In the "Procurement and Tendering" YouTube video section discussed, the speaker covers various aspects of procurement management, including the importance of being prepared for Rapid Critical Situation interviews, the role of quantity service professionals, and the traditional design-bid-build method. The speaker also explores alternative methods to reduce construction project duration, such as packaging, design-build, and tender Evolution criteria in design and build tenders. Additionally, the speaker discusses the concept of management contracting and its advantages and disadvantages compared to construction management. The video also touches on term contracts, serial Contracting, and continuation contracts as alternative procurement systems. Throughout the section, the speaker emphasizes the importance of being well-prepared, understanding the different methods and their advantages and disadvantages, and effectively managing procurement processes to achieve project objectives.
00:00:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the importance of being prepared for Rapid Critical Situation (RCS) interviews, particularly when answering questions about procurement. Procurement is a complex topic with multiple aspects, and candidates should be able to answer questions about it within a short time frame. The speaker suggests dividing procurement into four aspects: working arrangement, contractor selection, form of contract, and contract type. For each aspect, candidates should be able to identify the different methods or types and provide examples. The speaker emphasizes the need to answer questions at different levels to show a comprehensive understanding of the topic. The interview process is fast-paced, with limited time for answering each question, so candidates must be well-prepared and able to convey their knowledge efficiently.
00:05:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the role of quantity service professionals in procurement management and the traditional design-bid-build (DBB) method of project delivery. Quantity service professionals, who are experts in cost estimation, construction law, and employee requirements, are well-suited for procurement management. Their responsibilities include determining employee requirements, assessing project viability, recommending organizational structures, and managing information and coordination.
The speaker then explains the traditional DBB method, which was the conventional way of executing projects. In this arrangement, the client engages a design team to create the design in full before going to tender to select a contractor. The contractor, in turn, hires subcontractors and suppliers to complete the project. The advantages of this method include maintaining quality under the client's control and achieving design prestige, which refers to the client's design intentions being met. The traditional DBB method allows for easy achievement of design prestige by hiring a design consultant focused on the client's objectives. However, it has the disadvantage of being time-consuming, as all work activities are in sequence and not in parallel.
00:10:00 In this section, the speaker discusses the Procurement and Tendering process, specifically focusing on the use of a Detailed Bill of Quantities (BQ) in the Post Contract stage. With a detailed BQ, changes can be priced accurately and fairly, avoiding unnecessary costs. The use of a detailed BQ also leads to cost certainty and less contractor risk, resulting in lower tender prices and preparation costs for contractors. However, there are disadvantages to this method, including the absence of single point responsibility for design and construction, potential blame games, and time-consuming variation claims. To reduce the time in the traditional tendering process, the speaker suggests reducing design duration by designing only 70% of the project and keeping the remaining 30% as provisional, or opting for two-stage tendering, where a contractor is brought in to design and price the tender.
00:15:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses methods to reduce the duration of a construction project through packaging and design-build (DNB) methods. Packaging involves awarding enabling and main construction contracts concurrently, allowing for overlapping work and time savings. DNB, on the other hand, involves a single entity responsible for both design and construction, reducing project time through parallel design and construction processes. The advantages of these methods include time savings, price certainty, and high buildability, but also come with risks such as higher costs due to limited information provided in the tendering process. In the case of DNB, the unique characteristic of comparative entry allows for design and time competition among contractors in addition to price competition.
00:20:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concept of tender Evolution criteria in the context of design and build tenders. When floating such a tender, the project team agrees on the importance of design, cost, and time, assigning percentage weightages to each. This information is included in the tender pack and communicated to contractors, allowing them to price accordingly. The speaker emphasizes the importance of fixing the tender Evolution criteria beforehand to ensure fairness and adherence to project requirements. The alternative to design and build tenders is single entry, where a design is selected and a price negotiated with the contractor. Another option is develop and construct, where the design is developed to a concept stage, and the contractor is then asked to develop and construct from that point. The potential disadvantage of design and build tenders is the compromise of design quality, as the contractor may not fully achieve the client's design intent, and variations can be costly.
