The industry must move towards twostage tendering, writes Ross Coker
WITH the number of routes available in the industry to procure contractors, why is single-stage tendering so popular? It does not deliver excellent projects and seems to disadvantage everyone involved from tender stage to project completion.
The client, quite naturally, accepts the lowest bid in single-stage tendering to keep costs down. But this can be a major disadvantage if a company, and there usually is one, is prepared to 'buy the work'.
The delivery is poor as a result, often 'extra' costs start to emerge and the design the client has signed off changes in favour of cheaper materials and labour.
Another downside, from the fit-out contractor's viewpoint, is the cost associated with the tender process.
Expecting a comprehensive, quality tender document - which can cost the fit-out contractor and its subcontractors approximately £10,000 each per tender, subject to the size and complexity of the contract - is perfectly reasonable if there really are other key drivers besides cost.
We take pride in the tenders we produce and win most of our work through single-stage tendering. But I wonder whether it would be better for a client to shortlist two or three companies and reach an agreement via negotiation or an alternative procurement route.
In this way, the money saved on the expensive tender process can be translated into a discount for the client.
A second procurement route the industry has explored, which is also entirely cost-based, is online bidding. When competing companies can see each other's entries, the first quote is often higher than is fair and then a process ensues for fit-out that I can only liken to ebay, but instead of the value going up, it goes down. As at an auction, you must establish the lowest fee at which you are prepared to do the job and not get carried away.
Towards the end of the bidding process, I visualise the staff of each competing company gathered around a computer, the excitement rising with only 30 seconds to spare. Before the final countdown, a lower bid is rushed through the system and everyone waits with bated breath to see if a lower quote will get through before the bell rings.
Anyone would think we were bartering for a souvenir rather than pitching, as professionals, for a job.
What does this do for the promotion of service and quality delivery? Do you only need to have a good reputation to get on the tender list, after which all that counts is pound signs?
Two-stage tendering, on the other hand, does not place such a massive financial burden on the fit-out contractor in the bidding process. Even better, reputation and service delivery are factors in the selection process, although still not enough.
Project delivery with two-stage is also more positive - the architect's design is respected and the client gets what he wants. Budgets are rarely pushed over the limit, because there are fewer changes, and deadlines are met. The entire team is working to the same agenda and budget.
I am not advocating that any procurement process is axed , just that we consider the opt ions.
Are we souvenirs to be bartered for or do we want a procurement process that promotes the importance of service delivery, track record and quality?
If we want the latter, the current front runner is twostage tendering every time.
Ross Coker is managing director of fit-out contractor Dovehouse Interiors