0061094721 Corey French Submit Assignment 2 PDF

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CMG3001

Building and Construction Procurement

Assignment 2

CMG3001: BUILDING AND CONSTRUCTION PROCUREMENT – ASSIGNMENT 2 Corey French & Peter Dixon Tendering is a common practice for Contractors seeking employment on various projects. Contractors, Subcontractors, Consultants, Architects & Engineers are all involved with tendering processes, whether providing fee proposals or procuring tender submissions themselves. This report provides insight to the various techniques and methodologies applied to maximise ‘value for money’ to Principals and Clients alike.

Corey French Peter Dixon

0061094721 0061023548

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CMG3001

Building and Construction Procurement

Assignment 2

Question 1a) - Introduction Augusta State School New 8GLA is a new-build construction project provided by the Department of Education and Training (DETE). The Superintendent for this project is nominated to Steele Wrobel PTY LTD who is responsible for the coordination and overseeing of Structural & Services Engineering, Architectural Design, Cost Control and the successful builder. This project was released for tender 30th October 2018, with a closing date of 27th November 2018. The Tender Form requested 3 hard copies and a digital copy of Builder bids to be submitted at the Queensland Governments Tender Box – Decipha in Brisbane’s West End. INTREC Management were successfully awarded the Head Contract to begin works in January 2019 under the contract format of AS2124, strictly a build-only contract. Featuring two levels of construction – Ground Floor and Level 1, the floor plates for both levels are roughly 1000 square metres. The ground floor implements large, open undercroft areas dedicated to future developments which are currently purposed for gatherings or parades. The two classrooms or ‘General Learning Areas’ (GLA’s) on this ground floor are designed to be multi-faceted, functionally flexible classrooms which may house various class sizes or dispositions as required by Augusta State School. Operable Walls which separate paired GLA’s allows classrooms to adjust, accommodating population demands. Level 1 will include a further 6 GLA’s for similar purposes, providing 8 new classrooms in total. This project features the installation of an elevator for disabled access, a new playground area introducing the latest approved play equipment, interactive audio visual and data/communication functionality within classrooms and new amenities facilities. The Invitation to Tender was received and reviewed by INTREC Management in early November 2018, comprising of Standard and Special documents as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Notice to Tenderers Tender Conditions Preliminaries AS 2124 Tender Form Special Conditions of AS 2124 Charter Statement AS 2124 Returnable Tender Schedule Drawings – for Tender Specifications – for Tender Department of Education Specific Documentation Reference Materials.

Comprehensively documented, Steele Wrobel on behalf of Department of Education provided an informative tender package for all Contractors to evaluate. The nominated time period for tender reviewal appears relatively standard for a project of this size, with a potential six known builders submitting construction bids. The documentation and tender deliverables will be discussed further below.

