Once the preferred contractor is appointed, they are no longer in direct competition with other bidders. This means that there is no particular incentive for the entrepreneur to get a good price, so other methods should be considered to ensure that the price is good value for money. The traditional supply route in the construction industry is for the customer to provide contractors with certain information related to a project. Based on this information, contractors ”set” the price of the work and submit their ”offers” to the customer. The customer then accepts the offer of the selected contractor and this forms the basis of the contract between him. Traditionally, customers accept the lowest offer for obvious reasons. For a contractor who intentionally purchased the order or who in fact innocently made a mistake in its price, this puts it in a position where its only way to cover its actual costs is to make ”claims” under the contract. In addition, the fact that customers traditionally go to five or six contractors means that the cost of tendering, as measured by the chances of success, is high. Therefore, price fixing and tendering, although illegal, are not atypical abuses caused by traditional tendering procedures. With a complex design, it is unlikely that the contractor will benefit from the same understanding of risk that is one of the obvious benefits of the process. Secret discount agreements and other abuses are used to inflate subcontracting offers at the customer`s expense.
The benefits of this approach for the customer are significant. The client benefits from the contractor`s technical expertise at a much earlier stage and the entrepreneur has the opportunity to engage in the supply chain to enhance the project, contribute to the final design and develop innovative solutions that can improve the constructability and improve the efficiency of the program. By sharing their own expertise, working with suppliers in a clear and transparent way, and working together as part of a seamless team, the entrepreneur can try to reduce overall delivery costs and set realistic schedules. The two-stage tender should not be used by an employer who only wants to obtain the lowest possible tender. This initial phase allows the contractor to submit details as part of a stem agreement and includes aspects related to project preparatory work, methodological statements, design, overhead and profits. The ability to include as much detail as possible in the pre-construction service agreement, the dates and duration of the pre-construction service agreement. B, cost targets, realistic design and procurement program, supply chain participation and pre-construction activities are critical to the success of a two-step process. This can help control all the variables that have the potential to lead to price escalation and delay. Ensuring a clear plan and mutual understanding of team roles and responsibilities can help facilitate deployment and achieve conflict-free results. The definitions of the first stage and the second stage are not identical in this article and in the RICS article mentioned below. The first step in the tender is to identify a suitable contractor and set an acceptable price level as a starting point for negotiations in the second phase.
This phase of the tender is competitive and several contractors submit the following: Keith Hayes, Graham`s Director of National Framework, recognizes two-stage procurement as a way to provide cost and program assurance to their customers: ”At GRAHAM, we fully support the two-stage tender, this procurement channel has brought real value to our customers and to ourselves. The two-step procurement process encourages collaborative work and significantly reduces the risk of the project to all stakeholders, resulting in greater certainty of costs and the program, as the design was developed completely and jointly between all parties. Above all, this includes innovation, MMC opportunities and constructability advice from us as an entrepreneur and from our supply chain. Phase 2 concludes with the agreement of a flat rate for the completion of the project and the terms of the construction contract. Theoretically, the employer can hire a completely different contractor to perform the construction work as part of the construction contract. In practice, however, the employer and the Level 1 contractor generally worked closely together in the initial phase, which allowed them to reach an agreement on the price and terms of the contract. Given the contractor`s involvement in the development of the design, the construction contract will generally be a design and construction contract. The contractor is appointed at a much earlier stage of the construction process than would normally be the case, but on a preliminary basis using a Pre-Construction Services Agreement (”PCSA”). Then there is a second phase in which the employer tries to appoint a contractor for the construction work under a construction contract. Subcontractors` tendering may also begin in the second phase, as soon as an acceptable contract value for the work has been agreed.
(ii) In the second phase, incoming bidders shall submit the requested technical and financial proposals. Technical proposals are evaluated first, and financial proposals remain sealed and secured. Companies that obtain the minimum technical qualification grade specified in the call for proposals or higher will then be invited to open their financial proposals to the public. .