Construction Tendering is a Learning Exercise – Understanding the Rules
The Master Builders Association of New South Wales asked me to draft an article on construction tendering and how to approach NSW government tenders.
I am grateful to Omesh Jethwani and the MBA for the opportunity to again share my views on construction tendering and how to turn it into a learning exercise.
The article shows how construction tendering is similar to a learning exercise as it:
- starts with understanding the playground rules;
- moves on to the classroom rules;
- deals with understanding and applying the rules to the lesson;
- manages understanding the exam rules; and finally
- graduating in your tender process.
Construction Tendering is a Learning Exercise
It can be daunting to submit your first tender and you may not even succeed. The reality is that unless it is a panel arrangement, most tenders only have one winner. There are no easy-wins.
Construction Tendering is a learning exercise.
“Don’t let your learning lead to knowledge. Let your learning lead to action.”
The good news is that many tenderers succeed.
For example, over the May 2015 to May 2016 period, NSW government agencies awarded approximately 432 contracts under the “Building and Facility Construction and Maintenance Services” category. The contract values ranged from as little as $10,000 up to as much as $200 plus million.
Government tendering requires:
- a commitment to time and resources and
- a constructive tendering learning approach.
It requires us to understand, learn and apply the rules applicable to tendering.
NSW PROCUREMENT POLICY FRAMEWORK: UNDERSTANDING THE PLAYGROUND RULES
In NSW, the NSW Procurement Policy Framework as guiding framework tsets the rules for all government procurement.
It is a good starting point. The Policy Framework deals with all areas of procurement, such as:
- who can procure what and when,
- how tenders will be advertised,
- fairness and probity and
- provides consistency in terms of process and form to be used.
It sets the procurement playground rules to make sure that all NSW procurement follows a fair and equitable process with best value for money outcomes.
The policy framework is logically set up and (even for a policy document) easy to follow. It is a must read.
NSW GOVERNMENT PROCUREMENT SYSTEM FOR CONSTRUCTION: UNDERSTANDING THE CLASSROOM RULES
Moving from the playground to the classroom, the procurement system for construction (“the system”) sets the rules for the construction procurement and tenders – applying both the government agencies and providers. It is focused on delivering effective and efficient government construction related services, holding both agencies and providers accountable. The system provides for a “whole of life” procurement whereby government agencies can be accredited and providers can be pre-qualified under the system.
In addition, the system allows for selective tendering, where only specific providers are allowed to tender. Most tenders under $1m will not be available for open tender and would be only open to prequalified businesses on the General Construction Scheme. Pre-qualification takes time but it is worthwhile to go through the process to access the selective tenders.
The system is a great initiative, as it removes the requirement to replicate the same information tender-after-tender.
It saves time and cost relating to tendering and aims to avoid duplication of effort.
TENDERING RULES: UNDERSTANDING THE RULES APPLYING TO THE LESSON
When a tender is issued, the tendering rules are included as part of the tender. These can be classed as the “lesson” rules.
These rules have to be followed or you may have to leave the lesson and not return.
You really have to spend time to work through the tendering rules.
There is no way around it – buckle down and work through it.
It is also worth looking at the Market Approaches Guide, it sets the rules that agencies follow when tendering.
It is handy to know what can score a “no” in a lesson:
- Absolute no-no’s: Do not talk to anyone about the tender in government except for the tender contact officer and only to ask for clarification;
- Another no-no: No late submissions are allowed, not even a few seconds. With electronic tendering the offer disappears the second the tender closes – so there is no real way to accept late tenders.
- “No” means “no” – Many tenders have mandatory pre-qualification requirements such as licensing/registration requirements or mandatory site briefings. Where a requirement is a mandatory requirement, this will be clearly stated. When you cannot comply with any of the mandatory requirements, “no” means leave the lesson and do not return. No need to hand in your homework either as it will not be considered.
- Sometimes “no” can mean “maybe” – Tenders can include requirements relating to disclosure and compliance such as subcontractors, declaration of criminal convictions and insurance requirements. In the event where you do not comply, the agency requires you to provide a proper risk-based justification for non-compliance. But remember – preferred still means “we really like you to have this” and impacts the success of a tender.
TENDER EVALUATION CRITERIA: BEST VALUE FOR MONEY – EXAM RULES
“Best value for money” is all about the criteria that will apply to your “exam”. A tender is an opportunity for a provider to show how it will make the tender scope work, how it will provide the best value for money and provide a better solution than the other tenderers.
Value for money is more than just having the lowest price.
In simple terms value for money is about making sure that procurement teams:
- do value for money procurement for the right reasons; and
- use the correct process (that includes both financial and non-financial criteria) to ensure that the procurement results in value for money.
CONTRACT MANAGEMENT AND PERFORMANCE – GRADUATION
When you graduate to a winning tender, make sure that you:
- can actually perform the requirements of the contract and
- will have the capability and capacity to perform well under the contract.
Remember constructive tendering is important. Thus tender for success and aim to perform better than promised.
It is best to allow time between graduating to the winning tender and commencing work under the tender.
Depending on the complexity of the tender, there may be:
- commercial negotiations to finalise the tender award and
- signing of contracts
before work can commence.
Government tenders start with a clean slate approach.
However, agencies remember:
- poorly executed contracts; or
- contract overruns in terms of schedule and budget.
As part of the NSW Government Procurement System for Construction, the system focuses on performance under contract and the opportunity for providers to receive “best practice accreditation”.
A successfully executed contract certainly assists in this process.
CONTRACT CLOSE OUT – AN OPPORTUNITY FOR LESSONS LEARNED
Lessons learned from tendering and contracting provide a useful opportunity to improve your next tender. It gives insight not only into improvement opportunities but also good scores.
The debrief saves reinventing the wheel. With the debrief you get an opportunity to improve your future opportunities for tendering successes.
Constructive learning happens when we can implement the lessons that improve our tenders.
In conclusion, some handy tips and tricks around construction tendering in general:
- Do your homework on awarded contracts; ultimately the published details include an estimated contract value and successful tenderer name; this information will provide an idea on the pricing and potential competitors;
- Raise a tender clarification request as soon as possible for unclear requirements. However, remember agency shares the clarification with all the interested tenderers;
- Plan to submit your tender early, know what you have to do and then get on with it.
- In your tender responses you answer the questions asked and provide the information to substantiate the evaluation criteria. You focus your response on the questions and criteria; remember quality still beats quantity.
- Carefully select the best examples that will substantiate capability and experience as required under the tendered scope; the same rule applies to referees, your referees act as back up your success story.
- Look at the validity period required for your offer and make sure that you consider any factors that impact your offer.
- All tenderers may request a post-tender debrief; the post-tender debrief provides the best opportunity for lessons learned.
Remember what Benjamin Franklin said:
“If a man empties his purse into his head, no one can take it away from him. An investment in knowledge always pays the best interest.”
Please contact us if you have any questions or require any assistance with government tenders.
You can also download a copy of our construction tendering article, as it appeared in the June/July 2016 edition, here.
Have a great day!
The views and opinions expressed in this article represent the author’s specific views and do not necessarily represent any official policy or position.
This document remains the intellectual property of Celia Jordaan. You may not copy, distribute, share, print or use the document or its contents without our prior written approval.
With over 20 years experience, Celia has worked in different countries, locations and cultures. Celia worked in the areas of:
- supply chain,
- contract management,
- law and
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