Corey French Peter Dixon

0061094721 0061023548

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CMG3001

Building and Construction Procurement

Assignment 2

Question 1a) - Body Tender Release Comprised within the Letter of Acceptance of Tender from Steele Wrobel, INTREC were provided tender documentation discussing the conditions and preliminaries which affect the Augusta State School project shall a Builder be successful. The Australian Standard General Conditions of Contract Form AS 2124-1992 were administered by the Superintendent, providing a framework which is common throughout commercial construction and the industry. The Special Conditions of Contract relating therein to AS 21241992 were also provided during tender, delivering supplementary conditions and information with the use of a completed Annexure segment. An accompanying Tender Form and Conditions of Tendering were implemented to further detail the format requested, rendering all conforming tender bids to an identical arrangement. Specifications and Drawings were provided, encompassing all architectural, structural, civil, services, finishes and specifications expected to comply with both DoE guidelines and the relative Building Codes. Further reference materials were provided which sit outside generic documentation, such as a Geotechnical Report, Survey results, Building Certification and Approvals, Room data sheets, Stormwater Management Plans, Bushfire Zoning and Prevention, Environmental Management and Dial Before You Dig (DBYD) studies. This additional documentation although essential to construction, can often be excluded from tender documentation – increasing contractor risk and exclusions to accommodate for such lacking material. Reference materials are contractually inclusive as much as architectural drawings and shall be respected as such. AS 2124-1992 provides a widely adopted form for construct-only head contracts. Builders and Consultants are very well versed by this contract which has been implemented for upwards of 30 years. Similar in nature to its successor, AS 4000, AS 2124 delivers a contractual framework encompassing most lump sum prices, fixed timeframes, practical completions, separable portions, latent conditions, provisional sums, delays and most extension of time requirements. Adopted by Steele Wrobel and approved by DETE, this means of contracting offers familiar territory for most parties involved with education projects. Some regard AS 2124 to be dated, calling for it to be superseded by its colleague in AS 4000, though many current and past projects have been administered with this contractual framework. As standard practice, amendments and adjustments must be noted and presented into a Special Conditions document, detailing clauses and conditions affected. Special Conditions of AS 2124-1992 relating to Augusta State School informed INTREC of alterations to standard clauses and condition modifications which differ from the General Conditions format. Included within the Special Conditions is a large Annexure which encompasses a broad range of important features relating to such contractual requirements. Included within this specific Annexure were details relating to: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Project location – Lot number, Area etc. Project Contacts – Principal, Superintendent, Successful Builder (post-tender). Securities – Retentions, Bank Guarantees, Periods of Claim. Notice – Time allocated to notice for EOTs, Delays, Claims. Insurances – Brief requirement for Public, Private, Personal requirements. Practical Completion – dates required for Handover, can be X weeks from Letter of Intent, may include differing dates for separable portions. Working Hours – weekdays, weekends, public holidays. Liquidated Damages – daily cash or losses expected by Client for delayed completion. Delay Days – number of allocated days, daily rate to be provided by Builder (often 6.5% Total Contract sum ex GST / project weeks * working days). Defects Liability Period – often 12-month basis. Variations – daywork, overheads, expected profit margins, notice. Claims – timeline or due dates.

Corey French Peter Dixon

0061094721 0061023548

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CMG3001

Building and Construction Procurement

Assignment 2

13. Project Bank Account – Projects over $1M but less than $10M may require specific trust funds. 14. Disputes – Resolution process, nominated Mediator/Arbitrator, location of Arbitration. The Special Conditions of Contract Annexure provides an important reference point for all parties to quickly locate details without searching through the various documents provided, especially with General and Special Condition documents exceeding 50+ pages each.

Tender Evaluation Period A common occurrence during tender periods, Addendas or Addendums are produced by the Principal post tender-release to further clarify any RFI’s or queries which may be presented by Contractors. These errors, although often minor, may be due to several reasons; miscommunications between designing and engineering teams, lack of detailed information, misguided or mislabelled items or any contradicting documents. It is vital for disconnected or disjointed information to be clarified prior to tender submission in order to avoid disputes during construction. Construction disputes are regularly carried upon suspicion of precedence in relation to specifications and drawings - Clients often not possessing the technical knowledge to clarify such differences. During Augusta State Schools’ tender period, 3 addendums were produced by Steele Wrobel relating to constructability issues, technical information requests and an extension of time for tender submissions. Addendum 1 was released 19th November 2018, surrounding a query regarding ceiling finishes and the respective luminaires and fans to be installed. Further to Addenda 1, Steele Wrobel released Addenda 2 on 21st November. The RFI’s responded to involved landscaping and play work details/ drawings – which were nominated to the company PlayWorks. Intumescent coatings and fire proofing to structural steel were also clarified. The 3rd and final Addenda came on 23rd November, providing an extension to Contractor due dates by an additional week – now required by 29th November 2018 by 2pm. Changes to tender closing times/dates require a formal notification to all known tenderers by written extension, less may provide unfair conditions to one Contractor.

