USING BUSINESS PROCESS MODELLING TO STREAMLINE …dagda.shef.ac.uk/dispub/dissertations/2010-11/External/... · 2012. 3. 27. · of traditional paper based procedures (Anumba & Ruikar,

USING BUSINESS PROCESS MODELLING TO STREAMLINE OPERATIONS IN SMES: A CASE STUDY APPROACH

A study submitted in partial fulfilment of the requirements for the degree of

Master of Science in Information Management

at

THE UNIVERSITY OF SHEFFIELD

by

KATIE SARGENT

September 2011

Katie Sargent - Student No. 100141128 MSc Information Management

INF6000 - Dissertation

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Acknowledgements

Throughout the duration of my MSc Information Management course I have

received a lot of support and guidance, and I would like to thank for following

people for all their help;

Firstly I would like to thank my personal tutor and dissertation supervisor Dr Miguel

Baptista Nunes for his understanding during my morning sickness and his expert

advice on my dissertation.

I would also like to thank my employers for their financial support, and to the

research participants for taking the time to complete the interviews.

Finally, I would like to thank my family for their emotional support, advice and

encouragement throughout my studies.



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Structured Abstract

Background

The majority of businesses within the UK are Small Medium Enterprises (SMEs). As

such, they are a vital part of the UK economy. However, they face many challenges

such as limited financial reserves, and a restricted workforce. Therefore, ensuring

that business operations are carried out efficiently is essential for all organizations in

order to retain a competitive edge.

Aims

The overall aims of this report were to develop a streamlined process model for an

SME tendering and estimating process, using Business Process Management. In

addition, the author aimed to establish how Supply Chain Management (SCM)

theory could be implemented within SMEs.

Method

A literature review was carried out and a set of research questions were established.

Qualitative methods were used to investigate these questions. A case study was

carried out at a small specialized civil engineering company. Three employees were

interviewed in order to understand how their tendering and estimating process was

carried out. A structured observation task was also carried out with one participant

and tender documents were examined. Business Process Modelling was used to

analyse the research data.

Results

Literature on SCM and tendering and estimating was mainly aimed at large

companies with an extensive workforce. Although SMEs are able to implement some

of the theoretical methods, they do not have the resources to execute complex and

expensive management systems, such as Enterprise Resource Planning. However,

the author created a list of recommendations in order to improve the case studies

tendering system drawn from the research findings. They also proposed a theory on

SCM within SMEs.



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Conclusion

The author concluded that main principles of SCM can be successfully implemented

within SMEs. Although complex and time consuming methods such as quantitative

forecasting were not financially viable and often unnecessary, customer relationship

development and supplier relationship management and supplier assessment are

useful techniques for maintaining a quality, proficient and competitive service.



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Contents

1. Introduction & Context ........................................................................................ 7

1.1 Background ................................................................................................... 8

1.1.1 Small Medium Enterprise ...................................................................... 8

1.1.2 The Construction Industry.................................................................... 10

1.2 Research Aims & Objectives ...................................................................... 12

1.3 Summary of Methodology ........................................................................... 13

1.4 Benefits & Constraints of this study ............................................................ 14

1.5 Structure of the Dissertation ........................................................................ 16

2. Logistics in Organisations .................................................................................. 16

2.1 Supply Chain Management ......................................................................... 16

2.2 Components of Supply Chain Management ................................................ 18

2.2.1 Customer Relationship Management ................................................... 19

2.2.2 Supplier Relationship Management ..................................................... 20

2.2.3 Procurement – Partnering, Tendering and Supplier Selection ............. 21

2.3 Tendering & Estimating .............................................................................. 26

2.4 Information Systems for Tendering & Estimating ...................................... 33

2.5 Supply Chain Management within SMEs ................................................... 39

3. Methodology ...................................................................................................... 41

3.1 Business Process Management .................................................................... 42

3.2 Case Studies ................................................................................................ 45

3.3 Data Collection Techniques – Interviews, Unobtrusive Measures ............. 45

3.4 Data Analysis - Role Activity Diagrams & RIVA ...................................... 50

4. The Case Study .................................................................................................. 53

4.1 Case study system ....................................................................................... 53

4.2 Theory Vs Practice ...................................................................................... 56

4.3 Recommendations ....................................................................................... 59



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5. Evaluation & Conclusion ................................................................................... 62

5.1 Summary of Findings .................................................................................. 63

5.2 Response to Research Questions ................................................................. 65

5.3 A proposed SME tendering & estimating system ....................................... 68

5.4 Future Work ................................................................................................ 71

6. Bibliography ....................................................................................................... 73

APPENDIX A - INTERVIEW QUESTIONS ........................................................... 84

APPENDIX B – CONTRIVED OBSERVATION TASK LIST ............................... 97

Figure 1 - Tender Process Summaries ....................................................................... 29

Figure 2 - Theoretical Estimating and Tendering Process Model (Brook, 2008 : 4) . 32

Figure 3 - Case Study Tendering and Estimating Process Model .............................. 55

Figure 4 - A Tendering and Estimating Process Model for SMEs ............................ 70



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1. Introduction & Context

For businesses to remain successful they must adapt to change and evolve in

accordance with an increasingly global business environment. The continual pressure

to retain a competitive advantage is augmented by the need to incorporate new

technologies and ensure that operations run as efficiently as possible. Downturns in

the economic climate make it particularly necessary to provide goods or services

cost-effectively and pass on savings to the customer. Concepts such as Total Quality

Management, ISO 9001 and Business Process Re-engineering are all responses from

the industrial and academic world, in order to promote a unified and productive

organisation. Yet, making drastic changes and identifying wasteful operations within

Small Medium Enterprises (SME’s) is especially difficult, as they generally operate

on much smaller resources and often work to their full capacity. In addition,

reorganizing operations within the construction industry is even more complex due

to the wide ranging specialized skills and diversity of companies involved in any

single project (Murdoch & Hughes, 2000 : 1). Furthermore, the implementation of

information technology has been relatively limited in construction works, in favour

of traditional paper based procedures (Anumba & Ruikar, 2002; Noor et al 2003;

Wang et al, 2007). However, with forecasts suggesting that construction is facing “a

7% decline in output over the next three years” (CIOB, 2009 : 1) due to the current

economic crisis, it is now more important than ever that theoretical and empirical

research is carried out into streamlining business operations within construction

SME’s.



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1.1 Background

1.1.1 Small Medium Enterprise

Small Medium Enterprise’s (SME’s) are an extremely important part of Europe’s

economy. The European Union estimate that “SME’s represent more than 99% of all

businesses and employ more than 90 million in Europe” (European Commission,

2011a : 1). In order for a company to be classed as an SME they must fall into the

following categories:

Enterprise

Category

Headcount: Annual

Work Unit (AWU)

Annual

turnover

OR Annual balance

sheet total

medium-sized < 250 ≤ € 50 million ≤ € 43 million

Small < 50 ≤ € 10 million ≤ € 10 million

Micro < 10 ≤ € 2 million ≤ € 2 million

(European Commission, 2011b)

SME’s face many different complex issues in comparison to larger companies. They

usually have limited financial expenditure, which Welsh & White (1981 : 1) refer to

as resource poverty. “Resource poverty results because of various conditions unique

to smaller companies. For one thing, small businesses tend to be clustered in highly

fragmented industries…that have many competitors which are prone to price-cutting

as a way to build revenues”. As a result they have fewer financial reserves and must

manage profit and investments very carefully. Minimal resources also make it

difficult to compete for work as “they are in competition with much larger

organisations where resources are not as constrained” (Mulhaney et al, 2004 : 326).

Their finances are affected further by external forces. “Changes in government

regulations, tax laws, and labour and interest rates usually affect a greater percentage

of expenses for small businesses than they do for large corporations. Such limitations

mean that small businesses can seldom survive mistakes or misjudgements” (Welsh

& White, 1981 : 1). SME’s are greatly affected by external factors such as Value

Added Tax increases, economic recession and late payments. These factors can in



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turn put pressure on them to delay payments to their own suppliers or take out loans

and fall into debt.

Furthermore, SME’s “have CEOs who are more involved in operational decisions,

need their employees to be multi-skilled as they carry on multiple/contradictory

roles, and they frequently have a “production mode” focus at the expense of strategic

planning” (Haug, 2011 : 491). Larger companies are able to have dedicated staff that

can specialise in particular roles, whereas in smaller companies employees have to

take on a number of roles. As a result, employees often have multiple tasks to carry

out within a limited time frame. In order to compete with larger company’s further

pressure is placed on existing employees to work overtime. SMEs “face additional

constraints in the organisation of working time when it comes to extending operating

hours. Longer operating hours require either deeper or wider use of employees”

(Smith & Zagelmeyer, 2010 : 396). Although, this has to be balanced with European

Working Time Directive which introduced minimum requirements for the number of

hours employees can work, rest breaks and annual leave. Due to such limitations on

working time many SME’s operate informal managerial procedures. This “may free

an organisation from bureaucratic rules but may also lead to a reliance on informal

working practices that could limit organisational performance” (Smith &

Zagelmeyer, 2010 : 392). Although few small organizations have the resources to

dedicate to business analysis and process improvements, doing so would create

efficient methods of working in the long term.



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1.1.2 The Construction Industry

The majority of firms within the construction industry are SME’s. During 1997 –

20091 the number of SME’s in the construction industry has increased steadily from

approximately 159,943 to 193,747 private firms (Office for National Statistics,

2010). However, the number of SME’s and large construction firms which have gone

into liquidation during 1996-2009 also increased from 12% to 19.3% (Office for

National Statistics, 2010). Furthermore, the output for small and medium sized

companies saw a larger fall of 9% in output, compared to large companies who saw a

fall of 4.3% during 2010 – 2011 (Office for National Statistics, 2011). These

statistics suggest that construction industry faces increasing competition and

financial difficulties, particularly for SMEs. Such financial constraints have led to a

reduction in levy payments made to the Construction Industry Training Board

(CITB), reducing the amount of funding available for employee training

(Construction Industry Training Board, 2010). This is disappointing considering that

in a report by Hall (1994 : 749) he found that a skilled workforce was key to a

construction companies survival, stating that “a company only ignores the quality of

its workforce at its peril!”. Further setbacks have been caused by the extreme

weather conditions the UK has experienced over the last few years. Flooded

construction sites, delays in transport due to heavy snow and heat waves have all

contributed to delays in works and significant insurance claims (Wedawatta et al,

2011 : 107). In addition, project works are often carried out across the UK or

worldwide. Consequently, construction companies need to communicate over large

distances, making it difficult to share information and knowledge. The “industry’s

frequently adversarial and fragmented nature mitigates the nurturing, sharing and

transfer of knowledge between organizations” (Love et al, 2011 : 195). Advances in

technology have facilitated such problems, for example Intranets which can be

accessed remotely via PDA’s, and other Web 2.0 applications (Grace, 2009).

1 The Construction Statistics Annual for 2011, providing statistics for 2010, is currently

unavailable.



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The construction sector covers a wide range of trades, ranging from plastering to

civil engineering for multi-million pound offshore wind farms. “The industry is

reliant upon virtual teams, fragmented work groups, sub-contracted labour and multi-

organizational project delivery structures” (Dainty et al, 2002 : 334). Due to the

nature of many construction projects, many skilled employees are only required for

the duration of the works and are retained on short-term contracts. As a result, many

employees are self-employed or work for consultancy firms. The construction sector

works on temporary and often unique projects. This method of working presents

many challenges. Projects “are characterized by discontinuous personal

constellations and work contents, a lack of organizational routines, a short-term

orientation and a cross-disciplinary integration of internal and external experts”

(Hanisch et al, 2009 : 148).

Due to such fragmentation, sporadic employment and diversity, a large amount of

research has been carried out into unifying the industry and improving quality. Two

influential reports were published by Latham (1994) and Egan (1998) in order to

advise on improvements the construction industry should make, in order to remain

competitive in a global marketplace, and to provide better customer service. One of

their key recommendations was the importance of improving supply chain

management. Although “the industry is increasingly sceptical about adopting

“management fads” and gimmick technologies that provide no strategic competitive

advantage” (Love et al, 2011 : 194), SCM has been implemented with great success

and is seen by some as an inherent part of running an efficient business (Ross, 2011).



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1.2 Research Aims & Objectives

Aims

• Develop a set of research questions from the literature review.

• Select a theoretical tendering and estimating process model for an SME to

test against.

• Establish the best method for gathering research data.

• Illustrate a real-life tendering business process model provided by data from

the case study.

• Compare the theoretical and real-life business process models and identify

any differences.

• Create a new tendering process model illustrated as a Role Activity Diagram

(RAD).

Objectives

• Provide an accurate description of the universe of discourse and identify any

limitations in its application to SMEs.

• Collect accurate and sufficient data in order to answer the research questions.

• To critically analyse any discrepancies found between the theoretical and

real-life tendering processes.

• To create a set of recommendations for a new streamlined tendering process

in order to resolve conflicts identified following the comparison between

theoretical propositions and the case study results.

• To contribute to Supply Chain Management theory by carrying out empirical

research and by investigating how SMEs can implement such management

practices.

