Tag Archives: Competitive dialogue

Ancillary contractual practices

By the end of the 1990s the construction industry had tried out a variety of permutations of construction procedures, most of them being only ancillary practices attached to one or other of the main approaches already described above. The following list gives the new terms most frequently used and their meaning. Few are radically new practices, and some had a phase of popularity which has already declined.
Alliancing A term principally applying to a contractor who joins with one or more other contractors to undertake a contract for some project. One firm is the lead firm; the others are often specialists. An example is an EPC Contract (Engineer, Procure, Construct Contract) under which a firm of consulting engineers may be the lead firm (see Section 2.6(c)) with a construction contractor and plant suppliers associated. Other setups are possible, such as when a construction contractor or plant supplier is the lead firm and uses consulting engineers to design the structures required. Alliancing is also sometimes used as an alternative name for Partnering.
Benchmarking A procedure under which a promoter (or manufacturer or contractor) compares his performance achievements on projects with the methods and achievements on similar projects carried out earlier by him, or carried out by some other promoter. It involves comparing such things as project cost per unit of some kind; time and cost over-runs against that intended; disputes and troubles encountered, etc.
Best Value Contracts The requirements placed by government on UK local authorities in place of Compulsory Competitive Tendering (CCT) (see below).
Tenders for construction or provision of services now have to be chosen not only on bid price, but also on the quality of the materials and services offered, as affecting the estimated operational and maintenance costs of a project and its estimated length of life. This is evaluating bids on a ‘ whole life costing’ basis.
Competitive dialogue Pre-bid negotiations initiated by a promoter who,
not having defined his project requirements in any detail, invites outline proposals from contractors for a design and build project as part of the prequalification stage for prospective bidders. Criticisms of the procedure are that the promoter gets useful advice on design alternatives without paying a proper design fee for same, and that the promoter may choose the best design submitted by one contractor but use another contractor to execute it.
Compulsory Competitive Tendering The procedure that the UK government previously required local authorities to adopt, before they introduced Best Value Contracts (see above). It meant that in-house local authority staff had to compete on price against contractors’ bids for constructing a project or providing services.
Construction Best Practice Recommendations of the UK ‘Construction Best Practice Programme’ to promoters and contractors for improving productivity and efficiency, following the findings of the 1998 Egan Report, Rethinking Construction (see Section 1.9 above).
EC Procurement Regulations EC rules have for some years required open
competition for certain types of work, as set down in EC Public Procurement Directives. These require that all public utilities and other major public organizations put tenders for services and construction out to a tender system open to all EU firms. The rules apply for values of projects above certain minimum figures and require that details of contracts open to tender are published in the Official Journal of the European Community. Contracts must be tendered individually or for groups of contracts for specified similar types of work. Individual tendering can lead to large numbers of bids being received, each requiring analysis; whereas grouping allows a short list of preferred bidders to be developed. Further details of EC tendering requirements are set out in Sections 6.2 and 6.3.
The Gateway Process Asystem of adopting checks on the progress of a project at critical stages i.e. ‘gates’.
Joint Ventures A relationship usually with a legally binding agreement in
which two or more firms agree to combine resources to carry out a contract. The joint venture may be for consultancy or construction work. Between themselves the parties to the joint venture may divide up the work and decide on profit split or liabilities, but the main contract with the promoter will usually hold them jointly and severally liable for the outcome of the contract.
’KPI’ or Key Performance Indicators These indicators are used for comparative purposes, are measures of success in the design and construction of a project. Chief measures are outcome cost as compared with estimate, time over-runs, promoter satisfaction, freedom from defects, and safety record.
’M4i’ (Movement for Innovation) Promotion of new techniques by members of the ‘Construction Round Table’ in line with recommendations of the Egan Report, the members of the Round Table comprising representatives of a number of companies making large investments in new constructions.
One Stop Shop Acolloquialism for the case where one contractor delivers all that is required to design and construct a project or series of projects.
Prime Contracting A form of design and build contract under which the prime contractor has an association with a number of subsidiary firms whom he uses to supply specialist goods or services. Thus, instead of a designer specifying nominated subcontractors to be used by the contractor, these are chosen by the prime contractor. This avoids the problems that can arise with nominated subcontractors (see Section 15.8).
Quality Assurance (or QA) This is defined as all those planned and systematic
actions necessary to provide confidence that a product or service will satisfy given requirements for quality. Thus QA is concerned to ensure that adequate systems are set up for checking that work is properly done, and that such systems are complied with in practice. It is not a system for providing ‘best’ or indeed any specific quality of materials and workmanship, but only to ensure that adequate administrative procedures are adopted to see the specified requirements are met. All aspects of the construction process may use QA. Consultants, contractors or suppliers can set up QA procedures covering the whole range of work they have to do, including checking work done against those procedures and arranging for audits to demonstrate compliance.
Permanent QA systems may be certified and audited by an independent organization or audits may be required by a promoter.
QAhas the advantage of requiring people to manage their processes better, but should not be taken as eliminating the need for checking the methods and details of working. Checking that a procedure has been followed does not necessarily mean that the work has been done correctly. Hence, although a construction contractor may run a QA system, it is still necessary for a promoter to be satisfied that the works have been constructed properly; for which independent site supervision of construction on behalf of the promoter is the best assurance.
Value engineering A non-specific term applied to any exercise to find out possible savings, economies and better ‘value for money’ by investigating alternative designs, construction processes, ways of planning and meeting risks, etc. for a proposed project. The exercise often takes the form of arranging a special ‘workshop study’ in which the client, designer, and contractor and other parties involved take part, and put forward suggestions for discussion and investigation.