Tender Finalisation and Submission Tender Deliverables were provided by the Principal in this instance with the inclusion of a Tender Form document (Appendix 1). Critical information is contained within this form, detailing lodgement type (Etender, Physical Lodgement) and address of physical drop-off if applicable. Further detail is requested from Tenderers regarding; Business Address, PQC rating and Registration Number, QBCC Licensing, ABN, ACN, Project Name and Number, Notice Address and No. Addenda received. Generated as a largely blank form, many Consultants or Principals implement this type of file to formally define Tenderers details, providing flexibility with many avenues for including information thanks to the blank format. Additional to above, a Tender Form will regularly include a formal signature panel for both parties to register their legal intentions. Each signature will require witnessing from a noted person of authority, and generally both CEO, Directors or Secretaries will necessitate signature. Noted beneath signatures in this Tender form is a Schedule of Agreed Damages for Delays – commonly referred to as Delay Days. This rate is implemented by the General Conditions of Contract to provide Contractors “agreed damages” (as seen under Clause 36 Alternative 2 – AS 2124). An example event which may satisfy Clause 35.5(b) of the General Conditions could arise from a Contractor facing delays due to an Employers’ attribution, or alternating types of excusable delays. Delay days are calculated using a generic formula which can be seen in Appendix 1. Provisional quantities are also listed in this Tender Form, providing detail of sums which must be included by Tenderers when submitting such bids. The final area requiring input from Tenderers is the transfer of final Net Tender Sums, broken into three arrangements; sum exclusive GST, GST component, sum inclusive GST. This figure will become contractually binding above all other Tender Breakdown forms and submissions, as noted in Tender Conditions, “In the event that the Tender contains an ambiguity in relation to the tender sum, then the amount in words at Item 2 of the Tender Form shall prevail” (See Appendix 3).

Corey French Peter Dixon

0061094721 0061023548

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CMG3001

Building and Construction Procurement

Assignment 2

Tender Evaluation & Award Referenced heavily through USQ course books and lecture notes, commercial construction is open to various formats for assessment of tender bids. Weighting is often delegated to both pricing and non-price criteria – offering opportunities for company experience, expertise and aptitude to take precedence away from a purely economical, cut-throat market. Clients often request various non-pricing metrics, such as methodologies, programmes, subcontractor database, cash flow indexes, traffic management and sustainability ethics when evaluating tenders. DETE and Steele Wrobel opted for weighting to be 70% price, 30% non-price criteria for this project, indicating largely competitive market conditions. Supplementary indexes included Key Staff, Experience & Skills, Resourcing, Management System, Methodology, Programme and Compliance with the Principles of Queensland Charter for Local Content, complimenting all pricing Tender Conditions. Selection criteria proved to be heavily weighted towards pricing for this project, and with the competitive market at time of tender, INTREC provided a bid which was both economically satisfying and provided fulfilment to all non-price criteria. Upon receiving the Letter of Intent from the Client, INTREC were made aware of more economical bids less than their own, further gratifying the strength of non-price criteria and the important of selective marketing. Quality premiums are an additional tool which may be implemented by a Client to further differentiate Tenderers, applying a fractional difference to tender figures – creating a marginal weighted sum. This method provides a fair and unbiased method where nonprice positioning is evenly applied across all submissions, discussed further below.

