Alpus Guide How To Prequalify Design Consultants, Contractors, Subcontractors & Trade Contractors

1. Overview

Firstly we need to discuss a few principles so you can see what is the point of this article. Surely, you just select the right specialist to carry out the work based on the price they offer, its that simple isn´t it?

Well, the answer to that question is that it is definitely not as simple as that. Have we got your attention?

We need to consider the Contracting Procurement Strategy or Project Contracting Strategy (you need to consider how you will procure all the project components) in order to answer this subject in a lot more detail and the larger and more complex your project is design consultants, then the more consideration you need to give to your Contract Procurement Strategy.

Contracting Procurement Strategy or Project Contracting Strategy, whatever you want to call it, you need to start from a helicopter eye view of your project and what are its objectives, and how you propose to purchase all the component parts. This is so that you can achieve the best economies of scale and also the most efficient way of working, with lowest risk to delivery of the end product

Fundamentally there are 7 scenarios where you need to prequalify contractors of one sort or another:

1. Turnkey Project: You have a large complex project and you would like someone to give you a Turnkey offer, for example you have an industrial or commercial facility and there are a limited pool of suitable specialist contractors with the capability, both technical and financial and the necessary skilled technical specialist resources to carry out your project. Examples would be gas or combined power or nuclear power stations, or process plants.

2. Main Contractor: For Construction of a Design You Have Prepared Separately: You have commissioned a design consultants team to complete a coordinated design for a particular building or civil engineering project, to secure all the necessary approvals such as Planning Permission (and all the associated Reserved Matters and Building Control Approval, so that you can give the Main Contractor the complete detailed design consultants (for Implementation by the Min Contractor).

3. Procurement Of Designers: In order to prepare drawings and specifications for a multi-disciplinary design consultants then you need to either procure and appoint individual design consultants such as an Architect, Structural & Civil Engineer, Mechanical Engineer (for Plumbing, Heating, Air Conditioning), Electrical Engineer, and specialist design consultants that may be required such as Specialist Lighting designers for internal or external lighting, Landscape Architects, and sometimes Town Planning Consultants, as well as specialist geological survey companies, audio and sound engineering consultants, specialist environmental consultants etc. Alternatively you could choose to use a multi-disciplinary design consultants such as one of the big design consultants companies for example Building Design Partnership, Michael Aukett, Arup, Atkins, Mott MacDonald, Jacobs etc.

4. Cost Control Consultant:

Usually, a Quantity Surveyor or Cost Consultant is required in order to coordinate with each of the design consultants and with the main contractor and to monitor and forecast all of the project cost expenditure and to report to the Client and Project Manager regarding the cost expenditure actual vs budget and forecast of the Anticipated Final Cost of the project.

5. Project or Construction Management Consultant:

It would be tempting to think that if you appoint all the necessary design consultants and contractors, then they would automatically cooperate and collaborate together in order to deliver your project in the optimum time, to quality and within budget.

That can only be described as wishful thinking because each of the companies that you appoint will have its own priorities regarding which projects it will carry out first, not necessarily yours,  and those to which it will allocate the highest priority of resources in order to complete the necessary works.

Especially on larger projects, it is essential to appoint a project or construction manager and depending on the Procurement or Contracting Strategy, their role may be tailored to usually either project or construction management, although the role can sometimes be extended to include Development Management, ie the whole of the project management for a development project, including dealing with funding and finance and all stakeholders.

6. Trade Contractors:

These Specialist Contractors carry out work packages for a Client when a Construction Manager is appointed by the Client or Owner rather than a Main Contractor. So the Construction Manager manages all the trade contractors and certifies progress payments to the Client or Owner. The Construction Manager also supervises the works on site and manages and coordinates all the activities of design consultants.

The scope of works of a Trade Contractor´s work package may be design or construction or it could be both design consultants. The Construction Manager must manage the interfaces between the packages, for information as well as physical interfaces.

Arguably by adopting a Construction Management approach with Trade Contractors it may be possible to achieve savings on expenditure in the region of up to 10%.

7. Design & Build Contract:

In this scenario, a Client or Owner will prepare Employers Requirements documents to reflect the outcomes that he requires in terms of the aesthetics, functionality and specification of the built asset. Usually the Client will prepare a preliminary design consultants only, and specify all his requirements within the Employer´s Requirements document.

The tendering contractors offer Contractor´s Proposals of what they consider will satisfy the Employer´s Requirements, and their obligation is to deliver the whole of the designs in detail and the physical implementation of those design consultants.

There is usually a negotiation to finalize the agreed contract which may be a compromise between the Employer´s Requirements as originally stated and the Contractor´s Proposals, which may not be exactly what the Client or Owner requires. This could be for any number of reasons, and Contractors will sometimes propose cheaper alternatives for parts of the construction for the client´s consideration.