00:25:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concept of management contracting in construction projects. Management contracting involves bringing in an experienced contractor to manage the project, including managing costs, time, and logistics, without the contractor actually doing the construction work. Instead, they bring in package contractors to do the construction. The client selects a management contractor before the design stage based on fees, which is typically a cost-reimbursement basis. The management contractor's fee includes their overhead and profit, as well as any preliminaries and staff costs. The client also has their own design consultants, and the management contractor contributes their constructibility knowledge during the design stage, leading to design advantages and potentially reducing project time.
00:30:00 In this section of the "Procurement and Tendering" YouTube video, the role of a management contractor is discussed. The management contractor's role involves managing the project on a professional basis, earning a fee for overheads and profit, and doing only the management work while the packages are on a lump sum basis, usually obtained through competitive tendering. During the instruction stage, the management contractor advises on work packaging, assists in selecting work package contractors, and provides constructibility input in the design and construction stages. Additionally, they manage the program, ensuring proper coordination and cost control techniques are implemented using the trade cost plan. The advantages of this approach include reduced time for early start and completion, the contribution of an experienced contractor for managing changes, and the ability to make design changes late in the project and incorporate them into the packages.
00:35:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the advantages and disadvantages of management contracting and construction management in building projects. Management contracting allows for changes and improvements in buildability and economic designs, but it results in higher management costs due to the additional layer of management. Construction management, on the other hand, involves a construction manager who assists the client in managing trade or package contractors. In complex projects, such as a mix-use development with various infrastructure, building, and hotel construction, construction management is used to manage multiple packages and contractors. The main difference between the two is the contractual relationship between the client and the package contractors, with construction management allowing for direct relationships between the client and each contractor. However, the client should have construction experts within their organization to effectively manage the construction process when using construction management. The design, construction, and tender processes can also be carried out in parallel to save time in complex projects.
00:40:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses construction management and management contracting, as well as the less common procurement system called design and manage. Construction management involves appointing a construction manager who takes responsibility for appointing the design team and reducing project time, but comes with increased contractual responsibilities and potential compromises in design prestige. Management contracting, on the other hand, allows the client to have a direct contractual relationship with package contractors and control costs directly, but requires more time and coordination. Design and manage is a combination of design-build and management contracting, where a management contractor is given design and construction responsibility, resulting in time savings and buildability, but with compromised design prestige and no direct contractual control over package contractors. The speaker also clarifies that a construction manager would be considered a consultancy, not commercial management.
00:45:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concept of term contracts, which are agreements signed for a specific number of years, typically around three, for maintenance projects in the facilities management sector. These contracts are used when dealing with numerous maintenance requirements in various locations, making it impractical to issue individual tenders for each job. Instead, contractors are selected through a competitive tender process, and a schedule of rates is established for most maintenance activities. The contracts include insurance requirements and other contractual administration, and work orders are issued under the term contract when needed. The advantage of term contracts is the ability to quickly address urgent requirements, ease of placing contracts, and avoidance of repetition, while still allowing for competition on quality. The speaker shares an example of using term contracts for school construction projects, where three consultants are selected through a tender process and design proposals are requested for each new project. The contracts last for three years and include insurance and other contractual matters, making the process more efficient for the client.
00:50:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concept of serial Contracting, which is a type of contracting where a client enters into a contract with a contractor for a series of similar projects. The advantage of serial Contracting is that the contractor can pass on the benefits of economy of scale to the client, such as purchasing plants at a lower cost due to the quantity required for multiple projects. However, there are also disadvantages, including the need for a client to have sufficient experience to manage multiple work orders and the restriction of competition for the duration of the contract. The speaker also mentions that serial Contracting is appropriate for industrial-type buildings where designs remain consistent throughout the series of projects. Serial Contracting involves the preparation of tenders based on a typical bill of quantities or schedule of works, and the rates submitted can be used to value works for multiple similar projects over a fixed period of time. Another type of contract discussed is continuation contracts, which are similar to serial Contracting but involve entering into a contract for one project and then automatically renewing it for subsequent projects.