• To create a RAD for a tendering process suitable for SME’s in the

construction industry.



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1.3 Summary of Methodology

In order to complete this study, a number of methods will be used in order to gain

and analyse the research data. Firstly, a literature review will be completed in order

to provide me with a conceptual framework from which I can develop a provisional

research question to test. Therefore I shall follow a deductive process. Initially, I

shall establish a list of “principles…that are then tested through empirical

observation or experimentation. But before such experimentation can take place,

underlying concepts must be operationalized (made measurable) so that they can be

observed to confirm that they have occurred”. (Gray, 2004 : 6).

In order to test my theoretical findings, I shall carry out a case study. “A case study

is an empirical inquiry that investigates a contemporary phenomenon within its real-

life context, especially when the boundaries between phenomenon and context are

not clearly evident” (Yin, 2003 : 13). The company which will be the focus of my

case study is a small specialised civil engineering company.

In order to gain an accurate idea of the current tendering and estimating process

within this company I shall use a range of qualitative data collection techniques. This

will include interviews with key personnel and unobtrusive measures. Unobtrusive

measures will include contrived observation and the selection and review of internal

documentation and client tender documents.

Data analysis will be carried out using a Business Process Management

methodology. BPM standards applied will be those formulated by Martyn Ould

(2005). Data will be represented with Role Activity Diagrams, using the online

Microsoft Office Visio template accessible from Ould’s website

(http://www.veniceconsulting.co.uk/). This diagram will then be compared to the

theoretical tender system diagram and differences will be identified. An analysis will

be completed and recommendations will be identified. Finally, a new streamlined

tendering system will be created using business process modelling.



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1.4 Benefits & Constraints of this study

There are several benefits which this report should achieve. Firstly, in a literature

review carried out by Zellner (2011 : 218), he found that many of the research papers

lacked detail “on the improvement act itself”. By identifying methods for improving

the business process and providing a list of recommendations, this research should

begin to redress this limitation in other research.

Secondly, according to Houy et al (2010 : 628) “empirical research is needed to gain

insight into the actual effects of developed concepts”. Despite this they illustrate that

there is significantly more theoretical research than empirical research on Business

Process Modelling. “Empirical research in BPM has reached top-class journals only

to a moderate extent which also stresses its potential for development” (Houy et al,

2010 : 631). This is emphasised by the fact that the Business Process Management

Conference in Europe 2011 will provide 20 case studies from companies including

the Ministry of Defence, AEGON and Shell, in order to “learn from organizations

who have already implemented world class BPM…approaches and solutions” (BPM,

2011 : 1). This research paper will not only meet this need for further empirical

research, but will also provide insight into a somewhat rare and specialised industry

within the civil engineering sector.

Thirdly, it is important to focus on the construction industry due to “its significant

size and because of its project-based nature, which may inspire other industries that

are increasingly organizing their activities in projects” (Ellegaard et al, 2010 : 219).

Findings from this study may be applicable to other sectors that implement tendering

and estimating procedures, not just the construction industry.

Fourthly, although this report focuses on SMEs, many large organisations are

heavily reliant on SMEs within their supply chain. “With a wish to minimize the

system wide cost large organizations often expects various kinds of changes at the

end of their SMEs supply chain partners” (Thakkar et al, 2008 : 98). Therefore, it is

important for larger organizations that SMEs improve their supply chains as this will

directly affect their own companies. By carrying out research into improving



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business processes within SMEs this should improve their interaction with large

companies and improve their supply chains too.

This study has several constraints which could affect the outcome. Using a small

specialised company for the case study could mean that the findings may only be

useful to a small number of similar companies. However, it is hoped that although

some of the recommendations may not be applicable, the majority of the process

model will be generic and adaptable for other companies to use. Furthermore, it

should provide a unique insight into a specialised industry within which very little

research has been carried out.

Another constraint is the methodology used for this study. All research methods have

their limitations and qualitative methods are no exception. As the case study

company is small and time is limited, only a few key personnel will be interviewed.

This could lead to bias within the findings, as the opinions and actions carried out by

these employees may not be representative of the whole company, or even this sector

of construction. As the researcher has worked for the case study company it could be

argued that this could also result in some subjectivity. The researcher could be

influenced by their own opinions and preconceptions. Their former role within the

company could also influence interviewee’s responses and cause unwillingness to

share information. For example if the researcher was in a managerial role

participants may not want to admit that they don’t follow existing procedures or that

they don’t know how to carry out certain aspects of their role. Alternatively it could

provide a distinctive advantage. The researcher receives “the same socializations as

ordinary members, acquires similar perspectives, and encounters similar experiences.

In this way the scientist acquires some sense of the subjective side of events which

he could less easily infer if he observed without taking part” (McCall & Simmons,

1969 : 5). The researcher is immersed in the culture of the organisation and gains a

far more in-depth understanding of the company, which would be impossible during

a brief visit.



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1.5 Structure of the Dissertation

Business process modelling is an effective method of identifying inefficiencies in

company procedures. For SMEs who operate within restricted time-frames and

limited financial and staff resources, it is essential that non-added value tasks are

limited and if possible eradicated. The construction sector is no exception and, as

such, will be the focus of this study. As an industry which, in 2009, relied on

approximately 1,017,210 SMEs, for nearly 80% share of the industries total

employment (BIS, 2010), construction companies needs to streamline their processes

in order to remain competitive and provide a good quality service. Therefore, it is

valuable to investigate how to streamline one of their key business processes i.e. the

tendering and estimating process.

Within Section 2 literature related to supply chain management, including research

on customer relationship management, partnerships and tendering, will be examined

in detail and a set of research questions will be established. Section 3 will provide an

explanation of the methodology used to gather data. Section 4 will provide an

analysis of the data and analysis of the findings from the case study and constructive

recommendations will be outlined. Section 5 will discuss and illustrate and ideal

tendering and estimating process and conclusions will be drawn.

2. Logistics in Organisations

2.1 Supply Chain Management

Supply chain management (SCM) is an essential element of efficient business

management. Almost all organizations have suppliers and customers. For example,

Robert Thompson’s Craftsmen Ltd is supplied with English Oak and they sell

handcrafted furniture to their customers. Working in harmony with these parties

offers many benefits to all those involved, including cost savings, quicker services

and tailor-made products for all customers.



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There has been a wealth of research carried out into the benefits and weaknesses of

supply chains, and numerous definitions have been provided. Christopher (2005 : 5)

defines the term as follows: “The management of upstream and downstream

relationships with suppliers and customers to deliver superior customer value at less

cost to the supply chain as a whole”. Furthermore, Bozarth & Handfield (2008 : 7)

provide a simplistic but effective representation of the flow of upstream and

downstream processes in SCM, for a beer company;

When specifically applied to the construction industry, Akintoye et al (2000 : 161)

defines SCM as follows:

“Construction SCM may be regarded as the process of strategic

management of information flow, activities, tasks and processes,

involving various networks of organisations and linkages (upstream and

downstream) involved in the delivery of quality construction products

and services through the firms, and to the customer, in an efficient

manner”.

In addition, in relation to SMEs, Thakkar et al (2008 : 98) define SCM as:

“a set of business activities including purchase from open/spotmarket,

manufacturing or processing of subcomponents/subassembly within the

plant and delivery to large enterprises using hired transportation to

enhance value of end product and in-turn to ensure long-term regular

purchase orders”



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There are a variety of reasons for implementing SCM. For some researchers the

ultimate goal of SCM is to “achieve a seamless integration through streamlining

business processes within and across firms” (Salam, 2011 : 359). Conversely, for

other researchers the goal of SCM is for financial gains (Crandall et al, 2010 : 6). Yet

for Ross (2011 : 1) SCM is a fundamental part of running a successful business, “for

corporate survival and competitive advantage”.

As mentioned previously, Latham (1994) and Egan (1998) identified SCM as a key

mechanism for creating efficient business processes. The next section of this report

will outline the key themes within SCM. Section 2.3 will focus on one specific

process within SCM – tendering and estimating. Section 2.4 will discuss the

information systems and technology which support SCM. Finally Section 2.5 will

critically analyse the ways in which the literature on SCM applies to SMEs and a set

of research questions will be established. Overall, Section 2 will fulfil my first two

aims.

2.2 Components of Supply Chain Management

A major company to reap the benefits of successful supply chain management is

IKEA 2. IKEA “does not manufacture its products but uses over 1800 different

worldwide subcontractors and suppliers from countries on every continent, who ship

products to IKEA’s distribution centres for eventual sale” (Waller, 2003 : xxi). If

they didn’t implement strict SCM procedures the company wouldn’t be as successful

as it is today. Unmanaged supply chains would lead to “high costs, long lead times,

and the quality of…products and…services would surely suffer” (Waller, 2003 :

xxi).

2 IKEA is a furniture and accessorise company, with a 23.8 billion EUR turnover in 2010

http://franchisor.ikea.com/showContent.asp?swfId=facts1



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2.2.1 Customer Relationship Management

Over the last few years the focus of supply chains has shifted from managing

suppliers to serving the needs of the customer (Crandall et al, 2010 : 4). Many

researchers term this aspect of focus on the supply chain as the ‘value chain’ (Porter,

1985, Soon & Udin, 2011; Zhang & Gregory, 2011). “The ultimate driving force in a

market-driven firm is to make a satisfactory profit, which implies satisfying the

client…The client should be considered king!” (Waller, 2003 : 5). Quality standards

such as TQM were introduced into the UK from the Japanese in the 1980’s

(Ramasamy, 2005) and, as a result, customers have had higher standards and

expectations. “Customers have become more demanding in terms of the standards of

product quality and delivery service which they now expect, while still looking for

cost and price reductions” (Saunders, 1997 : 12). Rather than focusing on

relationships with suppliers and making a bigger profit, meeting the customer’s

requirements has become the main focus. “Good relationships with profitable

customers pay off in the long run because the cost of retaining customers is much

less expensive than recruiting new customers” (Crandall et al, 2010 : 12).

According to Salam (2011 : 360) Customer Relationship Management (CRM)

“involves identifying key customers and target markets, and developing and

implementing programs with key customers”. A number of methods have been

recommended in SCM literature in order to encourage good relationships with

customers. One such method is Forecasting. This is used to predict a future variable

such as customer demand, future trends, price fluctuations etc. The can be estimated

using quantitative and qualitative techniques (Bozarth & Handfield, 2008). For

example, by using quantitative forecasting techniques in a construction company,

you could examine historical data and calculate how long it took to carry out each

weld on a pipeline and the cost per man hour. This data can then be used to predict

future costs on similar projects. Whereas using qualitative forecasting techniques

you may want to invest in carrying out a survey to discover customer’s future needs

(Crandall et al, 2010), or apply the Delphi method and approach a number of leading

experts in the field of construction and pose a list of questions on future trends in the

industry. By applying forecasting the supplier can predict what the future customer



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will want and reduce its prices to provide the customer with a competitive and

reliable quotation.

Salam (2011) identifies two other methods that are essential to business processes

for successful SCM; Demand Management and Product Development. Demand

Management involves meeting the quantities of products and services needed and

Product Development is where new and improved products are developed in order to

meet the needs of the client. Crandall et al (2010) not only state that CRM is useful

for relationship building, but also expand upon this concept by stating that

Operational CRM (providing help desks for customers, call centres etc.), and

Analytical CRM (capturing and storing customer data), are also useful techniques.

For Lao et al (2011 : 46) in “order to meet the needs of single-period contracted

SMEs, service quality should be emphasised rather than reputation” and “to meet the

needs of long-term contracted SMEs, reputation should be emphasised”. This

concurs with the findings of Egemen and Mohamed (2005 : 270), who discovered

that clients valued the “image and identity of the contractor firm in the market” as

one of the top three criteria during the selection process, whereas consultants rated it

tenth during their selection process.

2.2.2 Supplier Relationship Management

Conversely, ensuring that upstream supply chains are as efficient as possible is still a

major focus within many literary works on SCM. Weele (2010 : 3) uses the case

study of British Airways to demonstrate the benefits of reviewing suppliers within

the supply chain. He explains that the airline made significant savings by trying “to

reduce the number of suppliers to a mere 2000, leading to more business per supplier

and hence increasing value of British Airways as a customer to them”. Suppliers

would remain competitive to win contracts and when successful would produce high

quality goods and services in order to remain a valuable supplier. Crandall et al

(2010 : 278) believe that an effective method for improving the upstream supply

chain is through Supplier Relationship Management (SRM). SRM is a process that

involves developing “relationships with key suppliers to reduce costs, innovate with

new products and create value for both parties based on a mutual commitment to

long-term collaboration and shared success” (Lambert, 2008 : 54). Wisner et al



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(2008 : 95) adds that SRM is supported by “software applications that enable these

processes to be managed for efficiently and effectively”. This method is similar to

Customer Relationship Management and involves developing long-term

relationships with suppliers and exchanging valuable information. In addition, Salam

(2011 : 364) identifies four behavioural aspects of SCM implementation to improve

supply chain processes. These include Continuity “the perception of bilateral

expectation of future interaction”, Communication “the sharing of meaningful and

timely information between firms”, Power “the ability of one individual or group to

get another unit to do something” and finally Trust “the willingness to rely on an

exchange partner in whom one has confidence due to the ability of that partner to

provide expertise, dependability and direction”. If companies believe that they will

be provided with work in the future, they are more likely to provide competitive

prices and high quality service in order to satisfy their buyer. By providing suppliers

with information they can prepare and order in products or services ahead of

schedule, and if the buyer exercises power over the supplier in an effective and

supportive manner, they will develop a greater amount of trust and confidence in

their customer.

