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Procurement Selection 1.0 Details of Procurement options in the Construction Industry: The Procurement mainly covers the following three aspects. 1) The working arrangement

2) The tendering process or method of selection.

3) Form of Contract to be used.

1.1 The working Arrangement There are four main various types of construction procurement paths currently used in construction industry and are as follows. 1) Traditional Path 2) Design & Build Path 3) Management Path – Management Contracting Construction Management 4) Design & Manage Path 1.1.1 Traditional Path

This is the most commonly used procurement path and it represents traditional “Architect – led” competitive tendering approach. According to this path the clients or their project managers usually engage architects, consulting engineers and cost consultants and prepare tender documents and then a main contractor is appointed. This traditional procurement path can be divided into the following two methods. a) Sequential method. b) Accelerated method. 1.1.1. (a) Sequential Method According to this method, contractors receive complete information from the consultants on which to base on their tenders and then successful contractor will proceed with the construction of the contract. This is a normal traditional method. 1.1.1 (b) Accelerated method The accelerated method is an alternative method under traditional route. In this method the contractor becomes part of design team by tendering. It may be either in competition or by negotiation based on partially complete design information. The successful contractor

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assists the design team for the completion of the design and then gets on with the construction process. When the time is an essence, the accelerated traditional system can be implemented. It is most likely to be successful if a project office is created in which the whole project team work as a Consortium. There are three basic types of contract used under traditional route are as follows.

• Lump sum contracts. • Measurement Contracts. • Cost reimbursement Contracts.

1.1.1.2 Lump Sum Contracts The contractor is invited to tender on the basis of drawings and specification for construction of project. Usually there is no provision for adjustment to the quoted price unless the client introduces changes subsequent to the letting of the contract. The contractor is responsible for assessing all the costs to be incurred in fulfilling the requirements shown on the drawings and specification. 1.1.1.3 Measurement Contracts This type of contracts will be used where work cannot be accurately measured before tendering takes place. The work has been designed to a preliminary stage and reasonably accurate picture can be given via drawings and an approximate bill of quantities. The signing contract and the beginning of work on site may proceed before the design is fully completed. The basis of this type of contracts is a re-measurement of all quantities of the work and will then be priced at the relevant prices contained in the tender document. 1.1.1.4 Cost reimbursement contracts This type of contracts are often referred to as “Cost – Plus” contracts because the method of payment is by reimbursement to the contractor of his prime cost or actual cost of labour, plant, and materials plus an agreed fee to cover management, overheads & profit. There are three various type of contract, which has been divided into based on the contractor’s management fee calculation methods and those are as follows. 1) Cost plus percentage fee The contractor is paid a fee equal to an agreed percentage of the prime costs of labour, materials and plant used in carrying out the work. 2) Cost plus fixed fee The fee paid to the contractor is a fixed sum, which normally does not vary with total prime cost, but it is based on estimate of the total cost.

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3) Cost plus fluctuating fee The fee fluctuates in relation to the success of the project. If the total cost is less than an agreed sum (the “target cost”) then the fee is increased (a bonus). If the total cost is higher than an agreed sum then the fee is reduced. (Penalty) “Prime Cost” means the total cost to the Contractor of buying materials, goods and components, of using or hiring plant and of employing or hiring labour, in order to carry out construction works. Drawings and specification Bill of firm quantities Bill of approximate quantities Schedule of rates Cost reimbursement – target cost (fluctuating fee) Cost reimbursement – final fee Cost reimbursement % fee Employer’s risk Contractors risk. Allocation of risk