00:55:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concepts of continuation contracts and prime contracting in the context of procurement. A continuation contract is an agreement to extend an existing contract to a new project, which can arise unexpectedly during the course of a project. Prime Contracting, on the other hand, is a procurement strategy where a single prime contractor is responsible for managing the entire supply chain on behalf of the client. This approach was originally used in defense organizations due to their primary focus on defense and the need to manage large construction projects. Prime Contracting offers advantages such as improved supply chain management, clear communication lines, potential for collaboration, economies of scale, and better consideration of whole life cycle costs. However, it also comes with disadvantages, including the potential exclusion of smaller companies, added overheads, and the risk of fraud due to the contractor's control over the entire supply chain. As a result, prime contracting is not widely used today, and procurement continues to be used as a risk management tool to achieve the objectives of a project, which may include time, cost, quality, early completion, and design prestige, among others.
In the "Procurement and Tendering" YouTube video, the speaker discusses various aspects of the procurement process for complex building projects, including the objectives of clients, working arrangements, and the importance of partnering. The speaker introduces a matrix to help identify the best working arrangement based on project requirements, such as early completion, single contractual relationships, cost certainty, and risk allocation. The video also touches on the concept of partnering as a management approach for collaboration between organizations, offering benefits like reduced disputes, cost savings, and improved quality. The speaker discusses the advantages and disadvantages of strategic partnering and Public-Private Partnerships (PPPs) or Public Financial Initiatives (PFI), which involve the private sector funding and operating public projects. The importance of writing detailed specifications for operational activities in PPP contracts is emphasized to ensure quality. The speaker also discusses the differences between the Finance route and the contractor selection process, fair and transparent practices in tendering, and the principles of good practice in tendering, including the use of standardized documents and teamwork. The video covers various tendering procedures, including single-stage and two-stage selective tendering, and the importance of understanding the pre-qualification stage in the tendering process.
01:00:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the objectives of clients for complex building projects and how various working arrangements can meet those objectives. The speaker introduces a matrix to identify the best working arrangement based on project requirements. For early completion, the speaker suggests design and build or management contracting. For a single contractual relationship, traditional management or design and build are recommended. The speaker also touches on cost certainty, design intent reporting, and risk allocation between clients and contractors. The discussion emphasizes the importance of identifying project objectives and prioritizing requirements to select the most suitable working arrangement. Client organizations are encouraged to involve procurement managers and quantity surveyors in project initiation to make an informed decision. The video also mentions that the risk allocation varies depending on the procurement strategy, with private finance initiatives shifting more responsibility to the contractor and management contracting having the client bearing more cost risk.
01:05:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the factors involved in selecting a procurement path. These factors include the client's risk-taking ability, time constraints, need for speedy construction or certainty, cost considerations, whole life cycle costing, function design quality, and project complexity. The client's involvement and the need for variations are also important factors, especially in projects like hospitals and hotels where operators may request numerous changes after completion. The speaker explains that prioritizing these factors using a matrix can help identify the most suitable working arrangement for achieving project requirements. The video also touches on the role of partnering as a risk management tool in construction projects. The speaker mentions that partnering was introduced in the UK construction industry through the Lam and Egan reports in 1994 and 1998, which aimed to resolve disputes and improve collaboration between clients and contractors.
01:10:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the concept of partnering as a management approach for achieving business objectives through collaboration between organizations. Partnering requires mutual objectives, an agreed method of problem resolution, and a continuous search for improvement. Partnering can be short-term (project partnering) or long-term (strategic partnering), with the latter being more beneficial due to repeated learning opportunities. The partnering process includes selecting a partner, agreeing on a partnering charter, and holding regular workshops to review performance, quality, cost, program, and safety. Advantages of partnering include a reduction in disputes, cost, and time, as well as early supply chain involvement. The speaker mentions the use of partnering charters like PPC 2000, which includes a contract subcontract agreement, to facilitate the partnering process.
