In this post, we’ll review some practice questions and answers focussed on the Procurement & Tendering Competency. If selected as a core or optional competency, it’s vital for APC candidates to understand the different types of procurement routes and tendering methods availble along with their advantages and disadvantages. From my experience of helping colleagues pass their APC over the last 9 years, I compiled the following questions & answers based on past interviews and really hope this helps candidates feel better prepared for their final assessment interview.
The following Questions & Answers are focussed on the Procurement & Tendering Competency
Question) Please explain your understanding of tendering?
Answer) Tendering is a structured process for obtaining offers or proposals from suppliers or contractors to perform specific work or services. It is used to award business activity either through competition or negotiation with a single contractor. The purpose of tendering is to ensure transparency, fairness and competitiveness in awarding contracts.
Question) Please explain the main methods of tendering you are aware of?
Answer) The main tendering methods I am aware of include:-
- Open tendering – This method allows any interested contractor to submit a tender. It is open to the general market and typically advertised publicly to ensure wide participation.
- Selective tendering – Contractors are pre selected based on criteria such as financial stability, experience and resources. It includes two sub types:-
- Single-stage selective tendering – All tender documents are provided upfront to a group of pre-qualified contractors.
- Two-stage selective tendering – The process is divided into two phases with selection of the main contractor in the first phase and negotiation of a final price in the second stage.
- Negotiated tendering – The client negotiates directly with a single contractor, often due to prior experience or a strong working relationship.
- Serial tendering – A contractor is awarded multiple similar projects based on agreed rates from an initial tender.
Question) What is open tendering?
Answer) Open tendering is the process of inviting bids from all interested contractors or suppliers. Open tendering does not require pre-qualification, allowing any contractor to submit a tender, which ensures inclusivity but may increase the workload for tender evaluation. Advertisements are placed in public platforms like newspapers or technical publications to maximise participation.
Question) Can you please explain the advantages and disadvantages of open tendering?
Answer) The advantages of open tendering are that it provides opportunities for contractors who may not have previously worked with the client. This may allow the client to harness the innovation and capability of specialist suppliers that are not usually considered. It also creates maximum pricing competition among tenderers and potentially leads to agreement of a more competitive price. Disadvantages include that bids may be received from contractors that are not financially stable. Tenderers may also not possess the specialist skills needed to fulfil the clients requirements. A lack of familiarity with the client’s requirements may create pricing uncertainty during the tender process. A higher volume of tenders being received may result in additional time and costs in order to undertake a detailed tender analysis.
Question) Please explain your understanding of selective tendering?
Answer) Selective tendering limits the number of contractors allowed to submit tenders by pre-qualifying them based on specific criteria. This ensures that only capable contractors participate in the process.
Question) What are the two types of selective tendering?
Answer) The two types of selective tendering include:-
- Single-stage selective tendering – This is where contractors submit their bids based on a complete tender package provided at the outset. Pre-qualification criteria include financial stability, certifications, track record, health & safety information and client references.
- Two-stage selective tendering – This comprises a first stage where the contractor is appointed based on an outline scope of work and initial pricing of preliminaries and schedules of rates. This is then followed up with the second stage where the contractor collaborates with the client to develop the final design. The second stage also involves negotiating the final price between the client and contractor based on the initial pricing information that was submitted in the first stage.
Question) Can you please explain the advantages and disadvantages of two stage tendering?
Answer) A key advantage of two stage tendering is that the skills and buildability experience of the contractor can be harnessed before the design is fully finalised. This can result in costs savings and increased efficiency for the sequencing of construction activities and building methodology. The overlap of developing the design whilst agreeing the price with the main contractor can also result in an earlier start on site. Disadvantages of two stage tendering are that pricing competition is reduced during the second stage as the client is only then negotiating with one contractor. This can lead to a higher price being agreed when compared to single stage tendering with numerous contractors. Negotiations during the second stage can alsolead to a lack of cost certainty until the final price is agreed.
