Tendering (CONS6811) Lara Tookey
TENDERING #4
Tendering (CONS6811) Lara Tookey
Session FOUR
Face 2 Face (4 hours)• Stage 2 – Project
appreciation & enquiries
• Introduction to subcontracting
• Why does a MC need subbies?
• How is the work split between the various parties?
Self-directed (6 hours)
• Read before the session:
• Weebly• eBook• CIOB overview of
subcontracting
Tendering (CONS6811) Lara Tookey
ACTIVITY (20 MIN) Working with your peers
• Working with those around you, please evaluate the three samples provided in order to determine a BID / NO BID decision.
• Please keep a note of your queries / assumptions made for further discussion.
• Feedback will be requested.
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Detailed Examination of Docs
• Adequacy of information in tender documents;
• Onerous or unusual conditions noted;• Discrepancies;• Specifications;
– Do they match the drawings?– Could be main contract document (if no Schedule of Quantities)
• Constructional problems.
Tendering (CONS6811) Lara Tookey
What kind of documents are we talking about?• The Contract – ‘rules’ NZS 3910/5/6:2013• Schedule of Prices / Quantities• Specifications• Drawings• Appendices i.e. consents; geotechnical
reports
Tendering (CONS6811) Lara Tookey
Project Appreciation
• View Drawings• Visit Site & Locality:
• Visit site & prepare site report;• Take photos (demolition, alterations, additions);• Photograph surroundings i.e. buildings, fences,
paths etc.• Determine construction methods• Prepare Preliminary Programme
Tendering (CONS6811) Lara Tookey
CAN WE (THE MC) DO ALL THE WORK ON OUR OWN?
Tendering (CONS6811) Lara Tookey
What work with the MC do?
• Do it all within the contracting organisation!!
• Subcontract it all• Construction Management approach
• Combination of own work & subcontract work packages
• Generally • 30% own work• 70% subcontracted
• Project & Contractor specific• Most common approach
Aka Packaging Options
Tendering (CONS6811) Lara Tookey
Objective of Packaging Strategies
• Obtaining competitive advantage through work package optimisation.
• Work packaging is the grouping of similar types of work processes to be carried out by one entity.
• Work Breakdown Structure (WBS)• Trade Based packaging
Tendering (CONS6811) Lara Tookey
Work packages
• Each work package should consist of work that would be done by a specific class of subcontractor.
Tendering (CONS6811) Lara Tookey
Remember!!
• Increasing the number of subcontractors on the job reduces financial risk to MC but increases communication complexity and cash flow problems for the project team
• Decision to subcontract versus retain works is a risk/return optimization problem
• Retained work has potential for greater reward, but carries more risk
• Retained is less risky when you have long-term trades people and well-understood market
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Enquiries to Subcontractors
• Which trade packages will require subcontract quotations – send docs to sub-contractors;
• Include all relevant info to enable technically accurate quotations;• Terms & conditions detailed;• Identify ‘unique’ materials;
• Essential to indicate approximate time when goods / services required on site.
Tendering (CONS6811) Lara Tookey
WHAT DO WE MEAN BY SUB CONTACTING?
Tendering (CONS6811) Lara Tookey
• A subcontractor is a construction specialist that generally contracts with the MC (using a contract called a subcontract) to perform some aspect of the MC’s work (a particular portion / work package of the project)
Tendering (CONS6811) Lara Tookey
WHAT LEAD TO THE DEVELOPMENT OF SUB CONTRACTING?
Tendering (CONS6811) Lara Tookey
Just a few issues
Transaction costs
Employee Training
Work RestructuringSafety and Health
Nature of the industry
Technological Change
Tendering (CONS6811) Lara Tookey
General pressures
• Different types of projects - different skills required.
• Increasing technical complexity / diverse skillbase requires increasing numbers of specialist inputs
• Perceived threat posed by trade unions.
Tendering (CONS6811) Lara Tookey
Nature of Construction Industry
• Sites are geographically dispersed, some workers better placed for some sites than others.
• Traveling distances – more inclined to employ from local workers.
Tendering (CONS6811) Lara Tookey
• Non-wage cost (transaction) of employment i.e. training, pension rights, sick pay, redundancy payments;
• If price of using SC’s exceeds cost of internal utilisation of resources, firm will in-source.
• If, however, cost of in-house production exceeds that of contracting out work, firm will opt for outsourcing.
Tendering (CONS6811) Lara Tookey
Advantages of using subbies
• Efficient and economical in the use of available resources.
• The prime contractor can obtain workers with the requisite skills when they are needed, without the necessity of maintaining an unwieldy and inefficient full-time labor force.
Tendering (CONS6811) Lara Tookey
Advantages of using subbies
• Qualified subcontractors are usually able to perform their work more quickly and at lesser cost than can the main contractor.
• Many construction specialties have specific licensing, bonding, and insurance requirements that would be costly for the main contractor to secure for irregular use.