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1.1.1.5 The contractual relationships in any of the traditional procurement path contracts ‘ can be shown in the below diagram. 1.1.2 Design and build path The whole project covering design and construction is normally undertaken as a single contract. Sometimes this is called as “Turnkey” “All-in” or one of the “package deal” in construction. In summary, employer makes his requirements known directly to one organisation which both designs and carries out the work. In some cases the design and build organisation may also provide the site and finance the operations on a ‘lease-back’ system. The main advantage claimed for this integrated approach to design and construction is that it results in a design which is better suited to the contractor’s construction method, giving lower production costs and a shorter contract period. It also allows an element of design competition which is absent from the conventional system, and the optimisation of design and production costs. The production-led type buildings should be procured under this path because the contractor can design the project based on the client’s requirements as well as production requirement. There are three main various systems used for selection of design and build contractor. 1.1.2.1 Single entry – The contractor is appointed at the beginning to design and

construct the project probably after some preliminary appraisal but without competition.

1.1.2.2 Competitive entry – project documents would be produced outlining the

client’s space and quality requirements. Three to five highly experienced contractors are usually invited to submit a proposal which includes design, specifications and price and completion date. The competition is introduced at the design stage through the price offered for the finished product, including commissioning, operation and maintenance if necessary. This system allows the client to choose design, price and completion date.

Employer

Architect Civil Engineer

Quantity Suyveyor

Structural Engineer

Services Engineer

Main Contractor

Nominated Sub-contractor

Domestic Sub-contractor

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For larger projects it would be wasteful of both resources and time for each firm to produce detailed designs at the early stage of the selection process. In such a cases the procedure could be in two stages: First, selecting a suitable firm based on outline design/specification details and price, and second, producing an acceptable offer with the chosen firm.

1.1.2.3 Develop and construction - under this method partial or outline design is

developed separately by the Consultant designer prior to inviting to submit their proposals. Based on partial or outline design, each contractor tenders to complete the design and construct the project.

When this path is used, the client or his Project Manager clearly needs to have considerable experience in agreeing with the contractor what is to be provided, its specification, and method of payment and means of monitoring performance. Because the cost of design up to tender stage can be high, the system is best suited to work and is very familiar to the particular contractor. § The most important two factors affecting the success of a design and build project

are:- a) The client’s brief b) The quality control and assurance procedures (QA). The client’ brief. It is essential that the client’s requirements are identified and stated clearly in the tender documents. These requirements may be detailed, leaving little scope for variation by the competing firms, or broad, leaving maximum scope for development by the firms and allowing maximum buildability. Quality control/assurance procedures (QA). If the client’s requirements are broad, it may be best to define them in performance terms. Overall performance may depend on good QA procedures. These should be identified in the brief and cover all stages of the process including design, manufacture and production. Under this method the contractor is responsible for designing, planning, organizing, control of the construction, generally satisfying the client’s requirements, and offers his service for an inclusive sum. The client may use the services of an independent architect and quantity surveyor to advise him on the contractor’s proposals as to design and construction method and as to the financial aspects respectively. The client may also appoint an agent to supervise the works and generally to act on behalf of him to ensure that the contractor’s proposals are complied with his requirement. Design responsibility When both design and construction are provided as total service, there is an implied warranty of suitability for the required purpose of work, as long as this purpose is properly known to the provider.This warranty, commonly known as a ‘fitness for purpose’ obligation, exists absolutely and independently of any fault likely to give rise to liability in negligence.

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1.1.2.4 The contractual relationship in design and build path can be shown in the

below diagram.

1.1.3 Management Path The management path procurement system can be divided into two categories and as follows: 1) Management Contracting 2) Construction Management. 1.1.3.1 Management Contracting 1.1.3.1.1 The principal of management contracting is that the client engages the

management contractor to participate in the project at an early stage, contribute construction expertise to the design and manage the construction.

The contractor is appointed on a fee basis.

The management contractor does none of the construction work himself but solely for managing the construction process.

Although the contractor is an active participant in the construction process and is responsible for co-ordinating construction operations, he does not directly undertake the role of either designer or contractor. The management contracting is procurement method consisting of 100% sub-contracting. Every item of building work is sub-contracted to the works contractors, each of whom enters into a contract with the management contractor.