Question) When would you recommend the use of two-stage tendering?
Answer) I would typically recommend two stage tendering for use on complex projects with an undefined scope of works. These criteria usually mean that early contractor involvement is essential for risk management, planning and to utilise their buildability expertise. Due to the overlap of design development and agreement of the tender price, it may also be beneficial for clients who require an earlier start on site than could be achieved with single stage tendering. I would not recommend the use of two stage tendering for clients who require maximum cost certainty as this is not achieved until a tender price is agreed upon conclusion of the second stage. Full pricing competition under live market conditions is also not possible due to the second stage being negotiated, two stage tendering therefore may not be suitable for clients who are looking to achieve the lowest tender price.
Question) Please explain your understanding of negotiated tendering?
Answer) Negotiated tendering involves the direct discussions between the client and only one singular, preferred contractor. This option is typically chosen due to the clients previous strong relationship and experience with the contractor. Due to the familiarity the contractor has of the clients requirements, it is often thought to be advantageous and more cost effective to negotiate with the preferred contractor than inviting multiple tenderers. This often results in an earlier start on site date as tender negotiations are quicker and can be agreed using schedule of rates and pricing information from previous projects costs. The cost and time implications of managing an open tender process is negated.
Question) What is serial tendering?
Answer) Serial tendering involves the award of a series of projects to the same contractor under agreed rates and contractual terms. It is often used when multiple similar projects are planned by the same client to ensure consistency and efficiency. Tenders are negotiated based on agreed schedule of rates which are used to value the works across a series of projects. This option can be utilised when the clients is undertaking a series of projects that are repetitive with few project specific abnormal items.
Question) What are the consequences of selecting an unsuitable contractor?
Answer) Implications resulting from appointment of an unsuitable contactor could include:-
- Strained working relationships between the client and contractor.
- Project delays and increased costs.
- Substandard quality of works.
- Financial instability or insolvency of the contractor.
- Reputational damage of the client.
- Poor health & safety performance.
- Environmental impacts and poor sustainability performance.
Question) Could you please explain the items you would include within a tender pack?
Answer) I usually follow guidance set out within the JCT Tendering Practice Note which includes the following items:-
- Invitation to Tender (ITT): A formal letter inviting contractors to bid.
- Instructions to Tenderers: Includes submission deadlines, evaluation criteria, and tendering procedures.
- Conditions of Contract: Specifies the contractual terms.
- Pricing Documentation: Details the structure and format for tender pricing.
- Specifications and Drawings: Defines the technical requirements.
- Employer’s Requirements: Outlines the project scope and expectations.
- Pre-construction Health & Safety Information: Ensures compliance with regulations.
- Form of Tender: A formal statement for the tenderer to provide their offer.
Question) What is a form of tender?
Answer) The form of tender is a standardised document in which the contractor formally agrees to undertake the work at the specified price. It typically includes the tenderer’s details and the total sum offered for the project.
Question) Can you please explain your understanding of traditional procurement?
Answer) Under a traditional procurement route, the design is completed by the client’s design team before a main contractor is employed to build what the designers have specified. The contractor takes responsibility and financial risk for the construction of the works to the design produced by the client’s design team. The client maintains responsibility and risk for the design and design team performance.
Question) What are the advantages of traditional procurement?
Answer) The client and their design team retains control over the design which can lead to higher quality over the materials and products that are specified. With a design largely complete at the time of tender and agreement of the contract sum, traditional procurement can also offer increased levels of cost certainty in comparison to other procurement methods. Design changes are also reasonably easy to arrange and value as there are typically rates listed within the contract sum that will form the method of valuation.
Question) What are the disadvantages of traditional procurement?
Answer) The overall project duration may be longer than other methods of procurement due to there being no overlap between design and construction phases. There is no input into the design and planning stages by the contractor and therefore no opportunity to utilise the contractors buildability expertise. There is a dual point of responsibility with the design team controlling the design and the main contractor retaining responsibility for the construction meaning there are two separate relationships for the client to manage.
