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Department of Finance
Building Management and
Works (BMW)
October 2016
Contracting with BMW
Building Management and Works
Aim
Objective
To provide contractors a greater understanding of doing
business with BMW
Building Management and Works
Agenda
1. BMW policies and procedures
2. Tendering for BMW work (part 1)
3. BMW tender management
4. Tendering for BMW work (part 2)
Building Management and Works
BMW’s role
BMW manages the State Government’s non-
residential building program
New building projects
Alterations and additions to existing buildings
Maintenance of existing buildings
Office accommodation for Government employees
Building Management and Works
Meet the presenters
Tony
Halberg
Director,
Policy and
Procurement
Services
Grayam
Sandover
Project
Director,
Infrastructure
Delivery
Anna
Rechichi
Assistant
Director, Policy
and Tendering
Services
Department of Finance
Tony Halberg
Director, Policy and
Procurement Services
October 2016
BMW policies and procedures
Building Management and Works
Agenda
Availability of work
Access to work
How decisions are made
Supporting local businesses
Prequalification
Contractor performance appraisal framework
Project Bank Accounts
Building Management and Works
Availability of work
Works contracts over $250,000 will be tendered
Early tender advice
Publicly announced projects are available on our website
Building Management and Works
Access to work
Submit a conforming tender
In most cases for contracts valued greater than $500,000
o Be prequalified
o Meet financial requirements
o Be a registered builder
No insolvency history
Building Management and Works
How decisions are made
1. Value for money
2. Generally lowest price and conforming
3. Multiple decision makers
Building Management and Works
Supporting local businesses
Preferences
Regional tendering price preferences
o Regional business (5%, maximum $250,000)
o Regional content (5%, maximum $250,000)
Aboriginal enterprise and employment trading preference
o Registered Aboriginal enterprise
o Aboriginal employees or subcontractors
o Maximum $100,000
Imported content
o Overseas materials (20% impost)
Building Management and Works
Supporting local businesses
Example of preferences
Scenario: you run Acme Builders Pty Ltd and you are located in
Perth. You bid for a project in Geraldton, tender is $2M.
o $1M to be provided by local subcontractors in Geraldton
o $200,000 to be provided by an Aboriginal business
o You plan to import goods to the value of $100,000
Bid Regional Business reference
Regional Content
Preference
Aboriginal Preference
Imported Content Impost
Adjusted Price for
ComparativeEvaluation
$2,000,000 nil minus$50,000
($1M x 5%)
minus$20,000
($200,000 x 10%)
plus$20,000
($100,000 x 20%)
$1,950,000
Building Management and Works
Prequalification
Identifies capable building contractors
Streamlines tendering processes
Generally required for construction projects
Not required for other types of projects
Building Management and Works
Prequalification
Criteria
Company profile
o Organisational structure
o Stability of organisation
Technical capacity
o Company experience
o Human resources
o Systems and processes
Financial capacity
o Business risk assessment
Building Management and Works
To become prequalified
1. Review our website to identify requirements
2. Consider your experience
3. Consider our financial requirements
4. Complete the application pack
5. BMW will assess your application
Building Management and Works
Prequalification
Financial Capacity (business risk assessments)
Minimum financial criteria
o 5% of turnover in net tangible assets
o 10% of the top of the prequalification value in working capital
Set a maximum workload capacity, Maximum Aggregate
Contract Value (MACV)
o highest turnover last 3 years plus a 30% uplift
Building Management and Works
Prequalification
Example of a business risk assessment
Turnover to net tangible assets
o Net tangible assets $600,000. Turnover $6M
o Ratio is 10%
Working capital to the top of the prequalification value
o Working capital $500,000. Top of prequalification value $3M
o Ratio is 17%
BMW sets the MACV
o Turnover $6M, plus 30% uplift
o MACV is $7.8M
Contractor is Low risk
Building Management and Works
Prequalification
Where risk mitigating strategies
can be implemented
o Medium risk
• Maximum Contract Value
• Guarantor
Where risk mitigating strategies
cannot be implemented
o High risk
• Prequalification declined
• Contracts not awarded
Business risk assessment outcomes
Building Management and Works
Prequalification
When tendering for a contract greater than
$500,000
You will be subject to another business risk assessment
Recalculate turnover/assets ratio and working capital
Compare workload against the MACV
o Workload is $5M. MACV set at $7.8M
o Ratio is 64%
Building Management and Works
Contractor performance appraisal framework
Contractor performance reports
Aim
When are reports undertaken
Who completes the report
Right of reply
Building Management and Works
Contractor Performance Reports
Criteria
1. Cost management
2. Time management
3. Contract administration
4. Quality management
5. Resource management
6. Communication and relationships
7. Occupational health and safety, and environment
Building Management and Works
Project Bank Accounts:
An Overview
22
Building Management and Works
Background
From 30 September PBAs will apply to tenders valued
between $1.5m and $100m that use the AS2124 general
conditions of contract (incl. GST).
23
Building Management and Works
A PBA is…
A project specific bank account set up by the head contractor
An account operated consistent with the trust agreement
A step in the payment process, not a pre-funded bank account
24
Building Management and Works
PBAs will…
Speed up the payment process for the next tier in the supply
chain.
Provide a degree of insolvency protection.
Increase transparency and accountability in the payment
process.
25
Building Management and Works
PBAs don’t…
Alter the contractual rights and responsibilities of contractors to:
o Select subcontractors and manage their performance
o Withhold payments when obligations are not satisfied
o Seek adjudication or commence legal action when in dispute (also
applies to subcontractors)
26
PBAs will apply…
AS2124 contract and
Where the tendered price is between $1.5 and $100 million
(inc. GST)
Subcontractors are being used on the contract
27
How a PBA is set up
Within 10 business days of Trust Deed being signed
Test payment of $1 made through PBA to contractor.