01:15:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the advantages and disadvantages of strategic partnering in construction projects. Strategic partnering offers benefits such as improved design, increased quality and safety, better working environment, stable workloads, and continuous learning for both clients and contractors. However, it also comes with disadvantages like the cost and time to select partners, lack of competition, lack of confidentiality, and legal concerns. The speaker shares an example of a joint venture in Abu Dhabi that failed due to a lack of trust between parties. The video also touches upon Public-Private Partnerships (PPP) or Public Financial Initiatives (PFI), which can cover a range of partnerships to deliver policies, services, buildings, or infrastructure using private money when public funds are insufficient. PFI is commonly used for construction projects to enhance the supply of much-needed infrastructure services.
01:20:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the use of the private sector to fund and operate public projects through a financial approach known as PFI (Private Finance Initiative). Started in the UK in 1992, PFI allows the private sector to design, build, and manage projects while funding them through a special purpose vehicle (SPV). This approach offers advantages when the government lacks funds and allows for more efficient operations. However, it requires clear specification of project requirements to avoid poor quality of service. An example given is a government employee quarters project in a remote area, where the government paid a daily fee per person to the operator instead of construction costs. The speaker also touches on the history of PFI, noting that similar projects were done using PPP (Public-Private Partnership) in the 1800s.
01:25:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the importance of writing detailed specifications for operational activities in Public-Private Partnership (PPP) contracts. Failure to do so may result in the contractor providing subpar quality. The usual way of implementing PPP involves creating a Special Purpose Vehicle (SPV) with shareholders, sponsors, lenders, and the government. The SPV enters into a concession agreement with the authority, which outlines the project's terms and conditions. Construction and design consultants are hired, and after completion, an operation and maintenance contractor is appointed. At the end of the concession period, the project is transferred to the authority. The speaker mentions that the UK has executed over 700 PFI projects worth £54.3 billion since 2011, covering various sectors like accommodation, transport, and defense. The speaker also explains the differences between Build-Operate-Transfer (BOT) and Build-Operate-Own (BOO) models, with the former having the SPV pay a fee to the government during the operation phase and the latter having the SPV own the facility. The speaker also introduces Private Finance 2 (PF2), which was introduced in 2012 to address public concerns about the private sector's focus on profits and lack of government control by requiring the government to hold at least 30% of the SPV's shares.
01:30:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the differences between the Finance route and the contractor selection process. While the Finance route is increasingly suitable for developing countries, the contractor selection process involves choosing between negotiated tenders and open tenders. Negotiated tenders allow for direct negotiations with a contractor, which can be beneficial for tight deadlines or emergency situations. However, this method lacks competition and may result in higher costs. The speaker also emphasizes the importance of the tendering phase, which requires collaboration from senior construction professionals to ensure fair competition, accountability, and best value for money. The tendering process should cover the entire scope of the project and reduce claims and corruption to obtain a quality product at a reasonable cost.
01:35:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker emphasizes the importance of fair and transparent practices in the tendering process as per RC's guidance. The National Building Services from RBA published a guide for tendering, which outlines clear procedures for a single round of fair and transparent competition. The process should ensure the receipt of compliant and comparative tenders, and contractors should only be allowed to submit compliant tenders. The tender list should be short and systematically compiled from a pre-qualified list of six contractors to avoid unnecessary costs and ensure fair competition. Confidentiality should be respected by all parties, and sufficient time should be given for tender preparation and evaluation. Practices that avoid or discourage collusion should be followed to ensure a level playing field for all contractors. Collusion occurs when contractors collude with each other to manipulate prices, and it is more difficult to occur with six or more contractors involved in the tendering process. Tender prices should not change on an unaltered scope of works, and standard forms of contracts should be used as much as possible.
