A two-stage procurement process can use provisional appointments (outlined further in Section 6) which govern a pre-construction phase during which the appointed team members' tender proposals and commitments can be tested, and often improved upon, before the full implementation of the project is approved. The JCT 'Tendering Practice Note' recognises that this 'increases the scope for value engineering, through early contractor involvement, teamwork and fixed (rather than estimated) sub-contractor pricing, and... reduces the scope for claims that result from inaccurate or inadequate designs or specification. With the design and procurement processes being in part concurrent, it may also save time'.
| 'The invitation to tender and the bid process must prioritise building safety, and balance the upfront capital cost against quality and effectiveness' Dame Judith Hackitt |
Early contractor involvement, defined as early supply chain involvement ('ESI') in the Construction Playbook, is outlined in Section 6 and can be combined with robust competitive procurement processes. The government recommends three procurement models that have been proven to achieve improved efficiencies using collaborative approaches that include ESI. These are described in Section 6.1 and comprise 'Two Stage Open Book', 'Cost Led Procurement' and 'Integrated Project Insurance' ('IPI')
For example, the government's 'Two Stage Open Book' guidance suggests that:
■ 'At the point of selection of the Consultants and Tier 1 Contractor, Two Stage Open Book provides the basis for a transparent competitive process in respect of their fees/ profit/overheads, and any other components of the project for which it is appropriate to test costing, such as risk contingencies and the provisional cost of particular proposals submitted.
■ Evaluation of fees/profit/overheads and such other costs needs to be balanced appropriately against evaluation of qualitative proposals and the proven ability of the Consultants and Tier 1 Contractor to deliver the project/programme within the Project Budget cost ceiling
■ At the point of selection of Tier 2/3 Subcontractors and Suppliers, Two Stage Open Book provides the basis for further transparent competition based on accurate costing and additional qualitative proposals.'
The government recognises that this approach 'reduces industry bidding costs, enables faster mobilisation and provides the opportunity for clients to work earlier with a single integrated team testing design, cost and risk issues ahead of start on site following full project award at the end of the second stage.'