This report summarizes the findings of a survey of leading contractors in the central London construction market. It finds that contractors are being more selective in the projects they bid on due to capacity constraints and abundant work opportunities. Relationships are also very important in winning bids as contractors prefer to work with clients and teams they know and trust. Input costs are rising which is increasing contractor margins. The market is seeing increased selectivity and inflation of tender prices as contractors are able to pick and choose projects.
SMEF2010 Request For Proposal Management Ask The Right Questions And Choos...Harold van Heeringen
Request For Proposal Management - Ask The Right Questions And Choose Wisely!
Paper published in the proceedings of the Software Measurement European Forum (Rome, june 2010)
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What is the meaning of innovation in RPO and how can the market become more innovative? New research from Capita seeks to find out what innovation means to resourcing leaders. The research provides an in depth insight on how RPO models can be better configured to realise the benefits from innovation.
Research participants included HR directors and resourcing leaders from large enterprises, with the likes of Arup, BSkyB, The Cooperative Banking Group, Lockheed Martin, TalkTalk, Thales and Virgin Money, among others.
Most of the respondents felt that the sector needed to improve on how it engages with candidates and hiring managers, and improve its capabilities around candidate sourcing. There was a strong sense of a need for research-led RPO, which could help improve conversations with active and passive candidates as well as boost the development of talent pipelines and pools.
Some respondents reflected challenges back on themselves; for instance, respondents linked several shortfalls to their organisations’ tendency to contract on cost alone, a failure to challenge how resourcing was perceived as a business discipline within their own organisation, and a lack of both focus and investment in workforce planning and talent management.
The Innovation in RPO white paper proves to be an interesting and upfront read. Its frank and honest view of the state of RPO comes with recommendations for driving positive change.
Tender writing – point of difference – important in wining tenders?Red Tape Busters
At Red Tape Busters - We have Specialized Tender Writers assisting businesses and non-profit organizations in understanding the key concept involved in tender writing. For more information, please visit - http://bit.ly/2zcO7xW
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All about Tenders and its Process | Here you will get all the information regarding tenders (Procurement) like what is tender, what is its process, types of tender, how to search tenders, what to do and what not to do in tendering, how to search tenders and more.... you can check our website for more details which is : http://tenderprocess.weebly.com/
SMEF2010 Request For Proposal Management Ask The Right Questions And Choos...Harold van Heeringen
Request For Proposal Management - Ask The Right Questions And Choose Wisely!
Paper published in the proceedings of the Software Measurement European Forum (Rome, june 2010)
Capita - Putting innovation at the heart of RPOEmma Mirrington
What is the meaning of innovation in RPO and how can the market become more innovative? New research from Capita seeks to find out what innovation means to resourcing leaders. The research provides an in depth insight on how RPO models can be better configured to realise the benefits from innovation.
Research participants included HR directors and resourcing leaders from large enterprises, with the likes of Arup, BSkyB, The Cooperative Banking Group, Lockheed Martin, TalkTalk, Thales and Virgin Money, among others.
Most of the respondents felt that the sector needed to improve on how it engages with candidates and hiring managers, and improve its capabilities around candidate sourcing. There was a strong sense of a need for research-led RPO, which could help improve conversations with active and passive candidates as well as boost the development of talent pipelines and pools.
Some respondents reflected challenges back on themselves; for instance, respondents linked several shortfalls to their organisations’ tendency to contract on cost alone, a failure to challenge how resourcing was perceived as a business discipline within their own organisation, and a lack of both focus and investment in workforce planning and talent management.
The Innovation in RPO white paper proves to be an interesting and upfront read. Its frank and honest view of the state of RPO comes with recommendations for driving positive change.
Tender writing – point of difference – important in wining tenders?Red Tape Busters
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These slides are from a presentation at the Think Local Act Personal conference on 26th November 2014. The slides and short film provide an introduction to the Coalition for Collaborative Care and its vision for a better deal for people with long-term conditions.
Conferência Regional de Geografia 2015. IGU Moscow 2015Juan Martín Martín
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These slides are from a presentation at the Think Local Act Personal conference on 26th November 2014. The slides and short film provide an introduction to the Coalition for Collaborative Care and its vision for a better deal for people with long-term conditions.
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QUESTION :
Taylor’s University is intending to build a branch campus in Kota Kinabalu, Sabah. Based on Taylor’s University plan they require the branch campus to be operational in mid-2019. Your quantity surveying firm, Innovative Cost Consultant Sdn. Bhd., of which you are a director, has been appointed to provide advice on the procurement system and the tendering methods that are to be adopted in carrying out the project.