01:40:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the principles of good practice in tendering, including the use of standardized documents and teamwork. The speaker also touches on the ongoing debate about the use of Public-Private Partnerships (PPPs) in government projects. The focus then shifts to open tendering, where everyone is invited to bid for a project, and the advantages and disadvantages of this approach are discussed. Open tendering allows for lower tender prices and increased accountability, but it can also result in incompetent contractors and high abortive tendering costs. Techniques such as government contractor grading and evaluating only a select number of technically qualified contractors are used to mitigate these disadvantages. The speaker then moves on to discuss selective tendering, where contractors are invited to bid based on pre-qualification, ensuring that only technically and financially capable contractors are considered.
01:45:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses two types of selective tendering: single stage and two stage. Single stage selective tendering involves pre-qualifying contractors and asking them to price based on their technical qualifications. The advantages of this method include a smaller pool of contractors, which can lead to lower overall cost, but the disadvantages include higher prices due to less competition and difficulty for newcomers to the industry. Two stage selective tendering is used for complex projects where the contractor's expertise is needed in the design phase. In this method, the contractor is brought in early and a pre-construction service agreement is issued, allowing the contractor to begin work before a fixed price is negotiated in the second stage. The first stage appointment is based on the pre-construction services agreement, and the contractor is paid for their costs during the design phase. The speaker explains that the fee mentioned in the agreement is the only payment the contractor will receive if the second stage is not proceeded with. The appendices requested in the first stage include a construction program, method statements, detailed preliminary bill, schedule of rates, labor plan, and agreed fees for design and other pre-construction services. The contractor is selected based on the total amount of the pre-construction services agreement, detail preliminaries bill, and schedule of rates. The speaker then explains how the detailed bill from the second stage is priced using the information from the first stage.
01:50:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the two-stage tendering process in construction projects. When pricing a Bill of Quantities (BQ), the majority can be determined using the schedule of rates, which have already been under competition and market tested. However, a smaller percentage requires building up rates for labor and materials on a principal basis, using a labor and material price schedule under market competition. The detailed BQ, priced using market comparative rates agreed during the pre-construction stage, serves as a negotiation tool between the contractor and client. If both parties agree, construction can proceed with the same contractor, who brings design know-how and potentially improved buildability, timing, and quality. However, if the negotiation fails in the second stage, the project must go back to the market, resulting in additional tender duration, a new contractor, and potentially higher costs. The speaker also mentions various tendering procedures, including design and build, and the stages of a design project where tendering can be used. They also discuss the advantages and disadvantages of single-stage selective tendering, which involves pre-qualifying bidders, shortlisting, site visits, tender documentation, and analysis.
01:55:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the tender process and the importance of understanding the pre-qualification stage. Pre-qualification can be done project-wise or annually, and involves answering a questionnaire with sections on technical capabilities, financial capabilities, and health and safety track record. Contractors must pay a fee to receive the questionnaire and submit their answers, which are then assessed using a point system. The threshold for qualification varies, but those who meet the requirements are put on a shortlist for consideration. The pre-qualification process is crucial for recognition and career advancement, and requires significant preparation.
In the "Procurement and Tendering" YouTube video, the speaker discusses various aspects of the tendering process, including the importance of thorough site visits, following specific procedures when responding to tender queries, and the commercial analysis stage. The speaker also highlights the risks involved in the tendering phase and the differences between Quantity Surveying and Cost Reimbursement methods. Additionally, the speaker emphasizes the significance of selecting the appropriate contract type based on project requirements and considering whole life cycle cost when making procurement decisions. The tendering process involves inviting pre-qualified contractors to submit bids through a tender document, which includes instructions, tender conditions, and submission requirements. Site visits are crucial for contractors to collect information about local labor and materials and identify potential obstructions. Proper understanding of the tender documentation is essential for providing comprehensive answers in interviews. Tender queries, notices, and addendums are forms of communication between the contracting organization and bidders during the tendering process. When responding to tender queries, all answers should be distributed anonymously to ensure equal opportunity. The commercial analysis report covers both technical and commercial aspects to determine the most responsive bidder. The tendering process also involves risks, such as overpayment, which can be mitigated through rate analysis and careful evaluation of tender submissions. The speaker encourages considering factors beyond just price during the procurement process, such as past performance, technical ability, sustainability, and innovation. Procurement systems and trends, including e-tendering and early contractor involvement, are also discussed.