The selecting criteria of management contractor is normally either nominated by the client on the basis of contractors previous experience of management contracting or is selected by competition based upon tenders obtained from number of suitable contractors for the management fees and prices for any

Employer

Design – build Contractor

Employer’s advisors

Structural engineer

Architect designer

Sub - Contractor

Quantity Surveyor

Services engineers

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additional services to be provided before or during the construction period. The successful contractor will then enter into a contract with the Client.

The management contractors’ role includes the providing a construction management services on a fee basis as part of the client’s management team-organizing, coordinating, supervising and managing the construction works in co-operation with the client’s other professional consultants. As part of his service, he provides and maintains all the necessary site facilities, such as offices, storage and mess huts, power suppliers and other site services, common construction plant, welfare, essential attendance on the works contractors such as unloading temporary roads, hard standings and removing rubbish and debris etc, This system is finding favour with client as experienced contractors increasingly complete for contracts based on their reputation of getting work completed on time, to cost and of good quality.

1.1.3.1.2 The Contractual relationships in management contracting can be shown in

the below diagram.

1.1.3.2 Construction Management 3.1.3.2.1 Construction management is a professional consultant service to the client,

provided on a fee basis, with the design and construction services being provided by other organizations. In this system a main construction manager is appointed early to act as the client’s adviser to provide planning, management and co-ordination of construction. The construction works itself is normally carried out by a number of contractors. They will responsible for the defined work package. All the work packages together constitute the total project. Each works contractor enters into a direct contract with the client.

The construction management firm is not allowed to carry out any construction work. The construction manager’s main role is a similar to architect, consulting engineers or site manager but without any design responsibility. Advice is given to the designer on buildability, including drawing up suitable work package contracts, arranging procurement contracts

Employer

Works Contractor

Works Contractor

Structural engineer

Architect designer

Management Contractor

Quantity Surveyor

Services engineers

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and managing the bidding phases of the works contracts. In addition to the above the construction manager’s duties include any or all of the following. § Preparation and updating of a detailed master construction programme for

whole project.

§ Co-operation and consultation with the other members of the client’s professional team.

§ Determining what site facilities and services are required and their

location.

§ Preparation of materials and components flows and arranging advance ordering.

§ Co-ordination the work of the works contractors ensure that it is carried

out in accordance with the master programme.

§ Establishing all necessary management personnel on site with responsibility to manage and supervise the project.

§ Dealing with any necessary variations to the work, providing the design

manager with estimates of their cost and subsequently issuing instructions to works contractors.

§ Submitting to the quantity surveyor applications from works contractors for

interim payments and all necessary documentation enabling the final accounts of works contractors to be settled.

3.1.3.2.2 The construction management method of procurement is most suitable where

some or all of the following circumstances are present. 1) The client is familiar with construction, and knows some or all of the

professional team. 2) Timeliness and cost dominate the risks associated with the projects. 3) The project is technologically complex involving diverse technologies and

sub-system. 4) The client wants to make minor variations to requirements, as the project

proceeds. 5) There is scope for separating responsibility for design from responsibility for

management of the project. 6) The client requires an early start on site. 7) The price needs to be competitive, but ‘best value for money’ is more

important than simply securing the least possible cost.

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1.1.3.2.3 The contractual relationship in construction management can be shown in the

below diagram. 1.1.4 Design and Manage Path 3.1.4.1 In this system the client invites the management (single) contractor to take

responsibility for also managing the design phase. Under this method of procurement all works will carry out by specialist contractors.

The initial scope design is often executed by the client’s own staff or an independent design firm, and forms the basis for inviting tenders. The contractor offering the lowest cost scheme for full design, and construction is normally selected but reputation, quality of service and management fee charged is also important considerations. The system offers similar advantages to design and build contracts and so potentially facilitates improved control of the design and procurement processes. Both design and construction are entirely sub-let, become enmeshed in the management designers / contractors commercial operations.

