7060MAA Contracting

Management – Tendering
 Spacer

• Safety
• Purpose
• Agenda
• Conduct / Contribution
• Expectations
• Roles
 Purpose
• Understand how supply chains impact Tendering
• Understand the strengths and weaknesses of Tendering
• Look at the Tendering process
• Consider different type of Tenders / Contracts
• Understand what is meant by Value for Money
• Consider questions to assess non price criteria & value for
money
• Develop non price criteria questions
 Module Learning Objectives
• Critically appraise the process for identification, short-
listing, assessment and selecting of a suitable
contractor for different phases of a project.

• Evaluate appropriate contract strategy given the

nature of a specific project and the
strengths/weaknesses of the client organisation.

• Assess pricing and payment strategies to ensure

control over quality, cost and time when contracting
for the supply of goods and/or services to the project.
 Agenda
• Supply chains
• Strength and weaknesses of Tendering
• Tendering process
• Value for money / Non price criteria
• Non price / value for money questions
• Tutorial
 It’s your module
• Action Learning
• Use the skills and knowledge in the room
• Feel free to comment and ask questions
• Risk free environment
• Bring a positive attitude
• Make a contribution
• Be present
• Have fun
 Supply Chains
• The type of supply chain can impact on who and how
tenders are issued
• Project v Operational Supply Chains
• Who really has the money?
Construction Direct Supply
Supplier
Project
Proponen Lead
t Supplier

Lead Lead
Tier 1 – Prime Supplier Supplier
Contractor

Tier 2 – Sub
Tier 2 Contractor/ Tier 2 Lead Lead
Customer
Supplier Supplier Supplier

Tier 3 – Sub
Contractor/ Tier 3
Lead Lead
Supplier
Supplier Supplier
Tier 4 – Sub
Lead
Contractor/ Tier 4
Supplier Supplier
Supplier
 Value, Complexity & Legal
Requirements
• Tendering is not always the best method
• Impacts that mean Tendering is a relevant method are:-
• Value of the spend
• Complexity of the spend
• Life of the contact
• Legal or Compliancy Requirement (Government)
• Availability of suppliers
 Benefits of Tendering

• Benefits • Weaknesses
• Detailed appraisal of the • Time consuming
offer • Costly
• Includes value for money • Reduces innovation
• Clarity of the requirements • Suits large corporations
• Short listing of preferred
suppliers
• Passes risk through the
supply chain
 Tendering Process
Scope of
Tender
Continuous
Type of
Improvemen
Tender
t

Contract
Advertise
Managemen
Invite Tender
t

Contract
Analysis
Issued

Negotiation Short List

See CIPS Ethical Code
 The Procurement Process
Tender process (Buyers Perspective)
• Plan the procurement
– market research, business case, budget approvals
– Select the most effective procurement method
• Prepare tender documents
– Specify requirements, develop evaluation criteria and weightings, conditions of tendering
• Advertise/release final tender documents to suppliers
– Respond to supplier questions/queries
– May include a supplier briefing session
• Tenders received and evaluated and pre-offer negotiations
– Tender interviews and negotiations may be conducted for shortlisted candidates
• Prepare final recommendations for approval by the responsible
authority level
• Contracts Awarded
– Contracts above $10,000 published
– Debriefs offered to unsuccessful suppliers
• Manage contracts
Procurement Methods
• Open offer process (“Public Tender”)

• Selective offer process

• Only suppliers who meet pre-

established criteria are invited
• Limited offer process
• Agency invites suppliers of its
choice
• Standing Offer Arrangements

• Direct Purchasing (“Direct Sourcing”)

Weighted Procurement

Value
for
money

Cost
 Value for Money
Price is not the only indicator of value

• Value for money is more than just the cheapest price

• Value for money assessment should include:
– Overall objective and outcome being sought
– Cost factors:
• Up-front price, whole-of-life costs, transaction
costs associated with acquisition, use, holding,
maintenance and disposal
– Non-cost factors
• Fitness for purpose, quality, delivery, service
support, and sustainability impacts
www.hpw.qld.gov.au/SiteCollectionDocuments/ProcurementGuideValueForMoney.pdf
 Weighted Procurement Steps
• What are the critical factors for the product or service?
• Are some more important than others?
• Develop a weighted matrix
• Exclude price
• Develop questions / criteria linked to matrix
• Tender
• Analyse against matrix
• Compliant tenders?
• Assess price
 Evaluation