2.2.3 Procurement – Partnering, Tendering and Supplier Selection

A key operation within supply chain management is procurement.

“Procurement…refers to the selection and appointment of specialist subcontractors

and suppliers” (Mitchell et al, 2011 : 298). One technique used in procurement is

partnering, and there are numerous articles promote its positive outcomes (Latham,

1994; Egan, 1998; Bennett & Peace, 2006). The Construction Industry Institute

(2011 : 1) defines partnering as follows:

“a long-term commitment between two or more organizations for the

purpose of achieving specific business objectives by maximizing the

effectiveness of each participant’s resources. This requires changing

traditional relationships to a shared culture without regard to

organizational boundaries. The relationship is based upon trust,

dedication to common goals, and an understanding of each other’s

individual expectations and values. Expected benefits include improved



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efficiency and cost effectiveness, increased opportunity for innovation,

and the continuous improvement of quality products and services”.

There are two types of partnering. Firstly, there is project partnering whereby

“partnering is undertaken on a single project. At the end of the project the partnering

relationship is terminated and another relationship may commence on the next

project” (Humphreys, 2003 : 168). The other type is strategic partnering which

“takes place when two or more firms use partnering on a long-term basis to

undertake more than one construction project, or some continuing construction

activity” (Humphreys, 2003 : 168). Wood and Ellis (2005) believe that partnering is

incredibly important for creating successful supply chains as it provides benefits to

all organizations involved. For Crouse (1991 : 6) it “provides access to a larger pool

of talent that one might not otherwise be able to take advantage of”, and enables each

company to specialise in its core competencies whilst offering a broader range of

services. Brook (2008 : 13) also endorses partnering, stating that “contractors have

developed partnering schemes in order to add a powerful ingredient to what may be a

highly competitive bid”. There are however, a number of cynical views in relation to

partnering. A major barrier can be due to “the inherent lack of trust between

potential partnering organisations, especially at the early stages of project

development” (Fortune & Setiawan, 2005 : 182). Furthermore, Chan et al (2003)

identify several reasons for the breakdown of partnerships, including financial

burdens making one party reluctant to commit fully, overdependence on one

company rather than equally sharing the workload, failure to communicate and share

valuable information and lack of support from top management. Partnerships can

also lead to the “increased scope for corruption and the influence of political

interests on decisions, which are thought to accompany partnership relationships,

might have a deleterious effect of the way in which public money is spent”

(Saunders, 1997 : 265). For some projects customers can hold a great deal of power.

“In some cases, the customer selects the manufacturer (contractor), the suppliers of

specialist parts and the material suppliers…Longstanding, efficient supplier-

contractor relationships are vulnerable to disruption in this context” (Akintoye et al,

2000 : 161). For example, if a client has already selected a designer for their project,

the contractor must quickly adapt and work with this company rather than relying on



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a long-term partnership with a preferred designer. The client can also decide if the

contractors chosen subcontractors are suitable to use and prevent them from

appointing their services.

Latham (1994 : 62) points out that a suitable “partner should initially be sought

through a competitive process, which would be necessary to meet EU requirements”.

Within the construction industry EU legislation, in place to promote fair and

competitive trading, reduces the ability to establish long-term partnerships with

clients. The “prevention of unfair discriminatory practices and a predisposition for

the encouragement of competition promote the desirability of operating clearly

specified tendering procedures” (Saunders, 1997 : 264). Tendering involves

requesting a price for carrying out a project. Clients may request prices from a

selected list of suppliers. “The number and size of firms to be invited to tender

should depend on the size and type of contract. The Code of Procedure for Single

Stage Selective Tendering 1989 recommend that the number of tenderers should be

limited to a maximum of six” (Aqua Group, 1992 : 101). Alternatively, the European

Economic Community states that all tenders for public works, supply contracts and

services which are valued above a certain threshold must be advertised in the Official

Journal of the European Communities and TED database3. Such restrictions prevent

clients requesting prices from just one preferred supplier. “Professional purchasers

may find it further odd and counterproductive that poor performing suppliers cannot

be excluded from the (public) tendering procedure” (Gelderman et al, 2006 : 707).

Clients involved in this process may receive many prices from a variety of suitable

and unsuitable companies, making the process of assessing tender submissions costly

and time consuming. As a result, “the culture of construction remains essentially

adversarial with continuing reliance on price competition and firm contractual

arrangements” (Saad et al, 2002 : 175). Like partnering, tendering is also open to

corruption. In 2009 Balfour Beatty, along with over 100 other British construction

companies, was fined for illegal price fixing. They joined a cartel in which

companies would collude to increase prices in tender submissions, forcing the client,

which was generally the government, to accept an inflated price for carrying out the

3 Tenders are advertised on the OJEC website http://ted.europa.eu/TED/main/HomePage.do



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works (Wearden & Webb, 2009). The adversarial nature of tendering can also lead to

companies trying to underbid each other, and offer a lower price by sacrificing

product quality (Crandall et al, 2010). It can lead to companies without the correct

equipment and skills, winning works due to low bids and causing the failure of a

project. Furthermore, the diversely skilled workforce and complexities of each

construction project create a number of variables (Mitchell et al, 2011), so a tender

price submission will never be completely accurate.

According to Saunders (1997 : 255), it would be easy to compare and contrast the

benefits and weaknesses between partnerships and adversarial tendering. Yet he

explains that this “oversimplifies the range of possible sourcing relationships”. By

using a tendering and rigorous selection process to establish a few key suppliers and

subcontractors, it should then be possible to build good relationships and

partnerships with a few companies. Prior to issuing tenders many clients and main

contractors require contractors and suppliers to meet specific criteria, such as

financial turnover, insurance policies and quality procedures. In order to establish if

they meet these conditions they send out a pre-qualification questionnaire. A simple

way to evaluate these questionnaires is by using a Categorical Method. This involves

evaluating suppliers from a range of perspectives and grading them on each

category. For example, one category may be quality systems. If a supplier is ISO

9001 certified they may be allocated 10 out of 10, whereas, if they have insufficient

finances to support their work they may receive 0 out of 10 for this category. The

suppliers with the highest rating are deemed to be the best. More recently a major

criterion for clients is a company’s carbon emissions. “Nowadays, organizations

routinely face queries about how green their manufacturing processes and supply

chains are, how wide the carbon footprint is, how wasteful their packaging is, and

how they will recycle” (Emmett & Sood, 2010 : 5). Due to the governments focus on

reducing carbon emissions and its introduction of the CRC Energy Efficiency

Scheme Order 2010, large company’s have to reduce their carbon emissions and as a

result clients have put greater emphasis on encouraging their supply chain to

consider their own impact to on the environment. Therefore, it has also become a key

criterion in the pre-qualification assessment.



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There are several alternative methods of assessing suppliers and subcontractors

questionnaire responses. According to Ordoobadi and Wang (2011 : 629), using just

one method of analysis could “lead to a biased decision, made with insufficient

information, given the fact that any model has its limitations”. A similar method to

the Categorical Method is the Linear Weighted Average Method. This involves

adding a weighted value to each category (Ordoobadi & Wang, 2011). For example,

for one supplier such as a stationary supplier, product quality and price may be high

priorities whereas insurance may not be as important. Many of the textbooks within

Sheffield University Library recommend this method (Bozarth & Handfield, 2008;

Crandall et al, 2010; Lysons & Gillingham, 2003). Alternatively, an evolutionary

fuzzy-based approach is recommended by several researchers (Ohdar & Ray, 2004;

Jain et al, 2004; Ordoobadi, 2009). It involves changing qualitative supplier

information into qualitative data. An algorithm is then used to calculate the rating of

each supplier. Evaluation of a supplier’s performance at the end of each project is

also an essential tool. “Periodic evaluation of supplier’s quality is carried out to

ensure the meeting of relevant quality standards for all the incoming items, and the

essential requirements advocated for suppliers’ selection are quality, cost, delivery,

flexibility, and response” (Ohdar & Ray, 2004 : 723). Ordoobadi & Wang (2011)

highlight that within an organization there may be two categories of people involved

in supplier selection. Firstly there may be the expert in supplier selection, an expert

in their field and the CEO or high level manager. They propose the experts should

have access to a number of evaluation methods, such as those described above, and

be allowed to choose any method they prefer for each supplier. Results should then

be shared using Web 2.0 technologies such as email, blogs and wikis. They should

then be reviewed by a senior manager for consistencies and discrepancies within the

results and then a final decision should be made by them. They believe that this

would enable knowledge sharing, collaboration and reduce any bias.

Supply Chain Management is an essential part of almost every company.

Researchers have examined the techniques for improving downstream processes and

serving the needs of the customer, including Forecasting, Customer Relationship

Management, Demand Management, Product Development, Analytical CRM and

Operational CRM, as well as emphasising quality and reputation. They have also



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stressed the importance of working towards efficient upstream supply chains by

using techniques such as Supplier Relationship Management, and the necessity to

encourage continuity, communication, power and trust. Furthermore, partnerships

are a popular technique for improving relationships with subcontractors, and

tendering is an excellent, if not essential method of procurement. Ideally it is

suggested that both techniques can be used together if rigorous supplier and

subcontractor selection techniques are also used. Methods such as the Categorical,

Linear Average Weight Method, the more complex evolutionary fuzzy-based

approach and collaborative reviewing techniques are all suggested for evaluating

supplier and subcontractor pre-qualification questionnaires.

2.3 Tendering & Estimating

A core function within all construction companies is the tendering and estimating

process. “The work of civil engineering contractors can be crudely represented as (a)

getting work at the right price; and (b) doing the work within that price.” (McCaffer

& Baldwin, 1986 : 1). An estimating and tendering process is “a purchasing

procedure whereby potential suppliers are invited to make a firm and unequivocal

offer of the price and terms which, on acceptance, shall be the basis of the

subsequent contract” (Lysons & Gillingham, 2003 : 651). A typical tender typically

includes the following requirements:

“- price

- timescale

- technical competence

- previous experience

- reliability

- size, ownership and financial status of suppliers” (Hyman, 1979 : 170).

However, the process of submitting quotations to clients can vary considerably. On

some occasions “bidding can require no more than a short letter in response to a

direct approach from a client. At the other extreme, the process can go through a

number of stages, involving a protracted sequence of documentation on the part of

clients and consultants” (Lewis, 2007 : 2). During a formal process, as discussed in



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section 2.2, contractors may receive a pre-qualification questionnaire to complete, in

order to assess their overall company capabilities. This may be obtained by

requesting the questionnaire for a project advertised in a journal or website such as

the Official Journal of the European Communities, or the client may approach the

contractor directly based on previous experience and partnership agreements.

Then, if suitable, the client will request a quotation, in the form of a tender package,

for carrying out engineering works and/or providing a service. Contractors must then

decide if they would like to provide a quotation.

“[T]he majority of bids are considered on the following commercial

factors: the availability of suitable staff to prepare the proposal; the likely

value of the contract; the size and nature of the competition; the

suitability and availability of products or services to meet the

requirements in the timescale” (Hyman, 1979 : 172).

Once the contractor decides to tender for a project, there is a multifaceted “process

that involves and depends on several different categories of personnel within the

contractor’s organisation as well as essential external contributions by the Engineer’s

staff, material suppliers, plant hire companies and specialist sub-contractors”

(McCaffer & Baldwin, 1986 : 12). Brook (2002 : 2) discusses a number of roles

involved in producing a tender package for a client. A quantity surveyor will

“examine amendments to conditions of contract, prepare bills of quantities, and

identify possible difficulties which have been experienced on previous contracts”.

The type of contract may also involve only construction works or it may be a design-

build contract whereby the contractor is usually provided with a set of preliminary

design sketches and outline “parameters relating to location, size, design and the

desired time of occupancy” (Pratt, 2004 : 8). In addition, a planning engineer will

create preliminary method statements, a programme of works and construction and

site layout designs. In order to prepare an accurate price a buyer will obtain

quotation from approved suppliers and subcontractors as well as maintaining a

library of product literature. “His knowledge of local suppliers and current discounts

is essential” (Brook, 2002 : 7) and enables him to estimate future price changes and

trends. Finally, a Director will make the ultimate decision on the lowest quotation



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the company can offer, after taking into account additional elements such as

company overheads and a desired profit margin. The price requested from the client

may be fixed price, lump sum or cost-reimbursable (Weele, 2010 : 34). During the

construction phase Brook (2002 : 3) adds that site “managers should report on the

technical and financial progress of their projects so the estimator can learn from the

company’s experience on site”.