3.1.4.2 The contractual relationship in design and management path can be shown in the below diagram.

Employer

Quantity Surveyor

Structural Engineer

Architect Trade Contractor

Services Engineer

Construction Manager

Employer

Scope Designer

Design & Manage Contractor

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1.1.5 Project management

Project management is taken to mean management of the whole project from inception to completion. These entire procurement paths involve the client to some extent in dealing with planners, local authorities, consultants and contractors. This can be very demanding and time consuming. Project management is not a procurement path, but is another layer of management that is sometimes necessary for particular projects. The decision to use a project manager must come from client. Where the client is a large organisation with little in-house construction knowledge, the project manager act as its agent, dealing with the contractor and all the construction consultants. This gives a single point of contract for the team and liaising with the contractor, but is not responsible for managing the site construction. It is also necessary for the project manager to take out a professional indemnity insurance policy to cover his liabilities.

Co-ordinating functions of the project manager Client Contractor Architect QS Engineers Etc., Project Manager Co-ordinating – planning, evaluation And reports on progress, costs etc., 1.1.6 Partnering What exactly is partnering? According to the guide Trusting the Team, produced by the Reading Construction Forum: “Partnering is a management approach used by two or more organisations to achieve specific business objectives by maximising the effectiveness of each participant’s resources. The approach is based on mutual objectives, an agreed method of problem resolution and an active search for continuous measurable improvements. Partnering can be based on a single project (Project Partnering) but greater benefit are available when it is based on a long-term commitment (strategic partnering or alliancing). Partnering should not just be considered as a procurement system for two reasons. Firstly it is not strictly a procurement system (it can be used in conjunction with most procurement systems), it is much more. It is a culture, a mental attitude.

Designer Works sub Contractors

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Second, the principle of “you scratch my back and I’ll scratch yours is not new. Two partners helping each other for mutual benefit, instead of each one trying to gain most at the other’s expense, has to be the way forward for any civilised business environment. Partnering should not therefore be considered as system, currently in fashion, which will eventually fall out of favour. It should be considered as the way forward for success in the construction and development industry. The potential benefits to the Client of successful partnering therefore are: ♦ Better value for money. ♦ At least the same level of quality ♦ Less confrontation (conflict/argument/disagreement) and therefore speedier delivery. ♦ Less risk, greater certainty of satisfaction. ♦ Fewer claims. ♦ Less bureaucracy (less excessive official routine). ♦ Better communications, understanding and tolerance of problems. ♦ Faster construction. ♦ Continuous improvement. The benefits to the Contractor: • Increased profit potential. • Less confrontation.(ARGUMENT/DISAGREEMENT WAR OF WORDS/CONFLICT) • Greater certainty of workload. • Better communications and understanding from Clients. • Less bureaucracy. • More involvement in key decision-making. • Greater potential for profit. • No competitive tendering process therefore reduced overheads. • Reliable flow of design information. The partnering process The primer objective of a ‘ partnering’ approach is to achieve a project completion in which both parties are satisfied with the result – the so-called’ win-win’ scenario.

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The process begins with a selection process to establish that all potential partners are suitable in terms of past experience, financial stability, management of resources (human, plant and equipment), competence, and attitude. Successful partnering requires that client and contractor work together in a spirit of mutual trust and co-operation for good of the project. This is almost the complete opposite of the more common confrontational approach, in which contractor and client each tend to look solely to maximising their own advantage. An open and co-operative attitude in therefore vital for the project to succeed. It may also help if the contractor has had partnering experience before. Above all, it is particularly important that the key executives of the two organisations not only have a common desire to work together but are able to put this desire into practice. Initially it may be necessary to invite a selection of contractors to submit tenders and attend carefully planned interviews. A client may start with the project partnering approach, hoping that it may lead to strategic partnering. No doubt the contractor will be made equally aware of this, if it is the client’s intention. The contractors tendering for the partnering agreement may be asked to submit details of the followings: Past experience. Human resources. Equipment resources Financial resources Procedures for dealing with supplies and subcontractors Rates and overheads allowances Profits Reaching agreement The following items should be included in the agreement. Method of payment (target cost/ guaranteed maximum price contracts are common) Method for dealing with disputes Allocation of risk Monitoring procedures Form of contracts to be used Management structure Duties of each party

