Section C
Issuing an Enquiry
Look beneath the surface; let not the several quality of a thing nor its worth escape thee.
Meditations VI, 3 by Marcus Aurelius Antonius AD 121–180
For an owner, one of the first steps after project sanction and the development of the contracting strategy is to prepare to issue an enquiry or a request for a proposal (RFP). For a contractor, the first step in the project process is receipt of an enquiry document and the preparation of a tender or proposal.
This phase is preceded by a prequalification process (see Section B subsection 4), whether one is a client or a contractor. The purpose is to find four to six organizations that have the capability to execute the proposed project and who are willing to do so on the terms outlined in the enquiry document.
If necessary, invite expressions of interest and prequalify the names on the list, in order to make sure you have people who have the right background, experience, and expertise.
The following enquiry checklist4 is designed to be used either by an owner enquiring for a contractor's services or to be used by a contractor enquiring for goods and services.
1 Enquiry Preparation Phase
1.1
An owner proceeding with an enquiry for a main contractor before authorisation would be a mistake. Nevertheless, there is nothing wrong with a contractor getting agreement to proceed with early enquiries for goods and services in order to validate their cost estimate.
1.2
Make sure that all enquiries are properly coded and logged into a register. Check with project controls for the budget and schedule requirements to be assigned to the goods and services to be purchased.
1.3
Perform a risk analysis (See Part V, Section M) with the project team and a stakeholder analysis as part of it (see Part VI, Section F Politics in Projects).
1.3.1
However, the risk analysis for a services contract should already have been performed. It would have formed part of the feasibility study; see Section A.
1.4
Are you going to provide a ground conditions survey and accept the risk of unknowns, or are you going to make each tenderer spend time and money doing their own surveys?
1.5
Decide on the appropriate allocation of risk and choose your contract strategy accordingly. Remember the broad brush payment terms labels do not give a true description to the factual nature of a contract – read the contract words.
1.5.1
Decide whether you are going to offer a contract that provides an inbuilt incentive mechanism, say, a target cost contract. Alternately, are you going to offer a stand‐alone incentive scheme?5
1.6
The procurement group should have either used the corporate database for suitable suppliers and contractors or carried out a market survey. Check where the names for the tender list originated.
1.7
Have preliminary talks with contractors and suppliers before issuing the enquiries. It will help get your project into their work schedule.
1.8
Do not impose more onerous terms on suppliers or subcontractors than your own contract document. This just adds costs.
1.9
Make sure you select the right/appropriate people for the tender list. The wrong/unsuitable organization on the list will submit what appears to be a good offer, and if selected, will give you problems on the project.
1.10
The specification is the key document in an overall contract package. Its importance cannot be overstated. It defines what you wish to buy and, consequently, what the contractor must supply. The specification should be as explicit as possible in defining the scope of work and the standard to which the work must be performed. The specification must define the deliverables required from the service and the type of labour, equipment, and materials to be provided. See Part V, Section A, subsection 2, Inspecting Work.
1.10.1
Whilst this definition document should state clearly what should be done, very rarely does it state what should not be done, that is, what is excluded from the project.
1.10.2
Perform a product breakdown structure analysis (see Part IV, Section F Scope) to supplement the written specification of the scope of work or material requisition.
1.11
Collate all the appropriate specifications, standards, and any examples/samples together with all the drawings, sketches, and plans.
1.12
Develop a schedule, showing the project objectives and key programme dates, together with critical items. For an owner initiating a project, this is likely to be a bar chart; whereas, for a contractor buying goods and services, it should be a network or based on a network.
1.13
Decide whether to use a standard form of contract or to use a tailored contract. See Section F Contracts, paragraphs 3.3 and 3.4.
1.14
Check the meaning of key words used in the contract terms.
1.15
Decide on the Incoterms to be used. See Part V, Section H.
1.16
Decide whether the payment terms are to be specified or requested as part of the competitive process.
1.17
Similarly, how is inflation to be handled as part of the competitive process or is a Cost Price Adjustment (CPA) clause to be offered.
1.18
Decide whether to offer a project insurance package, rather than duplicating with the contractor's or supplier's insurances.
2 Tendering Phase
2.1
Decide on the type and method of enquiry:
- Openly advertised, open or selectively prequalified
- Local, national or international
- Verbal, written or sealed tender process
- A tender to be accepted as submitted
- A proposal for discussion of options and ideas
- A quotation (a price) for a standard catalogue item
2.2
Allow a realistic period of time for submission of tenders appropriate to the type and method chosen. Check the schedule with project controls. Give the tenderers time to exercise their creativity. This is the time when money can be saved.
2.3
Tenderers are bound to have questions. Respond to questions and supply written answers so that everyone gets the same information without knowing who asked the question.
2.4
Make arrangements for contractors to visit the project location and respond to their questions at a clarification meeting.
2.4.1
If necessary/relevant tell the tenderers where documents can be viewed.
3 Evaluation Phase
3.1
The analysis seeks to determine the best combination of project execution factors and business terms. The difficult part is selecting the assessment process and evaluation criteria to be used.
3.2
Schedule or set‐up a Tender review board.
3.3
Specify the tender opening process, whether a private project process for goods and services or a public opening for contractor selection.
3.4
Specify the duration of the evaluation period and the required evaluation completion date.
3.5
Record the tenders received. Check that the tenders are complete and that there are no missing documents.
3.6
Identify the tender analysis criteria:
- Technical and execution appraisal
- Contractual appraisal
- Financial appraisal
3.7
If all tenders are significantly different from your budget estimate then you should question whether your specification or scope was sufficiently clear.
3.8
Log questions that are required to make the tender compliant with the enquiry.
3.9
Ask tenderers to submit the cost impact of each numbered query and their revised tender price.
3.10
Final post‐tender negotiations take place to eliminate queries, minor commercial or technical omissions or qualifications. Identify the ‘must haves,’ ‘like to have and nice to have’ issues for negotiation with the two front runners.
3.11
After selection of the qualified tenders, the key to successful contracting is the quality of the proposals submitted and in particular the project team. Interview the key personnel. All other matters being equal, choose the better project manager.
3.12
Approve the recommended supplier or contractor and obtain management and owner approval, if necessary. Be prepared to answer the question: “Why have you chosen this supplier or contractor?”