Given the importance of this process within a business, it is essential that it runs

efficiently in order to remain competitive, whilst creating an impression of

professional expertise to potential clients. However, having reviewed current

literature on tendering there seems to be some irregularity on there the process of

tendering begins and ends. For McCaffer & Baldwin (1986 : 12) it “takes place

between two well defined points, the decision to tender and the submission of the

tender”. Conversely, for Hackett et al (2007), the process begins on receipt of an

initial enquiry and finishes when all tender queries have been resolved, following

submission. The diagram below represents a summary of the differences between

authors description of the tendering and estimating process:



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Bentley (1987)

Brook (2008)

Hackett et al (2007)

Lewis (2007)

McCaffer &

Baldwin (1986)

Preliminary Enquiry Tender announcement

Decision to tender Initial Actions &

Appraisal

Tender documents &

Invitation to Tender

Pre-qualification Decision to tender

Collection of

information

Project appreciation &

Enquiries

Tender period Shortlist Material and sub-

contract enquiries

Resources &

Preparation of the

estimate

Bid specification Project Appraisal,

construction method

& Planning

Preparation of

estimate

Tender adjudication Bid - tender, proposal,

application for funding

Estimates

Tender finalisation

& submission

Tender finalisation &

submission

Tender compliance Evaluation Tender finalisation &

submission

Action with

successful tender

Late tenders Negotiation

Contract Award

Figure 1 - Tender Process Summaries


INF6000 – Dissertation

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As stated in the research aims and objectives, it is necessary to identify an ideal

business process model for a tendering process for an SME from the literature

review. This model will then be compared to the tendering process identified within

the case study and any discrepancies and improvements can be made.

The discrepancies found within the tender process models, summarised in Figure 1,

mean that many are not a reflection of SMEs processes and are therefore not

relevant. Some of the variations between authors are influenced by the perspective

from which they are writing their textbook. Brook (2008 : x) aims to “introduce a

practical approach to estimating and tendering from a contractor’s point of view”,

whereas Hackett et al (2007 : 3) aims to cover aspects from both the client and the

contractor as they believe that it’s “vital that all members of the building team are

fully conversant, not only with their own role but also with the roles of others and

with the interrelationships at each stage of the project”. Although it is necessary to

have an overview of the clients processes, it doesn’t form part of the contractors key

activities or as Ould (2005 : 174) terms them, Essential Business Entities, “the

essence of the organization’s business”, and shouldn’t be included in the process

model. In addition, Lewis (2007 : 21) illustrates a “typical local authority

procurement process for services or consultancy”, and in doing so limits the scope of

this process, so this diagram would not be suitable for a SME construction company

in the private sector.

Furthermore, the employees involved in the process vary between each text. Whilst

some remain generic, the diagram by McCaffer and Baldwin (1986) is aimed at

larger organisations and involve a large team of people, including in-house

designers, planners and buyers. Therefore, this diagram would not be suitable for an

SME to implement and cannot be selected. The number of personnel and roles they

carry out can vary significantly based on the size of the organization. “In a small

firm, the estimator might be expected to carry out some quantity surveying duties

and will be involved in procuring materials and services” (Brook, 2002 : 1). Whereas

in larger companies the estimating team alone will “often comprise of a chief

estimator, senior estimators and estimators at various stages of

training…administrative and estimating assistants” (Brook, 2002 : 2).



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Bentley (1987) illustrates the tendering process by creating an activity schedule.

Although his diagram provides a simple and concise list of activities which are

carried out during the tender process, it doesn’t demonstrate how different activities

can be carried out at the same time. Ould (2005 : 44) states that “organizational

activity is massively concurrent: there are many, many things going on at the same

time”, but by representing activities in a long list, it doesn’t allow for interactions

and relationships between roles. Therefore, this diagram is not an accurate portrayal

of the tendering process.

Conversely, Brook’s (2008) process model (Figure 2) satisfies all of the above

criteria. Not only does he represent the tendering and estimating process for a

medium sized company, it focuses entirely on the organization completing the tender

submission. It also identifies congruent activities, highlighting that multiple tasks

take place at the same time. Therefore, this is the theoretical process model selected

from the literature review for the purpose of this research, as stated in the second aim

within the introduction, and will be compared against the findings from the case

study in Chapter 4.



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Figure 2 - Theoretical Estimating and Tendering Process Model (Brook, 2008 : 4)



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2.4 Information Systems for Tendering & Estimating

The Internet and information technology have transformed the way many business

carry out their daily operations. It has become common practice to communicate

through emails, hold video web conferences, or creating letters, and calculating

complex mathematical equations using Microsoft Office software. As a result,

computers and personal digital assistants (PDAs) have become a fundamental device

within many organizations. Due to the wide ranging benefits and popularity of IT

applications, many software companies and website designers have developed a

range of applications to aid the process of supply chain management. During the late

80s and 90s, Enterprise Resource Planning (ERP) systems became a widely

implemented resource for carrying out a variety of business transactions (Stadtler &

Kilger, 2000). Although in some cases it didn’t transform companies in the way

many expected (Gargeya & Brady, 2005), with the right change management

implementation, staff training and internal process development, such systems can

facilitate daily operations. Procurement methods, including electronic marketplaces,

e-catalogues, e-tendering, Software as a service (SaaS), and radio frequency

identification (RFID) have enabled companies not only to improve their internal

company processes, but have promoted customer relationship management (CRM)

and supplier relationship management (SRM) too.

As mentioned in the introduction, many construction companies are reluctant to

adopt new technology and electronic information systems (Anumba & Ruikar, 2002;

Love et al, 2011). Instead many companies still rely on “mostly manual, and

numerous paper copies of documents and drawings…the management of these loose

documents is often very time consuming and tedious, which reduces the productivity

seriously” (Wang et al, 2007 : 158). Yet there are numerous applications which the

construction sector can benefit from and use to improve their supply chain

management.



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The ultimate supply chain systems is one which aims to help all areas of an

organisation work together, preventing silos of isolated information in each

department and unnecessary duplication of work. It is, what Ross (2011 : 73) terms,

an Enterprise Business System (EBS), as illustrated in his diagram below:

An ideal system brings together all the key functions of a business such as

manufacturing, procurement, finance, logistics, human resources and customer

management, and enables each department to access essential information in order to

provide a better service to their customers. Of course many businesses don’t have all

of these functions. A supermarket, for example, doesn’t manufacture its own food

and drink products and wouldn’t require this application within its information

system. Therefore, systems can be adapted to suit the needs of its users. One of the

best solutions is an Enterprise Resource Planner (ERP), which is used by many

companies today. It operates by “providing a central database that collects

information from and feeds information into all the functional application areas so

that effective transaction management, shared management reporting, and decision-

making can be effectively performed” (Ross, 2011 : 83). In doing so, it offers a

number of benefits to organizations including an increase in inventory turnover,

excellent customer service, improved inventory accuracy, reduced project set up



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times and better quality work (Lysons & Gillingham, 2003). On the other hand,

although SAP (UK) Ltd refuses to provide students with a direct response to their

enquiries and an approximate cost for their systems, literature suggests that the cost

to purchase such a system is too high for many businesses. “[M]any SMEs either do

not have sufficient resources or are not willing to commit a huge fraction of their

resources due to the long implementation times and high fees associated with ERP

implementation” (Buonanno et al, 2005 : 386). They have, however, created a new

solution called SAP Business by Design4, which operates using a cloud computing

system.

“Cloud computing delivers an infrastructure, platform, and software

(applications) as services that are made available to consumers in a pay-

as-you-go model. In industry these services are referred to as

Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and

Software as a Service (SaaS) respectively.” (Beloglazov et al, 2011 : 1).

Cloud computing allows SAP to host their software on their central computer system

and their customers can use the software and store their company’s data. Customers

can connect to SAP’s data store using the Internet. It works in a similar way to

Google’s Gmail which allows users to send emails by logging in to their account on

any computer, but the user doesn’t have to save the emails on their computer. There

basic ERP packages start from £98.00 per user per month, for a minimum of 10 users

(SAP, 2011). Therefore, this system will still require a minimum investment of

£11,760 per year which is still a high cost for software which the company

ultimately does not own. However, it does avoid costs incurred from purchasing

software applications and large data storage devices.

There are, however, many other technology solutions which can assist many other

businesses. Companies such as SAGE and Causeway Technologies offer specific

applications for individual company functions. For example, SAGE 50 Construction

enables managers and accountants to monitor costs throughout the project and

compares them to estimated costs, including labour, plant hire and subcontractor

4 http://www.sap.com/uk/campaigns/businessbydesign/why-sap/index.epx



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charges and timescales. It also enables estimators to produce improved quotations as

they can monitor the progress of these expenditures, access a detailed analysis report

of actual costs for each project which provides valuable feedback for future

estimates, and access a database of supplier details and their quotations (SAGE (UK)

Ltd, 2011). This has the added advantage of transferring quotation details on to

buyers and quantity surveyors, in the form of a tender handover package.

Internet based applications have become an ideal solution for carrying out business

quickly and efficiently with both customers and suppliers. It is commonly referred to

as e-procurement, which is defined by Weele (2010 : 44) as follows: “all web

enabled solutions aimed at supporting the purchasing process and all electronic data

exchange that is needed for efficient transaction processing”. There are a variety of

solutions available to support online transactions. A popular technique is the use of

I-Marketing. Many companies now have websites which have replaced traditional

forms of paper catalogues and company brochures. “Use of I-Marketing browsing

enabled customers to search, view graphical presentations, and read static text about

companies” (Ross, 2011 : 98). Anumba & Ruikar (2002) identified several benefits

including; a decrease in marketing costs, easy access for clients, and business

transparency. Many websites have advanced and now offer Business-to-Consumer

(B2C) services, which is “similar in concept to the traditional method of retailing,

the main difference being the medium used to carry out business – the Internet”

(Anumba & Ruikar, 2002 : 266). There are electronic marketplaces such as ebay,

which enables forward auctions, which are “used to sell products. Different buyers

need to offer their bids to the seller” (Weele, 2010 : 45), and reverse auctions, during

which the “buyer sets a starting price that the supplier needs to meet in order to get

access to the auction” (Weele, 2010 : 44). Electronic catalogues and ordering

systems can also be used to carry out purchasing transactions. Lysons and

Gillingham (2003 : 178) define this solution as a “web page that provides

information on products and services offered and sold by a vendor and supports

online ordering and payment capabilities”. An example is the Health & Safety

Executive publications website; http://books.hse.gov.uk/hse/public/home.jsf, which

allows its customers to access a catalogue of its publications, then select, order and

pay for them online. According to Presutti (2003 : 223), by implementing e-

procurement companies can make great savings. It can reduce “labor costs in the



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purchasing process”, companies are “relieved from the non value-creating effort

required for transaction processing…reducing sourcing cycle times...and time-to-

market”. He also states that inventory levels are reduced as products are sent to

customers quicker.

Radio-frequency identification (RFID) is an effective information technology which

has been increasingly applied within SCM. “RFID systems use small electronic

“tags” to track the position and movement of items” (Bozarth & Handfield, 2008 :

374). Scanners are used to read the electronic data stored in the tags, and this

information can be transmitted back to a central data store. Many companies use

RFID systems for monitoring the location of goods and equipment. “RFID can

reduce information gaps by enabling real-time supply chain visibility, and is useful

in purchasing, product manufacturing, shipping and receiving, storing, and selling”

(Chen et al, 2010 : 13). This technology has been applied within a wide range of

sectors including manufacturing, retail, logistics and information services. For

example, some libraries have added tags to their books in order allow readers to

check out books and return them using self-service machines, and so they can be

sorted automatically (Hamlett, 2007).

“The use of RFID, Bluetooth, global positioning systems (GPS), and

other technologies, working in tandem with cloud computing

environments, Web Portals, and back-end systems to track everything

from apparel, equipment, and appliances to animals and even people is

transforming the information processing capabilities of the supply chain”

(Ross, 2011 : 59).

A company which has fully embraced many of these technologies is the courier

company CitySprint (UK) Limited5. They use GPS to track their fleet of vehicles,

barcode scanning to track the location of parcels and Web Portals to provide their

customers with up-to-date information on the location of their delivery and book and

pay for their services.

5 http://www.citysprint.co.uk/



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Another popular method for carrying our procurement transactions on-line is through

the use of E-tendering. “E-tendering concerns the process of sending requests for

information and prices to suppliers and receiving the responses of suppliers using

Internet technology. Sometimes, e-tendering also includes the analysis and

comparison of responses” (Boer et al, 2002 : 25). Websites such as

https://www.sell2wales.co.uk/ and http://ted.europa.eu/TED/main/HomePage.do

enable companies to advertise projects and search for tender opportunities.