Tendering (CONS6811) Lara Tookey
ACTIVITY (10 MIN) Working with your peers
So, what do you think the disadvantages of subcontracting are?
Tendering (CONS6811) Lara Tookey
Issues related to dealing with SC’s
• Job spiking. • Occurs when a SC signs up for more work than he
can handle & then starts a little bit of each project to secure the work.
• The MC is left with a SC who simply does not have motivation or capabilities to pursue work in a timely manner.
• SC do not understand / care about the domino effect their non-performance causes.
Tendering (CONS6811) Lara Tookey
• Extensive subcontracting can seriously complicate the overall scheduling of job operations, lead to a serious division of project authority, fragmentize responsibility, make the coordination of construction activities difficult, weaken communication between management and the field, foster disputes, and be generally detrimental to job efficiency.
Tendering (CONS6811) Lara Tookey
• The MC remains responsible under its contract with the owner for any faulty performance by the subcontractor.
• The MC assumes complete responsibility to the owner for the direction and accomplishment of the total work including the responsibility of coordination and supervision of the subcontractors.
Tendering (CONS6811) Lara Tookey
ACTIVITY (10 MIN) Working with your peers
Identify and explain the difference
between the various types of
subcontractors.
Tendering (CONS6811) Lara Tookey
Types of Sub-contractors
• Domestic• Selected and appointed by the MC.• MC responsibility to ensure delivery, quality,
progress etc.• Supply & fix all labour, plant & material.
Tendering (CONS6811) Lara Tookey
Types of Sub-contractors
• Nominated• Selected by Client• Client negotiates a price with nominated subbie
and then instructs MC to appoint them for that work.
• MC may make ‘reasonable objection’• MC will include price as a prime cost sum, to
which they can add overheads, profit and attendance.
• Declining practice
Tendering (CONS6811) Lara Tookey
Types of Sub-contractors
• Named• Subbie for a particular package selected from a
list of acceptable subbies provided by the client.• Allowed for in the tender docs by means of
provisional sums for which the MC makes allowance for profit, attendance and programme within it’s tender offer.
Tendering (CONS6811) Lara Tookey
• Named cont.• Once appointed, the MC seeks tenders for the
package from the named subbies, places a sub-contract with successful tenderer, and provisional sum is replaced with tendered figure.
• MC responsible for performance • Delays, performance etc
• MC also completes payment certificates.
Tendering (CONS6811) Lara Tookey
Types of Sub-contractors
• Labour-only / Labour & plant only• Materials provided by MC.
• Eg brickwork & concreting gangs; reinforcement steel SC.
• Selected & engaged as per Domestic SC.• MC responsible for delivery, quality, progress etc
Tendering (CONS6811) Lara Tookey
Subcontractor selection process
Tendering (CONS6811) Lara Tookey
Three Stage Process
• Preparation phase• Determine a bid list
• ‘Public’ call or select
• Implementation phase• Notification
• Analysis / tender phase• Receive bids• Evaluate the bids• Choose the best SC• Inform all bidders of results.
Tendering (CONS6811) Lara Tookey
Preparation Phase -Determine a Bid List
• Most MC’s maintain comprehensive records concerning suppliers & sub-contractors.
• History of past performance;• Aka track record• Perceptions of quality• Financial stability
• Extent of geographical operation;• Size & type of contract on which previously
used;• Information concerning contracts.
Tendering (CONS6811) Lara Tookey
Implementation PhaseNotification
• Provide info required by tenderers:• Contract documents• Tender information
• Tender format & submission date & time.• Contact for further information• Updates• Clarifications
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Method of Construction
• Alternative methods of construction, sequencing of work and site layouts need to be evaluated.
• Requirements for labour, plant & site facilities determined.
• Technical risks:– Define construction methods before costing the
work.– If cost of failure high in relation to value of project –
insure against possible loss, or increase control.
Tendering (CONS6811) Lara Tookey
Programme & Temp works design
• Done by specialists.• You will need to work closely with them in
order to develop your P&G costs.
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Site Report
• Description of site
• Description of access to site
• Topographical details of the site
• Description of restrictions to / on site
Tendering (CONS6811) Lara Tookey
• Description of ground conditions
• Position of existing services
• Any problems related to security of the site• Facilities for disposal / storage of soil• Location of site amenities.
Tendering (CONS6811) Lara Tookey
• Description of any demolition work
• Description of temporary works
• Assessment of availability of labour
Tendering (CONS6811) Lara Tookey
• Identify• Local Statutory Authorities• Building surveyors• City engineers• Emergency services
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Tendering (CONS6811) Lara Tookey
Session FIVE – Chris Prigg
Face 2 Face (4 hours)
• Stage 3 – Resource & Preparation of the Estimate
• Pricing
Self-directed (6 hours)
Tendering (CONS6811) Lara Tookey
YOUR ASSESSMENTS
Q&A