The management of the University has informed you that the following requirements are of priority:
i) Cost to completion to be within the budget fixed.
ii) Timely delivery of the facility in order to commence operation in mid- 2019.
You are required to prepare a report to Taylor’s University recommending the procurement system and the tendering method to be adopted.
In your report you shall consider the procurement systems commonly used. You shall list out and explain the advantages and disadvantages of each system before making your recommendation.
As for the tendering methods, you shall consider all the three methods; i.e. open, selective and direct negotiation methods. Similarly you are to describe the advantages and disadvantages of each method before arriving at your recommendation.
Your report shall clearly explain your reasons for your recommendations.
Based on the above recommendations you are also required to prepare a simple programme or schedule in a form of bar chart showing the various activities commencing from the confirmation of the procurement system until completion of the project.
Analysis of Optimum Bid and Contractor’s Effort in Obtaining ProfitAI Publications
The government in Bali Province, Indonesia offers a limited number of projects, even during 2018-2020 it has decreased by 32% annually. The limited number of projects makes contractors compete to submit low-value bids. That phenomenon raises a question of what the optimal construction bidding for contractors is. A bid could be defined as optimum when it provides both of winning opportunity and the expected profit. Optimum bid analysis was carried out using the Friedman method, where it was discovered that the optimum value of construction bidding is in the range of 1%-9% mark-up or bidding at 76.21%-82.25% of the owner’s estimate. Based on a review of projects throughout 2021, only 19% of projects were won with an optimum value but the quality and quantity of the results remained good according to the agreed contract and was acceptable to the owner. The contractor needs to formulate efforts to maintain the targeted profit margin from the bid value that has been submitted. The factor analysis method is used to find the main factors that affect the profit margins expected by the contractor, where it is found that the Financial-Coordination Factor is the main factors that must be considered. The semi-structured interview method is also used to obtain the right implementation strategy in order to strengthen indicators related to Finance-Coordination factor, such as: smooth payment processing from the owner, good internal communication, safe environment, skilled workforce, proper site conditions, cooperation with suppliers, and good response from the community.
International Journal of Engineering and Science Invention (IJESI) is an international journal intended for professionals and researchers in all fields of computer science and electronics. IJESI publishes research articles and reviews within the whole field Engineering Science and Technology, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
1. IT’S WHAT
FRIENDS
CHANGING
ARE FOR:
STATE OF
THE LONDON
MARKET
This report is based on
the findings of a recent
AECOM survey of leading
contractors in the central
London market
December 2014
2.
3. INTRODUCTION
AND KEY
FINDINGS
Our recent survey of leading
contractors focusing on the central
London construction market,
reveals that an abundance of work
opportunities means contractors are
opting to work for trusted clients and
teams, input costs are rising and so are
margins.
It’s not just what you know, it’s
vitally important who you know in
the current market. In this annual
survey of contractors in central
London, relationships are identified
as key in the tendering process at the
moment. With plenty of opportunities,
contractors have the luxury of
choosing between teams they know
and trust and those who are new to the
scene — or who may have been less
collaborative in the past. In the dark
recesses of the recession, and even
as recently as last year, choice was a
luxury few could afford.
The economic backdrop has been
one of growing optimism and
confidence, with a good stream of
work, particularly in the residential
sector. There is an anticipated brief
slower pace of activity in the lead up
to the election, and it’s expected that
a Labour victory could produce greater
investment in infrastructure.
4. This year, AECOM’s survey
finds that main contactors are
only bidding for around two in
three opportunities.
Main contractors
Trade contractors
Selectivity - rate of tendering by main
contractors and trade contractors (2014)
62%
55%
5. THE LONDON SCENE
Trade contractors have, on average, a
lower bid submission ratio. The main
reason for this change is that pre-construction
teams have capacity
constraints and are therefore adopting
a more selective approach to tendering
only for projects that fit business
objectives.
Market recovery during the past 12
months has seen requests to submit
tenders increase substantially. A
number of dormant projects have
come back to life and new projects
have become viable once more on
the strength of rising property sales,
rents and values. However, despite
this upturn in activity, the level of
bidding hasn’t always matched the
boost in opportunities. In fact, some
contractors stated that tendering
activity has declined as a result of
being more selective.
Due to the lack of capacity,
relationships across the supply chain
are paramount for successful project
tendering and delivery. A smaller pool
of market resource accentuates any
relationship aspects of trading. As
part of the subtle shifts in power and
influence that have been evident in
the past year, there’s also common
agreement that subcontractors
certainly wield significant influence
presently.
