previous customers can give a reasonable picture of the character, but an eyes on look at the work will always give a better idea of competence. Most prior customers of tradesmen are usually willing to allow you access to view work and discuss the competence issue, as they do understand how important this is. In addition, if they found the work to be of poor quality, it’s a very good time to find that out.

The next stage is to interview the likely contractors. The project can take a while to complete and forming a rapport with the contractor is very important to get the best from them and to gain their loyalty and trust. If there is no trust built up between client and contractor that will in time show itself in the quality and cost of the build. A hard-nosed approach to this could easily be taken and realistically in commercial building, this trust probably doesn’t exist. Unfortunately, the commercial client pays a price for this lack of rapport, that the domestic client cannot afford.

It is sensible to use a standard JCT Contract. This is then applied to the standard terms and conditions to enforce them and to give everyone involved the protection of the law of the land in their dealings. There are many JCT contracts covering a large range of eventualities, so it is important to choose the right one. This is a job for a professional and an architect, a building surveyor or a construction manager will be able to advise on this subject. Solicitors can also advise on which contract to use, but they normally lack enough technical expertise to be to do this effectively and have a habit of creating over complex contracts. The whole tender package should be seen as one entity and there should be no conflict between any of the clauses contained within it. This again requires careful composition and scrutiny.

Once the build team is chosen, they will be invited to sign the contracts to accept all of the terms within the tender package including the design and the specifications. This is very important… not in the legal sense… as litigation in the construction industry can be very expensive and often fruitless. The objective is to ensure a moral obligation on the contractors part. If the tender process has been thorough and right team has been chosen then this can be a very positive tool when dealing with people during construction. Don’t be tempted to celebrate with a bottle of champagne though, as it would be a shame if your chosen contractor was lost to a drink driving charge.

SFS Management Contracting would carry out all of this for you. The choice of the right team and the correct generation of the work schedules and contracts is crucial to the success of a project. It could be a perfectly planned scheme, with everything in place and ready to go, but just one mistake or rotten apple and the whole thing can be derailed. The tender process is a delicate balance between creating technical and legal requirements and gaining trust and respect. This mind set is important to the future management of the project and its successful conclusion.

The cost for this is about 1.2% of the nett construction cost of a new build, dependent of course on the project’s complexity. It should easily be recouped with efficiency savings and compared with a loosely run site with an ad hoc labour force, it would be much, much cheaper and a lot less stressful.

If you still really want to do all of this yourself, SFS Management Contracting would create a bespoke package to work with you as a mentor, guiding in the background, advising on procedure and documentation, so that the project can run as smoothly as possible. The right JCT contract would be advised upon and any work schedules and terms and conditions would be scrutinised for conflict or error and also compared with the architects drawings and specifications, for efficacy.  The cost for this would be about the same as the above, dependent on the level of involvement, so no real savings can be made. There is however a great deal to be discovered and if the intention is to go on with further projects this can be a great way of learning the tender process.

Project Management

What is this and why should we use it for our building project?
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Feasibility

What should we look for?
Can we afford to do this?
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Budgeting

Finding out what it should all cost.
Keeping those costs under control.
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Programming

How it can really help a project.
How to do it properly.
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Tender Process

Making sure the build team is properly chosen and prepared.
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Procurement

Finding the best value materials.
Making sure they stay that way.
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Site Management

Working with the whole team,
helping everyone to get it right.
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CDM 2015 Regulations

Carrying out the Principle Contractor Role For CDM 2015 Regulations
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