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Incentive schemes and liquidated damages Method for dealing with insolvency and termination. Supply chain management Considerable emphasis (importance) has been laid down on the need for efficient management of the whole construction production supply chain. Usually this is done by main contractor, involving co-ordinating and arrangement of many subcontractor and supplier organisations. Historically the supply chain management practices of contractors have been poor, with many complaints over the years from subcontractors alleging unfair and unscrupulous treatment by main contractors. Many of these issues were addressed directly by the Construction Act, and both Latham and Egan reviews highlighted better supply chain management as one of the keys to improved efficiency in construction. Construction contracts are therefore being urged to apply partnering concepts to their own supply chains, to form strategic long-term alliances with key trading partners, and encourage the spread of such practices down to the very bottom of the supply chain. Prime contracting Prime contracting is the methodology adopted by Defence Estate to address the partnering/strategic alliance/supply chain management problem. In essence, Defence Estates intended to establish a small group of strategic partners (prime contractors) to carry out all their work. Projects will be let on a design and build basis, and prime contractors will be responsible for managing the entire supply chain required to satisfy the client’s needs, taking complete responsibility for all aspects of the project and carrying the majority of the risk, including a fitness for purpose obligation. Projects will be placed using a new purpose-written form of contract and let on a target cost guaranteed maximum price basis. Individual projects will be subject to competition among a number of prime contractors in order to meet their requirements of the procurement role. In the partnering process the following problems can occur: Key personalities fall out, resulting in acrimony. Client begins to wonder if he is paying too much because of the non-competitive pricing Reducing the risk may affect competitiveness of the contractor or his ability to innovate. The contractor becomes too ‘comfortable’ and reliant (dependent) upon too few clients. The client expects too much, so becomes disillusioned.(disappointed.) The arrangement fails due to a lack of understanding by one partner of the other partner’s business. The ideal procurement system to accompany the partnering culture is construction management. However it may be used with other system too.

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Partnering Vs traditional procurement.

To explain the difference between partnering and traditional procurement, imagine that a plumber is needed to repair a cold water piping system. A house owner might seek quotes from several plumbing firms, but these are likely to be high and relate not so much to the works to be carried out as what the market will bear off the house owner were to adopt a different approach; however, he could procure a better deal. Instead of seeking competitive quotes, the house owner could sit down with a plumber whom he trusted. He could ask him about his daily rates and how much he expected to earn from this project. He could ask him where he would obtain his materials and how much he would pay for them. Did he know of any more cost-effective ways of dealing with the problem or achieving cost savings? Then only would the house holder be in a position to agree terms that remunerate the plumber fairly for his work and give the householder better value for money. This is the essence of partnering.

Traditional Procurement and Partnering

Comparisons between the two concepts.

Traditional Partnering

• Adversarial relationships • Collaborative work • Arms- length relationship • Trust • Right design specifications • Flexibility – encouraging innovations. • Arbitrator or litigation • Disputes resolution procedure • Lower tender • Whole – life cost • Apportion for blame for problems • Team approach to problem solving • Commercial secrecy • Open book accounting Selecting the path First identify the issues the client considers important. These, of course, will vary from client to client or even project to project. However, it should be possible to produce a list of issues to cover most situations – perhaps only the relative importance will vary between projects. A list of issues is described in the Building Economic Development council’s publication Thinking about Building:

• Time • Quality • Cost • Single point responsibility • Flexibility • Contractor input • Certainty • Risk

