Tendering: Objectives, Process, and Ethics

• This module covers the objectives and ethical background to tendering, the process of calling tenders, receiving, evaluating, and selecting tenders, tender negotiations and engaging a contractor.
• Ryan Loveday, a director at Fulton Trotter Architects, is the presenter.
• Ryan studied Architecture at the University of Technology Sydney and has worked on public projects like education, health, aged care and community architecture.

NSCA 2015 Performance Criteria

• The module aligns with competencies from the National Standard of Competency for Architects 2015, focusing on project delivery during the construction stage.

NSCA 2021 Performance Criteria

• The module relates to competencies from the National Standard of Competency for Architects 2021, covering practice management, professional conduct, design delivery, and construction phase services.

What is Tendering?

• Tendering is a formal offer to perform work for payment, sought from multiple suppliers in a competitive process where bidders are unaware of others' quotes.
• Buyers evaluate and accept the tender response that best meets their needs and offers the best value for money.

Procurement

• The point when tendering occurs depends on the procurement model, influencing documentation, but the tendering process remains substantially the same.
• Traditional lump sum tender involves 100% complete documents.
• Design and construct tender: 20% - 60% complete documents.
• Trade packages: 100% complete documents released progressively.
• Architects are often invited to tender for design services, and architects invite bids from subconsultants.
• A traditional timeline is: Brief, Concept design, Design development, Construction documentation, Tender (100% complete documents), Site establishment, Construction and Defects liability

Code of Tendering: Ethics

• Tendering's objective is delivering the client the most advantageous offer through a fair and ethical competitive process.
• AS4120-1994 Code of Tendering encourages fair and honest dealing, having regard to the expense of tendering and avoiding collusion.

Selection of Tenderers

• Tenderers can be selected a number of ways.
• Expressions of interest (EOI), leading to a shortlist
• Pre-qualification panels, resulting in a shortlist
• Directly invited/selected tenderers
• Public open tenders via an online government portal
• Securing a good contractor is critical to the project and the architect's reputation.

Checking References

• The architect commonly checks and vets tenders by checking items like:
• a current license that is appropriate for the work
• the relevant experience necessary to do the work
• the capacity to complete the work
• the insurances necessary to complete the work
• the contractor's solvency-history and ongoing
• the contractor's current workload
• the architect or client's prior experience with them or unbiased references from others

Tender Package

• The tender documents form the basis of the contract, so they must be clear, complete, and consistent for precise and unambiguous pricing.
• The tender set of documents normally includes: Notice to tenderers and Conditions of tendering, General conditions of contract (eg AS 4000), Contract schedules (or annexure) filled out, Schedule of provisional sums, Tender form-for consistency, Technical specification, Drawings and Information-only documents

The Tender Process

• It is important to maintain discipline when managing queries and addenda during the tender period.
• All queries should come to the architect only.
• Fairness and equal access to information should be maintained.
• All tenderers are included in replies to queries.
• Addenda are issued promptly (but not in the final week).
• Addenda are recorded clearly with numbered, dated revision numbers.
• Extra time should be allowed for complex addenda

Receiving Tenders

• Tenders should be handled carefully to ensure fairness.
• Tenders should close after 2pm, not on a Monday or day after a holiday, as per AS 4120.
• Maintain distance by having a designated person handle the tender box.
• Open tender envelopes with a witness, ideally the client.
• Define the policy on late tenders well beforehand
• Define whether email or fax submissions are acceptable
• Inform tenderers of the result as soon as possible

Evaluating Tenders

• Tenders should be evaluated by comparing fixed prices on the documented scope.
• A consistent formal process is required, often an evaluation matrix and scoring system.
• The process is impartial
• Must identify conforming and non-conforming tenders.
• Must follow the stated conditions of tendering.
• Alternatives and offered savings are taken into consideration.
• A defensible decision must be capable of being challenged
• Factors to consider: price, offered program, references, and capacity

Tender Report

• The architect's tender report includes a recommendation, but the client doesn't have to choose the lowest price, but rather, the most advantageous offer

Preferred Tenderer

• The preferred tenderer is accepted.
• The client enters further negotiations with the preferred tenderer.
• The project does not continue and is re-tendered if necessary.

Negotiations

• The architect is involved in negotiations with tenderers at this stage.
• Negotiations are conducted face to face and with only the one preferred tenderer at a time.
• Trade breakups are taken into consideration
• Outcomes are carefully recorded
• Tenderers are offered very limited options:
  • No add-backs are allowed for items missed or excluded
  • Stand by their tender price as tendered
  • Withdraw their exclusions and maintain their price as tendered
  • Withdraw from the tender entirely without penalty

Acceptance

• Assuming a satisfactory result is achieved, the following must occur:
• Confirmation of acceptance given in writing; the date is the date of the contract.
• This may be by way of a formal instrument of agreement or a formal letter of acceptance
• The architect assembles the contract set for signing, including all relevant documents in chronological order.
• The architect oversees that proper process is followed
• The architect informs the client of their responsibilities
• Courtesy letters are sent to unsuccessful tenderers.
• Acceptance is followed by formal possession of the site by the builder on an agreed date, usually three to four weeks allowing for the builder to gear up.

Concluding Summary

• Competitive pricing can be vulnerable to collusion and manipulation.
• The architect's reputation relies on conducting an ethical tender process.
• Architects must be transparent, professional, and disciplined.
• Poor practices encourage 'gaming' and reduce market confidence
• Tendering is expensive so you shouldn't take builders for granted
• Architects prefer builders to preference tendering because they know they'll be treated fairly.