Furthermore, websites such as www.constructionline.co.uk and

www.achilles.com/en//uk offer suppliers and buyers with the opportunity to access

and submit pre-qualification questionnaires, in order to qualify for tenders. It saves

suppliers time by enabling them to complete just one questionnaire, which multiple

clients can access. Plus it allows buyers to access numerous supplier details without

having to send out multiple questionnaires and waiting for responses. Tenders are

often then sent out by email or on CD to qualified suppliers. Sending tenders to

suppliers electronically has many advantages for clients. It “offers significant time

saving by reducing paperwork, postage, and photocopying, which in turn paves way

to a reduction in costs” (Arslan et al, 2006 : 1409). However, there are some

shortcomings for the contractors involved in the process. Printing costs are passed on

to the contractor, presentation of tender documents can be jumbled and badly

referenced, and not all small companies have the software capabilities to access

electronic some documents (Tindsley & Stephenson, 2008). E-tendering promotes

fair and transparent bidding and enable clients to make cost savings, yet it must be

managed in an organized way, in order to prevent delays and perplexity for

contractors.

Of course, technology is rapidly changing and new methods for managing

information are continually occurring. Anumba & Ruikar (2002) suggest that in the

future m-commerce, i.e. commerce via electronic mobile devices, is a possible trend.

The BBC has just implemented QR codes during its cookery program The Good

Cook, to enable watchers to download recipes to their mobile phones6. Perhaps

future programmes and adverts could use the same technology. They also highlight

6 The BBC implements QR codes within its cookery programme The Good Cook:

http://www.bbc.co.uk/pressoffice/pressreleases/stories/2011/06_june/16/cookery.shtml



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the possibilities of ubiquitous computers and intelligent autonomous software agents

which carry out tasks for users when they are not present.

Information systems can be transformed with the assistance of technology. The

ultimate method of managing organizations information is through the use of ERP

systems to share information across all functions within the whole company.

Unfortunately, such systems are inaccessible to many SME’s due to the high

purchasing costs and long time frame for implementation. Yet there are many other

options. Software which manages individual processes in a company offer a more

affordable solution. SAGE estimating facilitates employees providing and analysing

quotations for customers, RFID provides customers with real-time information on

their products, I-marketing promotes organizations to a wider customer base, B2B

services enable rapid financial transactions and e-tendering enables customers and

contractors to exchange prices without the hassle of printing and postage. When used

correctly, these technology solutions can enable companies to effectively manage

their supply chains by integrating internal systems and improving external systems

with suppliers and customers.

2.5 Supply Chain Management within SMEs

The wide variety of literature on supply chain management provides a wealth of

information on how companies can effectively improve this aspect of their business

in order to remain competitive and profitable. However, much of this advice is

limited to large companies, with extensive manpower and financial resources.

Therefore, having carried out a thorough literature review, a number of research

questions have been established.

Forecasting techniques such as industrial expert studies can be very expensive to

fund. Furthermore, the assessment of customer’s future needs using demand

management and CRM can be time consuming given that employees are already

stretched for time with their every day tasks (Smith & Zagelmeyer, 2010). Supplier

Relationship Management is often developed informally within SMEs, rather than

setting clear and focused goals, which again can be considerably time consuming.



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Question 1 – How are relationships with clients and subcontractors developed?

Supplier and subcontractor assessment is a useful way of maintaining quality

services. Yet, within a small team it is unlikely that employees can devote the time

and develop the skills needed to carry out complex assessments such as the

evolutionary fuzzy based approach and developing algorithms.

Question 2 – How do SMEs carry out supplier and subcontractor assessment?

The literature on tendering and estimating provides an excellent discussion on the

number of different employee roles, information resources and activities within this

process. Yet much of this literature focuses on how a large or medium sized

company with extensive financial resources and a large team of staff carry out this

work. Although Brook (2008) acknowledges that small companies distribute

activities within the workforce differently and his process model is simple and

therefore generic, a tailor made solution is not provided. An SME will not have

dedicated employees to carry out each individual set of activities. Tasks will instead

need to be carefully managed and evenly distributed within the workforce. They will

also be restricted by the amount of work they can carry out within a short timeframe,

so some non-essential tasks will not be completed. Therefore, the next question I will

seek to answer within this research report is:

Question 3 - How does a small company with a limited number of employees manage

its work tasks during the tendering and estimating process, and which activities does

the company include within this process?

The literature review also identified a variety of technological solutions for

improving information systems within supply chains. Yet many of these solutions

are costly and time consuming to implement, making them unavailable to SMEs.

This is particularly true of ERP systems. Although the cloud based ERP system may

be within the financial budget of some medium sized company’s, it is unlikely that

many SMEs can afford to spend so much on technology. Other solutions such as E-

procurement are much cheaper and easier to implement. Websites provide an



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excellent way to promote a company and access a multitude of customers. Tendering

websites such as www.selltowales.co.uk have also proved to be a useful method of

advertising work opportunities to a wide audience.

However, additional features such as on-line transactions may be unnecessary for

many SMEs who have a small number of customers and a small number of products

or services to sell. It is interesting to note that many of the electronic commerce

websites identified by Presutti (2003) and Wang et al (2007 : 159), including General

Electric’s (GE’s) Trading Process Network (TPN) and www.bidaec.com, are no

longer in operation, suggesting that the extent of the success of electronic commerce

within the construction industry has been limited. While a lot of literature discusses

the benefits of software for improving information systems, there is little information

on how organizations actually implement a variety of technologies within their

companies, especially within SMEs.

Question 4 – How does an SME with a limited budget for technology, use IT to

facilitate their information systems?

3. Methodology

In order to collect, analyse and represent the data within this report a number of

techniques will be applied. Firstly, I shall use qualitative research techniques in order

to gather data for this study. The benefits of choosing qualitative rather than

quantitative methods for this study are that they “can be said to yield more

contextually detailed data - richer data…along with the data collected, one also gets

a description of what activities were going on around the phenomenon in terms of

time and social circumstances surrounding it” (Glazier & Powell, 1992 : 7). Such

qualitative research methods will include a case study, interviews and unobtrusive

measures, including structured participant observation. Secondly, in order to analyse

this data I shall use business process modelling techniques. This will enable me to

analyse the way in which the case study organization carries out its tendering and

estimating process, and compare it to the process model illustrated by Brook (2008).



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The models will be represented using Role Activity Diagrams, which will provide

clear diagrams of the tendering and estimating process.

3.1 Business Process Management

The importance of managing business processes has been an important area of

research for over 50 years. The focus on processes can be seen in the works of

Feigenbaum’s (1961-1963) “cycle time reduction methodology:

1. Define process.

2. List all activities.

3. Flowchart the process.

4. List the elapsed time for each activity.

5. Identify non-value adding tasks.

6. Eliminate all possible non-value adding tasks.” (Ramasamy, 2005 : 1.10)

However, the adoption of managing business processes didn’t take off in the UK and

USA until the 1980’s with the emergence of Total Quality Management (TQM).7

According to Ramasamy (2005 : 1.3), in “1985, the American Navy coined the term

TQM to represent broadly the Japanese way of quality management”. However,

dissatisfaction with this method led to the popularity of Business Process Re-

engineering (BPR). “Throughout the first half of the 1990s, BPR was one of the

most eagerly embraced management techniques” (Deakins & Makgill, 1997 : 81). It

was developed to revolutionise the concept of improving business processes.

“Whereas TQM was designed to improve existing business processes incrementally,

BPR radically transforms business processes, creating new ones” (Valentine &

Knights, 1997 : 78). However, Davenport (1995 : 1), who was one of the creators of

BPR, admits that the concept was detrimental to many companies; “reengineering

7 According to Hoyle (2001 : 91), TQM originated from the works of Juran and Deming. “Juran wrote

about the universal principles of Breakthrough and Control in 1966 and Deming wrote Out of the

crisis in 1982 addressing the key principles that should be used in organizations to turn around the

flagging economy”.



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has become a word that stands for restructuring, layoffs, and too-often failed change

programs”.

Its focus on IT systems led to analysts treating employees “as if they

were just so many bits and bytes, interchangeable parts to be

reengineered. But no one wants to "be reengineered." No one wants to

hear dictums like, "Carry the wounded but shoot the stragglers" -

language that makes workers feel like prisoners of war, not their

company's most important assets”. (Davenport, 1995 : 1).

Whilst the importance of improving processes within businesses was still seen as an

essential tool for management, they were now fully aware that IT systems and

information management alone is not the key to success.

“But we are now seeing a Third Wave – a term first coined by Howard Smith

and Peter Fingar…a wave driven by the new technology of Business Process

Management (BPM). Finally, the business process has become a first-class

citizen, the one that now determines what information will be kept: process first,

then information” (Ould, 2005 : 2).

Ko et al (2009 : 748) clarifies the differences between the two concepts as follows:

“BPM and BPR are not the same: whereas BPR calls for a radical obliteration of

existing business processes, its descendant BPM is more practical, iterative and

incremental in fine-tuning business processes”. (Ko et al, 2009 : 748). BPM has

moved away from the concepts of modelling processes in flowcharts (as part of the

TQM philosophy) and isn’t restricted by IT systems, such as the notorious ERP

systems. Instead it enables processes to be “visible, changeable, and potentially back

in the hands of the organization, with the result that the organization now has the

power to change how it wants to do its business, and to change it when it needs to”

(Ould, 2005 : 2). BPM not only allows organisations to map the flow of their

processes using information technology applications. It also enables them to identify

where improvements need to be made, and alter their processes to suit their varying

needs. BPM is defined by van der Aalst et al (2003 : 4) as follows; “Supporting



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business processes using methods, techniques, and software to design, enact, control,

and analyze operational processes involving humans, organizations, applications,

documents and other sources of information”. There are a number of benefits for

applying BPM. Within a literature review by Kohlbacher (2010) he found that the

benefits included increased customer satisfaction, improved product quality and

financial performance, quicker activity life cycles and in many cases there was a

reduction in business costs.

The popularity of BPM seems to be on the increase. In a literature review carried out

by Houy et al (2010 : 627) they found that the number of journal articles on BPM

has increased dramatically between 2002-2008. Their findings are represented in the

following diagram:

In line with Ould & Davenport’s theory, the peak in research during 1995 and 1998

was “expedited by the hype on BPR which settled afterwards”. The increase in

research after 2002 demonstrates the increasing popularity of BPM, and with the

publication of:

“specialized journals (e.g. the Business Process Management Journal)

and conferences (e.g.the BPM-Conference…) as well as the

institutionalization of degree programs specialized in BPM at several



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universities evidence that it is not a temporary fashion but an evolving

trend in management science” (Houy, 2010 : 619).

Within this research project BPM will be applied, in order to identify the current

tendering and estimating process within the case study organization. It has been

chosen as a suitable methodology because it enables the researcher to “identify and

improve on bottlenecks and potential fraudulent loopholes in the business processes”

(Ko et al, 2009 : 748), enables processes to be altered quickly and easily illustrated.

3.2 Case Studies

In order to test my theoretical findings, I shall carry out a case study. “A case study

is an empirical inquiry that investigates a contemporary phenomenon within its real-

life context, especially when the boundaries between phenomenon and context are

not clearly evident” (Yin, 2003 : 13). The company which will be the focus of my

case study is a small specialised civil engineering company. It is useful to carry out a

case study when “(1) a large variety of factors and relationships are included, (2) no

basic laws exist to determine which factors and relationships are important, and (3)

when the factors and relationships can be directly observed” (Fidel, 1992 : 37).

Given the diversity of process flows identified within the literature review, and the

variety of job roles each author discussed, there is clearly a lack of basic guidance

for tendering processes within SME’s. Therefore it is necessary to establish the

factors and relationships within this process by observing it in a real-life situation.

3.3 Data Collection Techniques – Interviews, Unobtrusive Measures

Interviews, “are essential sources of case study information” (Yin, 2003 : 89). The

specific interview approach I shall use is a semi-structured interview. I shall prepare

a list of questions based on the literature review and objectives, “but may not deal

with all of them in each interview. Indeed, additional questions may be asked,

including some which were not anticipated…as new issues arise” (Gray, 2004 : 217).

This will give me opportunity to prepare for the interview and identify key aspects



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which must be discussed whilst allowing the flexibility to ask alternative questions

to clarify or request further information on certain aspects.

According to Grummitt (1980 : 2) it “is essential for the interviewer to be well aware

of the objective of the interview to be conducted”. The objective of these interviews

will be to establish how those involved in the tendering and estimating process

perceive their role and the work they carry out.

As the company is an SME and there are just a few personnel involved in the

tendering and estimating process, it will only be necessary to interview a few key

employees. There “is no hard and fast rule for how many people you need to

interview, since it will partly depend on the time available to collect, transcribe and

analyse your data” (Travers, 2001 : 3). Therefore, just three employees will be

interviewed – the Managing Director, the Senior Estimator and the Document

Controller. The Managing Director should provide an insight into the commercial

and business strategy aspects of the tendering process. The Estimator should provide

details on the technical areas of the process. The Document Controller should

provide information on the receipt, control and transmittal of the tender documents.

All three employees should therefore, supply enough information on the entire

process within this organization.

Pyle (2003 : 174) identifies three aspects which the interviewer must consider when

trying to discover the actions involved in a process:

“What?: What is the situation, what’s wanted, what’s going on, what’s

expected? The question at this stage reminds a modeller to focus on

understanding the basic issues, the context, and the situation.

