This seminar looked at: (1) how employers can make their tenders attractive in an increasingly competitive market, and (2) from a supply chain's perspective, what employers are looking for from tenderers.

1. Winning tenders / securing tenderers in a
competitive construction market
November 2016, Nottingham

2. Winning tenders / securing
tenderers in a competitive
construction market
A joint seminar by
Browne Jacobson and Turner & Townsend

3. Overview
• In this talk we will consider:
• Regional market conditions in the East Midlands
• What do employer’s want from their tendering contractors?
• How can employer’s make their tenders attractive in an increasingly
competitive market?
• Key points to take away from this talk are:
• Preparation
• Sensible attitude to risk
• Having clear expectations

4. Tendering – ‘What do you want?’
Outputs
EmployerEmployer ContractorContractor
• Competition / Multiple Tender Returns
• Completely Aligned with Requirements
• Risk Transfer
• Flexibility
• On Budget / On Programme
• Delivered Safely
• Zero Defects
• Attention of their Supply Chain
• Realistic, Unambiguous Requirements
• Risk Transfer
• Repeat Business Opportunities
• Interesting Projects
• Clauses / Contract Terms that are relevant
to the project
• Certainty / Profitability
To ensure we do the right thing, we need to understand the wider market place

5. Employer and Contractor objectives –
bridging the gaps
• Flexibility (such as voluntary termination and omission of works)
versus certainty (guaranteed work and income)
• Different attitudes to risk – risk should be placed with the party
best placed to manage it
• Appropriate payment mechanism and periods for payment

6. Regional market conditions
East Midlands
Tender Price Inf lat ion Index: C omparison of C ompet it or Forecast
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Average exc T&T T&T G&T Gleeds
AnnualPercentageChange(%)
2016 2017 2018 2019 2020
Assorted Consultants
Tender Price Inflation Forecast
Overview of Market Conditions 3Q2016
 Fairly busy with effects of ‘Brexit’ not immediately
felt
 Uncertainty looking ahead
 Good visibility of future projects
 Cautious approach is unfolding to investment
decisions and to tenders
 Tender price inflation 2.2% over coming 12 months
 Material price fluctuations
 Single largest supply chain challenge is availability
of labour, placing upward pressure on cost

7. Regional basket of goods
East Midlands
4.6%
4.9%
4.7%
4.1%
4.3%
4.5%
8.6%
10.8%
2.5%
3.6%
5.2%
6.5%
2.8%
0% 5% 10% 15%
Plumber/Electrician
Carpenter/Bricklayer
Carpet layer, Tiler,…
General Labourer
Site Foreman
Concrete
Reinforcement Bar
Structural Steel
Aluminium Curtain…
Aluminium Composite…
Copper Cable
Sheet Metal
50t Crane
Percentage increase (in nominal terms) of construction costs in the
last 12 months
4.3%
4.8%
4.5%
4.3%
4.5%
4.9%
6.8%
8.7%
3.9%
4.6%
4.9%
5.0%
3.5%
0% 5% 10%
Plumber/Electrician
Carpenter/Bricklayer
Carpet layer, Tiler, Plasterer
General Labourer
Site Foreman
Concrete
Reinforcement Bar
Structural Steel
Aluminium Curtain Walling
Aluminium Composite Panel
Copper Cable
Sheet Metal
50t Crane
Expected percentage increase (in nominal terms) of construction
costs in the next 12 months

8. Regional market conditions
East MidlandsOrder Book Completion
93.1%
40.1%
22.5%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
2016 2017 2018
Percentage(%)
Tendering Conditions
Lukewarm,
50.00%
Warm,
50.00%
Cold
Lukewarm
Warm
Contractor Portfolio
Single Stage,
36.9%
Two Stage,
14.4%
Negotiated,
21.3%
Framework,
24.4%
Other, 3.1%

9. Regional market conditions
East Midlands
 75% of surveyed contractors
expect the market to remain
at current levels
 Equal split of remainder
suggested cooler or warmer