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The most important issues are generally time, cost and quality. All procurement paths can provide satisfactory performance in these areas, but of course provide a different emphasis and different levels of risk and control for clients. The procurement guide – Section 4 Selection of most appropriate procurement strategy This section of the guide is divided into four sections. The method recommends that the firs three sections be completed in consultation with the client. The resulting information is transferred in to section 4 for analysis and evaluation by the procurement adviser. A check list summary identifies that the project should be allocated initially to one of two broad categories: Design - led or Production - led In design – led projects the client appoints his own design team. In production – led projects the contractor takes on some or all the design function. This requires experience from the adviser, but does not give any support mechanism for justifying his recommendation to the client. There are no weighting or charts used here to guide the decision. When to use what approach Risk/certainty of time, quality and cost will govern selection of the approach. • The faster the programme needs to be from inception to completion, the less detailed will

be the pre-contract documentation provided by the client and his consultants, and the less certain will be eventual cost at contract stage.

• The more certain the eventual cost needs to be at contract stage, the more detailed will

be the pre –contract documentation provided by the client and his consultants, and the slower will be the pre-contract programme.

• The less certain the existing conditions are on site, the less certain will be the

eventual cost at contract stage and, if it is a detailed or complicated conversion or alteration project, the more likely it will need to be run under a ‘ non – traditional’ contract such as a management contract.

• For clients who want a straightforward, reasonable quality project at a reasonable

price but complicated quickly, a design build path could be appropriate. • Management based routes, however, can provide innovative design, are flexible

and can give fast completion.

Special Contracts Term contracts Term contracts are normally used where regular maintenance and repair work or minor improvement work is required. Rather than enter into separate contracts for every piece of

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work, it is often better to appoint one contractor to carry out all the work during a specified period. The types of term contract can include the followings: • Measured. The work is measured after completion and the contractor paid in

accordance with a schedule of rates. The schedule is often pre-priced, with the contractor tendering a percentage ‘ mark-up or ‘ mark-down’

• Daywork. The contractor is paid the cost of labour and materials for the job plus a

tendered percentage to cover overheads, profit etc., or contractors may be required to tender ‘ all in’ hourly labour rates.

• Service (Specialist).The contractor is paid a tendered price per visit or per operation, or

even for a predetermined service for whole term. In order to obtain competitive rates, tenderers need to be informed of the type of work involved, the place or places of work, and the duration of the contract. Term contracts differ from limp sum contracts in that it is not possible to define the extent of the work or establish a contract sum at the tender stage. It is usual to give an approximate total value of work per annum within the documents. Provision can also be made for priority orders and a stipulated response time can be given in the documents. Provision can also be made for priority orders and a stipulated response time can be given in the documents. The main advantages claimed for term contracts include: • Lower prices quoted by contractors in view of the continuity of work. • Saving in time and overheads compared with a series of single job contracts. • A long-term relationship resulting from the contractor becoming familiar with the

requirements and needs of owners. • Potential for computer application. • The contractor can establish an efficient rapid response team. The disadvantages are: • Reliance (dependence) on a single contractor. • A minimum workload may need to be established. • The client can place over- reliance on the easiness of the system, resulting in inadequate

pre-planning and excessive costs. In long - term contracts there will be a clause allowing either party to terminate the contract on giving written notice. Call-off contracts Call-off contracts can be used where the provision of a services or certain type of repetitive work is anticipated but cannot be specified at the time of making the arrangement. For example, they are used by Shell for contracts for the supply of draughting and contract staff, and for services such as road haulage, drilling and planned maintenance. It is awkward

