Tendering – getting what you wished for

NBS Technical Author, Roland Finch, produced the content for the recently published NBS Guide to Tendering: for construction projects. Here he introduces this 'much-needed short guide'.

We had a flurry of calls in the NBS office late last year from subscribers asking where they could lay their hands on a copy of the NJCC Code of Procedure for Single Stage Selective Tendering. It seems this document had finally been removed from The Construction Information Service, the online technical information tool produced jointly by NBS and specialist provider IHS.

It was intriguing to discover that people were still referring to this document, which has been otherwise unavailable since long before NJCC's successor body, the Construction Industry Board, was wound up in 2001. Perhaps even more interesting is the fact that its two erstwhile successors, JCT Practice Note 6 (Series 2): Main Contract Tendering and the CIB's own Code of Practice for the Selection of Main Contractors, have also been out of print for some considerable time. That left a sizeable gap in practical advice, so, after almost 10 years of waiting for somebody else to do it, we decided it would be a good idea to write our own Guide to tendering for construction projects.

Procurement is one of the fundamental activities to take place in a construction project. Put simply:

• One party would like some work done
• They need to find someone who is capable and willing to do it
• They must find a means of explaining what they want, so that bids may be invited in competition.

That process is called Tendering.

There are a number of situations in which tendering may be applied. For instance, it may be concerned with the appointment of a building contractor, subcontractor, supplier, consultant or subconsultant. Tendering can take many forms, and the procedures and methodologies can be quite strict, especially for the public sector where there are swathes of legislation. This is in addition to the Fraud Act and the Bribery Act which already lie in wait for less scrupulous players.

Recently, the UK Office of Fair Trading (OFT) has had its own pronouncement on the subject, with an investigation into 'controversial' practices, such as cover pricing – the practice of pricing a job in order to show willing, but without much real interest in winning the job – which the OFT decided had resulted in a breach of the 'Chapter 1 Prohibition' (a failing under legislation concerned with 'Agreements, etc. preventing, restricting or distorting competition' under the Competition Act of 1998). The outcome of its investigation was the imposition in 2009 of some huge fines on various contracting organizations. While several of these have been reduced on appeal, it is clear the OFT takes the subject very seriously.

For the rest of us, it makes sense, therefore, to have a set of practical rules to follow. Some organizations will have their own detailed policies and procedures, but our research showed that many are unaware of the potential pitfalls of not being able to demonstrate that they have complied with the watchwords of 'fairness' and 'accountability' that we ourselves demand of our public officials nowadays.

Of course, with some notable exceptions, modern Tendering is no longer primarily concerned with the central idea of specifying what the requirements are and applying the logic that the bid that comes in with the lowest price wins. In fact, many in the industry actively discouraged this approach, even before the use of mandatory fee scales for professionals were ruled to be anticompetitive in the early 1980s. Nowadays, there are many other things which need to be considered, and the concept of 'quality' in delivery matched to an output or performance specification is much more important that it once was. The trouble is that as more complex methods of packaging, specification and evaluation have emerged, it is often quite easy to lose sight of the basics, with the result that even the simplest of principles can end up being ignored.

The NBS Guide is not intended to be a detailed critique of all the possible alternative tendering methods; it is a relatively straightforward guide through the stages and processes involved. It includes an overview of the processes commonly involved and a few simple rules to help with:

• Advance information: How do you let potential interested parties know that you have some work you want to do?
• Pre-qualification: how do you draw up a list of suitably qualified and interested people?
• Establishment of willingness to Tender: What is a good way to make sure you will get a bid from those people you ask?
• The Specification: How do you describe the work?
• The Tender rules: How is the bidding process undertaken?
• Tender assessment: What is the procedure for evaluating the relative merits of the bids? What sort of evaluation criteria might be employed?
• Tender acceptance: How would this be done? How are the successful (and unsuccessful) parties notified?
• Contract award: What happens when the Tendering process is complete?

Experience shows that many projects suffer because it was not clear at the outset what was required, and what was on offer in response. This is particularly evident with clients for whom construction is not a 'core' business activity; so they don't always understand how to explain precisely what they want, or what is proposed, despite the best efforts of the professionals who are advising them. The hope is that by once more having a straightforward 'standard' set of rules to follow, it will make it easier to make sure that important steps are not missed. Clearer tendering leads to fewer problems further down the line, and that is what we are all seeking to achieve.

To order a copy of this book, please visit RIBA Bookshops.

Related NBS information:

Articles:

• Advising clients on the appropriate form of building contracts
• Which procurement method?

Selected links:

• Contracts

May 2011

 

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