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Last edited 25 Apr 2018
Management contract: tender works contracts
The tender stage is the process of selecting and appointing works contractors. Tendering involves a number of works contracts, contracted by the management contractor. Works contracts may not all be tendered at the same stage, and so this process might be repeated a number of times during the project.
The management contractor and client consider the preferred form of contract, contract conditions and the allocation of risks for works contracts. They then co-ordinate a stage start-up meeting with the consultant team and the client to agree the programme and procedures that will be adopted for tendering.
 Preparing the tender documentation.
The management contractor obtains from the consultant team information for the preparation of the tender documentation, pre-tender estimate, cash flow projection and tender pricing document and prepares the pre-tender estimate, cash flow projection and tender pricing document.
The client reviews the tender documents (including assessment of the pre-tender estimate in relation to the budget) and issues instructions to make further amendments if necessary. The management contractor instigates change control procedures for the tender documents.
 Identifying potential tenderers.
The management contractor prepares a long list of suitable works contractors and issues pre-qualification questionnaires. The management contractor receives completed pre-qualification questionnaires from the long list of potential tenderers and carries out financial checks on potential tenderers (ideally the contract should not be more than 20% of the annual turnover of the potential tenderers).
The management contractor co-ordinates advice on prospective tenderers and prepares a short list of tenderers to present for client comment or approval. The client accepts or alters the initial short list of tenderers and where appropriate the management contractor arranges pre-tender interviews with the initial short list of tenderers.
 Identifying the preferred tenderer(s).
The management contractor compiles queries from tenderers and co-ordinates responses which should be issued to all tenderers. If necessary, the management contractor arranges mid-tender interviews and/or site visits for the tenderers. If queries from the tenderers or discussions during the mid-tender interviews result in significant clarification of, or changes to, the tender documentation, the management contractor may recommend to the client that the tender period is extended.
The management contractor receives the tenders. They may follow a formal procedure for opening and recording tenders. The management contractor co-ordinates the assessment of the tenders. This may include further interviews.
The client receives the tender appraisal from the management contractor, and instructs the management contractor to enter into negotiations with the preferred tenderer(s). A reserve tenderer may be retained in the event that negotiations with the preferred tenderer are unsuccessful.
 Entering into negotiations with the preferred tenderer(s).
The management contractor co-ordinates negotiations with the preferred tenderer(s). It is paramount in any negotiation that the individuals at the negotiating table either have authority to fully negotiate terms or make it clear from the start the limits of their authority. This may mean re-convening with the right people empowered to make decisions.
The management contractor co-ordinates the preparation of a tender report. The client considers the tender report and instructs the management contractor if any changes are required to the tender documents. If instructed, the management contractor co-ordinates adjustments to tender documents and requests a revised tender from the preferred tenderer(s).
At this stage, the client may negotiate the second stage of the management contractors appointment. This may result in 'definitive particulars' being inserted into the management contract. Any changes to the definitive particulars in the management contract may also require changes to the works contracts.
 Appointing the works contractor.
The management contractor collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for themselves and one for the works contractor. This can take place at a specially convened signing meeting. Alternatively, the management contractor might retain one executed contract, with certified copies being issued to the works contractor, this can avoid potential errors in preparing two contracts for execution. The works contractor may be required to provide: a performance bond, warranties, evidence of insurance cover and so on.
The management contractor informs other tenderers that they have been unsuccessful.
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