Design and build: tender

This stage describes the process of selecting and appointing the main contractor. Design and build projects are unusual in that the tender process can take place at any point after the preparation of an initial project brief, and can be either a single-stage or two-stage tender process.

Where a two-stage tender process is adopted, the contractor might be appointed in the first instance on a pre-construction services agreement, based on pre-construction fees, along with preliminaries, overheads and profits and a schedule of rates for the second stage. The second stage is then agreed by a process of negotiation.

Ideally, the form and terms of the second-stage contract should have been agreed during the first stage, along with a basis for determining the contract sum. If second-stage negotiations are not successful, the client may begin negotiations with an alternative contractor.

The role of client may be described in design and build contracts as the 'employer'. We use the word client for consistency with the other procurement routes. We attribute the role of contract administrator to an 'employer's agent'. This role might be carried out by the client if they are experienced.

[edit] Starting the work stage

The lead consultant co-ordinates a stage start-up meeting with the consultant team and the client to agree the programme and procedures that will be adopted for tendering. This may include; novation (or consultant switch) collaborative practices, deciding whether to follow a single-stage or two-stage tender process and the allocation of risk between the client and the contractor (in particular planning risk). The client gives any instructions necessary relating to lists of approved contractors, OJEU requirements, preferred form of contract, contract conditions and the appointment of an employer's agent.

The client identifies, or appoints an employer's agent. If necessary go to work stage: design and build: appointment.

NB: If the client intends that the consultant team should be novated (or switched) to the contractor after tender, they may wish to appoint independent client advisers to carry out design reviews and provide other advice.

The employer's agent agrees with the client their delegated limit for issuing instructions in relation to the contract.

The lead consultant and client prepare selection criteria for contractors and if appropriate pre-qualification questionnaires. If it is necessary and has not already been done, OJEU or other adverts are prepared.

[edit] Preparing the employer's requirements

The lead consultant co-ordinates advice from the consultant team on the form of contract, contract conditions and the allocation of risk, and advises the client.

NB: The first-stage appointment for a two-stage design and build project may be made using a separate pre-construction services agreement (PCA) sometimes called early works agreements, rather than under the provisions of the main contract.

The lead designer co-ordinates the preparation of the employer's requirements. The cost consultant prepares the pre-tender estimate, cash flow projection and contract sum analysis.

The client and principal designer co-ordinate the preparation of pre-construction Information. If it has not already been done, the client prepares or arranges for the consultant team to prepare a site waste management plan.

The lead consultant co-ordinates a review of the employer's requirements and issues instructions to make amendments if necessary.

The client considers the employer's requirements (including assessment of the pre-tender estimate in relation to the budget) and instructs the lead consultant to make further amendments if necessary. The lead consultant then instigates a change control procedure for the employer's requirements.

The lead designer arranges printing of the employer's requirements.

[edit] Identifying potential tenderers

From responses received to any adverts placed, or from recommendations received, the employer's agent co-ordinates the preparation of a long list of potential tenderers (the client may wish to include particular tenderers on this list) and issues pre-qualification questionnaires to the potential tenderers.

The employer's agent receives completed pre-qualification questionnaires from the long list of potential tenderers. The cost consultant carries out financial checks on potential tenderers (ideally, the contract should not be more than 20% of the annual turnover of the potential tenderers) and the employer's agent prepares a short list of tenderers for client comment or approval.

The client accepts or alters the initial short list of tenderers and instructs the employer's agent to arrange pre-tender interviews.

If necessary, following comments received during the pre-tender interviews, the employer's agent co-ordinates amendments to the employer's requirements. The employer's agent co-ordinates any amendments to the initial short list of tenderers and agrees the final short list of tenderers with the client.

[edit] Identifying the preferred tenderer(s)

The cost consultant collates the employer's requirements and arranges dispatch to and return from the tenderers.

