Serial Tendering Advantages And Disadvantages

The advantages and disadvantages of the various procurement procedures Student paper Course: State aid and Public Procurement in the European Union Coordinators: Dr. Sarah Schoenmaekers and Dr. Niels Philipsen Georgi Batoev: i6053412 Christian Schlosser: i6049305 Abstract.

Categories: Thought Leadership

Historically, construction projects have been procured through either the traditional ‘single-stage’ tender process or via the ‘two-stage’ approach. The main aim of the single-stage approach is to generate a firm price at the outset through a competitive tendering process, where-as the two-stage approach embraces a collaborative open book approach throughout the project.

Historically, the two-stage route has been the most popular within the construction industry, but in more recent times the single-stage process has gained in popularity - in Q4 2017, nearly 35% of projects were single-stage versus two-stage at 31%.

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This shift has occurred because property teams are under increasing pressure to manage costs and need full visibility of these at an earliest stage. However, by doing this they are losing the potential development flexibility and added value that comes with the collaborative two-stage process.

There are undoubtedly pros and cons to both routes, and which one is right for you will depend on the project, the project team and the organisation’s outlook on cost management and planning. We can help guide you through that decision, as our framework options all come with the help and support you need throughout the life of your project.

To give you more of an idea about which is the best option for you, here we list the risks and benefits of each:

Single Stage Procurement

Benefits:

• The client benefits from a competitive tendering process which can lead to more competitive pricing.
• The client can also benefit from a fixed price through this tendering process.

Risks:

• The number of contractors prepared to bid for the project may be low. Historically, single-stage procurement was done through an OJEU process, which often resulted in high tendering costs to the contractors. Because of this many have shifted their focus to the more cost effective two-stage schemes over time and are no longer willing to engage in single-stage.
• The development scheme is generally designed and costed up by the contractor in isolation which can often result in the project budget being exceeded. Generally, this is because contractors may not have been consulted on the buildability at the outset meaning ever-changing building costs throughout the project.

Two Stage Procurement

Benefits:

• The project doesn’t have to be fully designed and costed before they can start procurement for the project, thus reducing costs.
• Shorter timescales required to get a contractor appointed.
• Due to the shorter timescales, the client would benefit from contractor early engagement which could result in project costs being reduced through a Value Engineering Process.
• The collaborative approach breeds greater communication with the client and the clients team, which can result in improved outcomes.

Risks:

• If the client and contractor don’t communicate with each other then it would be unlikely that they would benefit from collaboration and project and cost clarity.

As you can see there are benefits and risks for both the single and two-stage approach. At PAGABO our focus is on getting the client the optimum outcome regardless of which process they choose.

Should the two-stage approach be preferred, we ensure our contractors provide a collaborative open book approach throughout the process. We do this by building a close relationship with the client and also the appointed contractor and acting as the linchpin between the two. This helps drive early engagement with the client’s team and ensures the client’s budget and programme is adhered to, whilst maximising value from the contractor.

And, whether a one-stage or two-stage approach is preferred, thanks to the level of support we enjoy from contractors we can ensure that the clients receives the appropriate number of bidders for their development scheme. Boxing helena sherilyn fenn.

Pagabo offers a wide variety of frameworks, ranging from Major Works, to DPS for Small Works, in addition to frameworks for Refit and Refurbishment Solutions, Total Car Park Solutions and Medium Works, all offering total flexibility for the client to move through the Procurement Stages using a direct award, single and the two-stage approach. A hybrid approach is also available, giving the client cost certainty with some building elements in a two-stage approach. We also provide an unrivalled level of support to the client with tenders and the documentation required for an effective and successful procurement process.

For more information on all of our frameworks and to find which is best for you and your project, please click here.

Procurement Strategies and Tendering

Coventry University

A serial tender differs from a continuity tender in that at tender stage, rival contractors are informed that the successful firm will be called upon to carry out a number of future separate contracts, each of which will be very similar, if not identical, to the original being priced – the prices contained in the bills of quantities being used to value similar work on the future projects.

The approximate extent of the ‘series’ of planned works will be known at the initial tender stage, even though the design work on some of them may as yet be incomplete. Serial tendering is, in effect, a standing offer to carry out a series of projects all based on the priced bills of quantities for the first project, which becomes the ‘master’ priced document. Serial tendering allows for a number of similar projects to be placed, with one contractor providing the incentive of a continuous flow of work for the contractor.

Rates contained in the original bill of quantities can be updated to account for inflation using either a ‘conventional’ or ‘formula’ method for assessing the amount of increased costs. The guaranteed workload to be enjoyed by the successful contractor should ensure that the client obtains value for money.

The rationale is that the contractor might accept a small loss on the first project, but by the time subsequent ones have been delivered, the contractor’s workforce and subcontractors would be fully conversant with the building system and a profit should ensue.

Again, the advantages to be gained from maintaining continuity of work with the same contractor are the same as outlined for continuity contracts, including keen tenders from competing contractors in the first instance.

Future contracts are based on the original pricing document, suitably adjusted in accordance with a stated price adjustment formula stated in the original tender agreement.

The client considers that negotiating with one contractor over a number of years is more cost effective than tendering separately for a number projects with different contractors.