So What?: For each of the “whats,” why do they matter? What impact

does each have on the business situation…

Now What?: What actually needs to be done next as a result of each of

the “so whats”? ”.



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In addition to these key questions it will also be necessary to prepare additional

supporting questions. This should ensure that all the relevant information needed is

obtained. On some occasions participants may want to provide as much information

as possible and this could result in them straying from the original question. During

these instances it may be necessary to ask a re-direction question, which should

divert the conversation back to the relevant topic. Other participants may be reluctant

or evasive in response to some of the questions and it may be necessary to ask

triggering questions in order to encourage a response.

Once all the required information is obtained from the interviewees it will be

necessary to carry out a second informal interview, in order to establish if all the

interpretations made are correct. Travers (2001 : 3) recommends that “if you ask

open-ended questions, follow up particular topics in a second interview, and give the

interviewee the opportunity to comment on your interpretation of the answers, you

are more likely to obtain some rich, original data”. Following the first interview, a

second interview will be arranged and the interviewees will be presented with a

diagram of the tendering and estimating process. They will be asked to comment on

the diagram and identify any errors or omissions. This should ensure that further

information is obtained and will also reassure interviewees that any statements they

make in the first interview will be reviewed in the second, after they have had time

to reflect on their responses.

In addition to interviews, unobtrusive measures will also be used to collect data.

“The term unobtrusive measure has developed in reference to types of observation

which remove the observer from any direct interaction with the people involved in

the behaviour he or she is studying” (Gorden, 1987 : 10). Using this technique

should ensure that richer data is gathered. In a research project carried out on

Burns’s Civil War, Glazier and Powell (1992 : 1) state that if unobtrusive measures

hadn’t been used and a top-down approach had been applied, a large amount of

essential information would have been missed.



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“It is not just a history from the point of view of generals or presidents

but also from those who lived with it every day…The story is told

through the use of personal letters, stories, and anecdotes recorded by the

individuals who fought in the war and their families”.

In order to gain an overall representation of the tendering and estimating processes

within the case study, documentation used will need to be reviewed, not just

interviews with senior management. This will include the selection of internal

documentation, client tender documents, company literature and journal or

newspaper articles on horizontal directional drilling, and tendering within the

construction industry. Of course “documents cannot be probed and cajoled in an

attempt to overcome” deficiencies such as incomplete or unsystematic items (McCall

& Simmons, 1969 : 63). Yet they will provide greater detail and insight into what the

employees are referring to during their interviews, and an overview of current

opinions and trends in the industry. Having reviewed this literature I shall carry out

contrived observation whereby the “researcher participates indirectly by contriving

the situation to include certain stimuli designed to elicit action toward some object”

(Gorden, 1987 : 10). Participants will be provided with a recent tender document and

asked to demonstrate how they deal with it, in order to gain a greater understanding

of the processes involved. This may involve observing how they deal with both hard

copy and electronic documentation. Furthermore, I shall also use participant-

observation. Participating “in some role other than that of the interviewer…will

provide access to those people and situations he or she must observe to accomplish

the objectives of the study” (Gorden, 1987 : 8). I have worked for the case study

company for over four years and part of my role there was to prepare tender

submissions. McCall & Simmons (1969 : 5) explains that a major advantage of this

method is that the researcher “receives the same socialization as ordinary members,

acquires similar perspectives, and encounters similar experiences. In this way the

scientist acquires some sense of the subjective side of events which he could less

easily infer if he observed without taking part”. Working within the organization

provides an understanding of the company and certain aspects of the tendering

process. However, subjectivity can also prevent researchers from gaining an overall

perspective of the process which could lead to bias in the results. However,



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objectivity should be maintained by completing the literature review and applying a

variety of data collection methods.

In order to ensure that “ethical principles are catered for in the research, including

the privacy of respondents and their anonymity (Gray, 2004 : 62), an email will be

sent to prospective interviewees requesting consent and will describe the purpose of

the interview. Interviews will be audio recorded so that they aren’t disrupted

throughout by note taking, and will be transcribed after the interview. Interviewees

will be informed that they are being recorded and that once the recordings have been

transcribed they will be destroyed.

Participants will be informed that their names will not be disclosed within the report

and the interview transcriptions will not be given to any other person. This will

ensure that confidentiality is maintained, and should provide employees with

reassurance that they can speak freely and share their opinions without any fear of

repercussions.

Finally, this study has been classed as Low Risk, because in some cases the findings

of a case study may cause potential upset and surprise. Such a result would pose an

ethical dilemma. Censorship of results would make the research report invalid, yet

causing upset and distress to participants must be avoided. In such circumstances the

employee or the organization may request that the researchers’ findings are not

published. Gorden (1987 : 111) proposes the following solution prior to sharing

research results:

“(a) promise to share results unless there is some very unusual reason

why this would be harmful; (b) when the promise is given, prepare an

follow through on the promise; (c) give respondents a chance to

comment on what they feel are errors …before the final draft is

completed; (d) do not back down from the facts and your best

interpretation merely because it would put someone in an unflattering

light; (e) do not distort the findings to avoid embarrassing yourself or the

research organization doing the study”.



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The Directors of the organization will be provided with the opportunity to review the

results of the findings and offer any comments. If for any reason they decide that the

consequences of publishing the results could be potentially damaging, they will not

be included within this report and an explanation will be provided. However, the

likelihood of this occurring is low, as the name of the company will remain

confidential and the subject of this research paper is not seen to be dealing with

sensitive issues.

3.4 Data Analysis - Role Activity Diagrams & RIVA

In order to analyse the qualitative data obtained from the case study, Martyn Ould’s

(2005) RIVA method will be used. Although there are a number of tools to analyse

business processes such as rich pictures, UML’s8 use case and activity diagrams, and

SSADM’s9 data flow diagrams, it was felt that RIVA would be most suitable for this

report. RIVA is a business process modelling method which is used for the

“elicitation, modelling, analysis and design of organizational processes” (Ould, 2005

: 11). The other tools focus more on the flow of information and data, the way users

use an information system, and how to identify problems within complex and

confusing flow of information within an organization. Therefore, RIVA is the most

suitable method for this report.

In order to represent business processes it is important to represent them graphically

as a process model. “A process model is an abstract description of an actual or

proposed process that represents selected process elements that are considered

important to the purpose of the model and can be enacted by a human or machine”

(Curtis et al, 1992 : 76). Although there are numerous ways of representing process

models, such as flow charts, RIVA uses Process Architecture Diagrams (PAD) and

Role Activity Diagrams (RAD) to illustrate processes. PAD are used for the

“chunking of the organizational activity into individual processes” (Ould, 2005 : 11).

Most organizations carry out multiple processes and PAD are used to identify the

boundaries and remove actions which are not relevant to each process and belong in 8 Unified Modelling Language 9 Structured Systems Analysis and Design Method



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other processes. However, as the company is so small and there are so few

employees involved in each process it isn’t difficult to distinguish individual

processes. Alternatively, RAD is a “structured technique for modelling

processes…[They] display the sequence of actions within roles and the interactions

between them. The main focus is on roles, their interactions and their constituents’

activities, as well as the connection with external events” (Noor et al, 2003 : 3).

RAD use the following notations, which are adapted Martyn Ould’s (2010) website:

The advantages of RAD are that it provides a simple format to define a process, and

enables all employees to easily understand their own roles and how this affects

others, without needing an in-depth knowledge of BPM. In addition, it reflects the

organisation as a “dynamic network of interacting instances” (Ould, 2005 : 169)

which are carried out concurrently, rather than static activities which occur

separately. They are independent of job titles and reflect job roles, which avoids the

need to change the models after a change in work force roles. For example, one



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employee, or what Ould (2005) refers to as an Actor, may have the job title

Construction Manager but this Actor may be involved in a number of roles such as

purchasing, estimating and stock control. These responsibilities may be given to

different Actors depending on work load and the company organisation. Finally,

“RAD is a modelling technique from “role” perspective which can be used to

explore features that will enable further improvement of the current process”

(Tbaishat, 2010 : 485).

Before beginning to model a process it is necessary to identify the main reason and

viewpoint which the diagram will represent. Checkland & Scholes (1990) argue that

no model will satisfy all needs and represent all perspectives. For example, an

engineer may believe the aim of a process is to ensure that a product is produces

safety and to a high specification, yet from a manager’s viewpoint a process should

ensure that a product is developed within budget, on time (Ould, 2005). Therefore, in

order to satisfy this requirement it is necessary to state the aims of the process

models within this report. The aim of the first process model is to discover how the

case study company carries out its tendering process. The second process model will

aim to illustrate a streamlined tendering and estimating process suitable for an SME.

Once the first process has been defined it will provide an excellent means for

analysing any areas in which the process can be made more efficient, and this will be

reflected in the second model.



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4. The Case Study

The company used for the case study is one of just a few privately owned horizontal

directional drilling and open-cut pipeline construction companies in the UK. The

company was established in 2004 and worked initially as a subcontractor. During

recent years they have expanded and now work predominantly as a main contractor.

They are classed as a small enterprise and employ around 30 people during

construction works, just 12 people when projects have been completed. They operate

across the country, carrying out two to three construction projects per year, for high-

profile clients including E.ON, CEMEX and Aquamarine Power. Aside from

carrying out highly specialized construction works, a key process within this

company is tendering and estimating. Whilst some tenders only require an

approximate figure for a theoretical project, other tenders require an exact price to

carry out the works, based on large volumes of contractual and technical data.

As each construction project requires exceptional technical expertise and precise

engineering in order to carry out such high-risk and high value works, it is essential

that the paperwork conveys this within the tender submission. Given the importance

of this system, accurate, streamlined processes are essential for the company to

maintain their competitive edge, and submit high quality tender submissions within

critical deadlines. As the company employs a small workforce roles and

responsibilities change due to workloads and the new business process should reflect

this.

4.1 Case study system

Three interviews were carried with three key employees involved in the tendering

and estimating process, in accordance with the methodology discussed in Section 3.

One employee also participated in a contrived observation task and notes were taken.

Interview scripts and the contrived observation research list can be found within

Appendix A and B. A previous tender provided by a client and a completed tender

submission was also examined. My findings are discussed throughout Section 4.

This section will describe and illustrate the case study tendering process. Section 4.2



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will critically compare the company’s process and the theoretical process, and

differences will be described. Finally, Section 4.3 will provide a list of

recommendations the case study company could implement to improve their current

system.

The case study company operates three main internal roles within the tendering and

estimating process. These are the Document Control role, the Estimating role and the

Director role. The Document Controller is the first contact within the company. They

receive the tender documents from the clients, liaise with other roles to compile the

tender submission, and ensure that the completed tender submission is submitted on

time, in line with the clients tendering instructions. The main activity for the

Estimator is to calculate the prime cost of the tender, prior to any mark-up’s being

added. The role of the Director is to act as key decision maker. They decide if a

tender is suitable to produce a price for, and the value of the mark-up’s added to the

prime estimate.

The Role Activity Diagram below illustrates the tendering and estimating process

within the case study company, and highlights how each of these roles interact in

order to submit a tender.



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Figure 3 - Case Study Tendering and Estimating Process Model



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4.2 Theory Vs Practice

There were a number of similarities and differences identified between the Brook’s

(2008 : 4) theoretical tendering and estimating process model (Figure 2) and the case

study process model (Figure 3). Although the role titles are absent from the

theoretical model, presumably to keep the illustration simple and generic, many of

the actions are also different to the case study model.

A significant difference between the two models was the lack of activities carried out

by the document control in the theoretical model. Within the case study organization,

the document controller registers the tender documents on their information system

and compiles a list of generic forms such as quality plans, organisation charts and

curriculum vitae. Yet neither of these activities is included in the theoretical model.

Many of the Initial Actions and Appraisal activities identified within the theoretical

model were also carried out by differently by the company. There is a template

tender summary form which is attached to all tenders received yet this form is often

overlooked and rarely completed. As Haug (2011) and Smith & Zagelmeyer (2010)

stated, employees within SMEs often have to focus on production rather than

strategic factors and formal bureaucratic paper trails. However, whilst this offers

freedom within limited time frames imposed by the clients, technical and

commercial decisions made at the time may be forgotten later on and recording such

factors would be useful if the tender is deemed successful.

The decision to tender is noted on both models although within the case study

organization this decision is made informally by the directors. It may be useful to

have a list of documented criteria against which the directors can check for

suitability. This would ensure that any variations in opinion are minimised, i.e. one

director may believe that it is worth the risk tendering against 10 other contractors,

whereas the other director may believe that time would be better spent tendering for

projects with fewer tenderers as there are greater chances for award. It would also

enable them to pass this role to other actors involved in tendering if their workload is

too great or the company expands.



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The other difference in this section of the theoretical diagram is the Estimate

timetable. This is not currently completed by the Estimator but the document

controller. As the company is small, the Estimator is not responsible for a large team

of estimators as suggested in the theory. Instead the document controller is

responsible for getting all of the documents compiled for submission and that all the

necessary documents are included in accordance with the client tender specifications.