A corresponding need for optimisation
of pricing is ensuring that price levels
are still tolerable. Main contractors
therefore continue to manage a
delicate balance between securing
their own higher output prices and
managing growing price demands from
the supply chain.
6.
7. OPPORTUNITIES
AND OBJECTIVES
With more opportunities and apparent
stability in the market, contractors are
taking a long, hard look at how they do
business. They are seeking jobs that
fit value, location, scope, timeframes
and desired client profiles. There’s
also a preference for a negotiated
procurement route with clients
who have a clear vision and delivery
programme, and where the consultant
team has prepared good quality
information.
Survey respondents are enjoying the
ability to choose — they can ‘focus
on good quality existing clients and
strategic relationships’; they are
looking for ‘projects with sensible
lead-in periods, and known entities’;
they can ‘focus on key clients that have
a history with us and a pipeline of work
that goes through into the future’; and
‘focus on our key areas regionally and
only pursue sizable projects that fall
outside these regions’.
The approach to opportunities is
also measured, with respondents
saying they prefer to seek out and
track appropriate opportunities
early, gain a full understanding of the
intricacies of the project and align
key supply chain members to make it
possible to provide a meaningful and
robust tender. There’s also interest in
pursuing projects where it’s possible
to make a positive difference to the
way the works can be delivered, while
recognising the necessity to provide
value for money through improved
performance, productivity and a
significant reduction in waste.
Key factors influencing tender decision – response frequency
Client
Resources
Relationships
Procurement route
Risk profile / transfer
Project size
Programme
Project location
Sector / work type
Supply chain
Margin potential
Project stage
Client work pipeline
Time for pre-contract stage
Pre-contract documentation
Need for turnover
Project funding security
Likelihood of project starting
Competition / tender list
8. THE PERFECT PROJECT
2013 2014
After years of operating in extremely
challenging conditions, contractors
clearly desire stability and continuity
of workload. When questioned about
clients, all respondents happily
sketched out the perfect work
scenario. There was unanimous
agreement on the preference for long-term
relationships, repeat business
and a visible pipeline of workload. ‘Is
the customer someone we know and,
if not, can we build a relationship or
do we hold a relationship with their
consultant advisors?’, and ‘we aim for
projects with a known/ trusted client
team’.
The benefits for clients that are
recognised as good to work for, is that
they still attract good price levels.
On the other hand, clients with less
robust reputations are avoided — ‘An
unknown or difficult client with a ‘one
off’ opportunity would not suit our
current workload’; ‘questions about
project funding lead to apprehension
as this doubtless has impacts on the
cashflow and payment terms of the
project’; and ‘a poorly coordinated bid
with insufficient design information
will invite fewer tenders’.
+ 2
17%
+ 3
3%
+ 1
40%
+ 2
32%
+ 3
7%
+ 1
66%
+ 2
26%
+ 3
+ 1 9%
71%
Secured turnover for +1, +2, +3
years from date of survey
2011
9. NATURAL SELECTION
Such is the present high level
of tendering opportunities that
contractors and subcontractors are
able to pick and choose projects. There
is also a necessity to be selective in
many cases where bidding teams,
reduced during the recession, remain
slim and so there is limited resource
to physically draw together the bids.
The scattergun approach to bidding of
a couple of years ago is now replaced
by being focussed on the projects
most likely to be won, and which fit the
contractor’s business objectives and
requirements.
OUR RESPONDENTS SAID:
‘We are intending to be very selective with the
opportunities we tender and seeking low-risk
opportunities. That will exclude any single-stage
tenders due to fixed-price uncertainties. We are seeking
negotiated and two-stage tendering opportunities.’
‘We are pursuing greater selectivity towards projects
that fit value, location and client profiles.’
‘We aim for projects with a known/ trusted client team.
Balanced allocation of risk between Employer and
Contractor.’
‘The approach will be to focus on key clients that have a
history with us and a pipeline of work.’
‘Our focus is selective – right Client, right procurement
route, team availability, timing for procurement and
delivery needs to fit.’
‘Two-stage tendering, even with a targeted approach,
sees our resources becoming extremely stretched and
we are starting to consider allocating resources only to
schemes that may be procured on a negotiated basis.’
‘A two-stage tender process will only be considered with
a preferred start-on-site date of the second quarter
2015.’
10. PROJECT
ATTRACTIVENESS
It’s no surprise that contractors are
seeking comfort in less exposure to
or appropriately priced risk. There’s
a broad belief that there should be a
balanced allocation of risk between
employer and contractor. As a result,
contractors will look at the risk profile
or attractiveness of the project when
bidding.
