Hello folks 👋
This week we are covering Level 3 of the Procurement and Tendering competency.
DISCLAIMER: The following is not an exhaustive set of notes, but it's an attempt to help those who, like me at the beginning, did not know where to start! Please feel free to let me know if I have said anything incorrect or out of date!
So what is Level Procurement and Tendering all about?
The RICS note that to demonstrate competence at Level 3, you need to demonstrate your ability to:
Give reasoned advice on the appropriateness of various procurement routes. Manage the tendering and negotiation process and present reports on the outcome.
Evaluating the appropriateness of various procurement routes
This bullet point is asking you to demonstrate that you understand the different procurement routes. Do you know when you should deploy the different procurement strategies? How do you make that judgement call?
I have only ever worked with construction informed clients, and it is very rare for me to suggest a procurement route to a client who already knows what they are doing. What I can do though is tell them when they are going wrong and suggest an alternative. For example, if the client is proposing to build an easy, run of the mill asset, but they want to go via the traditional route. I would always advise against this because it is a waste of resources. We can offload the front end burden to the contractor as long as we are very careful with the Employer’s Requirements!
In my role, when a new project requirement appears, I first have to write a procurement strategy. This tells the budget holder how we are going to procure this piece of work, generally, this is written in conjunction with the project manager who has the end say in how they want the work procured. This is usually determined by the content of the work i.e. its complexity. the level of design available and its urgency. This process may be different for your client.
The procurement strat briefly identifies the scope, discusses whether we have undertaken an initial estimate, and explains how we will procure it. For the last question, we have to explain whether we are using an existing client framework, or direct awarding this piece of work. If we are using an existing client framework, we can pre-select suppliers who we potentially want to be involved. After this point, I would get the procurement strategy signed off by the budget holder, and issue Expression of Interest letters to the prospective suppliers.
Managing the tendering and negotiation process
This bullet point is straightforward and it involves you demonstrating that you can handle a tender process yourself.
In my first role after I graduated I worked on maybe two or three tenders in the space of 3.5 years. In my current role, I have personally worked on and dealt with nearly a dozen tenders in 10 months. I have worked on traditional, design and build and framework tenders!
Please review my previous posts where I have described the work involved.
Negotiations with contractors are interesting. In my experience, they are usually about one of the assumptions or exclusions the contractor has made. It is your job to be fair and reasonable, but also get the best deal for your client. I will make a separate post about common assumptions I’ve faced within my role!
Side note - If you feel like you aren’t getting experience at your current organisation, you need to ask to be allocated more procurement experience,
Preparing procurement and tendering reports.
Tender reports are pretty standard across the industry. Any variations will be specific to your client.
A standard tender report may have the following headings:
Executive Summary: Provides the result and recommendation for tender award
Introduction: Identifying the reason for the tender i.e. brief description regarding the scope of work.
Tender Process: This breaks down the tender process for the client (if they are a non-construction informed client, this may require more detail). In this section, we identify the prospective tenderers, the reasons why they were pre-selected (i.e. because they had experience or they are specialists). At this stage, we also discuss how the tender was scored and weighted i.e. technical and commercial scores. It may be 50/50 or60/40 in favour of price.
Results: This identifies the scores of the tender usually in a table format. A discussion of the scores may also be presented here with a breakdown of any abnormal costs. We may list out items that are abnormally high/low and whether any specific concerns still exist post negotiation.
The report usually ends with a conclusion identifying the winner of the tender process and a recommendation for award.
That’s it for this post folks, as always if you have a comment or query please get in touch!