One other process is missing within the initial appraisal is the directors decision to

choose an estimator. As the company carries out both HDD and pipeline works the

director will review which speciality the tender works are for and advise the

document controller to distribute the documents to either the HDD or pipeline

estimator. If both estimators are busy, the director may carry out this role. If the

project is for both works, both the HDD and pipeline estimator receive copies of the

documents and combine their estimates within the tender package. Within a larger

company a senior estimator would be responsible for distributing the works within

their department, after consulting the estimate timetable.

All of the activities with regards to a successful tender were also completed

differently. The theoretical model states that a handover information package should

be created. This should contain client correspondence, the form of tender, drawings

and specifications, etc. (Brook, 2002 : 239). Although a copy of the entire tender file

is copied from the computer system and copied onto their personal laptop, an

assessment of what they require and a checklist to ensure everything is included, has

not been implemented.

The activities for checking contract documents, pre-contract meetings and conditions

of award was seen by the company to be part of the next process, which is the

contract award process rather than the tendering and estimating process. Often the

contract documents are carefully negotiated and this can become a costly exercise

involving external experts. Consequently, it would not be financially viable at tender

stage, if there was a significant chance the tender could still be awarded to another

company. Usually, some form of initial agreement is been made between the two

parties before contract negotiations begin.



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Finally, the last major difference between the two models was the theoretical activity

of monitoring methods and costs on site. Although the estimator monitors costs

during most projects, either by obtaining weekly updates or carrying out commercial

works for the project, this information is not analysed and used for future estimates.

Theory suggests that forecasting methods should be used to analyse the cost and time

length of previous projects and this information should be used to produce future

estimates (Bozarth & Handfield, 2008; Crandall et al, 2010). Yet, this company does

not forecasting methods. As each construction project is completed in unique ground

conditions, different locations and with different pipeline or drilling lengths there are

too many variables to use data from previous projects to apply to new tender

estimates. In addition, major disruptions and delays are typically due to unexpected

and unpredictable circumstances and are highly unlikely to occur again on future

works.

However, the estimating role was very similar. The estimator examines the tender

documents and establishes the client’s specific requirements such as time deadlines.

Then they establish time needed to complete the works, size and type of crews

required for each type of work, for example a welding crew or a fencing crew. Next

materials and plant required are chosen. If items are not available within the

company supplier and subcontractor enquiries are sent out, requesting quotes and

supporting documentation. Method statements and programmes are then completed.

Once the quotes are received an estimators report is completed on an excel

spreadsheet and sent to the director for approval. All of these tasks are included in

both process models although they are in a slightly different order. This difference is

not seen to be significant though, as the author of the diagram has chunked the

activities into sections in this case rather than strictly following a sequential process.

As a result this difference is seen to be a diagrammatical error rather than a flaw in

the process.

It is important to note that there are a few limitations which may have affected the

results obtained from the interviews and unobtrusive measures, which have been

described above. Firstly, during the interview with the estimator, the last five

minutes of the interview were not recorded as the laptop on which the recordings



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were carried out on, went onto standby. Notes were taken, however a few important

points could have been missed, regarding the problems he identified within the

existing process. Secondly, the Director had a meeting arranged following the

interview. This meant that some of the answers were short and the interviewer was

under pressure to complete the interview quickly, so some important information

could have been missed. It is hoped that the second informal interview would have

rectified this issue.

4.3 Recommendations

The literature review and comparative study discussed in the previous section has

identified a number of areas in which the case study company could improve its

tendering and estimating process. Although some of the differences from the

theoretical process model are justified, several suggestions have been identified in

order to streamline their current process. This section will fulfil the fourth objective

of this report: to create a set of recommendations for a new streamlined tendering

process in order to resolve conflicts identified following the comparison between

theoretical propositions and the case study results.

Within the company process model there are a number of points where there is a

delay in the distribution of documents. These delays occur while they are manually

sent i.e. they are held in one email inbox, or time is spent taking photocopies, or

while the documents are recorded within the information system on tender and

document registers. This bottleneck in the process could be removed with a new

information system. The company has recently implemented a shared server, which

enables employees to access the entire server from remote locations, not just within

the office. However, although this should mean that some delays are avoided, they

are still continuing to process documents in the old way i.e. by sending them by

email and saving documents on their personal computers rather than accessing the

server. The first recommendation would be to implement the new process model for

SMEs in Section 5 (Figure 4) of this report.

The second recommendation would be to participate in another research project

looking specifically at implementing information technology to improve their



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information systems. Research projects are chosen by university students in

December each year. This would enable the company to implement the new process

model over the next several months and would give all employees time to become

familiar with the shared server system recently implemented, prior to further

research investigations taking place.

During the interviews all employees acknowledged that feedback from clients

regarding their tender submissions would be very useful, however they rarely receive

any such information. Although on the majority of occasions the tender submission

may be rejected simply due to commercial reasons, it would be beneficial to receive

comments on how future submissions could be improved. Concern was expressed

that asking the clients for feedback would be an imposition and it is unlikely that

they have the time or the desire to give each contractor a detailed response as to why

they failed to win the contract. However, Lewis (2009 : 268) argues that feedback

from clients is essential, in order to continually improve future tender submissions

and increase your chances of success. “Whatever its outcome, the tendering process

in incomplete without an effort to understand the reasons for success or

failure…There is no need to be apologetic about approaching them on this matter”.

The third recommendation is to create and implement a simple and quick electronic

evaluation questionnaire, using a website such as http://www.surveymonkey.com/.

Clients can then quickly respond to a few specified questions and consequently the

company is more likely to get valuable feedback.

The fourth recommendation would be to develop a check-list of tender suitability

conditions, including criteria such as minimum contract value, minimum drill length,

and contract works location. As discussed in the previous section, this would enable

the Directors to ensure that a uniform decision is made between them, and allow

others to carry out this role when required.

The case study company do not currently use forecasting techniques as they are not

seen to be a useful method for improving the accuracy of estimates. Although

research identified in the literature review summarises a number of techniques and

benefits for using such methods for improving customer satisfaction, due to the



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variables involved in such a specialised and varied type of construction work it

would not be useful for this organization. Brook (2002) concurs, identifying a

number of other reasons for its unsuitability for SMEs within this sector, such as the

frequent changes in market prices, confidential restrictions applied to commercial

information within the organisation and the expense of implementing feedback

systems. However, he does recommend a few other simpler, but more specific

forecasting techniques to improve the reliability and accuracy of further estimates;

1. “Individual investigations can be carried out to find the actual waste of

high-value materials.

2. The average cost of employing certain categories of labour could be

compared with the all-in rate used at tender stage.

3. The value of sub-contracts (and major material orders) which have been

let can be entered on a comparison spreadsheet…This would give

management, and estimators, evidence of the buying margins which are

available in the current market” (Brook, 2002 : 243).

Therefore, my fifth recommendation would be to incorporate some or all of these

cost checks within a contract close-out report, which could be completed by the

Project Manager at the end of each project. Such feedback could then be shared with

both the Estimator and the Directors.

Another difficulty with implementing forecasting techniques is the time needed to

evaluate the project costs. A comparison of estimated cost against actual costs could

be made using Microsoft excel spreadsheets. However, much more detailed cost

comparisons could be made if a specific ERP system was implemented.

My sixth recommendation would be to invest in SAGE 50 Construction, a

description of which is given in Section 2.3, Information Systems within SMEs.

Although the system is expensive, with an approximate cost of £8000.00 –

£12,000.0010, in order to be financially viable the company could pay in instalments

over two to three years. This investment then has the potential to reap back savings

10 Quotation provided verbally by SAGE on 12th August 2011, and includes training and set-

up costs as well as allowing 3 users to access the system.



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through a decrease in wasted time spent on duplicated work activities throughout the

organisation (such as data input for purchase orders and timesheets), easier cost

monitoring for managers which would allow them to manage finances better, and

more accurate and reliable estimates. It would also increase customer satisfaction if

the projects were completed within budget and would in turn improve the company’s

reputation and increase their chances of gaining future work.

A summary of the recommendations for the case study to implement are as follows;

1. Implement the new SME tendering and estimating model (Figure 4).

2. Participate in another research project on information technology to support

information systems.

3. Implement an electronic client feedback request form.

4. A tender selection criteria check-list.

5. Carry out simple forecasting methods suggested by Brook (2002).

6. Invest in SAGE 50 Construction software.

5. Evaluation & Conclusion

Within this report a detailed literature review on SCM and the tendering and

estimating process has been completed. A set of research questions were then

established and qualitative research techniques were then used to develop and

understanding of how such theory can apply to SMEs. This section will now draw to

a conclusion the theory and findings described, and establish a new theory based on

these findings.

Section 5.1 will provide a summary of the findings during the literature review and

how this compared to the case study. Section 5.2 will answer the research questions

ascertained in Section 2.4, following the literature review and in doing so create a

new theory. The findings will fulfil the fifth objective which is to contribute to SCM

theory by investigating how SMEs can implement such management practices.

Section 5.3 will describe and illustrate a tendering and estimating process model



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which can be used within all SMEs. Finally, Section 5.4 will outline further research

which could be carried out.

5.1 Summary of Findings

SCM has been described as a fundamental part of running a successful business

(Ross, 2011), and essential for improving financial gains (Crandall et al, 2010). One

of the key areas of focus within SCM literature in recent years is on customer

relationship development. Suppliers have realised that as customer expectations and

demands for high quality service have increased, it is cheaper to satisfy and retain

existing loyal customers, rather than implementing expensive marketing campaigns

(Crandall et al, 2010). In order to retain successful customer relationships, a number

of techniques have been developed. Such tools include forecasting, to predict

customers future needs and to produce better products, services and quotations.

CRM can also be used to develop a programme on improving relationships with

clients (Salam, 2011). Improving service quality and reputation is also vital for

retaining existing customers (Egemen & Mohammed, 2005).

SRM is also an important component of SCM. Developing long-term relationships

with suppliers can not only save money, but facilitate the exchange of valuable

information. Behavioural aspects including improving communication, trust, power

and continued expectation of future work can develop such relationships (Salam,

2011). Furthermore, procurement methods including partnering and tendering can

influence SCM. Partnering can offer many benefits for developing long-term

relationships with both clients and suppliers. Whereas tendering can ensure that high

quality suppliers are selected in order to provide the customer with an excellent,

competitive service. Although both approaches have their benefits and weaknesses

supplier assessment can offer a useful compromise. Suppliers are assessed on a range

of criteria including quality, safety, commercial and environmental aspects. Such

suppliers can then be added to a preferred supplier list. This enables the contractor to

ensure that suppliers provide a competitive and high quality service, whilst allowing

them to develop long-term relationships with just a few key suppliers and

subcontractors.



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The majority of companies carry out a number of essential processes but an

investigation into all of these processes was impossible given the time restrictions

given for this assignment. Therefore, the tendering and estimating process was

selected in order to develop an understanding of how SCM can be used to streamline

operations within an SME. Tendering and estimating is a core function within civil

engineering companies (McCaffer & Baldwin, 1986). It involves a team of

employees who create an estimate based on a client specification, and a package of

documents including programmes and method statements. However, the literature

review revealed that there was a lack of clear guidance on how SMEs should carry

out this process, and where the boundaries of the process should be. Brook’s (2008)

diagram was selected as the best theoretical model for SMEs as it focused only on

the company completing the process and represented activities carried out

concurrently rather than sequentially.

The final part of the literature review examined the role of information systems and

information technology in SCM within organizations. The ultimate system identified

was an Enterprise Business System which combined all aspects of information

within a business into one central point. This could be supported by an Enterprise

Resource Planner (ERP) which is a tailor-made technology system which provides a

central database for enabling reporting, decision-making and operation management

(Ross, 2011). However, this solution was is unaffordable to many SMEs (Buonanno

et al, 2005). Cheaper solutions include SAP Business by Design and SAGE 50

Construction although these still require a substantial financial investment.

Alternative technological methods identified included I-Marketing, such as advanced

company websites which support financial transactions, electronic marketplaces and

electronic catalogues. E-tendering is also a popular and cheaper solution. Companies

can monitor and express an interest in up and coming projects as well as completing

pre-qualification questionnaires in order to join clients preferred contractor lists.

RFID technology is also useful for managing stock and providing real-time

information on products. Technology is rapidly improving and new solutions which

can be used within SCM are constantly being developed, and in the future possible

tools could include QR codes and automated computer systems.



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Following an extensive literature review a number of research questions were

developed. Although a wide variety of information exists on SCM there was a lack

of detail on how these solutions could be applied to SMEs with limited financial and

man power resources. Consequently a section on qualitative methods which could be

used in order to investigate solutions to these questions were discussed. A case

study, interviews and unobtrusive measures were used to gain information on a real-

life SME tendering and estimating process, and SCM techniques employed. This was

then modelled using Martyn Ould’s (2002) Business Process Management

methodology and Role Activity Diagrams. An analysis between Brook’s (2002)

process model and the company process model could then be carried out.