The employer's agent compiles queries from tenderers and co-ordinates responses which should be issued to all tenderers. If necessary, the employer's agent arranges mid-tender interviews or site visits for the tenderers. If queries from the tenderers or discussions during the-mid tender interviews result in significant clarification of, or changes to, the employer's requirements, the employer's agent may recommend to the client that the tender period is extended.

The client receives the contractor's proposals (including the contract sum analysis). They may follow a formal procedure for opening and recording contractor's proposals.

The employer's agent co-ordinates assessment of the contractor's proposals (this may include further interviews). The lead designer co-ordinates assessment of design proposals submitted by tenderers and the cost consultant assesses the contract sum analysis.

The client receives the tender appraisals from the consultant team, and instructs the employer's agent to enter into negotiations with the preferred tenderer(s). A reserve tenderer may be retained in the event that negotiations with the preferred tenderer are unsuccessful.

[edit] Entering into negotiations with the preferred tenderer(s)

The employer's agent co-ordinates negotiations with the preferred tenderer(s). Negotiations may be led at different stages by the cost consultant, employer's agent, lead designer, architect or by a client representative such as a project manager. This process of negotiation may involve changes to both the employer's requirements and the consultant's proposals to ensure a best value solution is adopted and to ensure consistency between the employer's requirements and the consultant's proposals.

It is paramount in any negotiation that the individuals at the negotiating table either have authority to fully negotiate terms or make it clear from the start the limits of their authority. This may mean re-convening with the right people empowered to make decisions.

The employer's agent co-ordinates the preparation of the tender report. The client considers the tender report; and instructs the lead consultant if any further changes are required to the employer's requirements. If instructed the employer's agent co-ordinates adjustments to employer's requirements and revised contractor's proposals are requested from the preferred tenderer(s).

Before a final investment decision is made to appoint the preferred tenderer, the client must ensure adequate funding is in place.

[edit] Appointing the contractor

The employer's agent (or sometimes the cost consultant) collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for the client and one for the contractor. Alternatively, the client might retain one executed contract, with certified copies being issued to the contractor, this can avoid potential errors in preparing two contracts for execution.

This can take place at a specially convened signing meeting. The contractor may be required to provide a performance bond, warranties and evidence of insurance cover (including professional indemnity insurance).

The employer's agent (or sometimes the cost consultant) arranges for copies of the contract documentation (or relevant parts) to be issued to the consultant team. The employer's agent informs other tenderers that they have been unsuccessful.

[edit] Novating (or switching) the consultant team to the contractor

The client may wish to novate some members of the consultant team to the contractor. This is common on design and build projects where consultants are appointed by a client to carry out initial studies or prepare a concept or detailed design. A contractor is then appointed to carry out or complete the design and construct the works and the consultants, or some of them (not usually the cost consultant) are transferred to work for the contractor.

Novation effectively re-writes the contractual history to give the impression that the consultant worked for the contractor from the beginning. Alternatively, a 'consultant switch' simply transfers the consultants from working for the client to working for the contractor. The consultant team are only obliged to agree to this if it was part of their initial appointment. Warranties may be required by the client to ensure that they have a direct claim against designers in the event that the contractor becomes insolvent.

If the consultants are novated or switched, the client may wish to appoint independent client advisers to help them monitor the work of the contractor, carry out site inspections, assess design submissions, value payments, consider claims and so on. If they have not already done so, the client may wish to appoint an employer's agent to administer the contract.

NB: From this point onward, all design development is attributed to the 'contractor'. The different disciplines working for the contractor (such as architects or engineers) are not separately identified. We do continue to identify the specific role of the Principal Designer as this is a requirement of the CDM Regulations. Any design reviews carried out on behalf of the client (or any other advice given to the client) is attributed to independent client advisers. Independent client advisers may previously have been members of the consultant team or could be new appointments if the consultant team have been novated or switched to the contractor.

⇒ outline plan

⇒ previous stage project brief or concept design by consultants or detailed design by consultants

⇒ next stage concept design by contractor or detailed design by contractor