Question) What is design and build procurement?
Answer) Design and build procurement is where the contractor holds responsibility for the design, planning, organisation, control and construction of the works to the employer’s requirements listed within the contract documentation. The employer provides the tenderers with the ‘Employer’s Requirements’ and the contractors responds with the ‘Contractor’s Proposals’, which include their price for carrying out the works.
Question) What are the advantages of design and build procurement?
Answer) There is a single point of responsibility for the design and construction of the project meaning it may be easier for the client to manage one relationship. An earlier commencement of the construction works may be possible as there can be overlap between the design and construction phases. Transferring risk of the design to the contractor can work in the client’s favour as any design issues incurred are the liability of the main contractor. By agreement of a fixed priced lump sum, design and build procurement can offer high levels of cost certainty. The client can also benefit from the contractor’s buildability expertise during the planning and design stages.
Question) What are the disadvantages of design and build procurement?
Answer) The client has to commit to a concept design early on in the project and any errors or omissions from the employers requirements may prove costly. There is also less control over the design and type of building materials to be used as design responsibility is transferred across to the main contractor. Variations from the employer’s requirements are usually more difficult to arrange and value than other methods of procurement as there is no bill of quantities with rates that can be used to value variations. It can be more difficult to compare tender submissions and determine whether value for money is being achieved as there is no singular bill of quantities that can be used during a tender analysis, instead the tenderers will submit their contractor’s proposals against the employers requirements.
Question) Please explain the management contracting method of procurement?
Answer) A management contractor is employed to contribute their expertise to the design and to manage construction with a management fee being paid to them for doing so. The management contractor has direct contractual links with all of the works package contractors. They have the responsibility for the construction works without actually carrying them out. Not all of the design needs to be completed prior to the first works package contractors commencement on site meaning there can be some overlap between the design and construction phases. The client reimburses the cost of the works packages to the management contractor plus their management fee.
Question) What are the advantages of management contracting procurement?
Answer) The overall project duration can be reduced due to the overlapping design and construction stages as the design does not need to be fully complete prior to commencement of the early works contract packages. The client can benefit from early contractor expertise during the design and planning stages. Changes to the design can be accommodated within the works packages that have not yet been appointed providing they do not carry a significant impact on the works packages that have already commenced. The works packages can be tendered competitively at current market prices on a firm price basis offering good levels of pricing competition.
Question) What are the disadvantages of management contracting procurement?
Answer) The price for the works is not finalised until the last works package contractor has been appointed resulting in reduced cost certainty for the client. Changes to the design later on in the construction phase may affect the works packages that have already been let making it more difficult to accommodate changes. There is little incentive for the management contractor to reduce costs as they usually receive a flat management fee plus the cost of the works. In practice the management contractor has little legal responsibility for the defaults of the work package contractors.
Question) What is construction management procurement?
Answer) The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction manager who acts as a consultant to coordinate the contract. The trade contactors carry out the work and the construction managers supervises the construction process and coordinates the design team. The construction manager has no contractual links with the trade contractors or members of the design team. Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works.
Question) What are the advantages of construction management procurement?
Answer) The overall project duration is reduced by overlapping design and construction phases. The construction manager can contribute to the design and project planning processes. Roles, risks and relationships for all parties are clearly defined. Changes in the design can be more easily accommodated without paying a premium as is the case under alternative forms of procurement. Prices may be lower due to direct contracts with trade contractors. The Client also has a means of redress for any defaults as they have direct contractual links to each of the trade contractors.
Question) What are the disadvantages of construction management procurement?
Answer) Cost certainty is reduced as the final price of the works is unknown until the last trade package is appointed. Changes to ongoing works packages may adversely affect works packages that are already appointed. The client must be proactive and hands on as they have multiple contractual relationships with each of the individual works package contractors in addition to the construction manager that is managing the works on their behalf.
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