Question 1b) Critical Evaluation When critically analysing a subject, one must obtain an impartial or unbiased viewpoint to truly scope arguments from both sides. Although INTREC were successfully awarded the Augusta State School project, there are opportunities for improvement through reviewal of submitted documentation and processes involved with completing a conforming tender. Tender evaluation criteria is a pinnacle basis for appraisal, a scenario without such measures may lead towards a biased opinion. By being a Government project, there are processes in place for Principals – such as the best “value for money” solution. It is important to consider the Principal retains absolute discretion to make an informed decision at any time. Selection of a successful Contractor appears simple in hindsight with corrective tender forms and formal trade breakdowns; though with varying alternative, non-conforming, cost effective or inflated tenders, verdicts require an iterative and unbiased judgement. Neutrality is a necessity for Government undertakings, hence the preferred method of pre-made, impartial selection criteria which weighs nonprice criteria numerically against net tender sums. Government projects are unique in the fact that Consulting firms and Client Project Managers act as a conduit between taxpayer-funded projects and taxspending Government departments, bringing a full-circle continuity to each undertaking. Pre-qualification demands are an excellent means of ruling out lesser bids and submissions from often incapable Contractors – a test for feasibility and minimisation of such risks. PQC ratings are undertaken by Government entities in order to grade Contractors into their acceptable project range – ensuring one doesn’t take on projects larger than its capability. Attributed to various traits, Housing and Public Works (HPW) currently monitor Contractors’ capability to undertake service works for the Government, demanding satisfaction of financial, experience and project specific criteria prior to a Contractor submitting such tenders. This process was well involved for Augusta State School project, with Steele Wrobel ensuring INTREC’s PQC rating of 2 was satisfactory. Conformance is a crucial particulate which may rule-out tender proposals before evaluation begins. Ensuring conformance to tender criterion is vital for Contractors wishing to obtain contracts, more so scrutinised in Public sectors where negotiation between Client & Contractor is rare. Tenderers are inclined

Corey French Peter Dixon

0061094721 0061023548

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CMG3001

Building and Construction Procurement

Assignment 2

to document all submissions as per RFT conditions, less will risk being thrown out impulsively. Tenders shall also be combed for arithmetical errors, rate loading, BOQ miscalculations and any offers which lie outside standard deviations of an Engineers’ or Quantity Surveyors estimate. Thankfully, INTREC’s bid was entirely conforming, elsewise consideration would have been ignored. As suggested above, INTREC were awarded this build-only contract from a position which was not most cost effective. Considering the differing type of evaluation methods; Lowest Price Conforming (LPC), Price Quality & Quality Based, one can assume that both LPC and Quality Based were not opted for by Steele Wrobel. Forming a selective combination of both pricing and quality weighted-attributes, Steele Wrobel’s’ decision was based upon RFT documentation contained within the Tender Conditions form, namely; 1. 2. 3. 4. 5. 6.

Key Staff Experience & Skills Company Experience Resources & Management Systems Construction Methodology Charter of Local Content,

A Supplier Quality Premium was noted within Tender Conditions, confirming the adjustment process for weighted attributes. This method involves the scoring of tenders against one another regarding non-price criterion, formulating a fractional quantity which is applied proportionately against alternative tender net sums. The Quality Premium sum is then subtracted from net tender sums to provide contrasting sums comparatively. Upon applying this methodology, reasons for rejecting the lowest conforming price will need to be overwhelming to overturn such adjusted totals. Builders are inclined to exclude various amounts of risk-inducing work, and a stringent evaluation process shall maximise the Principals value for money by ruling out or marking down bids which avoid completing works. A Principal is also inclined to confirm any ambiguity or uncertainty by a written or formal meeting with a Contractor to ascertain if any mistakes have been made during tender submission, lest a price increase whilst undertaking construction. It is vital for both Contracting and Principal parties to conduct their due-diligence in order to minimise error or fault prior to commencement of contracts. Tender Breakdowns are an instrument used by Principals to contrast Contractor pricing into individual trades in order to highlight areas of concern. Generated by Quantity Surveyors, Tender Breakdowns are useful for tracking future tasks, especially whilst Consultants are reviewing and processing progress claims. The Tender Breakdown required from Steele Wrobel is a nonspecific format used across many new-build educational projects (see Appendix 2 below), with a number of avoidable items. Without presuming exclusive trades, a number of incompatible items may be removed from this register, namely; Piling, Carpentry, Tiling, Decanting, Design Fees, Sports Fields, External Courts & Shade Structures, all of which are not required for these works. Tender documentation supplied to INTREC at the time of offering appeared to be largely conclusive, though it is important for Principal’s to stay active throughout the entire tender period in order to resolve RFI’s and clarifications with the addition of addenda. A water-tight tender documentation package is not necessarily indicated by a lesser quantity of addendums, but a thorough and comprehensive design coordination...