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and time consuming to have to enter into a contract every time work is required. If a call-up contract is in existence it merely requires an order to be placed with the contractor to carry out the work. Like term contracts, call – off contracts are specified to cover a period of time, perhaps with an option to extend after agreement of price fluctuation – or a price fluctuation clause could be incorporated into the original agreement. Serial contracting This is form of standing offer in which a contractor undertakes to enter into a series of lump sum contracts in accordance with the terms and conditions set out in the initial offer. The offer usually relates to a firm programme of specific jobs of a similar nature and construction and planned for execution within a stipulated (specific or fixed) time. The prices in the offer may be presented in the form of a notional bill of quantities, prepared to provide a competitive base for selecting the contractor and subsequently negotiating tenders. The standing offer is usually taken up in a letter of intent, which should make clear that the number of contracts let within the framework of the offer will depend upon satisfactory performance by the contractor, and that the individual offers must be acceptable to the client in respect of quantity, quality, cost and completion on time. The system offers an incentive to firms to maintain a high standard of workmanship and co-operation. It produces time savings by eliminating lengthy pre-contract procedures for each project in a programme. It also enables skilled production gangs to be kept together, which aids productivity. Continuation contracts These are similar to serial contracts. They are used to place further contracts based on terms of an existing contract in order to obtain the benefits arising from continuity of work. Continuation contracts are therefore negotiated on the basis of the original contract. However, such ad hoc arrangements are less likely to produce all the benefits to be gained from the forward planning and early knowledge of the intended load obtained in the true serial contracting. Where they relate to the same site as the original contract they may be referred to as ‘extension’ contracts. The object is to avoid the practical difficulties of having two contractors working on the same site concurrently. (at the same time) 1.2 The Tendering Procedure In the construction industry, there are various procedures such as open tendering single stage selective tendering, two stage selective tendering and negotiated tendering etc., 1.2.1 Open Tendering Under this method an advertisement is placed in local newspapers and/or the technical press stating that the client wishes certain work to be carried out and inviting contractors to apply for the tender documents. Any contractor, irrespective of size or capability, may apply for the documents and tender. The advertisement will carry brief details of the location, type, scale and scope of the proposed work. Usually a deposit is required in exchange for the documentation the deposit is refunded upon receipt of a bona tide tender.

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1.2.2 Single stage selective tendering Under this method the client or the architect and quantity surveyor compile a list of the preferred contractors for the proposed project. Basically this consists of pre-selecting a limited number of contractors to tender for the works. It is recommended that the number of tenders should be limited to between five & eight, depending on the size and nature of the contract. 1.2.3 Two stage selective tendering Two-stage selective tendering is a method, which allows the negotiation of a tender with an element of competition. First, suitable contractors are selected in the same manner as for single stage selective tendering and a list is compiled of those willing to take part in the initial competitive stage. The tender documents sent to the contractors comprise outline sketches of the scheme a summary of the client’s requirement and a notional bill of quantities. The notional bill of quantities is a document containing an outline specification and provisional item description and quantities. Many design teams, however, do not use the preliminary tender based upon the notional bill as the sole method of selecting. Instead of that they will invite each tendering contractor to a meeting to discuss the contractor’s approach to the project. The approach will be discussed in terms of the contractor contribution to the design, the previous experience of such schemes, the personnel to work with the design team and their previous experience. The aim is to ascertain whether the contractor and design team can work well together. It is the combination of these meetings and the preliminary tenders which determines the successful contractor. An agreement will be made with the successful contractor regarding the cost of the contractor input before the commencement of the design stage. The design stage is under taken bills of quantities are prepared by the quantity surveyor and where possible priced at the rate in the notional bill. Those items, which cannot be priced on this basis, are priced by the contractor and are subject to negotiation. Finally, following a successful negotiation the contractor make a formal offer to carry out the work for the sum of money negotiated and this is formally accepted by the client. 1.2.4 Negotiated Tender Under this method only one contractor is approached. This method is used when the client has a preference for a particular contractor, because he may have done satisfactory work for him previously. If only one contractor tenders for the proposed project, competition is eliminated and that will almost inevitably, lead to a higher price. After the completion of the design the contractor will price the bill of quantities and then enter into a negotiation with the quantity surveyor. The contract sum will be arrived at by a process of negotiation when agreement on the whole is reached; a contract will be entered into between the client and the contractor.