The funny thing is just before you actually get the award – I always get the feeling that industry has already got a good idea of who won the project prior to the actual award of the project.
You go through the motions and then out of the blue – you start getting quotes that were submitted to other builders who are out of the race. Time goes on and you don’t hear much from the client yet – more and more unsolicited quotes arrive in your email box.
If you are lucky you have pretty much got full coverage and hopefully clusters of pricing across all trades. At this stage, there has been some type of conversation at management level and there has been some type of indication that a contract or a Letter of Intent is pending.
In preparation for the pending hand over the estimate will start to go through all the files and slowly start house cleaning and making sure all the document controls and naming protocols are in order. Then the estimator would make sure tender BOQ is coherent and the packages are coded in the standard procurement codes. Any post-tender contract negotiations are transferred into the contract budget. It is basically an accounting masterpiece that tells a story to anyone who procures the trades. But you can’t go too far into the process as the final button could take some time to land and often there may be some last-minute negotiation.
The reason why an estimator doesn’t go too far into the Handover docs in because it takes a good couple of days’ work which costs a lot of money. So until you get something concrete you don’t waste too much time. So when a project has been awarded the trigger for an estimator to get prepared to pass the ball to the contracts team is either a “Letter of Award” (LOA) whilst the contract is been finalized or a signed contract. As an estimator, your focus is winning tenders – so you are normally in the midst of another tender. So bottom line – You haven’t got a lot of time to spare, but it is also your job to hand the estimate over to the contracts team so that you can best procure the project.
HANDOVER – Documents
The handover form basically a massive checklist that paints a very detailed story of the tender of “What we tendered, Who we tendered for and How we got to the Number?” The Handover document is a number of documents and is summarised by the handover form.
So you need to think what are the CAs are going to need to know?
- Client details
- The tender submission and pricing schedules and any special conditions.
- The tender documents;
- Site assessment/risk
- The history of the tender and how you got to the winning price.
- Subcontractor & supplier quotes
- Trades you have to use “First Principles or Bench Marking”. And obviously any areas of risk.
- They will need to know all the headlines of the contract.
- Then a coded budget for procurement.
Budget – DROp
The tender quote has normally a small percentage padding in the number to compensate with the game that is played during the second round of procurement. Now sometimes the price goes up but the vast majority in the wash of the project procurement drop anywhere from 3% to 9%. The CAs job is focused on negotiating the best number for each trade.
So when the LOA has been sent and the green light has been given – the estimator under the direction of management relocate money to different areas of the budget and generally money is stripped out of all trades and a trade target is set academically.
This recipe is based on past projects and patterns. But preliminaries are normally the beneficiary as you need enough money to run the project safely.
If you refer to the “Australian Method of Measurement” you will note there are some global headings that relate to building elements. Now – to manage costs within procurement each element often has a unique cost code that links to an accounting package.
Most building companies have their own codes to each one of this element but the format is very similar. The recent movement to BIM codes is pushing the larger companies to an industry coding system which I will discuss in later Blog.
HANDOVER – MEETING
Time has a lot to do with how successful the handover process. In a meeting, you normally have the site manager, CAs and project manager (who are also very busy.) Now people process information differently. So if all the contracts team are coming into the meeting cold – well you can right of at least half a day. You may have to explain the one basic thing in three different ways. etc.
What I prefer (but always possible) is to issue the handover document and then give everyone time to absorb the small novel of documents especially the site guys.
Then one to two days later you arrange a meeting around a table and then work your way through the documents and then you table any question at the end of the meeting.
This way the presentation will often answer most questions – then once you have finished the presentation, you need to be very patent and let people move at there own pace.
Then I would suggest another meeting a week later to answer any queries that may arise.
there is no question until the end of the meeting.
It is also the final line in the sand where the estimator has not an active roll in the project including the filing of emails requests etc. Basically, you are setting the profit targets for the project, and stepping away from your baby.
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Tender Process – Click Here