Property

Quote me tender

Thinking of building this year? Choosing the right type of tender process can be crucial to achieving success, writes Ian Price

With the credit crunch already impacting on the budgets of many independent schools, it is important that a bursar of a school contemplating a building programme should be able to give informed advice to the board of governors on the type of tender process that will deliver best value.

Broadly, there are four types of tender: traditional, two-stage, design and build and negotiated. The last may well be suitable for a school building project, but is difficult to justify to the governors looking for evidence of best price. The other three, however, are all contenders in these ultra-competitive times.

Which method?
The traditional tender is the most straightforward. The client (in this case, the school) will appoint their own professional design team, usually comprising architect, quantity surveyor, mechanical and electrical engineer, and a structural engineer who together produce the detailed information to enable competitive tenders to be sought from a number of contractors on a fixed-price, lump-sum basis.

The successful contractor (usually the one offering the lowest price) will carry out the works as set out in the contract documentation, which can contain some elements whose design will be the contractor's responsibility. That said, although there will be regular site meetings with the architect, the quantity surveyor and the engineering consultants, the contractor's primary role will simply be to execute the work. While the professional expertise of his staff may be called upon to solve specific on-site problems, the contractor will have no formal design input except as noted above.

If all goes well, the traditional contract means that a school gets the building it wants at the price it has agreed to pay. The downside is that unforeseen circumstances can result in large additional costs that the school, as the client, will be contractually obliged to meet.

In a two-stage tender, the prospective contractors will be asked to provide initially just two pieces of information: a price for site overheads and a level of overall mark-up expressed as a percentage. Using these two figures, the client’s architect (with the client’s agreement) will choose a contractor and will then invite members of the contractor’s team to obtain detailed and competitive works packages for individual elements of the work (ie brickwork, joinery, mechanical and electrical etc). From this will emerge a final figure, agreed by all parties, that represents a fair price for the job.

The benefit of this type of tender is that the contractor joins the team at a very early stage, so that building work can get started earlier because negotiations with subcontractors can take place while detailed drawings are still being prepared. In addition, it means that the contractor’s expertise can be used to address problems before they arise and may also enable him to suggest a better and more cost-effective way of achieving a required goal. Ultimately, this will benefit the client.

The fourth type of tender is design and build. In this, the contractor employs his own architect, quantity surveyor and engineering consultants and becomes responsible for both the design and the construction of the building. For the client, the advantage of design and build lies in its guaranteed price, which will only change as a result of client variations or unforeseen contingencies. On the other hand, the contractor’s bid price is likely to be higher because of the need to build in an extra margin to take account of the extra risks.

Ultimately, constructive involvement with the main contractor by the school and its design team at the earliest possible stage of a project is the best guarantee for success.

Ian Price is chief estimator, R Durtnell & Sons Ltd, Britain’s oldest building company.

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