The risk profile of a project directly
relates to contract conditions and
risk transferred through design and
project requirements. In this market,
contractors will likely reject single-stage
design and build for projects
with increased risk. Risk is also
determined by the type of project and
its complexity, duration and project
team. For example, work to existing
buildings is often regarded as more
challenging, potentially more involved
and consequently higher risk. In the
current market, programme and risk
included in tenders will reflect the
scheme’s requirements, with pricing
levels higher than a similar-sized more
attractive scheme.
Risk and its influence on decision
making is not binary: it stems
from client decisions and from
the contractor’s own skills and
capabilities, or, alternatively, possible
shortcomings in these areas. As
much scrutiny is now being applied
to variables within the control of
main contractors — for example,
insufficient experience of the project
work type or work that is too far away
from its chosen business strategy will
mean that the tendering opportunity is
rejected.
2011/12 2014
Risk transfer
Project attractiveness
2013
Timeline of market dynamics
project attractiveness and risk trade-off
+
–
11. 2013 2014
Availability of skilled trades
Availability of staff and
associated costs
Supply chain
margins increasing
Increasing labour costs
Supply chain selectivity
Own margins increasing
Trade contractor
prices increasing
Commodity price inflation
RELATIONSHIPS
Many of the contractors surveyed
agreed that relationships are the
driving force in the market. Trading
relationships and trusted networks
are playing an important role in
project delivery. Moreover, they are
increasingly referred to when main
contractors are bidding for projects.
The decision to go ahead with a
bid rests on who the client is, and
often also includes the consultant
team running a project. Previous
adverse experiences with either of
these parties can play a part in the
decision not to tender. To counter this,
clients need to make their projects
commercially attractive before going
to bid and this means having the right
offer and consultant team to ensure
they receive competitive bids and the
best contracting team available.
There is heightened focus on
the relationships throughout a
project’s supply chain too. While
main contractors are reliant on
subcontractors in order to deliver a
project, lack of capacity and skills
shortages are making deadlines
difficult to achieve. While these
capacity issues are accentuated by
a current cyclical upturn in activity,
structural industry issues have
been created over a much longer
time. These include the move to a
fragmented supply chain following the
90s recession. A bigger question is
whether these changes are long-term
or whether they are just the result of
transient issues brought about by a
cyclical housing construction spike.
The consensus answer is probably a
little of the former and definitely the
latter. Some views are that once the
housing spike recedes there is the
possibility of returning to the usual
order of things.
Materials shortages
+2
0
0
Drivers of cost and price inflation
response frequency
Risk
+9
+1
+2
–3
–3
–4
–4
12. THE SHAPE OF
THINGS TO COME
The upturn in workload seen in the
last 18 months has raised questions in
respect of how the contracting market
will respond if growth rates remain
strong and continue to increase.
Further capacity constraints are likely,
in the absence of significant numbers
of new entrants to the industry — both
people and firms.
Clearly, the residential sectors’
contribution is one of the main drivers
behind current levels of workload and
activity. The question remains whether
this will continue in future years, or
if we will see output levelling off as a
result of capacity constraints and/or
other external factors.
Current sentiment in the market
though is a continuing approach of
selective tendering by contractors and
incremental tender price inflation.
Clients and consultant teams must
therefore invest time in making
their projects look appealing to the
contracting market, especially projects
that are perceived to carry higher
levels of risk.
2011 2013
Infrastructure & Industry
Public
Hotels, Sports & Culture
Residential
Retail
Commercial
12
27
12
16
6
27
Infrastructure & Industry
Public
Hotels, Sports & Culture
Residential
Retail
Commercial
10
32
6
16
5
31
Turnover – sector split
2014
Infrastructure & Industry
Public
Hotels, Sports & Culture
Residential
Retail
Commercial
8
27
4
33
4
24
13. REPORT CONTACTS
Brian Smith
Director, Cost Management
brian.smith1@aecom.com
Michael Hubbard
Associate
Michael.Hubbard@aecom.com
14. ABOUT AECOM
In a complex and unpredictable world,
where growing demands have to be met
with finite resources, AECOM brings
experience gained from improving
quality of life in hundreds of places.
We bring together creative, technical
and management specialists to work
on projects at every scale. Our Europe
teams belong to a worldwide network of
45,000 staff in 150 countries. Through
360 ingenuity, we develop pioneering
solutions that help our clients to see
further and go further.
aecom.com
30905