There were a number of similarities and differences between the theoretical literature

and the case study system. Within the theoretical model there was a lack of detail on

the role of the document controller. It is an essential part of the process to record

tender details within the company information system and this should have been

included. The theoretical model also suggested that an estimator timetable should be

created but this would only be required for a large company with a number of

estimators who would need techniques to manage their workload effectively between

employees. However, the theoretical research also identified some areas in which the

case study company could improve their process, such as pre-submission meetings

and tender handover packages. As a result, a list of recommendations for the case

study company was created.

The rest of this report will use the research findings, summarised above, to answer

the initial research questions and develop a new theory which establishes how SMEs

can implement SCM to improve their business operations.

5.2 Response to Research Questions

Following the literature review in Section 2, it was found that research into supply

chain management was insufficient and four key research questions were developed.

Findings from the case study have provided an insight into how SMEs implement

supply chain management and responses to each question will now be discussed.

Question 1 – How are relationships with clients and subcontractors developed?



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One of the fundamental components of effective SCM is relationship development

with both customers and suppliers. This can be achieved through methods such as

customer relationship management and supplier relationship management. However,

there was a lack of specific information on how SMEs in the construction sector can

develop these techniques. The case study results revealed that SMEs prefer long term

relationships with both sub-contractors and clients. There were many advantages for

the company as a result of forging a partnership with one major utility company

within the UK. Employees within the company were able to develop personal

relationships with their client’s employees, facilitating harmonious working

relationships, and in turn encouraging the sharing of information and efficient

problem solving. The company was eager to provide excellent customer service and

the client assisted by providing advice on developing their health, safety, quality and

environmental systems. Likewise the company employees also developed

relationships with two of their key contractors. This enables them again to share

information quickly and efficiently, not only on current projects but to share

potential leads for future projects. This supports Salam’s (2011) theory that effective

relationships are built upon trust, power, communication and continuity (the

expectation of future work). Of course on some occasions it isn’t possible to use

their preferred subcontractors due to each client’s contractual terms and conditions.

However, where possible these subcontractors were used.

Question 2 – How do SMEs carry out supplier and subcontractor assessment?

To ensure that effective customer service is provided, the case study company carries

out assessments on all of their subcontractors and their main suppliers, addressing

aspects including health, safety, quality, environmental and commercial information.

Questionnaires are completed and reviewed by three key personnel within the

company. However, as Ordoobadi and Wang (2011) warn, without a structured

assessment process in place these reviews could be skewed by personal bias.

Although there is a wide variety of literature on different review methods, employees

within an SME are unlikely to have time to develop and implement difficult

assessment measures. Within the case study company there is often just a few week



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turn around between one project finishing and another project starting. As a result,

assessments need to be carried out quickly. Therefore, one of the best solutions for

supplier assessment within SMEs, and one which was suggested by many textbooks

within Sheffield University Library (Bozarth & Handfield, 2008; Crandall et al,

2010; Lysons & Gillingham, 2003) is the Linear Weighted Average method.

Question 3 - How does a small company with a limited number of employees manage

its work tasks during the tendering and estimating process, and which activities does

the company include within this process?

Contrary to many of the textbooks on tendering and estimating processes which

discuss a multitude of roles involved in this system, the case study company only

implemented three or four roles within the organization. This included the document

controller, the director and one or two estimators, depending on the type of works

involved. A detailed model of their process is illustrated in Section 4 (Figure 3).

Several additional activities were carried out in the case study process such as

document control. However, many essential activities were not carried out. These

included carrying out pre-submission meetings and creating a handover package.

Additional activities will be added to the new tendering and estimating process

model for SMEs (Figure 4).

Question 4 – How does an SME with a limited budget for technology, use IT to

facilitate their information systems?

Within the case study company free e-procurement resources were implemented, and

seen as a useful means of monitoring and obtaining information on current and

future projects. Websites including www.selltowales.co.uk and the Official Journal

of the European Communities online database were searched on a weekly basis and

updates were received. Furthermore, they also subscribed to Achilles UVDB which

is an on-line pre-qualification questionnaire, which the contractor completes and

clients have access to. This solution enables the company to promote directly to a

number of key clients and save valuable time spent of completing numerous client

questionnaires.



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The case study recently installed a remote access server by purchasing a new

computer system and operating a software called Dropbox11, which enables

employees to access data not only from the office but from their homes or on site.

This system was relatively low budget and was completed with little interference to

employees. This is an excellent method which all SMEs could implement to improve

their information systems.

5.3 A proposed SME tendering & estimating system

Following the completion of the case study and critical analysis a new Role Activity

Diagram for the tendering and estimating process has been developed. A number of

activities have been removed to streamline the process and several activities have

also been added in order to produce a high quality tender submission.

The first major change in the new system would be to remove the bottlenecks which

occur during the document control stage. Ideally a new information technology

system would facilitate the distribution of tender documents by automatically

sending them to the Director, rather than being delayed while they are recorded

within the company system. It would also automatically allocate reference numbers

for letters and documents without the need for somewhat slow manual data input. It

may be possible to create a new document numbering system to facilitate this

process without the need for a new technology system. However, if a further

research investigation was carried out, these suggestions could be tested and a

suitable solution could be developed.

The activity to manually pass document from one actor to another has been removed

from the new diagram. Documents no longer need to be transferred by email or post

with a shared, remote access server. A notification of the project number and when

the documents have been completed is all that is now required.

11 http://www.dropbox.com/features



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Several activities have been added which are necessary to carry out in order to an

accurate tender submission has been completed. In order to ensure that an overview

of the tender information is accurately shared between all personnel a tender review

form has been included. It should summarise all the basic correspondence details,

technical details and commercial information i.e. type of contract and ground

conditions. It should also include a list of tender documents received from the client

so that documents aren’t missed during the review process.

A pre-submission meeting should be held in order to ensure that all actors

understand what is required within the tender submission and to ensure that all

documents are included. It will also provide an opportunity to discuss any technical

and commercial variations if necessary.

Feedback should also be requested following submission of the tender in order to

gain information on how to improve future submissions.

A tender handover package has now been included in the new diagram. Brook

(2002) recommends that a checklist should be completed to ensure that all the

relevant documents are handed over to the project team. This could be incorporated

into the tender review document to avoid any duplication of work and information.

Finally, the new diagram includes the new role of the Project Manager. At the end of

each project a summary of quality, technical and commercial recommendations and

problems during the project should be completed by the Project Manager. This could

then be passed on to the Director and Estimator in order to account for these issues

during future tendering and estimating submissions.



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Figure 4 - A Tendering and Estimating Process Model for SMEs



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5.4 Future Work

This dissertation has investigated how supply chain management theory can be

applied to SMEs, in order to streamline their processes.

There are however, a number of limitations which the findings of this report have not

been able to accomplish within the timeframe provided:

• A complete study, including the implementation and evaluation of the

suggested streamlined process model has not been carried out.

• Only one business process was researched and analysed;

• Only one case study has been carried out;

• An indepth enquiry into possible information systems for SMEs has not been

carried out;

• This report has only focused on SMEs within the construction industry.

Therefore, in order to provide a more accurate and broader understanding of how

SMEs can improve their processes using SCM, the following future work has been

proposed:

• Researching how the new process model for SMEs and list of

recommendations were implemented within the case study company, and

evaluating whether its implementation was successful;

• Investigating different processes within SMEs, such as purchasing, and how

current theory applies;

• Contribute further to empirical research by carrying out further case studies,

and examine whether the research findings are typical within a variety of

construction SME organizations;

• Carry out a detailed study into information systems within SMEs, with a

focus on technology to support tendering and estimating systems. By

carrying out a more detailed review of current literature on information

technology available and identifying systems which could be implemented

within SMEs, taking into account limited financial expenditure and minimal



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time for implementation, information systems within many SMEs could be

simplified and free up scarce resources;

• A further study into technology for facilitating information systems within

SMEs could look at solutions for overcoming issues with remote access. As

some organizations operate from remote locations such as power stations and

offshore platforms, obtaining internet connectivity can be difficult and SMEs

have limited resources to spend on high-tech equipment.

• Carry out additional theoretical research and complete a similar case study

within a different industry, such as health or manufacturing.

Word Count: 19,274



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APPENDIX A - INTERVIEW QUESTIONS

Interview 1 – Document Controller

Introduction – The aim of this interview is to discover how a small business carries

out its tendering and estimating process. What I would like to discuss with you today

is your role and the activities you carry out during this process. At the end of the

interview I shall ask you for any opinions and recommendations to improve the

current process.

Participants job role:

1. How long have you worked for the company?

2. Have you been involved with tendering and estimating for long?

3. Please could you talk me through the main activities you carry out during the

tendering and estimating process, starting with how you receive tender

enquiries?

• Triggering Question – Could you describe step by step all the activities you

carry out to complete a tender submission, such as who the tender documents

are sent to and where they are all saved and filed?

• Redirection Question – Please could you describe just the activities involved

in creating a tender package?

Notes



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4. Which are the main documents you create for a tender submission?

• Triggering Question – Do you create documents such as programmes,

method statements, or the covering letter?

• Redirection Question – Could you list the main documents you create?

Notes

5. Are there any forms you use to assist with planning, controlling and recording the

tender process?

• Triggering Question – Do you use forms such as a tender register, a tender

summary form or a tender programme to record tasks and responsibilities?

• Redirection Question – Which forms specifically are used within the tender

process?

Notes

6. Do you use any particular computer software to complete your tendering and

estimating activities?

• Triggering Question – Do you use any forms of software such as Microsoft

Office, SAGE estimating or Computer Aided Design (CAD)?

• Redirection Question – Which are the main software products used to publish

and assist you in creating presentable tender submission?

Notes



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7. How many other people are involved in this process?

• Triggering Question – Who do you receive tender documents from, who

carries out the estimates and who submits the final tender?

• Redirection Question – Which people directly contribute to the tender

submission package?

Notes

8. What would you say are the main problems with this process?

• Triggering Question – Do you ever have problems with time constraints or

have the clients ever provided negative or constructive feedback on a

submission?

• Redirection Question – Within the tender process which would you say are

the three main problems?

Notes

9. Can you suggest any areas for improvement?



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• Triggering Question – Are there any ways in which your activities could be

made simpler and easier?


the three main ideas for improvement?

Notes

Thank you for your time. Now I have an understanding of how the process works I

shall create a process model. Would it be possible to arrange another meeting to

discuss my findings and establish if I have understood the process correctly?

Interview 2 – Estimator



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current process.






enquiries?






Notes

4. Which are the main documents you create for a tender submission?



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• Triggering Question – Do you create documents such as programmes,

method statements, or the covering letter?

• Redirection Question – Could you list the main documents you create?

Notes

5. How do you select which suppliers and subcontractors to use?

• Triggering Question – Do you use any selection techniques such as

subcontractor assessment and a supplier rating scheme?

• Redirection Question – Could you briefly sum up the key selection methods

used?

Notes

6. Do you use forecasting methods to predict the future costs of projects?



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• Triggering Question – For example do you review the time it took and the

cost incurred to weld a pipeline during previous projects, and if not why not?

• Redirection Question – Could you identify the three most useful forecasting

methods?

Notes

7. Do you receive feedback from site managers regarding the technical and

financial progress in order to learn from their experiences?

• Triggering Question – Do construction supervisors or project managers keep

you updated on any cost changes and provide you with an explanation

regarding why such changes were made?

• Redirection Question – Do project managers report cost updates on a weekly

basis?

Notes



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8. Are there any specific sources of information you use in order to carry out the

estimating role?

• Triggering Question – Do you refer to documents such as the Code of

Estimating Practice and the Working Time Agreement?

• Redirection Question – Could you list the key documents you use?

Notes




submission?



Notes



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submission?



Notes






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Interview 3 – Director





current process.






enquiries?






Notes



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4. How do you decide which projects to tender for?

• Triggering Question – Do you refer to a list of criteria such as the location of

the project, competition from other contractors or the estimating team’s

current workload?

• Redirection Question – Could you state the main criteria for project

selection?

Notes

5. How you obtain the majority of tenders?

• Triggering Question – Are many of the tenders received via tender websites

or are they sent direct from clients due your reputation in the industry?

• Redirection Question – What are the four key sources of tender sources?

Notes



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6. Do you have, or have you considered forging partnerships with subcontractors

or clients?

• Triggering Question – Have partnerships been a successful means of

completing projects/ the literature on partnerships identifies may benefits and

weaknesses with this work ethic. What are your reasons for not going into

partnership?

• Redirection Question – What were they main benefits and weaknesses?

Notes




submission?



Notes



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• Triggering Question – Are there any ways in which your activities could be

made simpler and easier?


the three main ideas for improvement?

Notes






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APPENDIX B – CONTRIVED OBSERVATION TASK LIST

Document Controller

Theoretical Tasks Actual Tasks

1. Receive documents by post or email

2. Record project on tender register

3. Tender enquiry form attached to tender

4. Send to Director for decision to tender

5. Decision to tender given/ declined

6. Client notified of decision

7. Documents sent to Estimator

8. Estimate timetable received

9. Examine document

10. Prepare template documents for submission

11. Receive completed documents

12. Compile tender submission

13. Pass copy of tender to Director for approval

14. Authorization to submit tender given/declined

15. Make additional changes if requested

16. Submit tender