With over 1.9m contractors in the UK and an estimated spend of £27bn on public infrastructure projects in 2021/22 alone, it is important clients secure the right contractor for successful project delivery. Issuing a Project Initiation Form (PIF) will give potential bidders enough information to make an informed bid/no bid decision. By then including a formal Expression of Interest (EOI), this will shortlist contractors based on their relevant experience, and the most appropriate for the contract will then be invited to tender. This avoids time being wasted preparing and assessing inappropriate tenders. Clients will then issue tender documentation and tenders are evaluated against stipulated criteria to award the contract to a successful bidder. But how do you ensure you attract enough interested suppliers to maintain competitive pressures?
In this blog, Procure Partnerships Framework Key Account Manager Natalie Palframan, with commentary from contributors Turner & Townsend, will examine how to ensure clients achieve a robust tender list.
Choose The Appropriate Call Off Option
It is important to evaluate the procurement process that offers the best fit for the project and to optimise contractor interest. This could be through the following routes:
• Single stage
• Two stage
• Direct award
• Mini competition express
Frameworks provide value for money, OJEU and FTS compliancy, save time, and can deliver measurable social value. They must comply with Public Contract Regulations 2015 and can offer both Professional Services and Contractor Appointments. Construction frameworks can be divided into Design & Build or Build Only packages with a variety of call off contracts available. Dynamic Purchasing Systems differ from traditional framework structures as they offer an electronic system for the supply of goods, works or services which suppliers can connect with at any stage. It adopts an ‘open market’ solution, designed to allow buyers access to a source of pre-qualified suppliers.
When clients establish an award route for contracts, there are two predominant processes known as ‘single stage’ and ‘two stage’ tendering. The single-stage approach has been a traditional undertaking to realise a fixed cost up front based on a project scope which often separates the design from the build. It is a labour and time intensive process for contractors with high risk factors; committing to a pricing structure without visibility of the design aspects of the project or movement in works schedules. This can result in contractors withdrawing from the bidding process, a poor quality of potential award candidates and in some cases no award being appointed at all.
There is increasing popularity for two-stage tendering to be used for construction contracts, which has demonstrable levels of success for a robust tender list. This method offers the flexibility of an ‘open book’ approach to the sub-contracted tender lots. Contractors submit bids based on an initial project design and compete for preferred contractor status. A more collaborative undertaking, with a pricing schedule and programme of works submission, reducing the time and resources needed to complete the bid and reducing levels of risk to the contractor. Only the preferred bidder moves to the second stage. The client then appoints the successful contractor under a Pre-Construction Services Agreement (PCSA) which essentially is an agreement between the client and the contractor to move forward with the project, and not at this stage a full design or fixed sum to carry out the works.
With a Direct award route, a framework contractor is directly selected for a project without re-opening competition. Contractors can work under a PCSA to develop any remaining design or the project can be fully re-priced. Arguably, for construction tenders, clients can benefit from a higher quality and more competitive tender process via the two-stage route and can appoint a contractor much earlier on in the project process.
Early Engagement With Potential Suppliers
Once you have established the most suitable procurement route for the project, it is important to begin any procurement process by engaging at an early stage with potential suppliers. A soft market test is a preferred purchasing activity, designed to test the commercial market of its capabilities to meet a set of requirements, which would include enough interested suppliers to maintain a competitive process. The best avenue to achieve this with construction projects is to issue contractors with a Project Initiation Form (PIF). This document defines the project scope, the management, and overall key criteria of the project, so bid teams have transparency over the basic context and specification of the project’s design and build. This allows contractors to allocate resources for bidding, make informed decisions and establish if this is the right contract for them. Open communication and access to the project details early in the process improves the retention rate of bidders throughout the exercise.
Through the Two-stage tendering route, interested suppliers then receive the tender documentation. For the single-stage route, a formal Expression of Interest (EOI) is requested, for keen parties to formally identify their commitment in proceeding to the tender stage.
To achieve high quality bid submissions and to keep contractors engaged throughout the life of the tender process, tender documentation should clearly outline the works required, including the design, and often decompartmentalise the tender into a range of packages or lots.
Steph Marshall, Director cost management, Turner & Townsend “this is more true than ever with a back drop of Covid/Brexit – making the contracting market aware of an opportunity early assist then in mapping pipeline, planning recruitment and importantly then provides a pipeline for the subcontracting market”.
Communication Is Key
All procurement routes and tendering processes should have the paramount objective of supporting public sector bodies to deliver their strategic targets. An open dialogue between the client and contractor can help to keep all stakeholders updated with regards to any changes in the tender programme. Public sector bodies often call on the support and expertise of dedicated procurement framework organisations, such as The Procure Partnerships Framework. Through our industry experience and extensive knowledge of procurement options in the UK, we have developed the most efficient and beneficial procurement routes for both client and contractors, ensuring it is flexible, robust, good value for money and delivers successful outcomes.