BCIS

Do poor contract documents lead to cover pricing?

I received some comments on my previous Blog on cover pricing from Clive Rowe, who works for BCIS on our resource cost estimating services but was, until a year ago, a building contractor and he has many years experience as an estimator.

He sheds light on previous practices but also highlights the influence of the clients QSs on the attitude of contractors to an invitation to tender, particularly the lack of consideration of the tender process and poor pre-contract documentation.

Clive wrote:

'Having worked on the contracting side of the fence, I can confirm that the practice (cover pricing), in the recent past, was quite common at all levels.

The temptation to indulge can be quite strong and, I maintain, rarely affected the level of the successful tender.

From my experience, the reasons for being tempted were:

1.    Finding out that the tender list consists of so many contractors the money invested in preparing a bona fide quote is basically being thrown away.
2.    The quality of the tender list is poor. One of the tenderers is suspect and hence more than likely to be the cheapest and thus successful.
3.    A short tendering period made shorter by the failings of others.
4.    The substantial cost of producing a bona fide tender made worse by     
  a.    The reduced number of BQs produced.
  b.
    A generally poor quality of pre-contract documents.
     i. 
   Ambiguities between drawings, specifications and the schedule of works.
     ii. 
  Whole sections of specifications and schedules of work that are irrelevant.
     iii.
  Use of colours on CAD drawings that will not photocopy.
     iv. 
Illegibly small fonts.
     v.
   Hardly any dimensions.
     vi.
  Clauses and preambles designed to pass the blame for any errors on to the contractors.
vii.  
  An expectation that any errors not reported during the tendering stage are incorporated into the contract and any consequences fall at the contractor's door.
5.  High levels of bureaucracy resisting the contractor's ability to expand smoothly if unexpectantly successful in a series of tenders.       

To avoid putting temptation in front of a contractor, all of the above needs to be addressed. The design team should be aware that there is:

1.    A duty of care in preparing the tender list and a regard for the cost of preparing a tender. Very few get paid for submitting one if not successful.
2.    The need to bring in each member of the tender list to a job specific briefing.
3.    The contractor should be made aware who they are tendering against before accepting inclusion on the list. It is always possible to ascertain who is on the list before the tender is submitted in any event. It is better to find out before agreeing to submit a tender. Trust must work both ways.
4.    The tenderer should be invited to a de-briefing after the contract has been placed.

Finally, the level of cover pricing that took place is an indication that the system broke down at the tendering stage rather than direct attempts to increase profits. In fact, it was normally done to save money.

There is no direct route for the contracting side of the industry to criticise the quality of the contract documents that they receive but I, and my contacts, feel that the general level is poor.' 

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