02:00:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the process of issuing an invitation to Tender to pre-qualified contractors. The tender document includes instructions to Tender, tender conditions, and submission of bids. The instruction to Tender outlines the project details, tender fee, and submission requirements. The tender conditions include general project information, bidding documents, and pricing instructions. The submission of bids requires original and copied documents, sometimes with specific requirements such as signing and stamping. The tender document also covers the evaluation process, including what to do in case of errors. Access to the site and availability of facilities and utilities are important considerations for contractors, and these costs should be factored into the tender price.
02:05:00 In this section of the "Procurement and Tendering" YouTube video, the speaker emphasizes the importance of conducting thorough site visits during the tendering process. During a site visit, contractors should collect information about local labor and materials to increase competitiveness and reduce costs. Obstructions, such as noise and access to permanent services, should also be identified to avoid productivity issues. The speaker then discusses the importance of understanding the tender documentation, including the various volumes and their contents, to provide comprehensive answers in interviews. Finally, the speaker touches on tender queries, notices, and addendums, which are forms of communication between the contracting organization and bidders during the tendering process.
02:10:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the importance of following specific procedures when responding to tender queries. When responding, all answers should be distributed anonymously to ensure equal opportunity and information for all contractors. The use of volumes in tender documents is not mandatory but is common practice in many organizations. Timely answers are crucial, and all notices and addendums should be distributed to all contractors. The cover letter should specify the tenders included, and tender submissions should be made by the specified time and location. Original and two copies should be submitted in a tender box, and formal acceptance and regret letters should be issued as necessary. In some cases, technical and commercial evaluations may be separated to prevent commercial aspects from influencing technical assessments.
02:15:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the process of tender openings and analysis. Tender openings can be conducted in two ways: openly, where all contractors are present and bidding prices are revealed, or closed, where tenders are collected and opened at a later time. Tender committees, consisting of delegated authority from the company, conduct tenders according to established policies. Quorum, voting systems, and communication restrictions are also mentioned. The technical and commercial analysis of tenders follows the tender opening. The technical analysis is conducted by engineers to assess a contractor's capabilities, while the commercial analysis is done after the technical analysis. Prior to the technical analysis, the tender checklist is reviewed, which includes checking for a valid trade license, tender bond, and power of attorney. The tender bond, which is around 5% of the tender price or engineer estimate, ensures the contractor's commitment to the project.
02:20:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the commercial analysis stage of the tendering process. After ensuring all tender documents have been returned and checking for any exclusions or qualifications mentioned in the cover letter, the commercial analysis report is prepared. This report covers both technical and commercial aspects to determine the most responsive bidder, not necessarily the lowest contractor. The commercial analysis involves price comparison, where rates and amounts of different contractors are compared, and any arithmetic errors are corrected. Unpriced items and tender qualifications are also checked for fairness, and abnormal pricing is examined to prevent contractor malpractices like front loading or spot loading.
02:25:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the risks and processes involved in the tendering phase of a construction project. The major risk for a quantity surveyor or client is overpayment, which can occur if the contract is terminated. To avoid this risk, rate analysis is conducted, and a like-to-like comparison is made during the tender evaluation process. The speaker explains the steps taken in the tendering process, including the removal of ineligible tender submissions, commercial comparison, and weighted scoring for both technical and commercial aspects. The final recommendation is to select and recommend at least three contractors for the project award, allowing the tender committee to make the decision. The speaker emphasizes the importance of being prepared to answer questions about the tendering process during mock interviews. Additionally, the speaker explains the three ways to pay contractors: remeasurement, lump sum cost, and reimbursement. In a lump sum contract, the scope of the project is agreed upon, and the contractor is paid a fixed price. Lump sum contracts are suitable when the scope of the project can be quantified easily.
