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17 Apr 2024 • Tom Haley

Quantity surveying fundamentals: Procurement

We continue our quantity surveying fundamentals mini-series with a focus on procurement.

This is a very wide subject area and, given this was the focus of my University of Cambridge thesis, there is a lot I could say. However, as I am constraining these articles to five minute bitesize chunks, I will try and be concise to give you some top tips at each stage of the procurement process with a focus on the quantity surveying role.

Enabling the procurement process

If you want the procurement process to run smoothly, you need to enable it to happen – it will not happen by chance or good fortune.

By this I mean making sure you have lined up the right tendering contractors (and you have enough of them), you have a plan and everyone in the team knows that plan and, as far as you can, standardise your tender documentation to reduce wasted effort - you need less tasks, not more, when the pressure of the procurement process cranks up.

At this stage, the critical check I perform is a review of the design documents as they are being developed to ensure the package is in line with budget. Are the quantities broadly in line with those in the budget, is the scope similar to any tender assumptions, do some market testing to get headline rates and see how they stack against those in your budget. Don’t be one of those QS’s who only knows the price of the package when it comes back – get ahead of these shocks and take action to avoid them.

The more of this you can do and address prior to going out to tender, the slicker and smoother the process will be for you.

Preparing the tender documents

I’m an advocate for bills of quantities (BoQ) and, from a QS perspective preparing these will be an important role fo you in preparing a tender package. I like BoQ’s because you have to get to know and understand the detail of the scope, challenge who will do what at the interfaces, and test whether there are gaps which need to be plugged. The tender documents you prepare will be more robust, if a good quality measure is performed, and the risk of package growth is reduced.

In a wider sense though, the documents need to cover the basics. Is there a form of tender, have you been prescriptive about what the return needs to include and when it should be sent and to who? Have you included all the right design and programme information, and have you been specific about what this package should and should not include?

Make sure the documents are easy to access and easy to understand. You should describe to the tendering contractors what value looks like to you and how their return will be evaluated against others. If appropriate, run mid tender meetings to allow queries to be raised and addressed (prepare salient points from these meetings and issue to all tendering contractors).

Put the effort in at this stage, it will pay dividends later in the process.

Evaluating the returns

It should go without saying, but I will say it; actively manage the process so that the returns arrive on time. Talk to the supply chain, ask if there are any issues, remind them when the tender return is due (and the consequences for missing the deadline). It can be very inefficient trying to evaluate tender returns in a staggered fashion, and it will disrupt your overall procurement timetable.

When you are evaluating the returns, be objective and assess these based on the documents in front of you. Whether we like to admit it or not, the first thing the QS will do is look at the price. This is understandable because you want to see where you stand against budget but I would enocurage you to go further and make sure you analyse the detail of the submitted price. Has anything been missed, is there any scope which should or should not be included in the price for this package?

An assessment of the value of the return, for me, requires a consideration of the tender price against what it is you need from the package. If there is a high technical risk, then you consider the experience of the tendering contractor and whether they have done this before. If the package involves a high labour content, then you consider how many operatives they employ and how this compares with your programme demand. These factors should be considered in your evaluation criteria so that any recommendation derives a best value recommendation.

Making a recommendation

The recommendation should be the outworking of the whole procurement process. You should be able to succinctly explain to someone, who has not been involved in the process (e.g. a business leader), the journey to arrive at the point of making the recommendation. You should cover what you did and how you did it, noting any salient points on that journey.

In making your recommendation you should state which tendering contractor you recommend for selection and the basis on which you make that recommendation. Remember you might be audited on this decision in the future so write to your future self and justify why this decision was reached.

Lastly, as you are drawing the next commercial line in the sand, you should reconcile the order value against the budget. Was there a gain or loss, and why? Do you need to retain budget for risks to come (e.g. scope growth etc) so that the gain or loss accurately represents the position. This will inform your project financial reporting.

Placing the Order

All the hard work is done, so make sure you don’t fall at this final hurdle.

If you have managed the process correctly, the task of preparing the subcontract order should be straightforward as the relevant pieces of information you have collected should slot into the subcontract order template.

The essential task here is documenting the agreement. What is the agreed scope, programme, risk profile and price. Make this clean and simple to understand so that anyone in the team can up the order and get what has been agreed without having to work too hard.

What I sometimes see is orders that have been rushed together and the quality is poor, but we are better than that. Take pride in putting these agreements together – they are the outworking of a lot of hard work so do it justice.

Final Reflections

That was quick, and I barely skimmed across the surface. There are so many facets to this issue that I could talk in depth about each, and more. Maybe this whole area could be a future mini-series on its own?

I hope the article helps you check against your current processes to see if any areas need to be tightened up or improved. Maybe you have been thinking about this for some time and the article it causes you to reflect and make that step to improve your entire end to end process.

In next week’s article, we will roll on from subcontract procurement to cover subcontractor payment applications before moving on to areas such as change control, cost forecasting, and more.

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