Within 28 calendar days of award
Trust Deed executed by contractor and BMW
PBA Agreement signed by contractor, BMW & Bank
Deed of Release or Priority Deed provided
Contract Award (Day 0)
Letter of award sent to contractor
28
PBA Progress Payments
Contractor submits payment
claim
SR issues payment
certificate
BMW assesses monthly payment
docs
BMW deposits funds to
general sub-account
Bank disburses funds to
contractor, joined subbies and retention
account
29
Payment Instruction
Payment Report
Statutory Declaration
Building Management and Works
Payment Process – Step by Step
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s Rep
BMW
BANK (PBA provider)
General Account
Retention Account
30
Building Management and Works
1. Subcontractors Claim Payment from Head Contractor
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s Rep
BMW
BANK (PBA provider)
General Sub-Account
RetentionSub-Account
31
Building Management and Works
2. Head Contractor Submits Payment Claim to Superintendent’s
Representative
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s Rep
BMW
BANK (PBA provider)
General Sub-Account
RetentionSub-Account
32
Building Management and Works
3. Superintendent’s Representative Assesses Claim and
Issues Payment Certificate to Head Contractor and BMW
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 14 days of payment claim
being received
Super’s Rep
BMW
BANK (PBA provider)
General Sub-Account
RetentionSub-Account
33
Building Management and Works
4. Head Contractor submits Progress Payment Instruction and a
modified Statutory Declaration and Payment Report to BMW
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 19 days of payment claim being
received
Super’s Rep
BMW
BANK (PBA provider)
General Sub-Account
RetentionSub-Account
34
Building Management and Works
BANK (PBA provider)
5. BMW Deposits Payment into General Project Bank Account –
Unless there are Anomalies with the Statutory Declaration
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s Rep
BMW
General Sub-Account
RetentionSub-Account
35
Building Management and Works
BANK (PBA provider)
General Sub-Account
RetentionSub-Account
6. Bank (Simultaneously) Pays Head Contractor, Subcontractors,
and Retention Account as Specified in Payment Instruction
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 28 days of payment claim
being received
Super’s Rep
BMW
36
Department of Finance
Grayam Sandover
Project Director,
Infrastructure DeliveryOctober 2016
Tendering for BMW work (part 1)
Building Management and Works
Agenda
Tender shells
BMW form of tender
Responding to tenders
Building Management and Works
Tender Shells
1. Goods and services
2. Minor works
3. Medium works (AS4906)
4. AS2124
5. AS4300
6. Bespoke
Building Management and Works
BMW form of tender
Common components
Tendering conditions
Conditions of contract
Scope
Response
Qualitative criteria
o Related to project
o Must be answered
o Can not be assumed
o Will be compared
Building Management and Works
Responding to tenders
Response format will be in the tender document
BMW forms of tender
Ready carefully
Respond appropriately and fully
Building Management and Works
Responding to tenders
Common errors
Incomplete forms
Inconsistent information
Incorrect addresses
Wrong entities (ABN, ACN, trading names)
No signature
Imposing conditions
Alternative bids
Wrong price
Department of Finance
Anna Rechichi
Assistant Director, Policy
and Tendering ServicesOctober 2016
BMW’s tender management
Building Management and Works
Agenda
Tenders office
Tenders WA website
Tender lodgement
Closing of tenders
Building Management and Works
Tenders office
Optima Building
16 Parkland Road, Osborne Park
Tenders for works, goods and services are
managed for:
24 Government agencies
Building Management and Works
Government Procurement
Building Management and Works
Tenders WA website
• Advertised public requests
• Lodge tenders electronically
• Published contractual awards
Building Management and Works
Tenders WA website
Why register
Email notifications
Set up profile
Help desk assistance – (08) 6551 2020
Building Management and Works
Tender lodgement
How to lodge a tender
Electronic Tender Lodgement (ETL)
Delivery by hand or courier
Post: Locked Bag 11,Osborne Park BC, WA 6916
Fax: (08) 6551 2333 – being phased out
Building Management and Works
Tender lodgement
2:30pm
2:31pm
Building Management and Works
Closing of tenders
Tenders close 2:30pm Tuesday to Friday
Tenders do not close:
o on a Monday or
o on the day after a public holiday
Late tenders – advice in writing of all offers not received by
2.30pm
Preparation of contracts for signing
Release of submitted prices – split list, no correlation
o tenderers – alpha order
o prices – lowest to highest
Building Management and Works
Tender lodgement
2:30pm
2:31pm
Department of Finance
Grayam Sandover
Project Director,
Infrastructure DeliveryOctober 2016
Tendering for BMW work (part 2)
Building Management and Works
Agenda
Tender evaluation process
Formal instrument of agreement
Tendering tips
Building Management and Works
Tender evaluation process
receive tender
clarification
tender analysis
business risk assessment
Tender Review
Committee
approvals
letter of contract award
Building Management and Works
Formal instrument of agreement
Sets out all of the documents which comprise the contract
documents
Applicable to all contracts
Once awarded, can be signed at the Tenders Office
Building Management and Works
Top 9 tendering tips
1. Read documents thoroughly – don't make assumptions
2. Respond as requested
3. State the legal entity name clearly
4. Visit the site if mandatory - a pre-requisite to tendering
5. Ensure you have the financial capacity – a major part of
evaluation
6. Check the qualitative criteria
7. Check closing date, time and location
8. Leave yourself time
9. Ask questions
Building Management and Works
Don’t be late
2:30pm
2:31pm
Building Management and Works
Contact us
Feedback Officer
(08) 6551 1888