• Check for compliance with conforming

requirements
• Identify bids not meeting mandatory
requirements
• Create a short list (if required)
• Determine the best value for money
• Complete matrix assessment
 Evaluating Offers in Purchasing

Matrix Selection Method (Example Only)

Dept. of Housing & Public Works, Queensland Government

Evaluating Offers in Purchasing

Matrix Selection Method (Example)

Dept. of Housing & Public Works, Queensland Government

 Evaluating Offers in Purchasing
Matrix Selection Method (Example)

Dept. of Housing & Public Works, Queensland Government

    Offier 1 Offier 2 Offier 3
Weighted Weighted Weighted
Criteria Weighting Score Score Score Score Score Score
Track Record 25% 2  5  3 
Skills and Experience
of Staff 25% 3  3  3 
Industry Reputation 20% 3  3  3 
Extent of Risk 15% 2  2  2 
Degree of Innovation 10% 5  3  3 
Willingness to
Cooperate 5% 5  3  3 
Total   20 0 19 0 17 0
    Offier 1 Offier 2 Offier 3
Weighted Weighte Scor Weighte
Criteria Weighting Score Score Score d Score e d Score
Track Record 25% 2 50 5 125 3 75
Skills and Experience
of Staff 25% 3 75 3 75 3 75
Industry Reputation 20% 3 60 3 60 3 60
Extent of Risk 15% 2 30 2 30 2 30
Degree of Innovation 10% 5 50 3 30 3 30
Willingness to
Cooperate 5% 5 25 3 15 3 15
Total   20 290 19 335 17 285
 Tendering
How to Respond Effectively
Understand your Customer
Understand your Customer
6 Principles of Qld Government Procurement

• Principle 1: We Drive value for money in our Procurement

• Principle 2: We act as ‘one government’, working together across
agency boundaries to achieve savings and benefits
• Principle 3: We are leaders in procurement practice – we understand
our needs, the market, our suppliers and have the capability to delivery
better outcomes
• Principle 4: We use our procurement to advance the government’s
economic, environmental and social objectives and support the long-
term wellbeing of our community
• Principle 5: We have the confidence of stakeholders and the community
in the government’s management of procurement
• Principle 6: We undertake our procurement with integrity, ensuring
accountability for outcomes
Reading the Tender
Common aspects to note
Templates present information differently, but
most tenders will contain:

• A summary of the tender outcomes

• The closing date and time
• The tender evaluation criteria
• An indicative timetable for the contract
• Detail of any industry briefing sessions
Reading the Tender
Other items to look for:
• The offer validity period
• Requirements to be a conforming offer
• Mandatory requirements
• A key contact for questions and clarifications
• How offers are to be submitted (hard copy, electronic,
online form)
• Conditions of the offer
Responding to a Tender
Innovation
Alternative Offers, Innovations and Improvements:
• Clearly detail the advantages your offer provides to the
government
• Pitch your advantages to the requirements of the tender
• If a brand is specified, check the terms and conditions –
you can usually submit ‘equivalent’ products
• Your claims will be ‘fact-checked’ either before or during
an interview
Responding to a Tender the Right Way
The Golden Rules

Golden Rule #1

ANSWER ALL THE

QUESTIONS

Especially on the Specifications

 Activity / Tutorial
• Develop 3 Non Price questions to assess the following that
you would use in a Tender (Can be for a product, service or
project of your choice.

• Quality
• Safety
• Environmental Management
• Track Record
• Financial Performance
• Capability
• Resources
• Skills
• Project Management
• Post Installation Service
• Innovation
 Summary
• Project & Operations Supply Chain Differ
• Tendering is a complex & costly process
• What are the drivers for the tender – Value for Money
• Open Tenders, Closed Tenders, SOA, Direct Purchasing
• Value for money include non price criteria
• Submitting a non compliant tender at a low price won’t work
• Non price questions can be qualitative & quantitative
• Tender questions should align to the vision, mission & values
of the business