Getting work © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 1

Business development Function- To get on tender lists – Regional markets Size of project- related to risk, funding and capability Technology- related to specialisation, relationships with subcontractors Client types- related to long-term relationships, knowledge of procurement systems and constraints – Entry into markets and vertical differentiation Market pressures lead to wider operational spreads Interface pressures Price vs outturn cost problems 2 © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Bid development Estimation process – Clear programme of responsibilities and milestones – Communication-key – Interfaces design and construction – Checklists – Risk Need for commercial assessment – Opportunities Client Design team Documentation Design Suppliers Subcontractors Commercial report – At commencement of bid – At tender committee Sectionalised Market opportunites – Buying gains Project 3 © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Process of tender assessment Who is involved? – Bid manager, pre construction manager (or estimating manager, director) Questions asked? – What is the origin of the bid? (solicited or unsolicited) – Do we know the client and his design team? – Does it fit our workload profile? – What is the procurement route? – Have we enough time to bid properly? – Who is the competition? – What are the key risks? – If we want to price how can we win? © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

What are the key risks? – Client Have we worked together before? Is there a chance of repeat business? Is the budget realistic? How is the client funding the project? Payment record (public or private client) – Form of contract Standard form or significant alterations Any deal breakers e.g. on demand bonds or “fit for purpose” © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Contractual risk assessment – Payment processes Payment period following issue of Architects Certificate Valuation method (cost plus, schedule of rates, stage payments and timing etc) Variation and claim evaluation- standards of “proof” – Supply chain risk Are there any nominated, specified or named contractors? Have we experience of them and can they perform © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Contractual Risk assessment Design Risks What is the extent of design responsibility? – D&B, contractor design portion supplement, no design Who’s involved? – Consultants, specialist contractors, planners, community groups. How robust is the design? – Concept vs. detail – Can we identify the extent of the design development necessary? Reliability of designers – Can they supply design information in accordance with the programme, big enough to carry PI if they fail – Robustness of their contract e.g. novation terms and the stage that the designers are integrated with construction team © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Production risk- commercial implications Programme risks – Is the contract period realistic? – Critical path and information/procurement of resources to hit key commencement dates – Early activities, design information availability Supply chain risks – How are subcontractors selected- price only?? – Do we need to align with key subcontractors i.e. M&E – Time available to resend out for commercial opportunity? © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

How is the commercial risk analysis undertaken? – Risk schedule prepared – Overall aim to arrive at a financial estimate of risk, threat and opportunity. – A range of market assessments made, subcontract/supplier comparisons, the competition, strength of contractor’s offer. – Commercial opportunity identified The extent of additional profit that can be gained via “commercial management” of supply chain and client(?) Sometimes tied into qualifications and/or the programme © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Shifting the risk? The use of qualification Qualifications to Bid (sometimes called Clarifications ) Design team’s view on qualifications – Risk transfer back to client/clients design team – Not complying with specification/Employers requirements – Risk of disqualification (LA’s) Single stage selective tendering requirement – Expressly excluded but sometimes considered if problems with documentation/construction process come to light during the tendering period. – Might decide to submit an alternative lower cost bid © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Responses- Commercial Front loading tender- cash flow enhancement – Money moved to early activities from later activities resulting in enhanced cash flow – stage payments – Movement of method related costs from measured work rates into prelims e.g. scaffolding or enabling works=early payment Variation assessment- profit enhancement – Loading of areas that are likely to change in future e.g. Substructure, soft spots, obstructions, incorrect quant's – Errors in BQ descriptions, quantities, drawings- check contract for variation definition. – Programme phasing not workable © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Responses- commercial II Subcontractor/Supplier assessment – View taken over post contract additional discount available (better buying!) Dependent on time available for negotiation Subcontract status- preferred Scope of subcontract e.g. design difficult to replace Extent of competition and the ability to replace tendering subcontractor with another. Type of subcontractor © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Finalisation of bid Adjudication of the bid – Decision making- key decisions and consequences – Overhead allocation/net price development – Deduction of commercial opportunity to reduce net bid – Agree mark-up Bid submitted – Format sometime only a single page submitted – Bills of Quants/docs called for checking Estimator “inks up” documentation and allocates overheads/comm opp/contingency Internal bill of allowances and external bill (submission to client) generated Where is profit shown? © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Client’s advisor responsibility Tender compliance (like for like) – What to do about qualifications? – Usually code of tendering procedure identifies all possible outcomes Check on arithmetical calculations – Usually alternatives are specified if errors found Check all pages/rates are completed Check for anomalous rates/areas where the design team may be exposed to risk Check programme, – ( e.g. engineered claims by putting pressure on design team early) Pressure to make sure that client not exposed – Client advisor PI responsibilities and cost if found liable © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Hand over to the project site staff by service staff Briefing by estimator/planner – Key decisions Documentation – internal/external bill – tender correspondence – subcontract quotations and comparisons, supplier quotations and comparisons – Programme Commercial Plan – Contractors QS develops project post contract commercial strategy to make margin- reported at monthly CVR meetings. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Tender lists Open competition Frameworks and approved lists Ad hoc lists 16 © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Newer approaches Auctions E-bidding Reverse auctions 17 © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.