Design Consultants and Build tenders usually take longer to prepare and submit, and therefore cost the bidding contractors more money.

Usually there is a limited number of tenderers for the work, appropriate to the capital value.

The Contractor has greater control once a contract is agreed. Variations or changes to the original agreed contract may take longer to implement and require negotiation regarding their impact. With goodwill on both sides these can be agreed without major impact on the delivery schedule.

2. What Is Prequalification And Why Do You Need It?

Prequalification is needed because tendering is an expensive and time-consuming process and you do not want to waste time allowing tenders from companies that are not suited or qualified to carry out the sort of work and the scale of development under consideration.

This usually involves checking a company´s financial capability, their track record and turnover and financial soundness, which may also involve assessing their current and future workload and what impact award of the contract under consideration could have.

Every pre-qualified tenderer should be a contractor who you would be prepared to award the contract to, after tender.

2.1 How To Find A Contractor or Subcontractor?

Sometimes you can invite suitable contractors from your own knowledge of their capabilities, and from your own experience of dealing with them, and how they performed on past projects.

Sometimes you can get recommendations from other members of your design and consultancy team for nominations to undertake the prequalification process, from their recent experience with certain contractors.

You may decide to advertise and invite expressions of interest in tendering for the project, from suitably qualified and experienced contractors.

You need to spend time in order to research who may be the most suitable contractor(s) for your tender list, so as to get the best completion and the most suitable candidate to perform the works.

2.2  How To Vet Or Prequalify A Contractor Or Subcontractor?

You can prepare a prequalification questionnaire for all interested contractors to complete and submit for consideration by you and your team of design consultants and managers.

You can ask for references from past clients and also seek testimonials from satisfied customers of contractors seeking prequalification for tender.

It is common the have a variety of contractors or subcontractors who say they would like to bid for your scope of work. It is usual to score them based on the most relevant criteria applicable to your project such as:

• Financial soundness and profitability recently, usually the last 3 years, but sometimes more for larger projects.
• Current and future workload (you would not want to further overload an already fully committed contractor or subcontractor.
• Health & Safety Record, Systems and Processes.
• Quality Assurance & Control Systems and Processes.
• Budget conformance (final accounts of recent past projects vs original tender amounts)
• Time Schedule conformance (is the contractor or subcontractor frequently.
• Claims performance – sometimes you will want to avoid contractors who regularly make claims.

3. What To Do When Problems Arise With Your Contractor Or Subcontractor?

Problems may arise at any stage in a project, and sometimes are not related to the project itself, but may have been caused by economic conditions, or payment problems from other projects resulting in cashflow difficulties for the contractor.

There needs to be good communication with the contractor about what is the real cause of the problem and what can be done to help to resolve it.

This is a situation where leadership is needed, good relationships and honesty about the real problems and what may be able to be done in order to resolve the issues.

4. Contractor Insurance, Licenses, Warranties, Guarantees And Bonding

Public Liability Insurance is mandatory for building contractors and subcontractors and the amount depends upon the scale of the work involved and the specific terms and conditions of the contract.

Professional Indemnity Insurance will be required for any design work that may be carried out by the Contractor.

On some occasions, especially on larger projects, a contractor will be required to submit a Performance Bond, which the Client has available to draw down if the contractor fails to perform the project in accordance with the contract terms and conditions.

Warranties are usually required for any specialist design consultants and installations, and these need to be Collateral so that they may be passed to the Owner or Client upon completion and handover of the works. specific requirements should be identified in the tender documents.

You should check that all of the contractor’s insurances are valid and up to date, ie that the current year´s subscription has been paid by the contractor.

5. The Contract Terms And Conditions

If possible you should give the tendering contractors as much information as possible about the proposed terms and conditions of the contract that are proposed.

It may be that certain design consultants could be swayed whether or not to tender based on this information, so the sooner you know that you have serious bidders the better.

For example, a large amount of damages for late completion may be a disincentive for a contractor to offer, if he considers this to be an unacceptable risk.

6. The Benefits Of Contractor Prequalification

The benefits of contractor prequalification are that:

1) All prequalified contractors have voluntarily submitted their prequalification information, and may be deemed to want to bid.

2) The process will highlight strengths and weaknesses of prequalified contractors, so that some may not be invited to proceed and submit a tender.

3) The Client and design consultants team can score prequalified contractors and decide what factors may definitely preclude contractors from bidding. For example Health and Safety deficiencies in a  Railway or other similar HSQE environment.

If you have a problem project and would like to discuss an appropriate procurement strategy for your project, then call Alan on +447539141257 or +443332241257 schedule a call with Alan on https://calendly.com/alanje or drop an email to alan@alpusgroup.com.