Tendering and Subcontractor Vetting

Handing over elements of a construction project to another company can be a daunting prospect. With it, you are losing an aspect of control, putting your firm’s reputation in another firm’s hands.

Perhaps you’ll be placing a multitude of orders with various firms for each of the different trade packages.

There’s a lot to consider. For example, who will be tendering for each package? What will the scope of works be? What’s the budget? Are the company a reputable or suitably qualified firm if you’ve not used them before? What will the payment schedules be? Which form of contract? And much more.

Producing, issuing and reviewing tenders can be undertaken in-house or outsourced to professional Quantity Surveyors practices.

Tender Invitation and Pre-Qualifying Questionnaire

Before you go too far down the tendering line, it’s time to get in touch with the trades you plan to invite to tender. Why? For several good reasons. The most important is to save time in the tendering process and ensure you get a good spread of costs, preferably a minimum of 3 to 5.

You are gaining a commitment by enquiring whether a firm would like to tender for the specific package. Alternatively, order books might be full, and the contractor is unable to take on any additional work, meaning you’d be left short of comparable tenderers once the tender submission date has passed.

This is also the time to ensure that they are fit for purpose. A pre-qualification questionnaire can assist here. By requesting information such as financial records, examples of comparable size contracts and references, allowing you to get an impression of whether the firm is suitable for the job at hand.

You can also request evidence of professional accreditations (see: Construction Accreditations –  Are they important and what do they mean?) and company policies such as Environmental, Labour, Diversity etc.

Finally, it’s an opportunity to get some early contractor involvement. An informal meeting or discussion to review the project, see where any issues may arise, what materials might be expensive or on a long lead time, or value engineer the scheme.

Tender Programme

Naturally, this all takes time. The questionnaires may be a standard form, but in a week or two, you can produce a confirmed list of firms that have committed to tender and have provided you with the information needed to deem whether they are suitable for the work or not.

But time slips away quickly, so a tender programme should be provided with the tender invitations, consisting of; a tender issue date, mid-tender review, tender submission date, final tender interview / the next stage process.

This programme ensures that all contractors are clear on the dates they need to hit, can resource their bid team appropriately and will find it easier to confirm whether they can or cannot undertake the tender in time.

An anticipated start date for the project along with a draft construction programme will add further clarity and comfort that a contractor can comply with the project’s needs.

Packaging a Tender

• Packages – Start by deciding what works must be outsourced and whether any packages can be combined for better value. For example, some firms will undertake mechanical and electrical contracts, carpentry and joinery, brickwork and scaffolding. Whilst not always the case, it can offer value for money.
• Drawings – Each tender pack needs to include the drawings of the scheme. Some will send everything, which can confuse and cause the contractor more work to decide which drawings are relevant. It is often more efficient to split the plans into tender packages, which a Design Manager, Quantity Surveyor or architect and engineer can do (or C-Link software).
• Scope of works – This is likely to be an in-house document where the standards and expectations of the works are laid out, alongside specific details for the materials and products to be used or installed. Such as a lift specification, how many people should it hold, the fit and finish, call points etc.
• Employer’s Requirements – what your client is expecting to be delivered and what your company is contracted to. Your subcontractors must be aware of these requirements.
• Contractor’s Proposals – sitting alongside the Employer’s Requirements will be your proposals of the work you tendered for if you are the main contractor. These two documents should be complementary to one another to avoid any confusion and dispute.
• Document Control – What format will the tender be issued in? Mostly, the days of sending a six-inch-thick pack of paper through the post have become outdated on environmental and cost grounds, replaced by electric transfer. This could be through a USB stick, a dropbox style data share service or C-Link software. Whilst these packages may cost more to set up, they will allow the tenderer to ensure that documents have been received and opened by the tenderer if not reviewed. In addition, new information can be issued to the tenderers, often directly from the design consultants. Finally, tender submissions can be received on the same system.

Contracts

The tender packs should contain a reference to or a draft version of which contract you will enter into with the chosen contractor.

Whether it is a JCT, NEC or a standard build contract. A back-to-back version of the contract that you have signed into can be preferable.

It is helpful to set out at the early stage what a contractor should expect in the way of payment terms, payments schedules, completion and handover strategies, any damages liabilities due to poor performance or tardiness, insurance requirements and levels of cover, dispute process and resolutions, collateral and product warranties, rectification periods.

Mid-Tender Interview and Tender Queries

A mid-tender interview is an excellent opportunity to learn more about the contractor, ensure that they fully understand the project, and pick up everything they need to price.

Additionally, it’s an opportunity to ensure there are no scope gaps within the packages.

There should be an opportunity for tenderers to ask for additional information during the tendering period and the mid-tender interviews. For example, perhaps to clarify a design detail, if they have spotted something contradictory, missing, or are requiring more specific information.

This can then be shared in a schedule, alongside your responses, to all tenderers.

Dealing with these elements should ensure that each contractor is pricing on parity, whilst any vital information discussed and shared should form part of a tender addendum.

Tender Review, Scoring and Comparison

• Tender review – checking for mistakes. By comparing the returned quotes’ side-by-side, errors are more likely to jump off the page, usually when a cost is suspiciously high or low. Additionally, this is prime time to check the small print. Has anything been qualified or excluded in the quote that doesn’t fit your requirements?
• Tender Equalisation – When comparing one price against another, the quotes must be on a level playing field. The steps taken above should have ensured this is the case as much as possible. However, there may still be some prices missing. In this case, you can equalise a tender and plug the ‘gap’ by taking an average cost of the other tenders price for that element of work.
• Tender Scoring – This is where you weigh up all the information provided. Whether you deem the presentation of a quote to be of high importance and need a substantial weighting, or the information provided in the PQQ, or the price itself takes significant precedence.

Summary

Getting packages of works tendered for a project is an in-depth process of procedures and tasks to ensure that the correct information is provided to contractors who wish to price for the job, have the capacity to carry out the work and are capable of doing so.

It is then vital to ensure that reviewed quotes are comparable and determine how you want to score the received information.

Once reviewed and scored, you can then carry out a final interview, contracts awarded, and the works commenced knowing that a thorough, professional, audited, tender and order process has been carried out.

Photo by Ryan Ancill on Unsplash

About Matthew Griffiths

Matthew takes great pleasure in combining his two professions. One has seen him give two decades of service to the construction industry, from roles as an Estimator through to sitting on Boards. The second is his passion for the written word. He now has the best of both worlds, building homes and constructing written content.