10. How do you get what you want?
EmployerEmployer ContractorContractor
• Select a Consultant Team
• Select an Appropriate Contract Form
• Develop / Understand Your Brief
• Establish a Clear Attitude to Risk
• Warm up the Market Place
• Establish Timescales
• Identify the Opportunity
• Track the Opportunity
• Establish a Clear Attitude to Risk
• Plan Resource to Respond
Preparation Stage

11. Risk profile – standard of design
• Professional indemnity insurance linked to ‘reasonable skill and care’. Fitness for purpose is
generally uninsurable, alternative may be to produce a more detailed specification
• Contractors (and their insurers) will likely refuse to accept any deviation from the standard
of reasonable skill and care
• The standard of design must be clearly drafted
“The contractor warrants to the employer that:
(a) the design has been and/or will be carried out with reasonable skill and care;
(b) the design will, when completed, comply with any performance specification or
performance related requirements included or referred to in or forming part of the
contract documents;
(c) the works will, when complete, comply with the Statutory Requirements and the
Consents; and
(d) the various elements of the design of the Works shall be properly coordinated and
integrated.”
• Note that only bullet point (a) is tied back to the standard of reasonable skill and care, the
rest are absolute obligations.
• Important distinction between standard of ‘architect’ and ‘design and build contractor’

12. Risk profile – ground and site risk
• Employers may desire contractors to accept responsibility for unforeseeable
ground and site risk. This should be applied in the context of specific project
risks, for example:
• Does the project involve a clear demolished site, or does it involve work to
an existing structure?
• What information can the employer provide the contractor in relation to the
site and is the contractor allowed to rely on that information?
• What is the employer willing to pay for the contractor to accept responsibility
for ‘unforeseeable’ site and ground risks?

13. Risk profile - general
• Indemnities:
• Are they required?
• If so, in relation to what loss or damage?
• Security:
• What does the employer require?
• What is the contractor able to offer?
• What are the costs
• Specified perils
• Responsibility for the Employer’s Requirements:
• Design and build – can the employer procure novations of the design consultants?
• Traditional – if contractor is responsible for Employer’s Requirements, from a
practical perspective the contract drawings which do not form part of the
contractor’s designed portion should not be included in the Employer’s
Requirements.
• Third party agreements

14. Incentivisation
• Choose the right contractual payment mechanism, i.e. lump sum fixed price,
cost reimbursable, pain/gain
• Consider the length of the contract and who should bear the risk for changes in
fluctuation costs
• Cash flow – agreeing appropriate payment durations
• Employers must illustrate confidence in themselves and their projects to
tendering contractors
• KPIs or continuous improvement

15. How do you get what you want?
EmployerEmployer ContractorContractor
• PQQ is to Establish Capability
• Direct the Questions Appropriately
• Easy for the Contractor to Complete
• Consider Processes & Policies
• Issue on Time
• PQQ is a Process of Exclusion
• Answer the Questions
• Demonstrate Experience
• Consider the Relevance of Your Response
Pre Qualification Stage

16. Process and policies
• Employers need to make clear which policies and process it requires contractors
to comply with, i.e. anti-bribery, freedom of information, data protection,
modern slavery act
• Contractor’s must ensure they have appropriate procedures in place – don’t fall
at the first hurdle!
• Browne Jacobson can provide a Modern Slavery Act toolkit

17. How do you get what you want?
EmployerEmployer ContractorContractor
• Place Risk where Appropriately Managed
• Incentivisation
• Timescales – Know the Market & Inputs
• Be Open
• Answer the Questions
• Demonstrate Experience
• Consider the Relevance of Your Response
• Avoid Standard Corporate Literature
• Don’t be Afraid to Ask Questions
• Share Innovation / Opportunity
• Be Open
Tender Stage

18. Conclusion
• Some Uncertainty in the Market Place. Employers are more careful with money &
don’t want to take undue risk, but don’t have the resource to manage it. This is
fuelling an increased behaviour of risk transfer.
• Contractor’s and supply chain don’t want to take on high risk projects.
• Employers should:
• Prepare tender documents
• Have a sensible attitude to risk
• Have clear expectations on what they expect for their project
• Contractors should:
• Prepare for tender responses and thoroughly review contract documents
• Have a sensible attitude to risk
• Have clear expectations on their key drivers for the project

19. Thank you