02:30:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the differences between Quantity Surveying and Cost Reimbursement methods in construction projects. For projects where the scope is well-defined and quantities can be easily quantified, Quantity Surveying is the ideal way to go. However, for infrastructure projects or emergency situations where the scope is uncertain, Measured and Reimbursed or Cost Reimbursement methods are used. In Cost Reimbursement, the contractor is paid for the actual cost of the project, plus their overhead and profit. The fee can be paid as a fixed fee, percentage fee, or a new system called Fluctuated Fee. Fluctuated Fee can be used in Target Cost Plus or Guaranteed Maximum Price methods. The speaker explains that in Target Cost Plus, an initial Target Cost is estimated using preliminary estimation techniques, and the contractor prices their risk. The final Target Cost is the ceiling or benchmark, and any savings are shared between the client and contractor. If the actual cost goes above the final Target Cost, it is called a pain, and the contractor may be required to absorb the cost.
02:35:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses Target Cost Plus contracts, specifically focusing on the assessment of base and prime costs, and the sharing of pain and gain in such projects. In Target Cost Plus contracts, there is a measurement and payment close, and the use of NC cost reimbursement is common. The payment clause outlines how to assess the base cost, which includes all actual project costs, requiring detailed documentation such as invoices and delivery notes. The speaker shares an experience where only 15% of the Prime cost was checked due to the vast amount of documents involved. The Prime cost includes allowed and disallowed costs, with disallowed costs including wastage over 5%, entertainment costs, and insurance costs. Checking disallowed costs is challenging as contractors may not disclose wastage, and engineers need a trained team to report wages and issues. The Target Cost contract provides the contractor with an incentive to reduce costs, as they receive both the fee and gain sharing. The fee is fluctuating due to the gain and pain sharing percentages mentioned in the contract. To ensure cost certainty, a Guaranteed Maximum Price is introduced, with the client knowing the ceiling price and potential savings if the contractor delivers under the price, but the contractor bearing the cost if they exceed it.
02:40:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses the importance of selecting the appropriate contract type based on project requirements and the need for cost certainty. Cost Plus contracts, specifically those with guaranteed maximum prices, offer cost certainty, while target cost contracts do not. The speaker also emphasizes the significance of considering various factors when selecting a procurement strategy, including the form of contract and whole life cycle costing. Whole life cycle costing involves considering both capital and operational costs, and the best value is achieved by balancing function, quality, and life cycle cost. The speaker encourages considering factors beyond just price during the procurement process, such as past performance, relevant experience, technical ability, sustainability, health and safety, innovation, resource availability, management skills, and systems.
02:45:00 In this section of the "Procurement and Tendering" YouTube video, the speaker discusses the importance of considering whole life cycle cost when making procurement decisions. He explains that saving money on design fees at the beginning of a project can be outweighed by higher operational costs throughout the project's life. The speaker emphasizes the value of paying a little extra to the design consultant for a good design that considers whole life cycle cost, which can save money in the long run. The speaker also introduces the concept of lean construction, which focuses on delivering value to the ultimate customer by thinking about the final product and removing unnecessary cost and waste throughout the design, procurement, manufacturing, and construction processes. The speaker mentions that e-tendering, an online tendering process, is another important consideration in the procurement checklist.
02:50:00 In this section of the YouTube video titled "Procurement and Tendering," the speaker discusses various procurement systems and trends, including e-tendering and early contractor involvement (ECI). E-tendering is an electronic procurement process that uses platforms like RCS and other software developers to streamline the tendering process. ECI is a method where contractors are brought in early as the lead designer, and the emphasis is on their expertise and design capabilities rather than cost. The speaker also mentions the use of ECI in complex infrastructure projects and the increasing role of technology, such as BIM and the Fourth Industrial Revolution, in procurement and tendering processes. The speaker encourages those interested in learning more to watch a related YouTube video.